The world of trading is being flipped on its head by the once innocuous retail investors. Wall Street has been shell-shocked by a band of 'Reddit traders' who squeezed $10s of billions from short-selling hedge funds, bringing some major firms to their knees. This past month has shown the world of high finance that a new breed of Gen Z and Millennial investors/traders are a force to be reckoned with and have the influence and capital to move markets.
The COVID pandemic has taken society online, with digital technology being the global economy's saving grace. This same digital technology has allowed millions of new investors to enter the financial markets with virtually no barriers. The combination of restless angst from being cooped up at home and a surplus in entertainment money piling up led to a retail investor revolution that the markets haven't seen since the Dot-com bubble of the late 1990s.
SPACulation
The next generation of investors are racing in fast and furious, with billions of dollars in fresh capital spilling into the stock market. Investment groups are taking advantage of the seemingly overzealous retail investment environment through SPAC IPOs.
A SPAC stands for special purpose acquisition company, and its special purpose is to go public with the promise of purchasing a real business at some point in the future. When the SPAC finds a suitable company, it then merges with the privately held enterprise and changes the ticker accordingly to bring them to the markets swiftly. These expediated deals heavily profit the underlying investment groups for the privilege of raising public funding efficiently. This form of public offering makes it easier and faster for businesses to hit the public exchanges without going through the stringent traditional IPO process that typically takes 4-6 months if not longer.
More than 450 companies IPO'ed in 2020, raising over $167 billion, far surpassing the previous record made in 1999 amid the Dot-com mania, and about half of this capital was raised by SPACs.
SPACs are running rampant in the market today, with over 250 "blank check IPOs" generating $79 billion in value in the past 52 weeks. According to a CNBC interview with Jim Chanos, founder of the Kynikos Associates, around $2 billion in value is being created daily by these IPO shell corporations (as of mid-January), which equates to $500 - $600 billion annually.
These investment groups are racing to get their respective SPACs on the market before the market euphoria deflates. Still, this market elation may just be heating up, with over 40% of the total capital raised in 2020 IPOs coming from Q4. The market is trading at frothy valuations (even for this ultra-low interest-rate environment), and risk appetites remain ravenous, especially with retail investors.
The rise of SPACs is going to bring more companies to the public markets at an expedited rate, which spell ripe opportunities to me with many of these SPAC IPOs showing triple-digit growth.
Continued . . .
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Notice to Zacks Members
Today, we’re inviting a limited number of investors to access a new kind of trading portfolio. It catches stocks with strong fundamentals and earnings estimate revisions just as they’re ignited by developments in the news.
The rewards in this favorably volatile environment can be quick and sometimes very substantial. Zacks stock-picking phenom Daniel Laboe has already used our approach to “headline trading” to catch gains like Tesla’s +810.0% in 13 months ... QuantumScape’s +224.3% in 3 months ... Target’s +95.0% in 17 months ... Square’s +285.4% in 14 months ... Sea Limited’s +413.6% in 1 year ... and Micro Strategy’s +93.9% in 6 weeks. ¹
Deadline for access: Sunday, February 14.
See the First Official Buys >>
------------------------------------------------------------------------------------------------------
The ease of market entry with a slew of online trading platforms that offer commission-free trading drove a new generation of investors and traders. With the market going effectively parabolic, everyone and their cousin is a "day trader." This cohort of "traders" has only seen skyrocketing stock prices and are not prepared for any market correction with their out-of-the-money call options, all aimed at more market euphoria.
Democratizing the Financial Markets
Robinhood, the fintech startup that has single-handedly democratized the stock market, has been the trading platform of choice for the massive new wave of investors. According to research collected by CNBC, Robinhood has seen between 1 and 3 million monthly new app downloads since the beginning of 2020, outpacing every other trading platform by a substantial margin.
2020 was a record year for ETFs with net inflows of more than $500 billion, surpassing the 2017 dash to ETFs by north of $40 billion.
Average trading volumes have surged in the past few years, with retail traders making up a growing percentage of volume. According to CNBC, daily trading volumes have more than doubled since 2019, with an average of 14.7 billion shares being traded daily in 2021, compared to the 7 billion in 2019. Risk-seeking retail investors are driving this daily volume growth.
A proliferating group of money-hungry Yuppies has come together on social media to fight Wall Street's 'financial oppression' or in an attempt to get rich quick (still up for debate). A Reddit message board called r/wallstreetbets, which now has 8+ million followers (from less than 2 million 3 weeks ago), is driving a cultural movement that goes far beyond the now legendary GME short-squeeze.
Droves of brand-new capital are being infused into the stock market, and bringing with it are fresh opportunities to profit. Market volatility is beginning to pick up again with this new cohort of retail traders making waves. Waves that we can take advantage of.
How to Profit from Breaking News
You could constantly monitor stocks with strong fundamentals and rising earnings estimates, watching for the first stirring of movement, checking for headlines and upcoming events.
Or let our just-launched portfolio service do all that for you. Until Sunday, it’s open to entry and I’d be delighted to welcome you to our brand-new Zacks Headline Trader.
With vaccines rolling out and pent-up economic demand only starting to unleash, this is an exceptional time to profit from positive news. Using the same approach that Headline Trader is built around, I’ve been able to follow breaking developments to multiple big winners. Here are four examples: ¹
• Tesla, the Year It Finally Meets Management Goals gave my readers the chance to experience a +810.0% explosion.
• Preparing for the 4th Industrial Revolution spotlighted NVIDIA which shot up +197.3%.
• The FAANG of the Roaring 20’s identified 5 stock winners including Sea Limited that gained a ridiculous +413.6%.
• Largest Contracted Chip Manufacturer Set to Open Plant in Arizona uncovered Taiwan Semiconductor before it boomed +136.2%.
Less frequently, we can also profit by shorting stocks affected by bad news so this portfolio can actually work no matter which way the markets are heading.
Important: Please note that the number of investors who view our first Headline Trader moves will be limited and the deadline to gain access is coming up fast. The first moves are almost ready to post but the portfolio closes to entry Sunday, February 14.
Be sure to check out Zacks’ New Headline Trader right now >>
Good Investing,
Daniel Laboe
Daniel has expertise in technical trading, corporate finance, and monitoring breaking news. He is the editor of Zacks' newest portfolio, Headline Trader.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.
Image: Bigstock
Good News from Shell-Shocked Wall Street
The world of trading is being flipped on its head by the once innocuous retail investors. Wall Street has been shell-shocked by a band of 'Reddit traders' who squeezed $10s of billions from short-selling hedge funds, bringing some major firms to their knees. This past month has shown the world of high finance that a new breed of Gen Z and Millennial investors/traders are a force to be reckoned with and have the influence and capital to move markets.
The COVID pandemic has taken society online, with digital technology being the global economy's saving grace. This same digital technology has allowed millions of new investors to enter the financial markets with virtually no barriers. The combination of restless angst from being cooped up at home and a surplus in entertainment money piling up led to a retail investor revolution that the markets haven't seen since the Dot-com bubble of the late 1990s.
SPACulation
The next generation of investors are racing in fast and furious, with billions of dollars in fresh capital spilling into the stock market. Investment groups are taking advantage of the seemingly overzealous retail investment environment through SPAC IPOs.
A SPAC stands for special purpose acquisition company, and its special purpose is to go public with the promise of purchasing a real business at some point in the future. When the SPAC finds a suitable company, it then merges with the privately held enterprise and changes the ticker accordingly to bring them to the markets swiftly. These expediated deals heavily profit the underlying investment groups for the privilege of raising public funding efficiently. This form of public offering makes it easier and faster for businesses to hit the public exchanges without going through the stringent traditional IPO process that typically takes 4-6 months if not longer.
More than 450 companies IPO'ed in 2020, raising over $167 billion, far surpassing the previous record made in 1999 amid the Dot-com mania, and about half of this capital was raised by SPACs.
SPACs are running rampant in the market today, with over 250 "blank check IPOs" generating $79 billion in value in the past 52 weeks. According to a CNBC interview with Jim Chanos, founder of the Kynikos Associates, around $2 billion in value is being created daily by these IPO shell corporations (as of mid-January), which equates to $500 - $600 billion annually.
These investment groups are racing to get their respective SPACs on the market before the market euphoria deflates. Still, this market elation may just be heating up, with over 40% of the total capital raised in 2020 IPOs coming from Q4. The market is trading at frothy valuations (even for this ultra-low interest-rate environment), and risk appetites remain ravenous, especially with retail investors.
The rise of SPACs is going to bring more companies to the public markets at an expedited rate, which spell ripe opportunities to me with many of these SPAC IPOs showing triple-digit growth.
Continued . . .
------------------------------------------------------------------------------------------------------
Notice to Zacks Members
Today, we’re inviting a limited number of investors to access a new kind of trading portfolio. It catches stocks with strong fundamentals and earnings estimate revisions just as they’re ignited by developments in the news.
The rewards in this favorably volatile environment can be quick and sometimes very substantial. Zacks stock-picking phenom Daniel Laboe has already used our approach to “headline trading” to catch gains like Tesla’s +810.0% in 13 months ... QuantumScape’s +224.3% in 3 months ... Target’s +95.0% in 17 months ... Square’s +285.4% in 14 months ... Sea Limited’s +413.6% in 1 year ... and Micro Strategy’s +93.9% in 6 weeks. ¹
Deadline for access: Sunday, February 14.
See the First Official Buys >>
------------------------------------------------------------------------------------------------------
The ease of market entry with a slew of online trading platforms that offer commission-free trading drove a new generation of investors and traders. With the market going effectively parabolic, everyone and their cousin is a "day trader." This cohort of "traders" has only seen skyrocketing stock prices and are not prepared for any market correction with their out-of-the-money call options, all aimed at more market euphoria.
Democratizing the Financial Markets
Robinhood, the fintech startup that has single-handedly democratized the stock market, has been the trading platform of choice for the massive new wave of investors. According to research collected by CNBC, Robinhood has seen between 1 and 3 million monthly new app downloads since the beginning of 2020, outpacing every other trading platform by a substantial margin.
2020 was a record year for ETFs with net inflows of more than $500 billion, surpassing the 2017 dash to ETFs by north of $40 billion.
Average trading volumes have surged in the past few years, with retail traders making up a growing percentage of volume. According to CNBC, daily trading volumes have more than doubled since 2019, with an average of 14.7 billion shares being traded daily in 2021, compared to the 7 billion in 2019. Risk-seeking retail investors are driving this daily volume growth.
A proliferating group of money-hungry Yuppies has come together on social media to fight Wall Street's 'financial oppression' or in an attempt to get rich quick (still up for debate). A Reddit message board called r/wallstreetbets, which now has 8+ million followers (from less than 2 million 3 weeks ago), is driving a cultural movement that goes far beyond the now legendary GME short-squeeze.
Droves of brand-new capital are being infused into the stock market, and bringing with it are fresh opportunities to profit. Market volatility is beginning to pick up again with this new cohort of retail traders making waves. Waves that we can take advantage of.
How to Profit from Breaking News
You could constantly monitor stocks with strong fundamentals and rising earnings estimates, watching for the first stirring of movement, checking for headlines and upcoming events.
Or let our just-launched portfolio service do all that for you. Until Sunday, it’s open to entry and I’d be delighted to welcome you to our brand-new Zacks Headline Trader.
With vaccines rolling out and pent-up economic demand only starting to unleash, this is an exceptional time to profit from positive news. Using the same approach that Headline Trader is built around, I’ve been able to follow breaking developments to multiple big winners. Here are four examples: ¹
• Tesla, the Year It Finally Meets Management Goals gave my readers the chance to experience a +810.0% explosion.
• Preparing for the 4th Industrial Revolution spotlighted NVIDIA which shot up +197.3%.
• The FAANG of the Roaring 20’s identified 5 stock winners including Sea Limited that gained a ridiculous +413.6%.
• Largest Contracted Chip Manufacturer Set to Open Plant in Arizona uncovered Taiwan Semiconductor before it boomed +136.2%.
Less frequently, we can also profit by shorting stocks affected by bad news so this portfolio can actually work no matter which way the markets are heading.
Important: Please note that the number of investors who view our first Headline Trader moves will be limited and the deadline to gain access is coming up fast. The first moves are almost ready to post but the portfolio closes to entry Sunday, February 14.
Be sure to check out Zacks’ New Headline Trader right now >>
Good Investing,
Daniel Laboe
Daniel has expertise in technical trading, corporate finance, and monitoring breaking news. He is the editor of Zacks' newest portfolio, Headline Trader.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.