Entertaining thoughts about investment banking and the stock market.
Working as a manager within two of the largest retail companies for the past 7 years has given me insight into consumer trends and essentially what people are buying on a normal basis. Why is that useful? Because it gives me a better understanding of the established and growing brands and companies that could potentially work to make YOU money. My name is Vance Alm and I am currently working on earning my MBA from the University of Nevada, Reno. I want to talk, teach, and find out more about investing in the stock market.
Recently, there has been a lot of news around the stock market, hedge funds, and normal retail investors which has reignited the nation’s curiosity about investing their money. A lot of people want to be involved with the excitement of potentially making money by investing in the stock market, but they don’t know how or even where to begin. I want to explore the world of investment banking with you and talk about everything involved, from researching different companies to invest in, to the different online platforms or financial service companies you can use and everything in between. I am not a wealthy hedge fund manager and I am not an expert in the field, but I am passionate about the idea of having your money work for you. I am always learning more on the topic and I want to open the conversation on how to start investing and what companies to potentially invest in.
The Wall Street Weekly Wrap Up is where I’ll be discussing the major news and events happening in the world of finance. I’m going to keep you informed on everything you need to know and update you on the events of the past week, all within a short 3 minute video.
This week, I discuss: the S&P 500 hitting its new record closing price; the downward trend in meme stocks; the FBI recovering half of the Bitcoin paid in the Colonial Pipeline ransom; and the 401(k) provider company ForUsAll Inc. giving retirement plan investors the option to invest in cryptocurrencies. Don’t forget to check out my website highfinancethoughts.com to learn more about investing and finances.
The stock market had a rollercoaster of a week but ended Friday afternoon on a positive note. The S&P 500 rallied this afternoon to set a new record price of 4,247.44 at the closing bell. The Dow and NASDAQ both also ended the day in positive territory.
Meme stocks had a meltdown this week. After some incredible gains over the past two weeks for meme stocks like AMC (AMC), GameStop (GME), and Bed Bath & Beyond, most of the hot meme stocks ended the week down from their earlier highs. But all of these meme stocks are trading much higher than they were prior to the WallStreetBets crowd pumping these stocks up. Some financially stable companies like Wendy’s and Clover Health received some unexpected attention from retail investors as the meme stock revolution moved focus away from AMC.
Earlier this week, the FBI recovered a little more than half, or approximately $2.3 million of the Bitcoin ransom that was paid to individuals in the criminal hacking group DarkSide. Joseph Blount, CEO of Colonial Pipeline Co., told The Wall Street Journal that the company paid hackers the $4.4 million ransom because the extent of the intrusion was unknown along with how long it would take to restore operations. The news that the FBI was able to recover part of the ransom caused the price of Bitcoin to fall on Tuesday and Wednesday. People have always assumed cryptocurrencies were untraceable but using the blockchain and the public ledger actually helped confirm the FBI’s investigation. This fact may have scared some shadier investors but I’m sure it was actually something institutional investors liked hearing and knowing there are ways to recover stolen cryptocurrencies.
In other Bitcoin news, the 401(k) provider company ForUsAll Inc., will start a new program in July which will let workers in the retirement plans it administers to invest up to 5% of their contributions in the leading cryptocurrencies through Coinbase. This is a huge step for institutional adoption of cryptocurrencies. People are curious about crypto and they want to invest in it after seeing its incredible growth over the past year.
I know the S&P 500 hit a record closing price, but I feel that inflation concerns and the inevitable rise of interest rates is going to cause a big downturn in the stock market soon. Popular meme stocks appear to be on the decline, does that mean some other stocks will start to be pumped like Wendy’s and Clover Health did? Bitcoin seems to be gaining traction with institutions in the US and I think this is the time to buy because I believe cryptocurrency prices will have a nice rebound soon from their current slump.
Those are my thoughts anyways. What are your thoughts? Leave me a comment below. Don’t forget to check out my YouTube channel, Vance Alm, where I post videos related to investing and finances.
In this video, I give you the quick definitions for the following:
Meme stocks: A meme stock is any stock that experiences excessive trading volume from retail investors who have targeted it on social media, especially the Reddit subgroup WallStreetBets. Examples are AMC, GameStop, BlackBerry, and Bed Bath and Beyond.
Retail investors: are simply regular people who are non-professional investors. Retail investors usually invest less than institutional investors and hedge funds. Examples are you and me.
Apes: dedicated meme stock investors. The term originated from a meme based on the movie “Planet of the Apes”.
#NotLeaving: popular hashtag with meme stock investors and the ape community. This comes from the movie “the Wolf of Wall Street”
Naked shorting: the illegal practice of short selling shares that have not been actually confirmed to be available or even exist. Normally, traders must actually borrow a stock or determine that it can be borrowed before they short sell it.
Brokerage companies: A brokerage company primarily acts as a middleman to connect buyers, like retail investors, and sellers, market makers, to facilitate a transaction. Examples are Robinhood, Webull, Fidelity, and Charles Schwab.
Market Makers: aka brokerage houses. They buy and hold large quantities of shares to sell to the market. Examples are Citadel, Goldman Sachs, Credit Suisse Securities, and Susquehanna Capital Group.
Hedge fund: a limited partnership of investors that uses pooled investment funds to utilize higher risk trading methods in hopes of making large profits. They typically require a large minimum investment to join a hedge fund. Examples are Bridgewater Associates, Renaissance Technologies, Tiger Management, and Two Sigma.
Blue-chip stocks: refers to established companies that have a long history of good earnings, stable dividend payments, and a solid balance sheet. This term is thought to have come from blue gambling chips which are generally the highest denomination of chips used in casinos.
Commodities: raw material that can be bought and sold. Examples of commodities include agricultural (wheat, soybeans), metals (gold, silver), and energy (oil).
Volatility: refers to the price movements of a stock or the stock market as a whole. Highly volatile stocks or cryptocurrencies are those with extreme shifts up and down within short periods of time.
Hopefully you have a better understanding of these popular terms and phrases. Don’t forget to like this post and leave me a comment.
AMC Entertainment and GameStop have been the main companies in the spotlight for the meme stock revolution that is currently unfolding in front of our eyes. But there have been quite a few other companies that have experienced similar rises in their stock prices thanks to Reddit, WallStreetBets, and the Ape revolution. The fast-food restaurant chain Wendy’s has become one of the latest companies to have the spotlight on it and experience a meteoric rise in their stock price.
BlackBerry, Workhorse, Sundial Growers (SNDL), and Bed Bath & Beyond were all meme stocks involved in the original short-squeeze events that happened at the end of January and beginning of February this year, 2021. GameStop led the way during this time in January because was in the news the most for having the largest jump in price. GameStop (GME) was trading around $17 at the beginning of the year in January and experienced an incredible meteoric rise that saw its peak price of $347 on January 27th. The price experienced an immediate drop in price and by the end of the following week, it was trading around $60. Like GME, all of these meme stocks saw explosive growth followed by an immediate drop in price but they have all been trading much higher than they were prior to the January short-squeeze.
The fast-food chain that’s home to the Frosty and Baconator, Wendy’s (WEN), and Clover Medical (CLOV) are the newest companies to be added to the meme stock watchlist. Unlike its fellow meme stocks, Wendy’s has not really been struggling and has enjoyed a fairly stable stock price. According to Yahoo Finance, Wendy’s only had about 4.64% of its outstanding shares being sold short. This counters the meme stock norm where they have been the targets of hedge funds short selling and trading options on them betting that their stock prices will go down.
This recent retail investor revolution has done more than make some people a lot of money. This fight against the hedge funds for their extreme short selling of companies has exposed the prevalent problem on Wall Street of naked short selling and synthetic shares. Both of these practices are illegal, but it has become apparent that Wall Street has been doing it anyways. Naked shorts and synthetic shares involve a big bank or brokerage, like JP Morgan or Robinhood for example, selling “borrowed” shares before they have actually located and borrowed the shares to sell. When this happens, the sellers are making money off shares that do not actually exist, or synthetic shares.
I think it is awesome how the retail investor community that refers to themselves as Apes, has not only fought the hedge funds and won billions of dollars away from them, but they have exposed this illegal practice. What are your thoughts? Leave a comment below.
This is the video version of my blog post where I defined some popular investing terms and phrases. The video can be accessed through the YouTube link above, or you can find my original blog post here. Thank you for checking out my website and don’t forget to subscribe to stay up-to-date on all the latest news and information regarding stocks and cryptocurrencies.
This was a particularly crazy week on Wall Street as the meme stock revolution was in full swing. At the heart of the revolution is AMC (AMC). The meme stock revolution really took off back in January when GameStop was the subject of extreme short selling by hedge funds. At that time, the Reddit subgroup WallStreetBets noticed GameStop had about 140% of its shares being shorted (more shares were shorted than actually existed). WallStreetBets and a user named Roaring Kitty worked on spreading this knowledge and encouraging regular retail investors to buy up shares and force hedge funds to pay much higher prices when they were margin called and had to pay back the shares that they borrowed on contract (options trading).
This same scenario was played out again this past week, but with AMC being the focus this time instead of GameStop. AMC was trading around $10 per share over the last few months but became the focus of the meme stock revolution starting last week, and its price began its meteoric rise. AMC started out last week, 5/24, trading around $13 per share and it quickly doubled in price to end Friday at $26 per share. AMC’s value peaked on this past Wednesday when it reached $69.29 per share, and it has been on a rollercoaster ride since then, and it’s currently trading around $47 at the time of writing this.
In cryptocurrency news, Miami, FL, is hosting the 2021 Bitcoin Conference on 6/4-6/5. This is the largest Bitcoin/cryptocurrency meeting ever. Speakers include Ron Paul, Senator Cynthia Lummis, Michael Saylor, Jack Dorsey, Tony Hawk, and Nick Szabo. A noticeable person missing from this list of speakers is Elon Musk, although considering his recent negative comments and tweets about Bitcoin it’s no surprise that he wasn’t invited. His response was to tweet the image below.
Tweet by Elon Musk
What are your thoughts on AMC and the meme stock revolution? What do you think about the 2021 Bitcoin Conference and Elon Musk’s most recent tweet about Bitcoin? Let’s have a conversation and leave me a comment below.
As I was writing my last blog post about options trading, I realized that there are a lot of investing terms that people might not be familiar with. Plus, the Reddit subgroup WallStreetBets has popularized many newer phrases and terms that might need some explaining. In light of that, this blog is going to be a little different and I’m going to simply give you definitions to some investing terms that you might need some clarification on.
Short Selling: an advanced investment strategy that speculates on the decline in a stock’s price. Short selling is started when the investor opens a position by borrowing shares of a stock that they believe will decrease in value. The investor then sells these borrowed shares to buyers willing to pay the market value of the stocks. The trader is betting that the stock price will continue to decline and they can purchase them at a lower cost when the time comes to pay back the shares. Short selling can generate profits but it can also cause potentially limitless losses if the prices sky rockets (like it did with GameStop and AMC).
Diamond Hands: investors who are ready to hold a position until their end goal is reached, despite potential risks and losses. (I’m currently diamond handing Bitcoin until it rises above $60,000 again.)
Paper Hands: investors that sell early due to negative news or the pressure of the situation.
HODL: “Hold On for Dear Life”, derived from misspelling the work “hold” as in a buy-and-hold strategy.
Bag Holder: someone who purchased when a stock or cryptocurrency’s price was high and holds the stock or crypto that has fallen in value and keeps holding, believing the price will recover.
Tendies: derived from chicken tenders, it means profits or gains.
To the Moon: phrase used to express confidence in the performance of a chosen stock or cryptocurrency.
Bull Market: a financial market that is on the rise and where the conditions of the economy are overall favorable. Bull markets generally see a sustained increase in stock prices.
Bear Market: a financial market that exists in an economy that is receding and where most stocks are declining in value.
Let me know if there are any other terms or phrases you want me to clarify or define. Don’t forget to like this blog post and follow my Twitter where I post investment news and articles every weekday.
Investor portfolios are often comprised of stocks, bonds, and ETFs, but options are another asset class that is getting more attention in the news. An option is a contract that gives the buyer the right to buy or sell the specified stock at a pre-determined price on or before a certain date when the contract expires. A call option gives the holder the right to buy a stock, while a put option gives the holder the right to sell a stock.
Options are generally used for income, to speculate, and to hedge risk. A stock option contract is typically comprised of 100 shares of the underlying stock. Options can usually be bought and sold like stocks on your brokerage account, such as Webull, Robinhood, or Fidelity.
People who buy options are called holders, and those who sell options are called writers. Options holders (buyers) are not obligated to buy or sell, they simply have the choice to exercise their rights. This limits the buyers’ risk to only the premium spent on the options contract. However, options writers (sellers), are obligated to buy or sell if the option expires. This means that a seller may be required to make good on a promise to buy or sell, even if that negatively impacts them. It also implies that option sellers have exposure to more risks. Writers can lose much more than the original price of the options premium.
There are four basic options trades: buying a call option, selling a call option, buying a put option, and selling a put option. With call options, the buyer is betting that the stock price will be higher than a predetermined price called the strike price. The call options seller is betting the price will go down. With put options, the option buyer is betting the stock price will fall below the strike price, while the seller is betting it will be higher than the strike price.
When valuing option contracts, it’s all about determining the probabilities of future price events. The more likely something is to occur, the more expensive an option would be that profits from that event. Generally, the closer an expiration date is, the less value an option will have because there is less time for the stock price to make a big move. For example, an option for a fairly stable priced stock will be more valuable as a three-month option than it will as a one-month option.
So, if you buy a call option then you are betting the stock price rises above the predetermined strike price listed in the options contract, that way you have the option to buy the shares for the cheaper strike price compared to the current market trading value. If you’re selling a call option, you’re betting the price will fall below the strike price, so you have the option to sell the shares for more expensive than the current market value. For put options, it’s the opposite of calls, where the put option buyer is betting the stock price will go down and the put seller is hoping it goes above the strike price.
That was a simplified quick breakdown of options trading but I hope you understood and liked it. Don’t forget to like this blog post and subscribe to see more weekly posts about investing and news in the stock market. Leave me a comment and let me know your thoughts or experience with options trading.
The biggest news from this past week has been the resurgence of the infamous meme stocks GameStop (GME) and AMC (AMC). As you may remember, back in January GameStop was made famous when the Reddit group WallStreetBets and in particular a user named Roaring Kitty, urged retail investors to buy and hold the stock because it was being short sold by big hedge funds. I went into detail about the whole situation in a previous blog post.
Prior to the stock reaching its peak price of $347.51, it was selling around $10-$15 per share. Within less than a two-week span, the stock price shot up more than 10 times its normal trading value and then came crashing back down. At the same time, AMC’s stock price was trading around $2 per share and shot up to $19.90. Both stocks have been trading higher than previously but nowhere near their all-time high prices. There was another bull run on these stocks in mid-March and then prices lowered again.
These two companies, AMC in particular, were the subject to another bull run driven by retail investors who are countering hedge funds attempting to short sell the stocks again. AMC started the week around $12 per share and is ending the week at $26. GameStop went from around $170 at the beginning of the week up to $222 to end the week. AMC’s stock price more than doubled in one week!
In other news, the crypto market has been on a downward spiral lately, and the announcement that came out on Wednesday regarding Iran banning bitcoin mining due to power outage problems didn’t help. Many large cities in Iran have been experiencing daily power outages and Iranian officials blame part of the problem on bitcoin and other cryptocurrency mining. This ban is effective immediately and will be in place until September 22nd of this year.
Do you think the crypto market will bounce back even after Iran and China have recently banned cryptocurrencies? What’s your thoughts on the rise of memes stocks like AMC and GameStop? Leave me a comment and let me know your thoughts. Don’t forget to follow me on social media, I post investment news every weekday on my Twitter.
May has been a rough month for tech stocks, even as many companies have posted record earnings. This past month saw a huge selloff in the stock market, particularly in the tech sector. Yesterday was finally a decent day of trading for tech stocks. Today saw prices dip slightly from yesterday, but it’s still an improvement from the past few weeks.
The NASDAQ Composite was down .04% today, but it outperformed the S&P 500 (-0.21%) and the Dow Jones Industrial Average (-0.24%). The NASDAQ is up a total of 2.67% for the last 5 days. Looking at graphs showing the past 30 days, it looks like the stock market and tech sector in particular, is ready to bounce back from its May slump. Is it time to buy the dip?
I’ve recently bought some Snowflake Inc. (SNOW), DraftKings (DKNG), GoodRX (GDRX), and Lemonade, Inc. (LMND) and made some small gains. Besides DraftKings, which has been traded since July 25, 2019, all of these companies are within one year of their IPO. I personally believe all four of these companies are recovering from the recent dip in the stock market and poised to make good gains. This is my opinion and not financial advice.
What do these companies do? DraftKings is the premier sports betting app that is only gaining in popularity as professional sports are all officially back now from the Covid-19 hiatus. Snowflake is a cloud-based data platform and offers “an ecosystem that enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data” (Yahoo Finance). Lemonade Inc. is an internet-based insurance company, I personally use them for renters insurance (don’t judge me for renting). GoodRX provides information and tools that enable customers to compare prices and save on their prescription drug purchases.
What’s your thoughts about these four stocks and the tech sector in general? Is it time to buy the dip or wait? Is the stock market starting to bounce back? Leave me a comment and let me know your thoughts.