Episode 63: New Retail Investors Are Here To Stay
This week the little guy took the game to another level. GAMESTOP got Wall Street to stop playing games and we saw the little guy win a small part of the abundance of capital pervasive in the markets.
It’s been interesting to watch this unfold being on both sides of the aisle. I have many years in the financial industry and today I continue to serve this community as a consultant through Pandocap. In addition, I am an active retail investor using Robinhood, trading GameStop and AMC, and part of the Wall Street Bets forum. So this story is hitting home for me from all sides.
In my experience and the reason why I started Pandocap, was because we have seen the advantage Wall Street has over Main Street. We saw it in the 2008 bailouts; we’re seeing it in the current environment with the pandemic-generated acceleration of growth in the markets, and now we see it in with the hedge fund scandal involving the Reddit WSB group and Gamestop.
The difference today is that the internet has given the everyday investor power through the readily available market intel, ease of discount trading, generally democratizing access to the capital markets. Some on Wall Street dismiss the new generation of investors as unsophisticated and overly opportunistic but the current drama has already started a reassessment of that view.
Many in the diverse community I serve don’t want to miss the party, standing by as hedge funds and Wall Street realizes double and triple-digit run-ups among their holdings. The new retail investor knows she can self-educate to learn the ins and outs of investing. You saw it first-hand when WSB uncovered the hedge fund shorts on Gamestop and other equities. Old school Wall Street needs to reconsider marginalizing the new self-directed trading communities as a flash in the pan, and come to grips with their emergence and staying power. This new world is here to stay and our community of investors is only increasing its participation in the capital markets. To that extent I will keep the little guy in my sights, making industry intel accessible to all. Whether it’s GameStop today or cryptocurrency tomorrow, wealth creation is something we should all be able to realize through access to a free and open market. #YOLO
Back to the short market: The total value of short positions in the market is roughly $800 billion, according to Barclays. The value of short interest in stocks that have more than 20% of their available float — or the number of shares available to the public — is $40 billion, just a 5% slice of the total.
“While we believe there is more pain to come we remain optimistic that it is likely to remain localized," said Maneesh Deshpande, head of U.S. equity and global derivatives strategy at Barclays.
Meanwhile, Bank of America said there are some other names with short squeezes that are less speculative in nature.
Market Close
Dow 30 29,982.62-620.74 (-2.03%)
S&P 500 3,714.24-73.14 (-1.93%)
Nasdaq 13,070.69-266.46 (-2.00%)
IPO
Coinbase, the San Francisco-based cryptocurrency trading platform, said it will go public via a direct listing rather than through a traditional IPO. http://axios.link/Nkoi
LATAM
Superfüds, a Colombian health food store, raised a $3.3M Series A funding round led by Alere Advisors. The total funding for the startup now amounts to $5.1M. Superfüds is the Whole Foods of Latin America, providing healthy food products to customers and retailers alike in a market where these products are more difficult to come by. The platform also aims to serve SMEs who are otherwise overlooked by traditional distributors.