Marc Faber on the Reddit crowd

Concerning the Reddit crowd, which buys meme stocks, unicorns, all sorts of cryptocurrencies, NFTs, etc., I am reminded of the words of Seneca the Younger: “It is the proof of a bad cause when it is applauded by the mob.”

~ Marc Faber, The Gloom, Boom & Doom Report, January 1, 2022

Bloomberg Businessweek on the FOMO economy

It's not just crypto: It's stocks such as those of AMC Entertainment Holdings, GameStop, and Tesla that are beloved on Reddit and Twitter, and it's the houses and condos being snapped up almost as soon as they list. The pressure to keep up with neighbors, friends, and social media meme lords who seem to be in the process of becoming wealthy - or, at least, talking about it - can feel unbearable.

[...]

People flush with pent-up savings after a year of lockdowns have more ways than ever to throw darts at the financial dartboard: zero-commission, zero-minimum trading apps; social media message boards; and exchange-traded funds you can hop in and out of as easily as stocks, including a few that explicitly play to the trend-chasing crowd with such tickers as BUZZ and, yes, FOMO.

[...]

Another cause of FOMO right now is the lack of a strong competing narrative.  Warning against risky short-term speculation and saying "it'll all end in tears" are widely derided as boomerisms.  Partly because it seems out of touch with Generation Z's economic reality, but also because asset prices keep bouncing back.  Bitcoin's rebound from a more than 80% decline in 2018 to a record high this year, along with property and stocks, is classic regret fuel for those who missed out.

~ Lionel Laurent, "The FOMO Economy," Bloomberg Businessweek, June 14, 2021

Myles Udlard on AMC Entertainment's $230 million capital raise

Q: The thing that's funny about this is they're raising cash to buy assets, to buy more of a thing that's not full already?  So we'll see how that strategy works out over the longer term.  It doesn't really matter, I guess, but if you're going to spend the cash, buy more movie theaters?

Myles Udlard: That makes sense.  They're in the movie theater business.  It goes all the way back to Hertz.  Hertz last year was being told by the market that it didn't have to file for bankruptcy and so these CEO are now looking at the meme market and they're saying, "Screw it.  I will go on offense.  The market is telling me to do that, whether it's a joke on Reddit or not."

~ Myles Udlard, "AMC higher on $230M capital raise," 3:05 mark, Yahoo Finance, June 1, 2021

The Economist on Reddit traders and GameStop frenzy

Events on Wall Street have become so strange that Netflix is said to be planning a show to immortalise them. But what should be the plot?  One story is of an anti-establishment movement causing chaos in high finance, just as it has in politics.  Another is how volatile shares, strutting online traders and cash-crunches at brokerage firms signal that a toppy market is poised to crash.  Both gloss over what is really going on. Information technology is being used to make trading free, shift information flows and catalyse new business models, transforming how markets work.  And, despite the clamour of recent weeks, this promises to bring big long-term benefits.

~ The Economist, "The real revolution on Wall Street," February 6, 2021

Nate Geraci on the speculative mania in "Reddit stocks"

The speculative mania in ‘Reddit stocks’ has simply overshadowed Ark Invest and pretty much everything else in the markets.  It’s a fascinating dichotomy right now with investors pumping money into companies of the past versus companies of the future. 

~ Nate Geraci, president of the ETF Store, "ARK Mania Finally Fading After GameStop Fever Sweeps Wall Street," WealthManagement.com, January 29, 2021

Reddit user on the rise of retail investors (2021)

This is a big moment.  A tug-of-war between tradition and the future.  Hedge fund managers live in the past, and continue to look down upon the retail investors.  They truly believe that we, the average retail investors, don't know anything about finances or the market (which may be true), and we're just gambling our money away.  This is the world they want to live in.  This was the past.

~ Reddit user benaffleks, week ended January 29, 2021

(As cited by Barron's, "The GameStop Revolut Has Just Begun. Get Ready." January 30, 2021)

Glenn Greenwald on Reddit traders vowing to drive GameStop stock up to $1,000

It has also enriched a lot of people who bought at $20 or even $30 or $40 or $100, and the stock is now at $350 with no sign of it going down because they're vowing to hold onto the stock and even drive it up to $1,000 a share.  That's the vow on Reddit.  We'll see if that happens or not. 

~ Glenn Greenwald, "The Reddit Revolution, GameStop and Melvin Capital," 15:40 mark, January 28, 2021