Over the past year, I have been using the stock market crash and subsequent volatility to make small investments. I have been able to pay my mortgage a couple of times thanks to cruise line stocks. As the market settled, I cashed out 50% of my holdings to keep long term. One of the stocks I decided I would park some money in was Black Berry ($BB). They have had some good news over the past month and the stock went up some. Last week it it made a huge jump over 2 days. I checked the news to see what the deal was and the only thing that I could find was that there were people investing in some stocks in hope of a short squeeze (hedge fund managers making bets that the stock would go down and when it doesn’t, they have to buy shares at a higher price and buying a lot of shares makes the price go even higher – my rough understanding). As I was researching the news, I placed a trailing stop on 50% of my BB shares so if it started dropping, those shares would sell. They did sell after a 16% drop from the high but my original position had gone up over 400% so, I have enough to pay some bills if I do not re-invest (the taxes will be high because I had held them < 1 year).
Bubbling anger history
In 2008 government bailed out financial institutions during the sub prime mortgage crisis. Too big to fail was bailed out and given much more support than individuals/families that were allowed to fail. I started to write a description but it’s worth a book so here is my experience during this time for ground level – where it started: I was saving to buy a home and would occasionally tour neighborhoods. After several months, it became apparent that I was not able to save faster than prices were going up and was getting priced out of neighborhoods. One of the first homes I went to tour, was in a neighborhood that had a lot of foreclosures. For homes that were only 1-2 years old, they were tore up. There was some anger in there and the homes were not worth what they were asking. The relator that had been involved in selling those, had given me a tour. She, later, took me on to tour another home. After the tour she took aside one of my friends that went with us and said that I was not buying a big enough home, that I should be looking at one more expensive. She asked me once, “well don’t you expect that you’ll get raises?”
The use of stock buy backs to boost prices and help share holders instead of using Republican tax breaks to help workers. Trickle down is a joke but when they are using turned up umbrellas, it is cruel.
More recently, in corona news, there was CNBC doing its job of letting hedge fund and investor bros come on and talk up/down whatever they are trying to manipulate. Here is a link to the almost 30 minute “interview” of Bill Ackman who made 2 BILLION from short positions (they were disclosed March 3 per site). If you have the patience, watch the ticker (including volatility index) on screen as he talks. Stocks were already declining and I would bet most people who had the ability to buy shorts, did to some degree when COVID hit but this brings up another point, there are algorithms and computers controlling huge volumes of trade and are able to act more quickly than a human can. If somebody says boo on TV, a particular stock could lose 200% before a human is able to hear and then react to the news.
There are a lot of sources of anger going back decades. There is enough of it that some supported Trump looking for solutions, and some are looking for answers in visions such as found with Bernie Saunders.
The remarkable thing about what was happening this week is that I saw multiple generations and multiple political leanings coming to together with a focus of their anger. Behind all of it may have been some heavy weight suits or new money, but I am speaking more to the online social media participants. For at least a moment, people stopped pointing fingers at each other and united against those that are happy to screw over anyone and everyone that does not have enough money and power to do anything for them.
The first primary target was GME. Hedge funders had shorted over 100% of shares. Seems lEgIt.
I trade the most with one of the more traditional brokers but I had a stock on Robinhood. A friend referred me and you get a free stock. I have had the account for about a year. When the crazy was really rolling, I decided to sell the one share. I used that to buy crypto currency. When you transfer money to Robinhood, they let use the money immediately, even though it can take up to a week for funds to be transferred from your bank account. They have stopped that feature for all of the suspect stocks and for crypto. They did also stop all trading of the volatile list at one point. I think part of their policy decisions have been based of their lack of available capital and server space. Like a website that suddenly goes viral and crashes. They are looking to go public soon and so may have been trying to keep financials a certain way. They may have also had pressure from some of their business partners would would be friendly to the hedge fund bros that are getting squeezed.
It will be an interesting week ahead as regulators and law makers decide on how much retail investors should be regulated while hedge funds due as they please. Does it matter who is doing the manipulating? I’ll be watching to see of there is a continued sort of class consciousness that has different political sides uniting against the real obstacles, instead of reacting to being told to hate each other.
Good luck, stay safe.
I am not giving any financial or investment advice in this post and have no expertise to do so.
Edit: Additional Thought: People with money and power seem to get away with all sorts of illegal things and that is if it has been made illegal. They also have influence over what laws are written and how how they are written. I once heard someone remark about how someone who committed a white collar crime should be cut a break and forgiven because the financial crime they committed was not violent and did not harm anyone. Sure, because screwing middle class and poor people out of money does not do harm??? It is too bad that financial crimes can not be found and prosecuted as easily as someone carrying some drugs and a pipe whose taillight is out.