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HEALTH, WEALTH, AND HAPPINESS |
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Smart Investors Stayed Out of GameStop.
GME stock is down 70% since last week. Investors that read our recent blog post stayed out of the drama. Build your investing force field! |
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Hi Everyone,
Soldiers in the Israeli Army have a funny analogy that quickly teaches young cadets not to question authority. It's called the kitbag question. It goes like this. ...
The commander tells his new troops, "hey guys we're going on a very long walk today to no place in particular."
One cadet asks the unfortunate question "should we take our kitbags along with us?" As the kitbag is quite heavy, it certainly would be better to go without, but the commander of course responds, "well, we weren't planning to but since you asked, yes, please bring them."
For all the backlash over the recent GameStop debacle, including all the headlines, all the noise, and all the attention from Congress, it does seem to have served as a kitbag incident for retail investors.
In this case, the commander represents the U.S. financial regulatory authorities, which may very well make things a lot worse for retail traders. |
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The government's response
A recent statement from FINRA, who oversees the market's integrity, was just seen on CNBC and it's the exact opposite of what we were hoping for. "This focus includes risks associated with app-based platforms with interactive or game-like features that are intended to influence customers, their related forms of marketing and the appropriateness of the activity that they are approving clients to undertake through those platforms."
In other words, they're looking at things like leverage, options, and other complex derivatives that Robinhood offers their clients with the intention of reducing access for retail customers.
As it stands, the government already makes a rather unfair distinction between "professional" and "retail" clients. We've discussed this several times before, in that those who are not already wealthy have a greater barrier to entry in financial markets.
We have advocated for these restrictions to be eased, but it seems like after the Robinhood incident, they're considering making them tighter.
This is the wrong takeaway!!
To make matters worse, it seems that Treasury Secretary Janet Yellen is planning on overseeing this case even after being paid upwards of $1 million in speaking fees from Citadel, the defendant in this case.
If there was any hope that something good would come from the market manipulation last week, or that it would in some way affect positive change, that hope is rapidly fading. |
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Well what did we really expect from the government, to actually help the people? |
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Stick it to the man
Having learned a valuable life lesson, our proverbial young cadet may be subject to ridicule and harassment from his comrades, but he will eventually emerge smarter and stronger for the experience, as will we all.
Hopefully, people have finally learned that you can't stick it to the man on Wall Street by buying stocks from him.
Ultimately, these historic events will very likely lead to more and more people joining the decentralized marketplace, where there is no such prejudice toward the rich or the poor, where everyone is free to make their own decisions for better or for worse, and where all disputes are settled by open-source verifiable code and not by corruptible politicians.
The real stick it to the man trade is currently playing out, as the crypto market today sees a wave of green and the major U.S. stock indices have just flipped red on the day.
Ethereum, which is the network where most of the new decentralized apps are being built, has seen its native token ether skyrocket lately, and has reached an all-time high above $1,600 per coin.
This is taking place as the fundamental picture for digital assets gets two large boosters from institutions. The first is from MicroStrategy, whose seminar for assisting institutions to learn more about bitcoin began right after I wrote this newsletter.
The second boost comes from a most unlikely new ally, Visa. But we'll let this headline speak for itself. ... |
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Wishing you a very happy day ahead!
All the best, |
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Mati Greenspan Analysis, Advisory, Money Management |
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