Recent rallies of bankrupt companies stocks remind me of movements in altcoin markets, with their pump'n'dumps and trading of useless assets when there is basically nothing left behind them...
It kinda looks like the crypto traders have flooded the stock markets, or maybe just the same type of people who traded crypto, are now actively trading stocks
. The traces of crypto trading mentality seem to be present in mainstream financial markets ATM.
This is just an impression though...
It kinda looks like the crypto traders have flooded the stock markets, or maybe just the same type of people who traded crypto, are now actively trading stocks
. The traces of crypto trading mentality seem to be present in mainstream financial markets ATM.This is just an impression though...
You're definitely onto something. Online brokers like Robinhood, E-Trade, and TD Ameritrade are all reporting a flood of retail investors into the stock market the past couple months. One notable demographic has been sports bettors. Dave Portnoy from Barstool Sports has turned his massive sports betting audience into a pump-and-dump army.
Barstool's Dave Portnoy leads army of new traders into stock market
Trading Sportsbooks for Brokerages, Bored Bettors Wager on Stocks
Quote
Millions of small-time investors have opened trading accounts in recent months, a flood of new buyers unlike anything the market had seen in years, just as lockdown orders halted entire sectors of the economy and sent unemployment soaring.
It’s not clear how many of the new arrivals are sports bettors, but some are behaving like aggressive gamblers. There has been a jump in small bets in the stock options market, where wagers on the direction of share prices can produce thrilling scores and gut-wrenching losses. And transactions that make little economic sense, like buying up the nearly valueless shares of bankrupt companies, are off the charts.
Even with modest investments, these newcomers can move stock prices, which are typically set by just a sliver of shareholders. On most days, the overwhelming majority of stock investors do nothing, while the buyers and sellers establish the prices. So even a small influx of hyperactive speculators can have a significant effect.
It’s not clear how many of the new arrivals are sports bettors, but some are behaving like aggressive gamblers. There has been a jump in small bets in the stock options market, where wagers on the direction of share prices can produce thrilling scores and gut-wrenching losses. And transactions that make little economic sense, like buying up the nearly valueless shares of bankrupt companies, are off the charts.
Even with modest investments, these newcomers can move stock prices, which are typically set by just a sliver of shareholders. On most days, the overwhelming majority of stock investors do nothing, while the buyers and sellers establish the prices. So even a small influx of hyperactive speculators can have a significant effect.
Quote
TD Ameritrade reported a record 608,000 new funded accounts during the first quarter, more than triple last year’s pace. Schwab set a record, too, with 609,000 — including 280,000 in March alone. E-Trade had 363,000 new accounts, more than double the same period last year and another record. And in early May, Robinhood said it had added more than three million accounts this year.
There has been a surge in small investors using option trades to make pure win-or-lose bets on where stock prices will be at a specific time, said Matt Maley, chief market strategist at Miller Tabak, an asset management firm.
“That’s another sign that it’s these gamblers,” he said.
There has been a surge in small investors using option trades to make pure win-or-lose bets on where stock prices will be at a specific time, said Matt Maley, chief market strategist at Miller Tabak, an asset management firm.
“That’s another sign that it’s these gamblers,” he said.
So what happens when sports come back in earnest? MLB, NFL, and so on? Analysts say these retail investors and sports bettors are big enough to move the markets. When sports come back, will they dump and leave? Will that be a bearish force in the market?