One of the most important touchstones of the equity madness which has gripped our nation since early 2020 is Reddit’s own wallstreetbets, which is predominantly populated by middle class young men with budding (or flourishing) gambling addictions.
It’s a good place to glance at on a regular basis, since WSB goes manic during strong periods (like now) and absolutely suicidal when the market has crashed, let’s say, by 1%. The degenerates on the site have no compunction about not just gambling, but gambling with borrowed funds, such as this example right here.
This fellow took out a $300,000 loan to gobble up almost 20,000 shares of a company whose symbol is VSTE.
As you can see, he’s already down over $100,000 on an investment he made just six days ago. I’ve marked below with an arrow his approximate entry point.
It’s pretty obvious what he was thinking: the stock already had fallen quite a bit, so it must be a bargain. The thing is it just kept falling. Not only did it keep falling, but it did so over the past couple of days in the midst of an insane rally for U.S. equities.
Looking at the longer-term chart, it’s quite clear that VSTE is in serious trouble. From a charting perspective, this is an absolutely gargantuan top, and even if the stock rallies mightily – – which is not out of the question! – – it’s going to get stopped short by that Himalayan Mountain Range of overhead supply.
Looking even longer term, you can see that this company has been failing in a series of waves. This is the third, and largest, reversal pattern we’ve seen in VSTE, so it’s a bit bonkers that this guy bet the house on a stock which was obviously pretty wretched. I mean, hell, even a permabear like me can give you twenty ticker symbols of stocks that are safe and in reliable uptrends. You don’t have to go hunting for some weird crap no one has even heard of.
Evidently, for about the past week, the gent who bought all this stock has been posting pumpy messages on /wsb in the hope that it would somehow turn the stock around. He needs to realize the lads reading /wsb don’t have the kind of buying power to do that, unless they’re led by some kid of messiah like RoaringKitty. Looks like the pumpy posts got deleted every single time (this is just a tiny sample):
Why do the /wsb boys do such things? Why do they borrow money (in this case, from SOFI at 11% interest) to gamble on equities? That’s simple: because posts like those below appear on a regular basis. It’s no different than the billboards featuring the “winners” from state lotteries or gambling casinos. The tiny, tiny fraction of folks that win big are going to be featured and promoted to everyone else, and that’s going to be enough to excite the that-could-just-as-easily-be-me crowd into handing over their life savings.
