Wednesday, January 27, 2021

Fools And Their Money. Are Soon Parted.

Making money in an everything up market is the easy part. Keeping it is the hard part. Every generation has to learn the hard way the difference between unrealized and realized gains. In this Idiocracy, some people have to learn more than once. However, I suggest that for most people this will be their final lesson. They have been seduced by Hendry's Iron Law of Disney markets:

"The worse the reality of the economy becomes, the more we take on the reflexive belief in further and dramatic monetary expansion and the more attractive the stock market looks...amid this falsehood of recovery, those drugged by the virtual simulation of prosperity and its acolyte QE, will be destroyed"

Today, we were once again reminded that making money in stonks is easy. With a one word tweet, Elon Musk doubled Gamestop today, again:

"His one-word comment — "Gamestonk!!" — was all it took to cheer on the the popular Reddit page that's been generating most of the hype around the stock"

That one word tweet was good for another 100% gain in Gamestonk. Now up some 2,000% in four weeks. 

All of which is reminiscent of October 2008 when Volkswagen shares went late stage parabolic in what used to be the most famous short squeeze of all time. That was around the same time that the casino was going into meltdown mode post TARP bailout. 

While Reddit bulls are busy exploding hedge funds left and right, they appear to be ignoring the massive dislocations they themselves are creating in the casino. So far this week on both Monday and Wednesday morning, the casino had a close call with meltdown. On both days multiple retail brokerages had outages. Just a prelude as to what is about to come. Two dinky stocks with the combined market cap of one Tesla up day brought down multiple brokerages on Wednesday:

"TD attributed its app outage to 'unprecedented volumes' of activity"

Add Fidelity (my broker) and Robinhood to the list of sites experiencing intermittent outages today and Monday. Now picture what happens when Tesla implodes, along with Microsoft, Apple, Google, and Amazon. 

So far, all sage warnings have been ignored. Millennials are now searching around for the next set of stocks they can swarm higher. Making money via groupthink social media forums has never been easier.

It's clear that most people gambling today don't remember Y2K or, they were still in diapers during that era. Most people today seem to believe that the biggest losses were suffered in, JDS Uniphase, Ariba, and other shooting stars that never survived that era. However, MOST of the real money was lost in Microsoft, Oracle, Intel, Dell, Cisco, Sun Microsystems and other large cap Tech stocks that were deemed "safe havens" at that time. Which is deja vu of today. 

Here we see the Nasdaq 100 / S&P 500 ratio. 

Of course the only thing easier than a Reddit message board for generating ephemeral wealth is central bank asset inflation. The source of all of today's billionaire fake wealth. For today's Tech billionaires in particular simulated wealth creation has never been easier while the real economy implodes in real time. Per Hendry's iron law of Disney markets.