The Long Term Investor

It is....a lot times you are getting back to the motel or hotel at 1:00 or 2:00 and pulling out to the next show at 6:00 or 7:00 the next morning. It is exhausting and often very boring. You deal with a lot of mechanical break down issues doing that many miles.....lots of personality issues.....lots of border crossing issues....lots of time being searched by dogs and police....lots of issues with severe weather while driving.....issues with work permits in foreign countries, etc, etc, etc.

The bottom line.....you are touring to sell CD's and merchandise. We would have CD's and merchandise drop shipped to us at various stops along the way. As the band.....we got 10% of all CD and merchandise sales (as a group....which we would split up at the end of each period on the road).... plus of course......pay for each show.

You are working for THE MAN.......the record label....to sell CD's.

 

Emmett....no. I am a sideman musician........and.......sometimes band leader.....not a front-man.

 

Yes....Dax. It is an ETF........an exchange traded Index fund that tracks the NASDAQ100.

 

SO......we continue to repeat the PAST. NOW....it is silver.....just like when the Hunt Brothers tried to corner the silver market back in the late 1970's and drove the price up to about $50 per oz.

Silver prices, miners surge as retail buyers pile in

https://finance.yahoo.com/news/silver-prices-miners-surge-retail-233525218.html

(BOLD is my opinion OR what I consider important content)

"SINGAPORE (Reuters) - Silver prices leapt to a five-month high on Monday and small silver miners listed in Australia surged after social media calls to buy the metal and emulate the frenzy that has driven GameStop shares up 1,500% in two weeks.

Spot silver rose as much as 7.4% to $28.99 an ounce, the highest since mid-August. Shares in a handful of mining firms such as Argent Minerals, Boab Metals and Investigator Resources leapt more than 15%.

Coin-selling websites also reported unprecedented demand and flagged delays in delivering bullion. The moves are the latest example of small-time traders buying en masse, particularly of stocks and other assets that were heavily bet against, resulting in large losses for major investors. [MKTS/GLOB]

"There is this curious situation now where the Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyse something of a short squeeze in the silver market," said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.

"The most important factor here is that silver is heavily shorted, the paper market is much, much larger than the underlying commodity can justify," he said.

"There's a lot of commentary on these platforms to pile in to the miners."

Silver prices are up 15% since Wednesday's close, around when messages began circulating on forums such as Reddit encouraging users to buy the metal and drive up prices."

MY COMMENT

AND....here is MORE as we continue to relive various events of the 1970's, 1980's and 1990's. Some like myself....that are old enough have seen ALL this stuff before....in some form or other.

Silver Coin Sites Grind to a Halt as Reddit Horde Takes Aim

https://finance.yahoo.com/news/silver-retail-sites-grind-halt-190456039.html

"(Bloomberg) -- Retail sites were overwhelmed with demand for silver bars and coins on Sunday, suggesting the Reddit-inspired frenzy that roiled commodities markets last week is spilling over into physical assets.

Sites from Money Metals and SD Bullion to JM Bullion and Apmex, the Walmart of precious metals products in North America, said they were unable to process orders until Asian markets open because of unprecedented demand for silver.

Robert Higgins, chief executive officer at Argent Asset Group LLC in Wilmington, Delaware, said he’s been on the phone trading all day, with people desperate to buy gold or silver.

“It’s a very, very tight physical market right now,” he said. “And I don’t know there’s any answer to it except when things calm down or the market explodes on Sunday at 6 p.m.”

Retail traders, inspired by Reddit posters, stormed into the silver market last week and successfully drove up prices of the physical metal, silver miners and exchange-traded funds. Spot prices, silver futures on the Comex and the largest silver exchange-traded fund, iShares Silver Trust, all climbed more than 5% in the week.

Premiums on American Eagle silver coins have risen to close to $5 from a normal level of $2 over the past three days, according to Everett Millman at Gainesville Coins in Florida. His company’s website has a notice saying orders are taking longer than normal to fulfill.

“That absolutely motivates more people not only to jump on the bandwagon with the Redditors,” Millman said by phone. It also “reinforces the bias that holding physical silver is a safer investment as opposed to speculating on the stock market.”

What’s unusual this time in the physical silver market is that “everybody has been raising their premiums,” according to Millman. In normal times, some retailers will be able to offer lower premiums.

There are also signs that investors are holding onto silver they own, rather than trying to take profits.

“Now we’re seeing nothing, no single offer, which is scary,” Peter Thomas, senior vice president at Zaner Group, said by phone from Chicago. “Whatever we sell, people are holding it. There’s no inflow of metal at all.”

MY COMMENT

Just by coincidence......I received my 8 Silver Eagle one Oz coins in the mail today......the coins that I give to kids and spouses for birthdays and Christmas. Lucky timing I guess....to be able to get them at the price of a few weeks ago. Gold at the moment is only $1853......not that much higher.

We are in the GRIP of.......post-pandemic-mania. The media, government, politicians, ELITES, etc, etc......FINALLY.........drove everyone else CRAZY. So now we are going to have a maniacal run on physical silver and gold. BROTHER....

 

You are so right Zukodany.....songwriting and building a catalog is where the money is. From what I see.....I also agree that live music is on life support.

 

It is a new.....investing....week tomorrow. It will be nice to get a new beginning and move through....and beyond. It will either be a better week for investors.....or......it will get us one week closer to moving forward once again. So....up or down....we move forward.

 

A good open today. Lets see if it can continue till the close.......that is the issue......and......if we can string together enough days for a good week. I have not looked at a lot of information yet today....but....it seems like some of the CRAZINESS has dissipated somewhat.

I am NOW .......with the nice gains so far today.....about 3.4% below my all time high that I hit just before the GameStop event grabbed hold of the markets. I WILL take it.......as a good starting point as we move forward from here.

 

I think this little article is a pretty good summary of where we are right now....short term:

Wall St. advances as small-time traders turn to silver

https://www.reuters.com/article/us-...all-time-traders-turn-to-silver-idUSKBN2A12EP

(BOLD is my opinion OR what I consider important content)

"(Reuters) - Wall Street’s main indexes climbed on Monday following a steep sell-off last week, as a shift in the retail trading frenzy to silver drove up mining stocks and investors monitored progress in talks over economic stimulus.

Nine of the 11 major S&P sectors advanced, with technology leading gains. Energy and consumer staples lagged the most.

The iShares Silver Trust ETF jumped 9.3% as silver broke above $30 an ounce for the first time since 2013 with an army of retail traders storming into the metal after betting billions of dollars on stocks last week.

Silver miners Hecla Mining Co, Coeur Mining Inc and Wheaton Precious Metals Corp surged between 5.5% and 35%.

“It’s just a relief rally after the sharp decline on Friday,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Wall Street’s main indexes last week logged their steepest weekly fall since October, as investors digested efficacy data from Johnson & Johnson’s COVID-19 vaccine trial results, while a slugfest between Wall Street hedge funds and retail investors added to volatility.

The CBOE volatility index eased on Monday from three-month highs that were fueled by a surge in shares of GameStop Corp, AMC Entertainment Holdings and others that burnt hedge funds who had bet against the companies. GameStop was down about 18%, while AMC jumped another 8% on Monday.

The wild swings in the so-called “meme” stocks dominated news on Wall Street last week, even as Apple Inc, Microsoft Corp and other corporate heavyweights reported quarterly results.

“The sentiment right now is precarious. The market has already discounted a good earnings season and rebound in economic growth based on the vaccination,” Cardillo said.

Of the 184 companies in the S&P 500 that have reported earnings, 84.2% have topped analyst expectations, well above the 75.5% beat rate for the past four quarters, according to Refinitiv data as of Friday.

Focus now turns towards quarterly earnings from Amazon.com Inc and Google-owner Alphabet Inc on Tuesday to wrap up results from the so-called FAANG group.

President Joe Biden will meet 10 moderate Republican senators on Monday to discuss their proposal to shrink his sweeping $1.9 trillion U.S. COVID-19 relief package, even as Democrats prepare to push legislation through Congress without Republican support.

At 10:05 a.m. ET the Dow Jones Industrial Average rose 102.99 points, or 0.38%, to 30,097.24, the S&P 500 gained 24.19 points, or 0.65%, to 3,739.05 and the Nasdaq Composite gained 128.37 points, or 0.99%, to 13,199.07.

Latest economic survey showed U.S. manufacturing activity slowed slightly in January, while a measure of prices paid by factories for raw materials and other inputs jumped to its highest level in nearly 10 years, strengthening expectations inflation will perk up this year.

Advancing issues outnumbered decliners by a 2.1-to-1 ratio on the NYSE and by a 1.8-to-1 ratio on the Nasdaq.

The S&P 500 posted four new 52-week highs and no new low, while the Nasdaq recorded 69 new highs and 10 new lows.

MY COMMENT

I am using this little article.....to point out....that what REALLY counts is NOT what is happening last week or even this week. What counts is what happens over the ENTIRE year and the next five to ten years. It is nice that we are up.....so far.....today. BUT.....we will be up and down all through the year. What is CRITICAL is......to NOT......get all caught up in the short term drama. As the article points out......the recent drop.....was the steepest drop since October. Since October.....that is ONLY.....THREE...months ago. So NOT really a shocking event.

As the article says:

"Of the 184 companies in the S&P 500 that have reported earnings, 84.2% have topped analyst expectations, well above the 75.5% beat rate for the past four quarters, according to Refinitiv data as of Friday."

THIS is.....money in the bank....for long term investors. Short term....the markets can IGNORE news like this and do all sorts of CRAZY things. Long term the markets....CAN NOT....ignore news like this. Sooner or later the pressure created by this sort of fundamental news just cant be held back and it all spills over in the form of a BOOMING market.

The events of last week changed nothing......the vaccine is spreading and.....WILL.....curtail the virus. The ECONOMY....WILL....reopen over the course of this year. Businesses.....WILL.....move toward NORMAL fundamental and market based results. Small business....WILL....begin to recover.

YOUR brain will try to trick you....your brain will play games with your psyche.....your brain will try to get you to change your reasonable investing plan.....and.....push you to give in to greed, or fear, or panic, or paralysis, etc, etc.

Hang in there.....think long term....even while watching and considering short term.....HIGH DRAMA.....events (who can resist? Not me.).

In the end.....the academic data will....once again....prove as ALWAYS that.....long term investors that DO NOT try to market time and trade....WILL....SUBSTANTIALLY and SIGNIFICANTLY OUTPERFORM investors trying to do other sorts of investing strategies.

 

HERE is a great article that pretty well outlines my thinking as a RATIONAL long term investor......as to the events of last week that their impact going forward. Anyone reading this thread KNOWS that my total sympathies lie with the Reddit guys....but.....as an investor with a focus on the.....long term....I MUST manage my portfolios based on PURE RATIONAL THINKING:

Redditors, Shorts and Crazy Single-Stock Swings
The theatrical coverage of “stonk” investors’ battles with short-selling hedge funds is more infotainment than investing news.

https://www.fisherinvestments.com/en-us/marketminder/redditors-shorts-and-crazy-single-stock-swings

(BOLD is my opinion OR what I consider important content)

"“Hey are you guys gonna write about GameStop?” That, as you can imagine, is the question we have received about 84 million times this week, give or take. So, to quote that old Toyota commercial, you asked for it, you got it. But first, please let us reiterate that we really don’t make individual security recommendations. We make jokes, occasionally buried in the footnotes. We analyze broad trends. We review financial media and occasionally offer hot takes. But we don’t make individual security recommendations.

What follows is our broad exploration of this week’s chief media story—the battle between a select group of individual investors and hedge funds. Many seem to think this is huge news for markets broadly that investors everywhere must weigh. We see it differently. This story is mostly overdramatized infotainment—not anything the majority of long-term investors need to worry about. Let us take you on a tour of this to show you why.

On the very outside chance you have been living under a rock, some unloved and distressed stocks went haywire this week. This is because investors and speculators who populate a Reddit forum called /r/WallStreetBets decided a viable strategy is to find heavily shorted stocks and, if they disagree with short sellers’ thesis, buy them. They share their actions with the forum, others mimic the trades and, given it has about 6.4 million users as we write, their actions made some targeted stock prices go vertical.

That peeved short sellers, including some hedge funds, one of which needed a capital infusion from a competitor. Some shorts even felt the need to close (cover) their short by buying shares, driving even more upside. The financial establishment lined up to denounce these alleged charlatans who dared put their money behind a contrarian opinion. Politicians, in a bizarrely bipartisan showing, lined up to support the retail traders. Trading apps temporarily blocked them from buying certain stocks, including the one that started it all—videogame store GameStop. The world went nuts. We all learned Redditors call stocks “stonks.” We learned Blockbuster’s stock still trades. We learned someone who can hold through huge volatility has “diamond hands.” You can read all of that, in great detail, pretty much anywhere.

A Bubble in the Next Blockbuster?

The common take on all of this, likely building on the growing optimism we have seen in markets since November, is that the Redditors are euphoric speculators buying hopeless stocks with terrible fundamentals. Articles abound warning this won’t end well. Some in America’s pre-eminent newspapers draw parallels between GameStop and the 17th century tulip mania in Holland or the South Seas Bubble that famously sank Sir Isaac Newton’s finances.

They are convinced GameStop—a retail storefront purveyor of video games and accessories—is the next Blockbuster, which we do not mean in the sense that it will be huge. (The other stocks most often featured here like movie theater chain AMC more or less fit this same, distressed theme.) Many are convinced herd mentality is at work, with the Redditors blindly buying stocks while ignoring fundamentals. A bubble in the making. We aren’t convinced by this narrative, mind you, because there are some big nuances and differences here. But this is what pundits have preened about all week, so we would be remiss not to recant it here.

Now, perhaps a way this most resembles euphoria is one most coverage ignores. When euphoria reigns, we expect to see bearish investors mocked in major outlets and coverage. The Redditors are participating in that, to an extent. But it isn’t bleeding into mainstream analysis, so if that is a sign of euphoria, it seems nascent.

The Case Against the Reddit Story as Euphoria

Usually, when euphoria is driving the train, you can see it in the buyers’ rhetoric. Basically, they grasp at increasingly far-fetched reasons the stock will go up—and only up. They project a far-flung future of profits based on pie-in-the-sky plans. After wading into /r/WallStreetBets and (before it disappeared) the related Discord server, we … aren’t seeing much of that? If anything, the most common sentiment seems to be a general hatred of hedge funds, a belief professional investors are too herd-like in ignoring fundamental turnaround potential, and adoration of Elon Musk—a longtime champion of individual investors who buck conventional wisdom.

As a bubble inflates, something called the Greater Fools Theory usually applies—people buy, knowing the move is irrational, but they justify it on the belief they can sell it to some sucker even more foolish than them at a higher price. There probably is some of that with these stocks—particularly in the case of Blockbuster Video. Yes, that Blockbuster, the one that went bankrupt years ago and doesn’t really exist anymore aside from one independently operated outlet using that name in Bend, OR.[ii] But some of its shares still trade over the counter, and the Redditors sent them for a ride on Tuesday. We can think of literally no fundamental reason to do this.[iii]

But with some of the other trades, it is less clear cut. Most of the companies targeted by the Redditors are still going concerns. Several institutional investors, mainly hedge funds, have big short positions in them. Many Redditors seem mostly motivated not by anything financial, but a desire to stick it to these short sellers. If they succeed, prove hedgies wrong, and the price rises, those shorts may have to cover their positions by buying—realizing losses. If someone playing around on Robinhood believes they can eventually sell to a hedge fund that needs to cover its caboose, is that euphoria? Or is it a tactical decision based on the knowledge of how markets work? We aren’t trying to argue this either way, but we do think it is important to note that some semblance of logic underpins a lot of these moves, even if you disagree with that logic. (Yes we are aware of the allegations of coordinated market manipulation here, and we are going to stay above that fray.)

Redditors are also taking a fundamental view of some of these companies. In some cases, they believe those struggling under the pandemic have a brighter future than the institutional world believes, and they are willing to put their money behind a turnaround. That was the case with the original people who bought GameStop and took to social media—one of whom posts under a nom de plume including the words, “Deep” and “Value.”[iv]

Perhaps you have heard of a guy named Ken Fisher, who wrote a hugely influential book on turnaround investing 27 years ago. It was called Super Stocks, and we would say it is great even if we didn’t work for the firm he founded. This is essentially a book on how to identify deep value stocks suffering through temporary problems. There are many, many others who seek out troubled firms in hopes of turning it around—and profiting. Activist investors do this daily! We find it funny that a turnaround thesis is somehow considered rational when an activist investor acts on it—and euphoric or dumb when retail investors do—but we will get to that in a moment.

For now, some rhetorical food for thought: Is it really irrational to believe a certain struggling movie theater chain will make money once we are all vaccinated and finally able to watch that delayed James Bond flick in the theater? AMC’s financiers don’t seem to think so, as the company was able to leverage the Reddit-fueled stock price boom to secure equity financing needed to ride out the pandemic and avoid bankruptcy. Is that euphoria, or is it sort of how markets are supposed to work? Prices send signals, capital gets allocated. As for GameStop, an activist investor took a large stake last year and helped make over its board of directors, prompting chatter about a turnaround plan. Are the retail investors backing a nearish-term turnaround really more euphoric than all those who bought GM Thursday based on its 14-year plan to go all-electric? If you think the latter is rational despite 14 years being far outside the 3 – 30 months markets usually price in (and we are not opining one way or the other), as a lot of the press coverage we encountered did, then you have to accept the former is possibly rational, too. Again, we aren’t backing one view or the other, just stressing the need for intellectual consistency.

Who Is Wearing the White Hats Here?

Also curious: the way the majority of financial news outlets have covered this story. Every good story needs a hero and a villain. Usually, when short sellers are in the news, they are cast as the villains deliberately driving stock prices down. When hedge funds feature, it is also usually in a villainous role, as destabilizers that drive stocks up and down in order to line their own pockets. Meanwhile, the role of hero or innocent victim usually goes to retail investors, frequently (and demeaningly) portrayed as “the little guy” who can’t hope to do well with all those hedge funds and algorithms driving the market and hogging all the profits.

Not so this time. Now, to read all of this week’s coverage, short sellers are innocent, well-meaning, venerable investors who are only trying to make markets more efficient. Many of the articles we have read take time to explain how short interest actually adds liquidity to the market. Which is … correct! And weird to see acknowledged so widely. Similarly, now the hedge funds are the protagonists, just trying to go about their normal business. And the villain? Retail investors! Suddenly they aren’t “the little guy” anymore, but a powerful, cult-like vindictive force capable of moving markets and making life miserable for the poor hedge fund managers. This is Mirror Universe stuff, folks.[v]

We don’t favor either side here. We don’t paint with broad brush strokes, we don’t split the investment universe into “good” and “evil” camps, and we don’t call people names. (We also know some institutional investors are on the same side as the Redditors.) Our point is simply, you can’t have it both ways. If short selling isn’t a powerful and inherently negative market force now, then guess what, it never is. If hedge funds aren’t evil today, guess what, they never were. If retail investors today are capable of a) making money and b) influencing markets, then, yes, they always were.

So the next time you find yourself bemoaning hedge funds for crowding everyone out or short sellers for driving prices down, step back and remember what happened this week. No transaction, however big or small, is a self-fulfilling prophecy.

Before Dubbing Someone “Dumb” Money, Look in the Mirror

Relatedly, there is a long-running thread in the financial press that labels the little guy “dumb money” while hedge funds and institutions are the “smart money”—the pros, steeped in financial logic, who see what individual investors cannot. We have never bought this thread, considering that in our collective experience following financial pundits, we have seen some pros say some pretty dumb stuff.

In this case, most coverage seems to assume that the hedge funds were smart to be short—until this band of rabble-rousers came to foil them. But that is an assumption. We have seen many shorts foiled over the years by taking dumb positions, like shorting Japanese sovereign debt on the notion its debt-to-GDP ratio—an irrelevant measure saying little about debt’s affordability—was unsustainable.

The grand irony here: It seems to us the allegedly smart money may have forgotten Markets 101: Sufficiently liquid markets are efficient and discount widely known information. Most of the stocks the hedgies shorted were companies well known to be troubled—in some cases before COVID, in some cases due to it. Those troubles were known to basically everyone. Thinking they weren’t baked into the stock price is truly irrational. So unless bears had some new, different reason to short, the biggest risk was that a positive surprise would rock them. Guess what? That happened.

Price Discovery, Outages and Outrage

By Thursday, several investing platforms announced they were restricting trading in Redditors’ favorite stocks. The initial theory pushed by the press was that the firms were trying to inject some sanity into markets, force everyone to take a breather, and protect retail investors from entering trades that could wipe them out. (This theory doesn’t seem correct, as we will explain, but it fed into the story’s frenzied coverage.) Showing how odd this story is, Senator Ted Cruz and Representative Alexandra Ocasio-Cortez both objected to what they deemed an unfair practice.[vi] We have seen some point to the subsequent drops in GameStop, Nokia and BlackBerry stock prices on Thursday as evidence that this “worked.”

That makes us wonder how those advancing these arguments would define, “worked.” We often note that markets are efficient. This is because they incorporate the opinions of everyone transacting in real time. That includes buyers, sellers, short sellers, people buying short-dated out-of-the-money call options, people buying on margin, you get the drift. The process of all these transactions affecting the price is what economists call “price discovery.” But this can be efficient only if the market is allowed to incorporate all opinions, including the Redditors.

So our general stance on all stuff like this is, let the market decide. This is sacrilege to all those who think valuations and models should determine optimum pricing, but in our experience, the market’s collective wisdom is the best pricing mechanism there is in the long run. Yes, that can lead to big seemingly irrational short-term swings, but that is part of the process. If you don’t believe us, then revisit the saga of JPMorgan’s purchase of Bear Stearns after the latter collapsed in March 2008. JPMorgan initially agreed on a purchase price of $2 per share. Investors then bid the stock up, and the final purchase price was $10 per share. The market was right.

People have long accepted that hedge fund managers blabbing about their short positions on television and all but trying to talk the stock price down are part of the pricing process. Call us crazy, but we don’t see much functional difference between that and Redditors who blab about their long positions and make memes. It is all part of this big, messy, beautiful thing called the market.

The Not-So-Secret and Really Boring Truth Behind the GameStop Lockout

But, perhaps illustrating just how much this story has left reality behind: The reason that seems most plausible for some brokerages limiting trading in GameStop and other hot stocks? The boring mechanics of clearing. Stock trades settle two days after they are placed, with the funds and shares changing hands via a clearinghouse, the Depository Trust Clearing Corporation (DTCC). DTCC requires brokerages to keep cash on deposit at the clearinghouse to serve as collateral during the two-day post trade window. It reportedly upped this requirement on firms like Robinhood on Wednesday, citing a vast increase in volume. Robinhood needed time to raise the cash. Hence, the pause.[vii] Once they got the cash, the pause lifted.

But don’t worry. We are sure this story has more twists, like possibly Senate or House hearings. Considering those are mostly theater too, with politicians grandstanding in search of popularity, perhaps the Reddit vs. Hedgie saga will then have found its proper home. So our counsel: Tune down the emotions—both fear and greed—that this story may bring. If you are a long-term investor, this is much more noise than news."

MY COMMENT

The......RATIONAL....lesson for investors in this little saga:

"Tune down the emotions—both fear and greed—that this story may bring. If you are a long-term investor, this is much more noise than news."

 

THIS is......EXACTLY......why I maintain my brokerage accounts at Schwab.

Robinhood raises $3.4 billion in funds from investors in a week

https://www.reuters.com/article/us-...-funds-from-investors-in-a-week-idUSKBN2A133R

(BOLD is my opinion OR what I consider important content)

"(Reuters) -Robinhood raised $3.4 billion in capital in the past week, its biggest ever, after the online brokerage was strained by a retail trading frenzy in heavily shorted shares of companies such as GameStop Corp.

The brokerage, which has become popular with young investors for its easy-to-use interface, is at the heart of a mania that kicked off last week following calls by Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.

Robinhood’s existing investors pumped in $2.4 billion in funding, the Menlo Park, California-based company said in a blogpost on Monday, just days after it raised $1 billion through a mix of debt and equity.

The latest round bit.ly/3oHtJx0 was led by Ribbit Capital, with participation from existing investors, including ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates.

New York Times reported that the $1 billion in funding came from Sequoia and Ribbit.

Robinhood also said it had tapped a credit line and that the funds raised would be used to invest in “record customer growth”.

“This round of funding will help us scale to meet the incredible growth we’ve seen and demand for our platform,” Chief Financial Officer Jason Warnick said.

Robinhood last week was forced to curb the purchase of a handful of hot stocks including GameStop and AMC Entertainment as it grappled with the extraordinary market activity, drawing the ire of customers, celebrities and politicians.

The company on Monday elaborated on the mechanics of how it works in terms of trading, clearing and settlement, seeking to answer questions related to the trading event that has sent shock waves through Wall Street.

Robinhood is preparing for an initial public offering and recent developments raise questions on whether it will push forward with those plans."

AND.....another article expanding on this topic

Exclusive: Robinhood explores raising more debt to fulfill Reddit-fueled order frenzy - sources

https://www.reuters.com/article/us-...dit-fueled-order-frenzy-sources-idUSKBN2A13HG

(Reuters) - Robinhood, the U.S. online broker that has emerged as a gateway for amateur traders challenging Wall Street hedge funds, has held talks with banks about raising $1 billion in debt so it can continue to fulfill orders for heavily shorted stocks, according to people familiar with the matter.

The capital raised would be separate from the $3.4 billion in financing that Robinhood announced on Monday it had secured from its investors since Jan. 29. It reflects the financial pressure that last week’s Reddit-fueled frenzy in shares such as GameStop Corp placed on the company, prompting it to restrict some trades.

Robinhood needs the money to backstop trades that its customers place, because its clearinghouse has asked for more collateral due to heightened volatility. Robinhood CEO Vlad Tenev said on Sunday that the trading app decided to place curbs on some transactions because the clearinghouse had asked for $3 billion in collateral.

Robinhood started negotiations with banks about expanding its lines of credit or arranging a new one after it drained its revolving debt facility during last week’s frenetic trading, one of the sources said. It is not clear how much debt Robinhood will be able to secure.

The sources requested anonymity because the matter is confidential. Robinhood declined to comment.

Robinhood, which has become popular with young investors for its easy-to-use interface, is at the heart of a mania that kicked off last week following calls by Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.

The online brokerage faced criticism from some of its users for placing restrictions on transactions. Its woes have raised doubt over whether its plans to launch an initial public offering by April will stay on track.

The Menlo Park, California-based company was founded in 2013 by Baiju Bhatt and Tenev, aiming to democratize finance. Its platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies.

Robinhood said on Monday that its latest equity financing was led by Ribbit Capital, with participation from existing investors including ICONIQ Capital, Andreessen Horowitz, Sequoia, Index Ventures and NEA.

MY COMMENT

I RECALL.....last week.....during the peak of the GAMESTOP crisis.......Robinhood saying that they were NOT facing a LIQUIDITY CRISES. WELL...now we hear that.....according to the above articles:

* They (allegedly) had to raise an additional $3.4 BILLION in funds from their investors.
* They (allegedly) had to tap their line of credit.
* They are in (allegedly) talks with banks for $1BILLION in additional debt in addition to the above.
* (They are in talks with banks for $1BILLION in additional debt)......."So they can (allegedly) continue to fulfill orders for heavily shorted stocks, according to people familiar with the matter".

SURE sounds like (just my personal view) a very SEVERE LIQUIDITY CRISES.....to me. In fact this sort of stuff sounds like a fight for survival as company to me (just my personal opinion).....although they seem to be able to raise money....so far. It is impossible to know what is going on behind the scenes with this or any other company in this sort of crises.

THIS is EXACTLY why I have ALL my various brokerage accounts that I manage at SCHWAB. I want the POWER and resources of one of the largest brokerages in the world standing behind my accounts and my money. I dont want some......NEWBIE....FAD....PHONE APP brokerage......that I cant even call on the phone....that has NO record of being in business for any substantial length of time......holding my money and controlling my ability to trade or manage my funds.

I....DO NOT.......see anything that Robinhood is going to go under. BUT......there is NO brokerage that is totally immune from financial failure.....stuff happens. AND....in theory when a brokerage FAILS......your account is secure and not impacted. BUT......in a nasty failure.....your account might be tied up for weeks to months....depending on the extent of the MESS.......before you can get it out of the old brokerage and into a new one. What a mess if you are a trader and end up with an account that you can not access for weeks or months.

SO......I dont care to take that sort of risk....even though slight. I want a FULL SERVICE.....discount broker....like SCHWAB to hold my account.....for......MY..... own comfort, safety, and convenience in doing business. It is.....ALL ABOUT ME.......and....MY MONEY.

 

BIG TIME......snap back in the markets today. I think this is a DEFINITE signal that the.....DRAMA.....of last week is.....OVER. Last week is the.....old-story.....we are moving on.

TODAY....for me....NICE gains and very much into the GREEN. My only two red holdings were Costco and Home Depot....very slightly. Plus....as an added bonus.....a nice beat of the SP500 today by .77%.

AFTER all the recent short term drama.....and.....the mini-correction....last week....I am ONLY about 2.2% below my all time account high. NICE.

It will be....fun....to see how the rest of the week shapes up.

As to the Reddit guys...most of the new articles that I see today regarding the little guys versus the hedge fund shorts....are dealing with SILVER. I dont think most stock investors really care much about the price of silver.....and....the number of investors and even traders dealing in stocks of silver companies is a very small percentage of the total markets. A more obscure investment area.

I am looking forward....with interest and curiosity....to the open tomorrow and how things go through the day. I think the....PROBABILITY.....is for another day similar to today. We WILL see earnings from AMAZON and ALPHABET (GOOGLE) tomorrow......BOTH.....after the market close.

I guess there is some "chance"....not probability..... that the markets will tread water waiting for these earnings. AND......as usual for the past few years.....there is a "chance".....not probability..... that the earnings will be GREAT and the markets will.....still....punish one or both companies slightly on Wednesday.

It will be a.....FUN WEEK.

 

LOL.......yes. Just throw that approach out the window......and WING IT.

It has been a ....very strange trip.....the past 10 months....right up to today. MOST on here have made REALLY GOOD MONEY.....in spite of......the pandemic, the shut down of the economy, the election, fears of market crashes, fears of earnings crashes, etc, etc, etc.

I guess......we just deserve it......or......some great big cosmic wheel has turned in our favor.......for a short while. What a CRAZY time......imagine....someone that invested for the first time starting about last February. Any NEW investor that got through the past 10 months should be .....good to go......for the rest of their lives. No matter what the markets throw at them.....they have gone through the ULTIMATE in crazy market conditions.....and come out the other side alive.

 

BREAKING NEWS

SO......in conjunction with my Robinhood......(possible) LIQUIDITY ISSUE......post a few posts above......I am NOW seeing a very small smattering of news items reporting that (allegedly) Robinhood is HALTING their planed IPO. (perhaps) Another NEGATIVE for the company....... (IF).....they.......NO LONGER have confidence in how the markets will view their company and their financials......and......are (allegedly) having to tank their IPO.

UNFORTUNATELY I can NOT view one of the two articles that I am seeing.....since it requires a paid subscription. BUT....here is the allegation:

Robinhood puts IPO plans on hold for now - Fox

https://seekingalpha.com/news/3656753-robinhood-puts-ipo-plans-on-hold

The article references a Fox Business article which alleges:

GameStop snarls billionaire Steve Cohen who re-opens hedge fund, Robinhood IPO halts
Robinhood's IPO is on ice

https://www.foxbusiness.com/markets...ohen-who-opens-hedge-fund-robinhood-ipo-halts

On this issue the article alleges:

"As FOX Business was first to report, people with direct knowledge of the matter say Robinhood has indefinitely suspended plans to come public through an initial public offering that it was eyeing sometime this year."

This single sentence in the above article is based on a report by Charlei Gasparino....which can be seen on Youtube.



In the video....Gasparino states that.......Robinhood has (allegedly) put their IPO on hold to (allegedly) focus on surviving the next couple of weeks.

MY COMMENT

WELL you heard......the allegations........ here BEFORE any other place in the media.....except for the above.