| By Bill Bonner Thursday, January 28, 2021 WEST RIVER, MARYLAND – Today, we turn away from Washington and look to Wall Street for our usual dose of claptrap. And yesterday… in what must be some kind of Bubble Climax… the price of a video game company purveyor, GameStop, traded as high as $370… and then up above $500 in this morning’s pre-market. That’s almost 80 times higher than its price this time last year… and more than 26 times higher than it was at the start of this year. Every oldtimer on Wall Street knows that you’re supposed to buy low and sell high. But this is no “oldtimers’” market. This is a casino, where gamblers bet against each other… all with chips furnished by the Federal Reserve. What played out in the stock market yesterday was a high-stakes poker game between those betting that GameStop shares would go down – mainly a couple of hedge funds – and those betting that they could force the share price up. | Recommended Link | | BUY ALERT: Little-Known Law Could Send These Stocks Soaring Again Most investors have no clue it exists… But the little-known law pictured above fueled one of the biggest bull-runs in stock market history. It’s already pumped $1.2 trillion into a tiny sector of the economy. And the amount of money increases every year. In other words, this trend is accelerating. But only a handful of stocks benefit from this law. | | | -- | Fake and Foolish But perhaps readers are in need of some context… as we were. On the banks of the East River, as well as on the banks of the Potomac, almost everything is now fake and foolish. There is no star to steer by… no fixed point of reference… no magnetic North. Fake money has screwed up everything – markets as well as politics. U.S. stock markets fell yesterday – not enough to make any difference… but enough to make the headlines. MarketWatch has the news: U.S. stocks book worst daily losses since October as Powell stresses long road to recovery and short squeeze drama plays out Stocks closed sharply lower Wednesday, leaving the Dow and S&P 500 index negative for 2021, on mixed earnings reports and after Federal Reserve Chairman Jerome Powell underscored the long road to economic recovery ahead, following the central bank’s first policy meeting of 2021. The Dow Jones Industrial Average skid 633.87 points, or 2.1%, to close at 30,303.17, posting its longest losing streak since Friday, February 28, 2020 when the market fell for seven straight trading days [Featured: Stock Options are DEAD! "Penny Trades" have WON…] Gone Bananas Dear Readers wisely pay little mind to what is happening on Wall Street. The Street has gone bananas. It’s supposed to discover what stocks are worth. Millions of careful investors with sharp pencils and sharper minds are supposed to tote up expected earnings and discount them to “present value,” based on their calculations of risk and interest rates. But both pencils and minds have gone dull. By almost every measure you choose – comparing share prices to earnings, sales, book value, GDP, clicks, electricity consumption, the nap on wooly caterpillars… you name it – stocks are overpriced. It’s not hard to see why. Interest rates are phony. And at negative real yields (adjusted for price inflation), any stream of earnings is an Amazon of liquidity and value. So young traders can think anything they want. And tuning into chat rooms such as WallStreetBets, they can make a sport of it. | Recommended Link | | Millionaire's Big Prediction From Living Room Couch Teeka Tiwari – America’s No. 1 Investor – has made an outrageous prediction. Recorded live from his living room couch… He blasts Congress, reveals nasty truths about America… And reveals one technology set to radically change our nation. Already, 400,000+ viewers have checked it out. WARNING: This video may make you furious. | | | -- | Like a Rocket In the case at hand, a pair of hedge funds saw that GameStop was overbought. Headquartered in Grapevine, Texas, it had respectable sales of $5.2 billion in its last full financial year, ending October 31, 2020. But it lost $275 million during that period. A company that loses $275 million per year is not a moneymaker; it’s a money destroyer. And yet, at its peak, the company was priced as if it had discovered the Holy Grail. Or developed an eternal youth drug. Or inked a contract to sell Donald Trump’s new autobiography, “How I Made America Great Again. LOL!” Of course, it had not. And that’s the point, as Bloomberg’s Matt Levine pointed out. You don’t need to do all that math and research anymore. You just buy a company with a rocket emoji next to its name. The rocket 🚀 is all you need. (The insiders must be selling stocks like crooks unloading stolen money from the getaway car.) [Featured: This one stock could be a game changer for you] Earlier this year, the hedge funds sold the shares of GameStop short. That is, they sold shares in the company that they didn’t own… betting that the stock would be a lot cheaper when they had to cover their bets. This may be a rocket, they said to themselves, but it is soon going to explode in mid-air and fall to the ground. | Recommended Link | Elites Moving to Desolate Islands – Why? Former President Trump… Tech moguls like Zuckerberg… Gates… Musk… High-profile politicians and executives… Barack Obama among them… Even pop celebrities like Kim Kardashian… They're ALL securing the most bizarre… remote… "offshore" properties you can imagine. To learn the concerning reason they might be doing this–and what it means for you… | | | | YOLO On the other side were the proto-momo (momentum) players. Every market has its buyers and sellers, its winners and losers. And it’s the momo guys who are setting the pace in this one. The spirit of it was further revealed in a comic video making its way around the World Wide Web. In it, The Joker, played by Joaquin Phoenix, explains to his interviewer host, played by Robert De Niro, that the baby boomers have essentially destroyed the economy. Millennials have no chance, says The Joker, of ever enjoying the financial success of their parents and grandparents. They might as well take their pittance – from unemployment or stimmy checks – and roll the dice. In the case of GameStop, the momo delinquents (the “longs”) expected to cash in on the new name recognition and dumb luck. After all, everything goes up, doesn’t it? And there was so much “short interest” on the other side, they saw an opportunity to squeeze the shorts, adding to the excitement, the drama, and the profits. If the longs could bid up the price, the shorts would be forced to “cover” – buy the shares at a higher price… and thus push the price even higher. As it turned out, they pushed up the price so high – with the help of “short covering” – that the hedge funds had to retire from the field, leaving their horses dead on the field – with 100% losses. Between them, buyers and sellers, GameStop was the most traded stock in the world this week. And it’s all good, pointless fun. YOLO. (You only live once). Regards, Bill Managing Editor’s Note: Today, Bill and his Bonner-Denning Letter coauthor, Dan Denning, reveal their new Trade of the Decade. Bill’s previous two trades of the decade combined would have seen a 500%+ return… versus just over 120% for the S&P 500. If you’re already a Bonner-Denning Letter subscriber, look out for this important Bonner-Denning Letter update in your inbox today. If you’re not yet a subscriber, you can sign up here.
Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com.
FEATURED READS 2020 U.S. GDP Experienced Worst Decline Since 1940s
Last year was a historically difficult one for the American economy, and numbers now coming out show just how bad things got. In fact, in 2020, the U.S. experienced the worst decline in GDP since 1946, during World War II… Why Stocks Are Soaring Despite the Pandemic
Bill’s Rogue Economics colleague Tom Dyson has been following the sky-high U.S. stock valuations throughout the COVID-19 pandemic, and, like Bill, believes the stock market is divorced from the economy. But why? Tom has an idea… MAILBAG Dear readers come to Donald Trump’s defense after Bill called the former president a “reality TV star”… and another believes Trump was the president conservatives were waiting for… Mr. Trump was (and is) among other things, a highly successful entrepreneur, real estate businessman, builder, hotelier, and American patriot. He raised a family to follow in his work, take risks, and yes, leverage the American “free enterprise” system, as given to him by our federal government. Not perfect by any means… but who is? Suggest a thorough reading of Victor Davis Hanson’s The Case for Trump. – G. Mark N. Bill, you seem to imply that President Trump accomplished nothing of value during his tenure as president. I strongly believe that by the end of Biden’s tenure, a great majority of Americans will sadly regret that Trump, by means fair or foul, lost this past election. – John H. Bill, you sound dangerously close to the willfully clueless Democrat “experts,” whose fevered dream is the absolute control of everything we do. Did you really believe that one man, with a four-year timetable, could stop the 100-year assault on everything that made America the envy of the world? Donald Trump was not ideological. Trump gave conservatives what we have been waiting for since Reagan, someone who would fight back against the unrelenting neo-fascism of the ideological Left. – Jon W. Meanwhile, one dear reader disagrees… Trump caused chaos. He eliminated some very good Republican candidates in 2016 through caustic, juvenile name-calling, which generated that very same type of base supporters. He has made the entire Republican Party look like fools. The last four years have been unbelievable!! He has destroyed America’s standing in world affairs. He has not taken knowledgeable advice from his Cabinet or anyone else. He has chosen to make national and global decisions based on his “gut.” After all, he is always right. Many times, EVERY DAY, he lied about (or misrepresented) situations, instead of telling us the truth. He shirked his responsibilities as president and frequently went AWOL (to his golf course). His response, from day one of the COVID-19 pandemic, has bordered on criminal. His political rallies had become atomic fuel for his base, to the point of inciting them to finally create a deadly riot that hadn’t occurred in our nation’s capital since the Civil War. Many of those rioters are being arrested and charged. Trump should be also!! – Doug J. And finally, another strongly condemns the January 6 Capitol riot… This was NOT a peaceful demonstration of the First Amendment. Five people died and many more were injured. Did you miss that? Feces was smeared on the walls of our Capitol. Did you miss that? Glass and furniture were smashed, and doors were broken down. Did you miss that? Senate chambers and offices were broken into, papers and Pelosi’s computer were stolen. Did you miss that? I’m a Repulican, but this… This was a disgrace to our country. Did you miss that? – Geraldine J. Do Trump’s “good” qualities cancel out his perceived “bad” ones, like G. Mark N. implies? Was Donald Trump the president that conservatives were waiting for, as Jon W. believes? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… What if… Just imagine… If you had bought Apple in 2003? You’d be up as much as 37,250%... If you had bought Bitcoin back in 2016, when it traded for just $428? You’d be up as much as 10,560%... And if you had bought a small altcoin called NEO back in 2017? You would have seen peak gains as high as 151,000%... These three examples have one thing in common: Teeka Tiwari had the foresight to pick ALL THREE. And now, Teeka is sharing his next big prediction… A tiny pre-IPO tech deal recommendation. And if you act now, you can get in for just 50¢ a share. To find out how to get a stake in this deal, click the link below: “Yes, I Want To Know More About This Pre-IPO Tech Deal” 
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