Many people don’t have the time to sit down, shop around and research what the latest opportunities are. With the current pandemic, This is a great time to do a self review and compare what you have to the best options available out there. This series is about tackling this as painless and clear as possible.
Today’s post is a brief cross-examination on some strong trends affecting the market and financial world. We already know this can impact crypto. Let’s take a look at what these so called meme stocks are, why the tech sector is headed for a bearish market correction, and where inflation rates are presently and the impact these issues have.
Meme Stocks: What meme stocks really are and why the news refuses to accept reality
“Meme Stocks’ as dubbed by the media is actually downplaying a huge ugly underside of the beast that is the stock market. The media has dubbed these stocks doomed to decline and fail since January. 5 months later, these stocks are valued way higher than what they’ve been in the previous year with ongoing bull trends. As mentioned before news media isnt reliable. At face level, this was accepted for local news event, feel good fluff pieces. Then came national news events; and has progressed to false business news.
During the pandemic, Institutional Investors decided to get greedy and aggressively shorted stocks they believe could go bankrupt and fail. So aggressively that some chose to short without any risk mitigation if the stocks rose up. Fast forward to the present and those same traders have chosen to double down extensively on their position while many other institutions and even retail traders have caused the stock price to appreciate in share price value extensively; some companies have used this as a chance to revitalize and innovate themselves to adapt and thrive.
Presently, we have billions at a potential loss for the bearish investors (Their loss is more than the assets they have; meaning their financial lender will have to cover the loss; causing a very large ripple impact on all investors and the market). The very same investors who received a federal bailout in 2008}(https://www.inquisitr.com/5300464/billionaire-ken-griffin-bailout-870-million-last-year/) are about to lose it all.
What Does this mean for the other side?
PROFITS.
A Short squeeze is bound to occur upon a forced margin call (liquidation of all positions b/c they are costing their lender too much money that will be unrecoverable)
A recent historic example of the same situation is the 2008 Short Squeeze on Volkswagen
The company was trading for $30 per share pre-squeeze with shares being sold for $3000 at the height of the squeeze.
Who are these Stocks?
AMC
GME
BB
MVIS
Is it too late?
No the squeeze has not occurred as short positions are still opened. Media has reported they closed in January, but that has been disproved.
How Can I Jump In On This Opportunity?
To get started on investing stocks, you should start here and reach out if you have any questions or need further advice.
Tech Decline
Whilst some traders are losing significant money on the “meme” stocks, they may need to liquidate other positions to satisfy margin requirements . The most overvalued industries will be drawn out first, as their current price indicates it is inflated for its value. Its already observed that Crypto is considered one of these overvalued industries. Another is the Tech sector! Unfortunately as a HIVE stock holder, this means the wonderful HIVE blockchain will be affected by both these factors.
For example, some analysis on TSLA proves its book value is around $150 but yet its present stock price is around $600.
Inflation Rates
This has been concern for a while as when the S& P 500 hit 4200 ~ its been realized the market is about 30% overpriced and was trading bearishly for a week or two among other factors. The last week or two of bullish activity correlates with inflation rates taking a temporary lessor priority for traders; but it cannot be ignored. The Consumer Price Index (The Measure for Inflation) is up 3% YTD (year to date) which is a strong bearish signal for the market. This means the market is due for a correction across the board. Looking at Bill Gates and Warren Buffet; Gates closed out his Twitter and Facebook stock positions in favour of Coke and Kraft. Buffet has closed out on some bank positions and is keeping his capital in fiat (cash).
Leave a comment if you have any questions. Let us know what you think!
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How did that portfolio turn out. I would assume it would have done quite nicely for you as those were the big names in the game of making and supporting the 3.0 lots are learning about now.