Retail investors have big money managers on Wall Street worried about more than just short squeezes.
We’ve seen some wild price movements over the last week in stocks related to everything from video game retailers to silver and more.
And it’s all thanks to the efforts of retail investors looking to put the squeeze on the most heavily shorted stocks in the market.
But what’s glaringly obvious is that the skyrocketing share prices have almost nothing to do with actual performance. GameStop Corp. (GME) shares didn’t jump over 2000% this month because customers suddenly started packing its stores and buying games again.
So naturally, concerns over whether financial markets can function properly when prices are so out of line with fundamentals have started to arise.
The CBOE Volatility Index (VIX) has also experienced a huge rise and fall over the last week as the short squeeze frenzy began – which isn’t ideal for companies that want a calm, stable environment in which to raise capital.
But unless you’re a hedge fund manager or on the board of a publicly traded company, should you really be concerned with the effect that the boom of retail investors is having on the market?
Where’s the money?
Retail investors have long been associated with market volatility, mostly because of their tendency to trade more heavily on rumors and headlines than on fundamentals.
And according to UBS research, the number of retail investors in the market has doubled in the last ten years.
But is the influx of retail investors we’ve seen over the past year really going to break the market?
I think not.
Look, it’s only natural for the professional traders and hedge fund managers to start sounding the alarm bells when their short positions are under attack and the status quo is threatened.
Yes, more retail investors means more volatility, but it’s not as though it will cause some sort of catastrophic market crash.
So I say pay no mind to the alarmists on Wall Street that are crying wolf. What you should really be focusing on is far simpler.
How do I get some?
You probably didn’t get into investing to worry about whether big institutional traders are having a rough go of it or not.
You’re here to make money, plain and simple. Everything else that doesn’t serve that purpose is just noise.
In the short term, the price of anything in this world is determined by the difference between buyers and sellers.
If we can exploit that, then we can make money.
Traders like us should not worry about valuations or P/E. Your only concern should be what you pay for a stock and where it’s going.
As We’ve Seen…
Everyday Americans can beat hedge funds and institutions at their own game with a focused trading plan.
Those ordinary folks have made killings with these trades that are known as “Super Squeezes.”
Today, I want to show you the two things you have to look for to get in before the next short squeeze, as more and more indicators race across my screen.
Click here for the full details.
In the Spotlight: What’s next for Amazon?
News broke yesterday that Amazon.com, Inc. (AMZN) founder and CEO Jeff Bezos would be stepping down from his role as CEO.
Now, you would expect the departure of the man that guided Amazon as it revolutionized the way people shop to deal a significant blow to AMZN stock.
But surprisingly, the stock remained unscathed yesterday.
The reason for the resilience of AMZN in the face of this news is Bezos’ replacement, Andy Jassy, the current CEO of Amazon Web services (AWS). Jassy has been a Bezos disciple for years and has built AWS into a global powerhouse in the cloud computing space.
Jassy taking over Amazon could spell big things for the future of AWS. The cloud computing space has some of the biggest profit potential of any industry on the planet, so I’ll be keeping a sharp eye on every development as AWS slugs it out with Microsoft Corp. (MSFT) to be the dominant player.