Since it is agonizingly evident that not a single interesting thing is going to happen to equities until that traitorous twit Jerome Hayden Powell does his little pack of lies on Friday morning at Jackson Hole, I’ll just share an insight about the meme stocks I had this morning.
There was a time only a few years ago when today’s meme stocks were actually traded as normal equities. Yes, all stocks were affected by the grotesque distortions that Fed had foisted upon the capital markets, but until the vomit-inducing Covid bailouts of March 2020, stocks still had some semblance of reality and could be considered a little bit anchored to the moorings of true facts.
AMC, for example, touted itself as the largest owner of cinemas in the world. That’s all well and good, but judging from the performance for the stock over its many years as a public entity, it pretty much sucked out loud as a business. I guess it takes a lot of overpriced popcorn to turn a profit in that industry, but it’s quite clear that the AMC theatre chain was a rotten, rotten business.
Once Powell did his money-shot of trillions of dollars all over the faces of corporate America, the game changed totally. AMC immediately stopped being a true equity, representing the true performance of its underlying enterprise and instead became a unalloyed gambling chip based on nothing more than the emotional gyrations of the 19-year-olds scurrying around the likes of reddit’s /wsb forum. The fact that AMC represents shares in a chain of movie theatres is, by this point, purely incidental.
I am not acquainted with the workings of the world of throw pillows and bath towels, but sometime along the way – – and I suspect Amazon had a lot to do with this – – BBBY’s fortunes took a turn for the worse, and the stock suffered mightily. Again, this is natural, it is right, and it is correct. This is how stocks are supposed to behave.
As with AMC, however, BBBY found itself, after the Covid bailout, to be little more than a plaything of the hedge funds and teenagers, which is why over short periods of time you will see this gambling chip soar hundreds of percent before collapsing its way down to $0. It is an abomination.
We live in Clown World, folks, and the ones who are thriving the most – – and even setting their filthy feet on my hallowed ground of technical analysis – – are the clowns themselves.