My .02.
The past 12 months has seen a number of unusual movements in the market spawned by intense speculation. It began with the Covid sell off that created hot pockets of opportunity in the market initiated by work-from-home speculators trading from mobile app platforms like Robinhood, SoFi and Stash.
Buying rotated furiously to the FATMAAN stocks (FB, AAPL, TSLA, MSFT, AMZN, GOOGL, NFLX) and later to electric vehicles, special purchase acquisition companies (SPACs), small caps, battered values and Bitcoin. By the end of the year a follow-the rotation pattern had emerged that left institutional money managers pissed off, frustrated and complaining to regulators of the antics of the new WFH grungers in one of the great ironies of recent memory.
The GME short squeeze is merely the latest ploy, facilitated by an understanding of how large and cohesive trading actions can be coordinated through social media. GameStop isn’t worthy of the crazy inflows or wild runup; it just happened to be in the right place at the right time. The short-squeeze rotation has continued with other cash-poor companies being happily exploited as a launch pad for a trading wave that has no intention of ending anytime soon what with trillions in cash still sitting on the sideline and more stimulus checks to come.
The hilarious thing is to watch traditional Wall Street raise its hands in frustration over the growing influence of the WFH crowd, affirming the collective power of the little guy placing trades on a mobile app.
If you can possibly anticipate the next rotation, you stand to make a ton of money in (pun intended) short order. But buyer beware. The movements are fast, furious and without notice. You don’t want to end up on the wrong side of the right trade.
