GameStop Reddit Investor Roaring Kitty Channels Warren Buffett With Trades

Mar 18, 2021

$31,926/$300,000 (10.6%)
Rory O’Kane

Lead Stories

GameStop Reddit Investor Roaring Kitty Channels Warren Buffett With Trades
Tae Kim – Bloomberg
Roaring Kitty and the Oracle of Omaha may have more in common than you think. GameStop Corp.’s wild ride this year shows how.
It’s only March and already the video-game retailer’s stock has had two epic rallies and one stunning collapse this year, a product of rampant speculation and a short squeeze. While many investors have been bruised by the day-to-day stock movement, Keith Gill — better known as “Roaring Kitty” on YouTube and a favorite of the Reddit crowd — has been able to profit from the stock-price volatility by putting his emotions aside and placing well-timed, reasoned bets amid the frenzy. In this way, he’s taken a page from fabled value investor Warren Buffett and may serve as an example to other investors looking to minimize the damage from what may be further violent market swings.
/bloom.bg/30STP6V

Fed Meeting: Powell Threads a Needle That’s Only Going to Get Smaller
Mohamed A. El-Erian – Bloomberg
The Federal Reserve nimbly walked a tightrope on Wednesday, cheering stock and bond investors by tolerating an unusually large divergence between significant revisions to its economic forecast and almost no changes to its policy statement, all supplemented by ultra-dovish remarks by Chair Jerome Powell during his press conference. That act will only become more difficult in front of markets that are hooked on the central bank’s liquidity injections unless the undesirable happens and the U.S., like Europe, finds its recent successes against Covid-19 challenged by new variants of the virus.
/bloom.bg/3scSYtu

GameStop Stock Had a Quiet Day as Congress Holds Volatility Hearing
Connor Smith – Barron’s
The House Financial Services Committee held a hearing on Robinhood and GameStop stock volatility on Wednesday. So, of course, GameStop stock had its quietest day in about a month.
GameStop stock (ticker: GME) ticked 0.8% higher to $209.81, trading between $204 and $231.47 during Wednesday’s session. The last time GameStop stock moved less than one percent in a day was Feb. 19, when it fell 0.3%, according to Dow Jones Market Data. The stock’s absolute average daily percentage change since Jan. 11 is 22%.
/bit.ly/30ZeNRi

How an inflation spike could force the Fed’s hand and send markets spinning, according to Morgan Stanley’s chief economist
Emily Graffeo – Markets Insider
Investors have grown increasingly worried about a rise in inflation as economic data has been coming in better than expected and yields begin to rise.
Chetan Ahya, Morgan Stanley’s chief economist and global head of economics sees inflation remaining elevated above 2% for this year and next year. While inflation above 2% is the Fed’s stated goal, Ahya is concerned that a rapid labor market recovery could push levels to spike and breach the Fed’s 2.5% “tolerance threshold” as soon as 2022.
/bit.ly/30WjbRq

Regulation & Enforcement

CFTC Creates Climate Risk Unit to Review Futures, Options; The derivatives regulator said the unit will help ensure that new products and markets fairly factor climate-change risks into pricing and other areas of the market
Dieter Holger and Kimberly Chin – WSJ
The Commodity Futures Trading Commission formed a new unit to gauge the dangers posed by climate change to futures and options markets, the latest move by a financial regulator related to climate change under the Biden administration.
/on.wsj.com/3lq1umC

DTCC Proposes Way Forward to Achieving Global Data Harmonization in Derivatives Trade Reporting
DTCC
The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, today outlined a three-prong plan to further harmonize derivatives trade reporting requirements and deliver against the objectives that were originally established by the Group of 20 (G20) at its historic 2009 summit in Pittsburgh. In a new paper released today, titled, Course Correction: Finding a New Path to Global Data Harmonization in Derivatives Trade Reporting,” DTCC outlines its recommendations for a path forward in reaching global data harmonization in the over-the-counter (OTC) derivatives market.
bit.ly/3eRRelB

‘Big Short’ investor Michael Burry says he’ll stop tweeting after SEC regulators paid him a visit
Theron Mohamed – Markets Insider
Michael Burry’s incendiary tweets have piqued the interest of federal regulators, the investor revealed this week.
“Tweeting and getting in the news lately apparently has caused the SEC to pay us a visit,” the Scion Asset Management boss said in a now-deleted tweet.
/bit.ly/2QivIfQ

Democrats Eye Game-Like Trading Apps at House Hearing on Markets
Daniel Avis – Bloomberg
Democrats renewed their focus on the gamification of investment apps as they weighed potential reforms during a second hearing in the wake of wild swings in shares of GameStop Corp. and others.
“As the events in January cast a spotlight on gaps in regulation of our capital markets, the committee must assess what legislative steps may be necessary,” House Financial Services Committee Chairwoman Maxine Waters said Wednesday, adding that she plans a third hearing to question U.S. regulators.
/bloom.bg/3rZKW7f

Strategy

Risks Are Growing for This Historic Stock Market. How to Protect Against a Plunge.
Steven M. Sears – Barron’s
Record highs. Record angst.
Such is the predicament of many investors as the stock market keeps rising higher and higher. The historic advance has left many investment accounts plump with unrealized gains, and that is starting to make some investors fret about what comes next.
“Does a good thing go on forever? Human nature, and experience, suggest otherwise,” Michael Schwartz, Oppenheimer & Co.’s chief options strategist, told Barron’s.
/bit.ly/2ON5PEj

VXX Short Volatility Strategy With Delta Hedging (BATS:VXX)
Adam Smiga – Seeking Alpha
The iPath S&P 500 VIX Short-Term Futures ETN (VXX) has a long proven history of destroying value. This volatility ETN seeks to track the short-term volatility index. It has several characteristics which I address in this article.
In the next part, I discuss the strategy focused on selling expensive VXX call options and hedging with underlying.
/bit.ly/2QmVQX3

Miscellaneous

63% of Americans Oppose a Financial Transaction Tax
Kristen Malinconico – TABB Forum
The results are in! The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) recently conducted a national poll of 2,000 likely voters to understand their views on a proposed Financial Transaction Tax (FTT). When they learned about this tax, 63% expressed opposition, including a majority of Democrats, Independents, and Republicans. Finding such broad support among all political leanings is nearly unheard of in today’s hyper-partisan environment, explains Kristen Malinconico, Director for the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.
/bit.ly/3ePUyxP

****JB: It is worth considering the source of this poll.

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