Wrote this a few days back. Posting here for your enjoyment. Since I wrote this, there have been some additional changes. Robinhood is limiting many retail stocks to one share purchases to be continued with the market open tomorrow. The Redditors also targeted the gag crypto Dogecoin and sent it through the roof. The next target for this Monday appears to be silver (Which I own 210 ounces of in my IRA). We will see where this goes. My letter starts below.
I will explain this in the quickest most efficient way possible.
For all of you who have known me for years, these past two years which have been awful from a personal perspective have been really good from a financial perspective. I have gotten very involved with crypto, precious metals and ETFs (If you need an explanation for these, let me know). I have always thrived in chaos. It is my one superpower. The markets have made more sense to me as the chaos continues to build.
Going back, I was an early adopter of the Robinhood application. It made buying mutual funds, stocks, ETFs and a limited supply of crypto extremely easy. They have informative articles. It was a great tool. One of the few things that made the internet better. The purpose of the Robinhood app was to bring investing to the common man and educate them. It absolutely accomplished this. This is also what led to the events of this past week.
Starting with a Reddit thread with over two million users called #WallStreetBets where the investors are led by Gen-X millionaire Barstool Sports founder Dave Portnoy and his followers who are mostly young and use Robinhood, the users decided to start buying Gamestop stock en masse after it became public knowledge that Wall Street hedge funds shorted the stock severely to basically bankrupt it. Bankrupt retail stocks have done well on Robinhood. I made money on American Airlines and Nokia after people on this Reddit thread started buying them. Both companies are on their last legs. One year ago today, one Gamestop stock was $3.93. After today, it is $325.00.Gamestop is basically bankrupt due to these COVID lockdowns. This short squeeze involved many other companies that are in trouble like Bed, Bath and Beyond. So far, this short squeeze has cost these evil, piece of shit hedge funds over 70 billion dollars. Like its namesake app, Robinhood users are literally taking from the rich and giving back to the middle class. As long as they hold these stocks, these hedge funds will lose big time.
Watching the smart investors whine and cry on CNBC all week has been my early 2021 Christmas present. Are these stocks all overvalued? Hell yes. But if you think a bunch of idiots bought these due to their lack of knowledge, that would be a mistake. These Reddit investors knew exactly what they were doing and who it would impact. Plus with the elevated stock price, banks now have to loan to Gamestop at the elevated price. These banks know that these stocks are garbage. So not only does the Reddit army make money but it is screwing over two of the most corrupt entities in this country, our banks and hedge funds.
So because regular idiots are making money, it is time for "regulation" and "rules" to be instituted. Robinhood's primary investor, Melvin Capital, was one of the hedge funds that got hit the hardest. Robinhood needed one billion dollars to stay functional this week. Now, they are limiting stock purchases. #WallStreetBets got suspended on Reddit and Discord.They have decided to move the people back into their proper "place" as passive investors slowly getting screwed by the self reinforcing system that is rigged against them. Expect more of these actions soon.
Two of my favorite leftists on this topic.
The Hill's Krystal Ball
Dave Portnoy (The instigator of much of this) has a scathing interview about this on Tucker. This is a must watch.
Enjoy the chaos!
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