Gordon: Surprising to see the return of the meme stock craze
TLDRIn a recent discussion, Todd Gordon shares his insights on the resurgence of meme stock trading. He notes that while the market is experiencing a transitional period, the current situation is not a simple return to the meme stock craze of 2020 and 2021. Gordon highlights the differences, such as the reduced short interest in stocks like GameStop, which diminishes the potential for a short-covering rally. He also reflects on the lessons learned from the previous frenzy, including the impact of pandemic stimulus checks and the surge in options trading. Gordon advises against chasing volatile stocks based on message board hype, instead encouraging a more disciplined approach to investing, particularly in companies experiencing significant growth due to advancements in A.I. technology.
Takeaways
- 📈 The return of the meme stock craze is surprising and seems to be a different market dynamic rather than a return to the past frenzy.
- 🤔 The current market is quieter and in a transitional period, possibly due to factors like the winding down of college classes.
- 🧐 High inflation and the Nasdaq reaching new highs are not directly linked to the meme stock phenomenon.
- 📚 Lessons from the 2020-2021 meme stock frenzy include the impact of pandemic stimulus checks and the surge in retail trading and options trading.
- 🔥 The original meme stock craze was fueled by a significant amount of open short interest compared to the float, which is not the case in the current situation.
- 💡 Short interest has significantly decreased, reducing the potential for a short-covering rally that characterized the previous craze.
- 🚫 The speaker advises caution, suggesting that there are better investment opportunities outside of the meme stocks.
- 💼 The company discussed (presumably GameStop) is expected to perform differently in the current economy, with people working and a transition period ongoing.
- 📊 The speaker personally tried to short the stock via options during the last craze but was unsuccessful.
- 🎓 Advice for younger investors and the CNBC audience is to focus on companies experiencing significant growth in the A.I. technology boom rather than chasing meme stocks.
- 💰 There is a more disciplined way to make money by effectively deploying capital in growth areas, rather than speculating on stocks driven by message boards.
Q & A
What does Gordon think about the return of the meme stock craze?
-Gordon finds it a bit surprising and believes that it's not a return but a different market dynamic with high inflation and the economy in a transitional period.
What was the backdrop for the original meme stock frenzy in 2020 and 2021?
-The original meme stock frenzy was fueled by the pandemic and stimulus checks, with many people opening Robinhood accounts and engaging in options trading.
How does the current short interest compare to the float in the stock market?
-In 2020, there was more open short interest than the float on the stock. Currently, the short interest is $65 million, which is 35% of the float.
What was Gordon's experience with Reddit boards during the meme stock craze?
-Gordon had a negative experience where he was criticized on Reddit boards and felt skewered for his stance on the meme stock situation.
What is Gordon's view on the current state of the company mentioned in the script?
-Gordon mentions that the company was expected to make 12 cents last year but only made 6 cents, indicating a different economic scenario.
Why does Gordon suggest caution when considering shorting the stock via options?
-Gordon advises caution because there are many opportunities in the market, and the conditions that led to the original short-covering rally are not present.
What is Gordon's advice for younger investors looking to trade in volatile stocks like GameStop or AMC?
-Gordon advises younger investors to focus on companies experiencing an A.I. technology boom and to deploy their capital in a more disciplined way rather than chasing cheap stocks pushed by message boards.
What does Gordon suggest as a reason for the current quietness in the market?
-Gordon suggests that the market quietness could be due to a transitional period, possibly related to college students winding down in class.
What was the short interest percentage of the float during the 2020 meme stock craze?
-During the 2020 meme stock craze, there was 275% of the float in short interest.
How does Gordon describe the current market dynamics compared to the past?
-Gordon describes the current market dynamics as different, with a different economy and a different stock trading pattern.
What is Gordon's warning about the potential pitfalls of engaging in meme stock trading?
-Gordon warns that there are too many opportunities to get involved in meme stock trading and that it can be risky, especially without a disciplined approach to capital deployment.
What is the current short interest in the stock market according to Gordon?
-According to Gordon, the current short interest is $65 million.
What does Gordon believe is a more effective way to make money in the stock market?
-Gordon believes that there is a more disciplined way to make money by effectively deploying capital in companies experiencing an A.I. technology boom.
Outlines
📈 Market Dynamics and Meme Stock Craze
The conversation begins with a discussion on the current state of the stock market, suggesting it is in a quiet transitional period. The speaker, Todd, refutes the idea of a 'return' to the meme stock craze, highlighting that the market dynamics and economy are different now. He mentions Roaring Kitty's involvement and the impact of high inflation and the NASDAQ's performance. The lessons learned from the 2020-2021 meme stock frenzy are also discussed, with a focus on the role of pandemic stimulus checks and the surge in options trading.
Mindmap
Keywords
💡Meme Stock
💡Short Interest
💡Robinhood
💡Options Trading
💡null
💡Short Cover Rally
💡Inflation
💡NASDAQ
💡Reddit Boards
💡GameStop
💡Bed Bath & Beyond
💡AI Technology Boom
Highlights
The return of the meme stock craze is surprising to some market analysts.
The current market is described as quiet and going through a transitional period.
The discussion suggests that the recent activity is not a return to the past meme stock dynamics but a different market situation.
High inflation and NASDAQ reaching new highs are mentioned as current economic indicators.
The pandemic and stimulus checks influenced the original meme stock frenzy in 2020 and 2021.
There is a significant difference in short interest between the 2020 situation and the current market.
The short interest for the stock in question has decreased, reducing the potential for a short-covering rally.
The CEO of GameStop, Ryan Cohen, took a position at Bed Bath & Beyond, which was met with cautionary advice.
The speaker's experience with Reddit boards and the challenges of responding to the community are shared.
The company in question is expected to perform differently than the previous year, with a lower profit.
The current economy is characterized by people working and a transitional period in the market.
The speaker suggests caution and considers shorting the stock via options, reflecting on a past attempt.
Many opportunities exist outside of the meme stock phenomenon for investors.
The advice given is to avoid buying cheap stocks pushed by message boards and instead focus on a more disciplined investment approach.
There is a current boom in generative A.I. technology with many companies exceeding expectations.
The speaker encourages viewers, especially the younger crowd, to effectively deploy their capital in a more disciplined manner.