GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained
Release Date: 01/31/2021
MSTR vs Bitcoin (IBIT) | VIX Seasonality | No Tarif Inflation Yet | Stock Buyback Seasonality | Confusing PPI Report
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Derek Moore reviews the relative valuation between MSTR MicroStrategy and the Bitcoin ETF IBIT, plus deconstructing the recent PPI report which may not be the inflation problem many people initially thought. The VIX Index has seasonal patterns, and we are going into the season for increased historical VIX levels, but will history repeat itself? What about corporate buybacks seasonality and what it means for the stock market over the next two months. Derek also reviews how railroad stocks were once a way bigger percentage of the US stock market than the top stocks in the index are today....
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Comparing Bull Markets | Employment Revisions | Nvidia Options Implied Moves | Wall Street Targets Get Bullish
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Derek Moore and Mike Snyder compare the 2009 bull market to today plus Wall Street year end estimates get bullish again. Plus, What Nvidia’s options market is forecasting for implied moves around earnings. Later, explaining (or trying to) the revisions to the employment data, historical perspective, and the low response rates. All that and more as markets try to make another all-time high. 2009 Bull Market vs 2022 Non-Farm Payroll Downward Revisions Average Differential Between Final Estimate and Initial Estimates 30 Consecutive Downward Revisions Market Cycles and Market...
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Can You Really Retire on High Dividend Paying ETFs? |What Investors Get Wrong on Premium Selling High Dividend ETFs and Income | Are Assets More Correlated Today? | Index Weighting Concentration Over the Years
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Derek Moore and Shane Skinner get into how investors are looking at high dividend ETFs the wrong way as total return vs distribution yield is what matters. Plus, how to think about how much in dividends you can take out knowing its total return that drives the probability of assets lasting during distribution phase. Later, they look at correlations between different asset classes over the years and ask whether today they are way more positively correlated. They then delve into concentration today in stock indexes vs prior periods. You might be surprised by who were the highest waited stocks...
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Opendoor Meme Stock Mania Gamma Squeeze? | Bull Market Has Legs? | FOMC Fed Dissents Coming? | Options and Mag 7 Earnings
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Derek Moore and Mike Snyder get into why anyone was short Opendoor and how the options market is flashing crazy implied volatility. Plus, how volatility and price movement may cause market makers to buy shares known as a “Gamma Squeeze”. Later, they get into how the signs are there that this bull market might have more to run (or not). Oh, and let’s not forget to look at what the options market is forecasting for expected moves on Microsoft, Amazon, and Apple earnings next week. All this plus some recommendations this week. Short Interest on Opendoor Implied volatility in...
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Powell vs. Trump | Crazy Inflation Survey Expectations | US Stocks Overseas Revenue | Options and Tesla Earnings
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Derek Moore and Shane Skinner give their thoughts on the Fed, interest rates, and the Trump vs. Powell situation. Plus, looking at new data on how much revenue US companies derive from overseas markets. Later the talk about what many get wrong about where their stock market returns come from year over year plus those crazy surveys and inflation expectations. Finally, they talk about what the option market is expecting around TSLA earnings How long are Fed Governor terms? How long is the term of the Federal Reserve Chair? Where returns come from changes in revenues, margins, EPS,...
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Does the Debt Matter? | Market Myth Busting | International Stocks Overbought? | Tax Rates Don’t Matter?
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Derek Moore and Shane Skinner examine some market myths. Does a weak dollar mean problems for the stock market? Looking at tax rates and the effect on government spending vs revenue. Plus, some international market ETFs are up huge so can they continue? Later, looking at the national debt and when it might matter. All that and more market musings. Best performing international markets Is the US Dollar weakness really that bad compared to other periods Government revenue as a percentage of GDP Government expenditure as a percentage of GDP Do higher tax rates really make a...
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Fallacy of Dollar Losing 90% of Value | Buy at All-Time Highs? | Gold Is More Volatile Than You Think | Fastest New High Post Bear Market Ever
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Derek Moore looks at some data showing that buying markets at all-time highs isn’t so bad. Plus, after years of listening to how the dollar has lost 90% of its value or more, let’s set the record straight about whether this is a fallacy or truth. You might be surprised by the data. Then, examine the volatility and drawdowns of gold prices. Yeah, they drawdown more than you’d have thought. Oh, and going long the F1 Movie! Comparing drawdowns in Gold, S&P 500 index, and 5-Year Treasuries over the last 18 years How to calculate the loss in purchasing power of the U.S. Dollar...
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Hated All-Time Highs | Semis Gone Wild | Does Apple Buy Perplexity? | Inflation Adjusted Oil Prices
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Derek Moore is joined again by Spencer Wright from Halbert Wealth to talk about the market breaking out to another all-time high and how hated a rally this is. Then they discuss semiconductors finally catching up to their only July 2024 highs. Then they talk about Chamath Palihapitiya’s criticism of Apple and a Bloomberg report that Apple had talks about buying AI company Perplexity. Finally, some odds and ends like whether oil prices on an inflation adjusted basis are lower than in the 1970s and whatever else we covered. Back to all-time highs Semiconductors finally join the...
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60/40 Portfolio vs Hedged Equity | CNBC Markets in Turmoil | Tired Fed Interest Rate Debate
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Derek Moore looks to answer the question on whether Hedged Equity or the 60/40 stock bond portfolio is a better fit given where we are and why. How bonds had a 40-year bull market but is it likely that is possible again given where we are? Later, looking at market returns after CNBC does their ‘markets in turmoil’ specials when markets are selling off. Plus, why debate about should or shouldn’t the Fed lower rates is getting tired and does it even matter outside of housing? Debate around Fed lowering rates Impact of Fed rates on real estate housing market Spread between...
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Geopolitical Risk | Most Volatile Decade? |Housing Is Cheap? | Gold & Oil Get a Bid
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Derek Moore examines markets around historical geopolitical events. Plus, the 2020s are trending to be the most volatile decade and by the way we are up over 80% so far. Then, looking at the pop in gold and crude oil this week and perspective on where those markets are. Plus, a contrarian take that housing is actually cheap. Later talking semiconductor stocks, the US dollar index, inflation, and useless sentiment surveys. 1-year forward inflation expectations U-Michigan survey Sentiment gets better Gold breaks out of its most recent range while crude oil breaks back into its prior range...
info_outlineThe Wall Street Bets community executed a short squeeze through Reddit on stocks like GameStop and AMC Theatres this week. But what is a short squeeze? How did they and others buying stocks and options cause the stock to go up at least in the short term? Is short selling bad? Why potentially some brokers had to halt trading in certain names? A look back to the late nineties when internet chat rooms were pushing stocks. Examples of the little investor turning thousands into millions, and vice versa. How short sellers can root out fraud in companies with examples. Jay Pestrichelli and Derek Moore get into this and more in this very timely and fascinating episode.
What is a short squeeze?
What is the GameStop short squeeze?
How did Reddit group Wall Street Bets execute a short squeeze?
How some people have made a lot of money
How other people may lose a lot of money?
What is short interest ratio?
What is short interest as percent of float?
What is a delta or gamma squeeze in options on stocks?
Large in the money option open interest in GameStop at expiration
How short selling adds liquidity.
What are short days to cover metric?
Short sellers uncovering fraud in Amazon Prime documentary the China Hustle.
Short sellers with Enron, Nikola, Wirecard
Trading halts and liquidity requirements on brokerages
Congressional hearings coming on Robin Hood and Wall Street Bets GameStop activity
Examples of pump and dump in 2000 by Michael Lewis in New York Times
Short selling was found useful even in 1918.
How short selling in itself does not bankrupt companies.
How short selling that drives price lower can impact ability for secondary equity offering.
Mentioned in this Episode:
Explaining Delta and Gamma Options Squeeze Robinhood vs Softbank Whale https://brokenpiechart.libsyn.com/robinhood-option-traders-vs-the-softbank-whale
Derek Moore’s Book Broken Pie Chart https://amzn.to/2YoxRaF
Documentary “The China Hustle” on Amazon Prime Video https://amzn.to/39uBJgm
Michael Lewis article on 16-year-old penny stock trader 2001 https://www.nytimes.com/2001/02/25/magazine/jonathan-lebed-s-extracurricular-activities.html
ZEGA Financial www.zegafinancial.com
Jay Pestrichelli’s Buy and Hedge Book on Amazon https://amzn.to/2YoJDSg