GameStop Mania May Not Have Been The Retail Trader Rebellion It Was Perceived To Be

[Option Beast]( 02/06/2021   |   [View in browser]( --------------------------------------------------------------- [GameStop Mania May Not Have Been The Retail Trader Rebellion It Was Perceived To Be]( A look at the 10 most-purchased stocks by retail traders during the market mania last month is missing one key stock: GameStop. AMC Entertainment and Plug Power, two names caught up in the trading frenzy along with GameStop, were popular buys among retail investors, JPMorgan found, yet the brick-and-mortar video game retailer that seemingly put Wall Street on its heels is notably absent from the list. The prevailing narrative was that a band of Reddit-inspired small traders rose up against Wall Street by buying GameStop en masse, forcing a short squeeze by professional hedge fund managers, who were forced to cover their negative bets or risk catastrophic losses. But several signs are pointing to institutional investors as big drivers of the wild price action on the way up. [More...]( SPONSORED CONTENT [You Could Make $300 to $1100 Per Contract With This Simple Trade]( Imagine getting really good at mastering just ONE simple trade. A trade that appears like clockwork between 9:30-10:45am on most trading days. This free step-by-step guide, by options expert, Dave Acquino, shows you how to spot and take these trades so you can walk away with daily profits! [CLICK HERE for instant access.]( [REFLECTIONS... Outfoxing Wall Street by David Sager](#) All it took was a short squeeze in stocks a few investors care much about to bring about the largest decline in three months. A decline we are not used to since the bull started. The S & P 500 index fell 3.3% to 3714 this past week, while the Dow Jones Industrial Average dropped 1,014 points or 3.3% to 29,982 and the Nasdaq Composite slid 3.5% to 13,070. All exchanges suffered their worst drop since the week ended October 30. There were some underlying reasons for much of the market's reaction. Of course, there was more than just wild trading for the stock market to deal with. Let alone the fierce trading by the upstarts usuing Reddic and other social media platforms. Investors learned that the U.S. economy had grown at a 4% clip, a decent number in normal times, but certainly not when the economy is trying to recover from the Covid 19 disaster. Investors were transfixed by the gigantic gyrations of the heavily shorted stocks like GameStop and AMC Entertainment, companies that had been left for dead, but whose stocks were certainly not. Add in the long awaited reveal of Johnson & Johnson vaccine data- the one that was supposed to be a blockbuster--fell short of the market's high expectations. Expectations had been for J & J to report an efficacy rate of at least 80%, but it came in at just 60%. It's stock fell 3.6% on Friday. Experts were quick to defend the vaccine, however., They noted that it prevented severe symptoms in 85% of patients, meaning that even those who caught the virus had some protection, and avoided the worst outcomes, while reaching the same level in treating the more-contagious South African strain. "The good news: The pain is likely to be short lived," says Ben Levisohn, Barron's. THE FRENZED GAME.....GameStops' ferocious ride showcases the new found power of individual investors to highlight fledging stocks and make swift and speedy profits....in a clever way--even the "heavy hitters'' are in awe of! Their objective is to outsmart, out think and out maneuver Wall Street, and they just did it. Those 'ones' fueling the insane rise made fun of themselves and readily admitted that they were involved in a 'foolish experiment to see if thousands of "nobodies'' could take on a goliath....Wall Street and....win. And win they did, they are winning BIG! It is remarkable that such a major story starts with such a seemingly insignificant strock, one mired in mediocrity. From 2017 to last summer GameStop fell to $4.00 from $25.00; still there were slight glimmers of hope along the way. Holiday sales slumped in '19 and '20, and the things got weird. The new power of retail investors is a "change that is not going away," said New York University professor Aswath Damodaran. "And that's shaking up traditional portfolio managers, because they've lost control of the process." The retail investors, many of which were teens (My friend's son, at 14, and all of his friends own GameStop, from 1 to 5 shares and the same scenario repeats all around the world), with a fantastic network of communication, via the internet (Reddit), are alerted and poised to move swiftly and in unison. Registered members (of Reddit) submit content to the site such as links, text posts and images, which are then voted up or down by other members. (Thank god for social media!) As of Friday's closing, GameStop finished the week at $325.00, up $131.40 or up 67.87%. The bull in the China shop is 'still bulling.' HOT COMMODITIES.....Commodities are starting to revive after a 10 year bear market. Natural resources such as energy, metals and agriculture look primed for an extended run, and investors should get on board. The recovery of commodity prices, according to Goldman Sachs will actually be the beginning of a much longer bull market that could rival the 1970's when gold rose 25% and into the 2000's when oil peaked at $140 a barrel. "Commodities are set up for a significant period of out-performance after such a long period of underperformance relative to other asset classes," says Rolland Morris, commodity strategist at VanEck Global. "There is a lot of fiscal and monetary stimulus being applied globally, and the dollar may fall as global growth rebounds. There are supply constraints and new demand drivers for industrial metals from the electrification of the world." Take copper, which conducts electricity. There is no good substitute for copper wiring. Electric cars require four times as much copper as vehicles with internal combustion engines. Onshore wind farms are four times as copper intensive per megawatt as traditional power plants. Weather and international demand drive U.S. grain prices and both have been favorable in recent months. U.S. corn is up 40% at $4.50 a bushel and soybeans have risen 50% to nearly $14.00 a bushel. With inflation 'stirring' and the Fed more conservative than ever in 40 years, the outlook for commodities is very favorable. There is a good chance that this decade could resemble the inflationary 1970's when commodities made historic moves. RUMBLINGS ON THE STREET James Rogozinski, founder WallStreetBets, Barron's "The boomer says to the millennial, 'What are you, growth or value?' And he goes, 'I'm a meme investor, and i'm kicking your ass.' " Austin Wynn, who runs a trading group that gathers on facebook and the social-media site Discord and plays stocks like GameStop. Barron's "We are stuck at home, and we are isolated and we are all scared, and alot of us are hurting for money, or struggling, losing employment," said Austin, "And I think it fulfills the high--as much as it may also fill the financial piece for awhile. Jason Mudfrick, founder of hedge fund, Mudrick Capital Management, Barron's "The thing is not to be short stocks with 150% short interest. As a risk manager, you have to look at all of these things." Brandon Luczek, s 28 year-old electronics technician for the U.S. Navy who lives in Virginia, Barron's "It's very much a community thing," says Brandon, "We were all making money together. People paid off their student loans, people paid off their houses. It definitely felt like I was part of something big," Luczek said. He made tens of thousands of dollars on GameStop grades, including as much as $46,000 in a single day by using options. Janet Yellon, U.S. Treasury Secretary, WSJ "Economists don't always agree, but I think there is a consensus now: without further action we risk a longer, more painful recession now- and long-term scarring of the economy later," she said Tuesday (1-19-2021). Ms.Yellon, at 74, will become the first woman to be the U.S. Treasury Secretary. [Is Options Trading Suitable for Beginners?]( Many people hear the word options and start to run. That's probably because there's plenty of misinformation out there about these flexible, powerful, endlessly fascinating financial instruments. The question is whether they're a good way for beginners to seek a profit while operating in the securities markets. The short answer is yes, but there are a few qualifying parts to the answer. 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