The Revolution

I've been a market observer for over 20 years and I've seen some really crazy shit. This GME mania is right up there. People from all walks of life, including porn stars and rappers are joining "the revolution". A tweet from Cameron Winklevoss sums up the revolution perfectly "If you don't like the suits buy GME and AMC, if you don't like the bankers buy bitcoin". I'm not surprised that this frenzy has lasted this long because "clever contrarians"  have simply been adding fuel to fire. On Monday I read an article which said that for every short position in GME that was closed there was extremely strong demand from new short sellers. They were probably thinking "What an opportunity to make money off these fools"  Whoops! The clever contrarians got ran over and they became the fools! Such a thing is not uncommon when you have a mania. People see what looks to be clearly irrational behavior and they figure they could profit from its inevitable demise, but they underestimate the frenzy and end up adding more fuel to the fire as they are forced to capitulate. 

This will of course end badly. There's only so long you can keep a stock or asset inflated based on feelings or hype and you'd be incredibly naïve to think that all the "retards" as the WSB members call themselves,  are going to successfully cash out at the expense of the shorts. Some will no doubt, but most will end up being bag holders as they are being brainwashed to "hold the line"  and have "diamond hands",  Unjustified high prices will attract sellers and eventually they will overwhelm the buyers once there's no more greater fools left or weak shorts to squeeze. Notice I said weak shorts. Not all shorts can be squeezed easily as they may have hedges or strong hands.  

The action in GME and the like are further examples of the point I made about bitcoin in that its inflated value is based purely on speculative inflows underpinned by some delusional belief/notion that goes viral. Now, don't get me wrong. I have no sympathy for hedge funds who are getting raped shorting GME. The setup to squeeze them was brilliant but ultimately, fundamentals prevail.  All of this revolution talk is nonsense and can only end badly for the little guy. Expressing your dissatisfaction of wallstreet elites by artificially inflating certain stocks to ridiculous prices is not a viable long term strategy and can only end in tears for those who are now jumping on board.  The easy money was made initially with the squeeze that caught the shorts by surprise. Again, well done.  But now the cat is out of the bag as this story has gone mainstream. The end result of this will be that the vast majority of the naïve revolutionists who are getting in now will be holding the bag. That's really the bottom line here.  I suspect the frenzy will fizzle out this week.