(Bloomberg) — Eleven interest rate hikes by the Federal Reserve did little to break the gambling frenzy in the U.S. stock market.
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In the same units that were in the worst part of the first outbreak – GameStop Corp. and AMC Entertainment Holdings Inc. Think – investors frantically bid on obscure stocks, only to see them fall spectacularly. The most recent example: Vinfant Automobile Ltd., an unprofitable electric-vehicle maker whose market capitalization in four weeks of trading is four times that of McDonald’s Corp. and General Motors Co. % in the eight days since.
All of this suggests that the big fool theory is now popular, and perhaps permanent, in a country where the investment landscape ranges from soccer to table tennis gambling, and Britney Spears’ failure to marry next year is now a click away. .
Peter Atwater, an associate professor of economics at William & Mary, has become the latest “lottery ticket.” The features will be very consistent: find something that has the potential to be dreamy and can be used by the lockstep crowd.
As Vietnam-based Vin Fast’s stock began surreptitiously skyrocketing in mid-August, several day traders entered the trade to fuel the six-day 504% rally.
Buy order flows from Fidelity’s platform and activity on popular forums such as Reddit’s WallStreetBets and StockTwits indicate that many in the retail crowd arrived too late, snapping up the stock just as it was about to start jumping. They, in other words, played the biggest fool.
This growth last year, according to Grindr Inc. and Intuitive Machines Inc. shows risky investors sitting on public companies with blank check deals. An important aspect of these de-SPACs (Special Purpose Purchase Companies) Known on Wall Street – only a small percentage of the stock has floated on the market over the past 18 months, making it easy to ride the highs and lows.
In the past year, at least five D-SPACs have seen shares rise more than 500% before liquidating profits. Many of these had small pools of shares for trading purposes, attracting groups of investors on social media sites such as X, formerly Twitter and Reddit, to increase their interest in getting others in on the act.
In VinFast’s case, 1% of the stock is available for trading and timely listing of call options, an easy way to leverage stocks, set the stage. In a six-day stretch, the stock rose from around $15 to trade as high as $93, before gravity triggered an eight-day slide back to $17.15.
Even after the record loss, VinFast’s market value is close to $40 billion. The company’s chairman and founder, Pham Nhat Vuong, controls 99% of the stock, but the terms of the blank check deal prevent him from selling. Rivian Automotive Inc., which has seen big rallies as Wall Street tries to make and sell vehicles safely. And it’s a company reminiscent of Lucid Group Inc. Each stock is about 90% off its intraday highs, suggesting that VinFast’s valuation still has a ways to go.
But that hasn’t deterred traders, many of whom started investing during the pandemic. Inspired by free money and personalities like Barstool Sports’ David Portnoy, they bet on stocks like they do table games at a Las Vegas casino.
Matthew Tuttle, CEO of Tuttle Capital Management, said: “When you have a generation that realizes they can sit in front of computers and trade things and organize on Twitter or Discord, the market changed with Covid.
“The ability that I’ve got now, I can gamble on anything from my phone – blackjack, poker, betting on sports, gambling on stocks – you definitely have a spoiled generation to do that,” he added.
–Courtesy of Annie Massa.
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