How Moguls Move Markets Within Minutes
You don’t have to be Musk or Cuban to push Bitcoin to an all-time high or get attention on CNBC.
All you need is a decent presence online, good timing, and patience to make your mark on the markets.
Whatever your motive may be to sway these overheated, exuberant frothy markets in the direction you want, realize it doesn’t come easily or quickly.
As we’ve witnessed at the start of the year with the retail trading frenzy between Reddit gamblers on Robinhood betting on unprofitably high flying stocks such as AMC to GameStop against hedge funds, this herd was widely and unexpectedly successful in pushing payment overflow to new levels for Robinhood and WeBull democratizing finance and leading a new generation of GenZers and Millennials to start investing.
It caused havoc, controversy, debate, and a $70 million FINRA fine on Robinhood and nothing to lose on the investors’ side who innocently had a bit too much fun.
Whether or not it is intentional to sway markets, every investor hopes their strategies will pan out the way they hope for which means others must get on board as well. Unfortunately in this day in age, it is easier than ever to entice novices.
Too many people consider themselves investors.
Although Buffett’s philosophy of, “being greedy when others are fearful” is understandable, proven and should be considered more often than not especially as most investors have little to no experience and pay too close attention to what strangers online are advising tying emotions with their actions, following the unusual herd can make you incredibly lucky at times as well. Once again, not something I recommend without having evidence, historical backing, and proof but in reality, the worst investment is not taking one at all!
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Testing It Out
In order to sway markets, you must be bold and willing to put your suggestions, beliefs, and opinions out there. Although the majority of investors believe this is the opposite of what prudent investors do if you want to lock-in gains and get lucky to start a movement, you need time, be on the right platform, at the right place, and adopt the “Musk effect” building momentum over time.
Your strategies need to be proven in order to establish a track record. In order for the SEC to not come after you as they did with Roaring Kitty in Jan of 2020, you need to do something responsible and frankly not stupid within the markets.
It means promoting a company, not a bankrupt company that sells unstable products, for the greater good.
If you’re promoting meme stocks for pure fun affecting broader markets and causing everyday investors to sell and question their positions, you are doing serious damage.
But if you want to indicate the volatile effects of owning crypto and promote a more socially responsible and understandable legit investment instead within ESG for example, the markets will actually work more in your favor and get the economy into a better spot.
It’s easier to convince markets on what’s already working and they can understand.
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The S&P 500 is trading at roughly 28X PE (its intended value). Assets are frothy and overvalued at this point as speculation and over-exuberance mixed with uncertainty are fueling the markets in this post-pandemic recovery. The Fed is dealing with a ‘Taper Tantrum’ signaling it plans on pumping more treasuries and mortgage-backed securities back into the market pulling back on stimulus efforts through the quantitive easing efforts they initiated in March of 2020. This will lead to rising interest rates, more expensive borrowing, inflation, and higher yields.
We are in the midst of an unstoppable bull market that many speculate is in a bubble that leaped frogged past the March 2020 lows which were erased within a few months.
No one can make sense of what the markets from real estate to equities are signaling just yet as everything is uncertain, arguably the sole essence of the market. Yet people are easily convinced and swayed by moguls which in turn leads the market in new directions.
This is partly due to boredom, lack of financial literacy, and speculation. Since too many retail traders are convinced billionaires are smarter than the market and listen to every word they say scouring the web and social media for hidden news that could move markets, they are still powerful as they get wealthier even if they don’t make any sense.
With brand power, anyone can boost the value of something, especially when that investment, or shall I say, thing, doesn’t have any internal rate of return and is solely based on speculation and hype determined by what investors believe it will be worth in the future cough cough crypto. This is certainly a dangerous effect and these business magnates have gone under fire for moving markets in random directions leading investors to panic.
Arguably in this case words are more powerful than actions and without regulation by the SEC or social media giants themselves, this can cause havoc although it eventually subsides and goes in a different direction.
If you’re looking to move markets, start by providing evidence as to why others should get into your position of choice. Not revealing your motive can come at a cost especially if you want others to get on board. The ultimate reason is to boost favorability in your trade of choice to ultimately profit.
Everyone wishes they could predict markets but it isn’t strategic without a reliable clan.
The last point to consider, timing is key and as always, time in the markets matters more than timing the markets, even in this situation where it is pure active trading, not something I recommend just an option if you have extra cash sitting around.
You never know when you can make it big. Testing out the waters isn’t dangerous as long as you know your limits. Keeping cash for sole emergencies such as divorce, natural disaster, blackout, flat tire, surgery, etc. and cash for investment opportunities on the horizon is essential.
If you had purchased shares of Cathie Wood’s ARK Innovation ETF (ARKK) during the March 2020 plunge and held onto those shares till now, they would be worth about 250% more but if you bought into the hype that was spreading like wildfire back in mid-February 2020 and bought in, you would be sitting on a 20% decline.
It is very difficult to discern what is a dip or not, read here for more, and who is right or wrong since what is certain is uncertain.
No one knows everything and whether or not you want to promote a company for the sole benefit of boosting your portfolio returns and it ends up working in your favor, remember you are never smarter than the market, and boosting one strategy will most likely not last long.
Know your why and how. Have an enter, exit, and explanation strategy. Eventually, over time people will catch on as long as it’s not dumb by most investing standards.