Right. You can say its hyperbole or "locker room talk" but in situations like this, it's very clear that a large part of the financial sector is _absolutely sincere_ when they look at retail investors as what they literally call "dumb money", "dumb flow".
This is not my impression. It seems to me that the dumb money is people who made early fortunes in crypto or regular people looking to ride the next pump and dump. If Wall Street money is coming in it's mostly to take advantage of the dumb money for a quick profit, for example by getting preferential pricing or timing so they can sell to later investors).
I don't know where you got this-- I saw a lot of people who were investing not even for a profit but simply 'to be a part of a movement'. Yes I'm sure there are plenty of naive fools in the mix, it still is the stock market after all. But the complaint here isn't that a bunch of misinformed people thought they'd be millionaires-- it's that a bunch of people made a conscious decision to invest and now brokerages are manipulating the markets. Ironically some of them justify it as being BECAUSE 'retail investors don't know what they're doing'. There's a lot of condescension towards retail traders, which is weird when 12 years ago the 'smart' institutional investors and hedge funds managed to crash the global economy. Looking at the whole picture, I don't see why it's so ridiculous that people get a piece of the action when the majority are acknowledging they might not make any money at all on this
I believe you are far off the mark here. Retail investors are well within their rights to drive up a stock to what could be above fair market value....some may well lose money in doing so. The whole narrative around retail vs. hedge funds/wall street is naive to say the least...people in financial services are worried that retail investors may lose a lot of money here which may dent confidence in the market.
The irony here is that you believe the market is a mockery which most of the time it isnt but at times it can be irrational. This is clearly one of those times....as an investment professional.....I look at this and see the irrationality of the price which is not underpinned by cash flow or a fair valuation close to the price...which is called fundamental investing and not trading like what is happening here.
Yep, and this is a particularly silly article. One group of investors caught another group making a spectacularly poor decision. It just happens that the first group are retail traders (I'm not sure I would call them "investors").
It's crazy that it's not basically fraud to do what they did. They put out a 100-200 page document saying "Our business is great" so that retail investors could make an informed investment decision and then 2 months later are like "actually it's relatively worthless and we have no money left and if we can't raise money right now, we will die". Did the people involved really believe that glowing 100+ page report? The difference between this and a pump and dump is simply intent, and I think it's most likely that the intent was there.
"retail investors piling ~$100b of other people's money"
Retail investors invest their own money, which, typically, isn't too substantial per investor. "Retail investor" is really just a finance-industry euphemism for mom 'n pop with a Charles Schwab account.
This is opposed to "institutional investors," which are big pension funds, trusts, and other mega-monied organizations. Or to "HNWIs (high net-worth individuals)," which is precisely what it sounds like: folks with millions of dollars of liquid capital, usually managed by private wealth management arms of investment banks or hedge funds. Both institutionals and HNWIs are perceived to be savvier than retail investors, both by the law and by the industry.
I'd actually be a lot more frightened if the latter two categories of investors were piling money into this company, solely on the basis of Psy's song.
I wonder if the investors are just like crypto-bros and pyramid-schemers. Knowing it's bullshit, but hoping the next dumbass will come tomorrow, next week, etc, to buy it off them where they can make a profit...
Considering the price of e.g. BTC, maybe thinking "People with money can't be this dumb!" is the dumbass move...
I don't think they're dumb. The stock market is perhaps the most analyzed and quantified human endeavor in history, and at the intersection of science and business I don't see any reason why the explanation isn't likely to be exactly this simple.
Besides, it's not leaving money "on the table," it's handing it to non-company insiders, for the benefit of those who sold into the doubling.
Yea, just people being silly. They can do what they want with their money. And it doesn't look like anyone actually invested $70M worth of human effort there; it's just illusions of the market cap metric.
I mostly agree, but I do believe the author is trying to paint a picture of a Ponzi-like dynamic of early investors cashing out as gullible later investors buy in (many hoping to cash out to still later investors). The fact that there are real cashflows is incidental, as they apparently aren't enough to cover the costs of doing business as usual.
I disagree. Just this morning I saw a number of posts warning people that they could lose their shirts over this and to be sure that they weren't investing anything they couldn't afford to lose.
Sure, there's a large contingent that denies this and holds onto their wishful thinking of a $10,000/share price, but you can't fix stupid.
They want to convince investors not to withdraw their money based on pseudo-logics.
They want to gather money by leveraging on emotions and feelings.
They can do both only with dumb people.
dumb money is exiting at a loss. who do you think is buying on the other side? not the dumb money that bought 60k, its the smart money that sold it who is buying right now.
The popularization of retail trading has brought in a ton of dumb money to prop up the real players. This is the real reason Robinhood et al have been so successful, it's like the fish paying you to swim into the trap.
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