04-APRIL 09-2021

Good morning. Early studies are showing that the latest round of stimulus money went into spending and bank accounts, rather than into the stock market.  A few are even stating that the era of retail investors dominating the market may be over as a result. Retail investors have done a lot.  They’ve saved GameStop (GME) […]

04-APRIL 02-2021

Good morning. Year to date, a number of hedge funds have gotten into trouble.  There’s Melvin Capital, which was overly short shares of GameStop (GME).  The short squeeze only ended when market makers shut off the ability of retail traders to buy more shares.  More recently, the hedge fund Archegos caused several stocks to get […]

03-MARCH 26-2021

Good morning. Investing isn’t just about valuations and how a company is performing.  It also involves second-level thinking, particularly about how others think about the market.  That can lead to some counter-intuitive observations.  For instance, bad news is typically good news for stocks.  Why?  Bad news increases the likelihood of further monetary and fiscal stimulus.  […]

03-MARCH 19-2021

Good morning. One the reasons investors have been bullish on stocks in the past year was summed up by the acronym TINA.  That’s short for There Is No Alternative.  Specifically, that meant that stocks offered better upside protection and income relative to bonds.  But with 10-year Treasury yields closing in on 1.75 percent, those yields […]

03-MARCH 12-2021

Good morning. The Nasdaq added to its prior weekly gains on Thursday.  The tech-heavy index has now recovered about half of its recent decline.  The move comes as Washington approved a $1.9 trillion stimulus plan, and as 10-year bond rates came down slightly from their recent spike higher. Market drops aren’t unusual, and neither is […]

03-MARCH 05-2021

Good morning. Last year introduced investors to the concept of a “gamma squeeze.”  Traders buying call options on markets caused market makers to buy stocks as a hedge, which created a positive feedback loop.  That trade also works in reverse, where market makers need to short stocks seeing a rise in put option trading. That’s […]

02-FEBRUARY 26-2021

Good morning. On Wednesday, shares of retail trader favorite GameStop (GME) managed to jump triple-digits higher.  And the trend continued with a 19 percent rally on Thursday, even as both days saw halts in trading for the stock.  Some are pointing out that shares never really got back under $40, and that those with short […]