Wall Street’s Weekly Wrap Up 6/11/21

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.

Photo by Sophie Backes on Unsplash

More Investing Terms & Phrases (Video)

This is a continuation of my last video: “Stock and Cryptocurrency Investing Phrases Defined” https://www.youtube.com/watch?v=cFDdL…

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.

The Meme Stock Revolution is Growing

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.

Photo by Batu Gezer on Unsplash