With a down day on Friday, 8/19/2022, the weekly upside trend for the stock market has been broken. Is this just a just a temporary pause in the five week uptrend that has recaptured almost 50% of the market’s 2022 decline, or something more significant?
Although this is not investment advice, I would suggest that investors pay attention to a word of advice I received recently from one of my associates: “Meme craziness, and Bitcoin volatility, are typical of the speculative activity that often signals the end of a Bull Run.”
Adding to those words of wisdom, is the fact that Bitcoin had a significant decline on Friday of over $1,200 per coin, ending the week at $21,600, significantly below a recent high of $25,000.
Then this week we also saw the speculative bubble in the stock of Bed Bath and Beyond (BBBY) burst, as the hedge fund RC Ventures, filed its intention to sell all 9.45 Million shares of BBBY stock that it had recently acquired.
The speculative nature of the market is highlighted by the fact that BBBY is one of the original Meme stocks; that is a stock with poor and non-existent earnings outlook, that has a large short interest which is forced higher by short covering and aggressive buying by momentum buyers, without any consideration of a company’s fundamentals. The sudden reversal by RC Ventures from aggressive buyer to agressive seller in a matter of weeks might be something that the SEC needs to look into.
Another sign of speculative enthusiasm in the market has been the strength in the aggressive ETF of ARKK which has moved from $35/share to over $50/share the past we
I think this is a good time to remind readers about my post several weeks ago about a potential giant Margin Call for several stocks, including Microstrategy (MSTR) which has used bank loans to build a subtantial investment positon in Bitcoin. If Bitcoin continues lower over the coming weeks it could trigger Margin Calls from the Banks that have made the loans.
As a final note today, I would like to mention that my suggestion about Warren Buffett’s continued accumulation of OXY stock when it was in the low 60’s might be worth considering, was a good suggestion.
On Friday, it jumped $6 dollars per share as Buffett’s investment company, Berkshire Hathaway (BRK.A and BRK.B) were given permission to buy up to 50% of the outstanding stock in the Company.
Does he see something developing in the Oil Sector, that the rest of us do not see as yet?