Momentum Monday – Everything Worked Other Than ‘Holding The Line’

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Happy Monday

Stocks had another big week. Gamestop came to a full stop. It’s not shocking the the financial game of chicken came to an end.

Ivanhoff and I toured the markets and the momentum was everywhere. We both shared some new ideas. You can watch the show here. I have embedded it on the blog below:

Here is Ivanhoff’s take:

Last week was a mirror image of the previous – the highly-shorted meme stocks crashed and the rest of the market went to the moon. There were so many 20-30% bounces in momentum stocks that pulled back to and below their 50-day moving averages in the previous 2 weeks.

Sentiment was so gloomy entering last week that it seems for a moment we had forgotten that dips are buying opportunities in bull markets. Pullbacks to 20 and 50dmas are normal and even desired because they provide good risk/reward entry points and keep the FOMO (fear of missing out) in check. Such shakeouts are needed because they create anxiety and doubt. No trend can continue without skeptics because otherwise there would be no one left to buy.

There are currently so many underlying trends:

The biotech ETF made new all-time highs. Gene-editing stocks have been raging higher;

The so-called recovery stocks continue to outperform – financials, oil & gas, leisure, small caps in general;

Inflation plays are waking up. Despite rising interest rates, the homebuilders ETFs broke out on Friday and are approaching their all-time highs;

Many cannabis stocks have already more than doubled since the November elections. The dips to rising 20-day EMAs in the sector remain buying opportunities;

Obviously, the clean energy stocks are still in play. They are currently in a consolidation period. Don’t lose sight of them. After a few weeks of pullback or sideways action, many of those names can set up again.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here

Sunday Sentiment….Access To Markets Not Democratization

Sunday is for sentiment here on the blog…and also for my long ride coming up in an hour.

This week should be interesting as the markets closed strong and nothing drives sentiment like price.

The top 20 stocks discussed on Stocktwits this week are not tickers I would get near.

Weekends have been for crypto on Stocktwits of late but this weekend crypto was only 75 percent of the trending tickers – just something I notice and not really much to read into …yet.

We saw the largest inflow EVER to the Nasdaq 100:

This hilarious SNL skit about sex flips to ‘Zillow’:

Most of the young people day trading today have never seen a bear market…

There is also Elon Musk, Gene Simmons and Dogecoin…

So….what does it all mean Howie?

Robinhood and technology have helped million get access to the market but don’t be fooled…you cannot democratize the Stock Market.

My friend Brian Lund has an excellent post on this subject. Have a read. The gist:

And why shouldn’t you have losers in the stock market?

There’s no divine right to profit, and besides, it’s the losses that you remember.

The pain of money lost provides motivation. The motivation to educate yourself on how the stock market and risk/reward works.

And thanks to technology, there is an infinite amount of free, high-quality information you can access on these subjects simply by using Google.

Despite the media’s focus on the most extreme examples and outlier cases, the vast majority of investors who participated in the GameStop saga may have fallen in the mud or bumped their heads on a plastic playhouse, but they didn’t get kicked in the head with an iron boot.

The ones who own up to being unprepared, and accept responsibility for their actions instead of looking for financial Boogeyman in the form of short-sellers, hedge funds, or brokers to blame their losses on, will learn from this experience and be better for it the next time they make a trade.

I will end with Josh Brown’s excellent piece titled How David Beats Goliath in Real Life Markets . My fave part:

As a retail investor, you have many advantages over the professionals. Pros are judged on nonsensical bullshit like 30 day returns versus a benchmark, quarterly performance, upside and downside capture, rankings versus their peers, over- and underweights relative to the index and all kinds of other stuff that you don’t have to even think about. Nobody is asking you. Unless you post it, your holdings and performance aren’t under anyone else’s magnifying glass. Thank god for that. It’s an unwinnable game played by consultants, CIOs, marketers and a whole assortment of experts and ass****s. I know these people and outside of work they’re wonderful. In their roles, they are absolute goblins. Stay out of the Misty Mountains.

In contrast, all you have to worry about is your own financial situation, not what someone else thinks about it.

Of all the advantages retail investors can claim, firepower isn’t one of them. I’ve heard about the whole “banding together” thing. It sounds better in an online forum than it works in real life. People bail. They don’t know you or care about you. The incentives aren’t there. It’s Spanish Prisoner stuff straight out of Mamet – who’s going to break in the interrogation first? Who’s going to panic before you do?

Have a great Sunday.

GameStop…Full Stop? And Why Technology May Soon Make Markets For All Kinds Of Assets As Liquid As The Stockmarket

Max and I are headed to the Phoenix Open today. I have not been to the open in 20 years because of the crowds. This year just 5,000 people got tickets and my friends Jim and Micah invited us so it should be a fun day in the sun.

If you trade and are not using the Stocktwits app, now you just might have too. Yesterday we added our unique social sentiment rankings to the app so you can quickly check ‘most active’, ‘trending’, ‘most watched’ as they change in real time.

Onwards…

Last Saturday I wrote about ‘Social Media As A Market Force‘ as Gamestop closed January with a 1,644% increase.

This week it closed down 80 percent, but still above $60 and well above the $10 it traded at just a month ago.

Justin had a great post about the ‘game’ players in the Gamestop squeeze.

Justin had another good post about PFOF – payment for order flow – which you will hear about endlessly the next few months. I have no strong opinion about PFOF other than my returns have never been better the last 15 years while using Robinhood and Stocktwits and Morgan Stanley (I PHONE my orders) so all that ‘front running’ of me has not made me paranoid of ‘the suits’. For 95 percent of retail making small orders and fractional orders, I actually believe PFOF is just a smart solution.

For your reading pleasure here are FOUR more good reads on Gamestop from smart people around the web…

Packy McCormick

Jill Carlson

Matt Levine and,

Alex Danco

The Gamestop story is long from over. I say story because a documentary is already being made by a big time producer who is already chatting with even me.

I really liked this article enclosed here below that speculates on the transfer of power to retail investors as technology brings liquidity to all types of markets.

Transfer of power – A new epoch for retail investors is just beginning _ Finance & economics _ The E

Have a great Saturday.

General Partner at Operator Partners and Angel investor Zach Weinberg Joins Me on Panic with Friends to Discuss the Future of Healthcare and BioTech

Today I had the pleasure of hosting Zach Weinberg on my podcast.

The details of the conversation are below but quickly, Zach is an incredible entrepreneur and now investor at just the age of 34. He and his partner Nat Turner built two great companies, selling the first to Google, then taking Google capital for the second to build Flatiron Health which Roche bought for $2 billion. Now they are prolific investors.

Zach joined me to talk about the journey and some of his favorite public companies, Google and Shopify. They are two of my faves as well.

I guarantee you will enjoy this podcast and it will help you be a better investor. You can listen to it here on Spotify or Apple, but please read on below for more on Zach and the episode.

Guest: Zach Weinberg

Profile: General Partner at Operator Partners, Angel investor

Where to Find Him: LinkedIn, Twitter

Fun Fact: Zach doesn’t just invest in healthcare-related companies – he’s also a bar owner!

What’s the Panic About:

I’ve conversed with a lot of impressive people on this podcast, but Zach Weinberg really made me nod my head a lot and smile. Zach’s made some incredibly smart investing moves in his life, and he’s only 34 years old. He is a grade-A hustler, habitual entrepreneur and prolific angel investor. Zach and his business partner Nat Turner sold their second start-up venture, an advertising technology company called Invite Media, to Google for $81 million in 2010. Their next move was into the healthcare sector, building then selling their data and software company Flatiron Health to Swiss pharmaceutical giant Roche for $2 billion in 2018. Flatiron Health, founded in 2012, makes software that pools patient data from electronic health rec­ords for cancer treatment centers. Zach was the company’s co-founder, president and COO. He oversaw research, product, engineering and recruiting initiatives. He’s currently invested in over 30 tech startups throughout the U.S. In this episode, Zach and I chat about his backstory, healthcare, biotech research, connecting with founders, Google, Shopify, education and more. Enjoy!

The Takeaway:

We’re moving faster and making discoveries at a rate no one has really seen before. This signalling matters – there are huge opportunities in sectors like healthcare, biotech and education in the next couple years that we should be paying attention to.

Favorite Quotes:

“As the Internet grows, Google grows.”

“When you hit a certain level of success, it’s hard to find other people to confide in.”

“I believe Facebook is the equivalent of digital cigarettes.”

“How fast can we make the world a better place?”

Food for Thought:

Back in 2018, Zach tweeted out some advice explaining that 90% of his job is asking these 3 questions: What’s the goal? Is this important and worth your/our time? And is someone paying?

PS – I am now doing one ‘Panic With Friends’ podcast per week. Thanks for listening and make sure you subscribe over on Spotify or Apple.

No Code Is Cool

My good friend Justin who ran product forever at Stocktwits has been working on a new company and writing a daily blog once again.

It is excellent. He is writing a lot about product and community so I encourage founders and product people to follow along and reach out because Justin has a wealth of knowledge and happy to share.

His recent post ‘An Ode To No Code‘ is a topic and trend that will really change the trajectory of many lives as companies and products get built. As Justin notes:

One of the tech trends that excite me the most is No Code platforms, which allow those with little to no programming expertise to build applications.

Perhaps the best example of a No Code platform is Shopify ($SHOP) – which has enabled entrepreneurs to quickly set up digital storefronts and spurred a boom in DTC retail commerce.

Have a read and have a great day.

The Irritable Steve Jobs and Apple Enterprise?

Jerry Seinfeld talks about being irritable as his edge.

That was the same for Steve Jobs.

So many things irked Jobs.

He did not like the fortune 500 companies and their CIO’s, he thought the five telcos were worse and the tablet that Microsoft launched in 2013 was going to fail (how many people would have the need or be able to afford a third computer especially one without a keyboard).

Have a listen of his 2003 interview by Walt Mossberg (first 30 minutes is just fantastic).

Steve was healthy and at the top of his irritable game.

Today we know Apple loves selling tablets and has dominated because they made killer deals with those telcos.

At the enterprise level, Apple has also started to make headway. A few weeks ago my friend Villi (he was on my panic podcast and made some great calls), who is a great investor, asked me about $JAMF so I looked it up.

Jamf Holding Corp. provides a cloud software platform for apple infrastructure and security platform worldwide. The company’s Software-as-a-Service (SaaS) solutions provide a cloud-based platform for lifecycle enterprise IT management of Apple devices. Its products include Jamf Pro, an Apple ecosystem management software solution for IT environments.

They went public recently and have a market cap of $4 billion and now for me a good proxy on Apple’s progress into Fortune 500 and the enterprise.

It is an interesting investment if you think Apple will make headway. I do.

Aaron Task Interviews Me To Talk Markets, Robinhood and Investing

America has a fever to trade and invest. Charlie snapped a screenshot of the Apple app store and the top apps were almost all brokerage…

This is a fever much like 1999.

I am with Fred on this ‘Revenge Of The Retail

I do worry that this Game Stop short squeeze will end badly and not only the hedge funds will get hurt. Markets can be brutal. But regulating markets to protect the small investor is not the answer. As we can see, the small investor is often a lot smarter than the large investor.

What we need to do is stop printing money to stabilize the economy. And start addressing the real economic issues that exist on main street, not wall street. Monetary policy is not the answer. Fiscal policy is. That won’t stop more Game Stops from happening. They are a by-product of markets. But it will get the money to where it is needed versus where it is just gameplay.

My old friend Aaron Task has been covering markets for 30 years and these days at Seeking Alpha.

He wanted to ask me a bunch of questions about Robinhood and the mood of the markets.

You can listen here. I hope you enjoy.

Momentum Monday – While Gamestop Was Being Squeezed …And A Second Video About Robinhood, PFOF and Short Squeezes

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Before I get into Momentum Monday, I asked some friends to join me for a Zoom to discuss Robinhood, Gamestop, WallStBets and the social swarming of stocks, payment for order flow and the behavioral science on display. Phil Pearlman, Todd Harrison, Blair Livingston, Rishi Khanna, Ben Hunt and Jack Newhouse all chipped in for a great discussion. You can watch it here on YouTube. I have embedded it below:

The WallStBets crowd will definitely be flexing their collective muscle for years to come. Have a look at their growth…

The hedge funds and professional traders now scan it like retail so the games they play will evolve. I’ll stick to my plans and not get distracted with my money.

Onwards…

As usual, Ivanhoff and I did our weekly tour of the markets for ‘Momentum Monday’. You can watch/listen to the episode here. I have embedded below:

I walk though it in the video, but I am just laying low this week to see how the markets digest the loud and wild moves in the heavily shorted stocks. The Nasdaq is in pullback mode but not so much that gets me interested.

I chatted with Ivanhoff about Robinhood which he uses along with Interactive Brokers. He explains why.

Here is Ivanhoff’s take on the markets:

The past few weeks have been one giant short squeeze and everything accelerated last week. The size of the squeezes has been unprecedented and they have led to liquidations in other areas of the market. All major market indexes closed the month below their 20-day moving averages for the first time since October of last year and are currently in a pullback mode.

What is currently quite fascinating is that we are in the midst of a new earnings season and no one is paying attention to earnings reports. All the attention is focused on stocks like GME, AMC, BB, NOK, and other highly shorted assets which are now negatively correlated to the major market indexes. The short squeeze bets have been so one-sided that they have led to liquidity crunch in some brokers.

There’s another concern on the market’s mind right now. All those new Covid mutations and new restrictions around Europe have inspired a new life in Covid-related stocks. Most vaccine stocks were on fire last week – NVAX, MRNA, BNTX, VXRT. Covid testing stocks also showed notable relative strength after HOLX and ABT crushed market estimates.

Back to Howie…

I am keeping an eye on the technology stock and financials pullback. This chart sums it up:

One sector that may be turning is Agricultural commodities relative to the S&P:

The markets have something for everyone again. It is not all tech, all the time.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.

Social Media as A Market Force….

The markets are humbling. Even if you have no direct skin in the game – for me that is the stocks of Gamestop and AMC at the moment – you can get you ass kicked in the fallout if the trades in the system are big enough. This week that is Robinhood (of course there could be many more companies already in the line of fire).

When I discovered YouTube, I knew I could use it to help me understand brand trends. I started my show Wallstrip and made over 400 episodes to discuss leading stocks and their catalysts.

As soon as I started to really use Twitter in 2007 I knew it would change markets. I whiffed/passed on a chance to invest 25k in the seed round, but made investments in many companies in the ecosystem like Tweetdeck which eventually got me early Twitter shares.

Twitter is why I started Stocktwits.

The social media explosion is why I invested in Etoro in 2010 and Robinhood in 2013 and Alpaca (powering the next thousand brokerages around the world) and many other investing startups.

I knew fractional ownership was a game changer and really lead to the unbundling of indexes.

What I did not totally comprehend:

1. That options would be so beloved by this next generation of traders and investors

2. The internet mob unleashed on public microcaps … this is fascinating and game changing and scary and here to stay …

3. The scale and mechanics and plumbing

Look at this chart of Gamestop for January. I joked that when I was a kid the only game we had was ‘Pong’ and ‘Pinball’

I have been making calls and reading as much as I could on the mechanics of the trades and the systems. I don’t still fully grok it all.

I am not sure how Wall Street and Main Street will reckon with the rise of social media as a market force. I am getting calls from very large Hedge funds (that has NEVER happened) telling me how in love with Stocktwits they are and how their traders are keeping an eye on the streams. They are already poring through Reddit and Twitter for the next GameStop.

In this new world, short-sellers may now be at risk of ruin by masses of small traders who have found a new strategy.

Citron’s Andrew Left threw in threw in the towel on his short selling YouTube videos.

My smart friend (I promise to get him on my podcast) Dan McMurtrie had this to say about sort selling – The golden age of short selling is coming.

I did a Bloomberg appearance on my friend Joe’s show to discuss the high level changes I have been seeing . Click here to watch.

For a deep dive on the plumbing and how this leveraged run took place , I liked this thread from a smart person on Twitter.

There are going to be many lessons and hopefully a better set of rules and regulations to come out of this moment in the markets.

The players are here to stay and so is the game and so are the markets. Pace yourself.

Disclosure – Along the incredible rise, our firm Social Leverage has sold a portion of our Robinhood shares, but we still do own a majority of our shares.

Former GoDaddy CEO Scott Wagner Joins Me on Panic with Friends to Discuss the Domain Industry and Digital Real Estate

GoDaddy is one of my favorite brands. I think it is one of the most important and underrated real estate companies in the world and it is right here in Scottsdale, AZ.

I was introduced to Scott a few months back and I could not wait to have him on the podcast to talk about the company and what it was like to run and grow a $13 billion internet treasure.

You can listen to the podcast here on Spotify or Apple. For some more background on the episode and information about Scott read on below…

Guest: Scott Wagner

Profile: Former CEO at GoDaddy ($GDDY)

Where to Find Him: LinkedIn, Twitter

Fun Fact: Scott helped take GoDaddy public in 2015 during his time as COO.

What’s the Panic About:

In this episode, I chatted with the former CEO of what I deem as one of the most important real estate companies in the world – GoDaddy. That’s right, I’m talking about digital real estate. And who better to talk about this with than former GoDaddy CEO Scott Wagner. Wagner was President and COO of the company for over 4 years before serving as CEO from 2018-2019. With his years of experience in the domain industry comes a font of knowledge and insights he was kind enough to share with us on the Panic podcast. In this episode, Scott and I talk about his career path, the domain industry, the state of the markets, content syndication, ecommerce, digital real estate, SPACs, Scottsdale National, branding and more. Enjoy!

The Takeaway:

GoDaddy has made it clear that the domain industry is about more than just simply securing a domain. It’s about what you do with it. Not only can you get a domain name, but can you turn that digital real estate into an online brand.

Favorite Quotes:

“I think [SPACs] are a valuable check on the traditional IPO process.”

“Bob [Parsons] really is the consummate American entrepreneur.”

“A site has turned into social presence, and email has turned into different communication channels.”

“The size of GoDaddy’s website building and commerce business is probably its most under appreciated asset.”

PS – I am now doing one ‘Panic With Friends’ podcast per week. Thanks for listening and make sure you subscribe over on Spotify or Apple.