Let’s start by agreeing that this video is scary. Do I believe its veracity? Not exactly, but it’s glamorizing the idea of easy money. Trading on margin is not a joke. When you lose money you can’t pay back, you don’t go to sleep and life resets. You lost money that you owe and if you can’t pay it back, you deserve jail time because it’s stealing. Putting 18 year old’s in jail for losing $100,000 is not going to sit well, but what other choice do you have? There’s no job an 18 year old can do to pay back $100,000. They should become a servant of the state.
Should you be allowed to trade with money you don’t have? No. If you can’t prove that you have collateral to cover your loss, you shouldn’t have access to capital to trade. Step 1 is eliminating margin to individuals to anti-greed the brokerage houses. What this has caused is a bubble that is getting bigger. To what extent? I’m not qualified to answer.
The Current Market
There is no such thing as easy money. You can get lucky in life, but you don’t stay lucky. Under the proper length of time, your life will even out depending on how hard you work. What has happened over the last year financially, is not normal. By that I mean that I’ve made money in the market. Not just some, but about 500% in my brokerage account. When Bill writes he made 15% last year, he’s investing. I’m gambling. Understand that what individuals are doing in today’s market is gambling and they don’t know who they are playing against. This doesn’t mean you can’t make money buying stocks, but watching videos like the one above should give you an idea that people are about to get the short end of the stick because stupidity comes along with losing.
I’m going to give you a few stocks that I’ve made money in and how I view my participation in the market. I’ve made money by identifying industries and gotten lucky with the company.
UAVS – I started out buying this stock at around $2 back in March. It’s a company that makes drones for agriculture with the hope of providing Amazon “Unmanned Aerial Vehicles” for delivery of packages. Its market cap, what the company is valued at, is $860 million. It’s a 5 person company that did $1 million dollars in revenue last year. It is currently trading around $15.00. I still own a few thousand shares of this company so I’m hopeful of its future, but I do believe it’s overvalued. If it pulls back to $9, then you may want to get back in for hopes of Amazon, but this company is probably worth $3 a share. I will note I thought PENN was overvalued at $12 and it’s $120. So, I don’t know anything. I do know I will be shorting PENN.
TSCRF – The Score is the Canadian Draftkings with some presence in the US. I bought thousands of shares at $.40 back in March. It’s up to $4 as the online gambling sector is hot because people are stuck at home. More players continue to enter this market to make competition stiffer. I’m happy to see this stock rising but it has a market cap of $1.82 billion dollars which is crazy for a company that did $27 million in revenue last year. This is a potential takeover target and they are having a reverse stock split. I expect The Score to continue it’s upward run and would look to sell if they ever get taken over.
NVAX – Let’s give a shout out to Evan for waiting a decade for this stock to pop. Novavax needed a pandemic to prove its worth and that’s what we got in 2020. It made a run up from $4 to $300 during the pandemic. NVAX is currently valued at $19 billion and the year before was $731 million. Does a company that produces a Covid vaccine increase $18 billion dollars in market value after doing $50 million dollars in sale the year before? I don’t see how buying this player at $300 makes a ton of sense. Waiting to see what the Covid sales #’s are would be smart but this market seems to have little to do with fundamentals.
ELY – Sam gave me Callaway golf as a nice stock to own. What I like about Callaway is that it’s popular. Look at TopGolf. I own a set of Callaway Maverik golf clubs. This is a $3 billion dollar company doing $1.5 billion in sales. Notice how close these #’s are compared to the previous stocks I mentioned. Callaway has a great name in the industry and I think Top Golf is a 300 yard drive to help propel this stock. It probably won’t jump to $100 overnight, but why wouldn’t it be $50 in a year?
TSLA – Saving the best for last. Tesla has a $783 billion dollar market cap doing $31 billion in revenue. Everyone agrees that Elon Musk is a genius but should Tesla be worth more than the entire auto industry combined? This is a short target if the market takes a dump. The options are so expensive though that it takes a big investment.
PHIL – Gourlay told me about this little gem. I’m now a proud owner of 200,000 shares. What is PHIL? How about, what isn’t PHIL? These guys are managing the finances of all of the roads built in Vietnam. I went through the company Tweets and the director delayed the SEC reports 10 times over the past months with varying excuses. What could go wrong? If this bad boy goes to .11 cents, just know that Gourlay and I will be riding Lambos (with serious loans).
Shorting the way down
All of these stocks I think are short candidates (except PHIL which is nearly impossible to go lower) as the entire market will burst. These thoughts are not my own and I’m copying the man who predicted the Big Short. I like money as much as anyone, and this market has been too easy. Look at those graphs of the companies and tell me what’s wrong? They all are up and the fundamentals don’t matter.