đ Is GameStop the Next Amazon?
Hello friends & new readers, welcome!
This week we saw a lot of meme-stock activity in the markets with Clover Health, Gamestop, Blackberry, AMC, Wish, Wendyâs all rising 10-100% and subsequently giving back all those gains a day later.
The r/WallStreetBets community on reddit is now 10M+ large, so can you really call it a small community? The efforts made to âpile intoâ a singular meme stock are becoming more distributed - which means that any attempt to squeeze a stock is not as potent as it would have been back in January when GameStop was the only focus.
If you are trading meme stocks, know your entry and exit points. And as a general rule, by the time you see a trending stock on the r/WallStreetBets homepage - itâs probably too late to get in - most of the profits are had PRIOR to them trending on the front page.
Lately Iâve just been piling my excess savings into large tech stocks like Apple, Google, and ETFs - continuing to invest to so that my money isnât just sitting in cash earning 0% interest. Another good place to put your cash would be real estate or commodities. If you do have excess cash that you donât need - it would be a good time to examine if itâs working for you or not.
Enjoy this weekâs newsletter!
Weekly News Roundup
GameStop names former Amazon execs as new CEO, CFO (CNBC)
In an effort to turn around the business, GameStop is attempting a shift from brick-and-mortar storefronts to becoming a major player in the online space.
GameStop is signalling this shift by hiring former Amazon executive Matt Furlong as its new CEO and Mike Recupero as its new CFO, on top of previously hiring three other executives to fill other C-suite positions (COO, CTO and CGO).
RH: Iâm a little skeptical about GameStop being able to turn their business around but hiring experienced, proven management is definitely a step in the right direction.
HY: If GameStop goes directly into DTC (direct to consumer) eCommerce and has the capital and leadership to do it well, it could bode well for its business, but thatâs likely a 12-36 month timeline.
Senate passes $250 billion bipartisan tech and manufacturing bill aimed at countering China (CNBC)
In one of the last major bipartisan bills of 2021, the Senate passed one of the largest industrial bills in U.S. history in an effort to remain technologically competitive with China.
The bill roughly commits $250 billion in funding for scientific research and subsidies for chipmakers and robot makers among things.
RH: Love this quote from President Joe Biden âAs other countries continue to invest in their own research and development, we cannot risk falling behind.â Big step towards remaining competitive in an increasingly global tech space.
SEC to Review Market Structure as Meme Stocks Stir Frenzy (WSJ)
Following astronomical surges in trading by retail investors pumping âmeme stocksâ such as AMC and GameStop, the Securities and Exchange Commission (SEC) is considering changes to some of the stock marketâs most fundamental rules.
On the top of the list of Gary Genslerâs (SEC Chairman) concerns: payment for order flow from wholesalers such as Citadel and Virtu Financial where orders are filled by wholesalers instead of routing them to public exchanges.
HY: Iâm not sure the SEC can do anything about people gathering online (on message boards) and sharing their ideas about the next meme/hot stock. If anything this week, what we saw as distributed short squeezes (which isnât as effective as say, when everyone just piles into one stock like $GME back in January). The SEC can however regulate trading apps and may do so in the future to âprotectâ individual investors against activity which resembles gambling on the stock market more than anything.
Term of the Week
In May 2021, the CPI increased 5% from the previous May - but this was not seasonally adjusted. This is also the figure people refer to when they say âInflation is 5%â! It is a âstarkâ figure but that figure can also be deceiving since the prior May (2020) CPI was flat from 2019. Hereâs the table if youâre interested: click here.