Anatomy of BAD Week on Wall Street

Why a dying video retailer suddenly became the top financial news story… February 02, 2021 UNSUBSCRIBE | ARCHIVES Anatomy of BAD Week on Wall Street Urgent update for any investor in the markets… Every time a Wall Street algorithm makes a mistake, you have the opportunity to profit. (Hint: It happens more often than you think.) This is your chance to level the playing field… No matter what the overall market is doing. I’ve created a powerful trading system to help you get there. Click here for all the details. Dear Money & Crisis Reader, Stocks are moving higher again as hedge fund liquidations slow. You’ve no doubt heard about the GameStop (GME) phenomenon. GME was one of a handful of companies that large hedge funds were selling short. If you’re unfamiliar with the concept of “short selling” — in its simplest terms — this is how it works: Investor “borrows” shares from a broker. Investor sells the shares on the open market collecting the money from the sale. The company’s stock falls. Investor buys back the shares, deducting the cost from the money he or she made by selling them at the higher price. Investor “returns” the shares to the broker. Short selling is essentially making a bet that a company’s stock will collapse. The key item here is that the investor “borrows” the shares from a broker in order to do this. Because the shares are borrowed, the broker can demand them back regardless of whether or not the investor is ready to return them. This is called a “margin call” and it is the stuff of nightmares for short sellers. Enter GameStop GME is a troubled retail company that sells video games. The company’s revenues were growing, but it had become unprofitable since 2018. As of November 2020, the entire company’s market cap was approximately $600 million. Meanwhile it had over $1 billion in debt. Suffice to say, from a financial perspective, GME was in big trouble. Because of this, hedge funds had taken massive short positions in the company. And when I say massive, I mean “MASSIVE.” The media had reported that more than 100% of the company’s shares were short. This is incorrect. Remember, shorting means “borrowing” shares. So if hedge fund A borrows one million shares from a broker which “owns” five million shares, it will look as if there are six million shares in play, when in reality, it’s still five million shares. Anyway, hedge funds were short a major portion of GME’s shares outstanding. World's Second-Richest Man's Washington Project The exact coordinates of the buildings circled in the image are 47 ̊ 40’ 42.50’’ North and 122 ̊ 5’ 20.30” West. Located in the heart of Washington… This factory is ground zero of a massive technological breakthrough Amazon recently patented. Once fully functional... this breakthrough will disrupt a $2 trillion industry.... And change the way Americans work, play, travel, live. As with all disruptive breakthroughs... this too will bring about huge opportunities for early investors. Get the complete details right here. The video game community as well as various online investing forums took offense at the bearish bets and began aggressively buying GME’s shares. This began to push GME’s shares higher which created a “short squeeze.” Remember, short sellers are borrowing shares which means their brokers can demand these shares back at any time. The only way that short sellers can obtain shares after shorting them is by BUYING THEM. Put another way, as GME’s shares began to rise rapidly, the hedge funds that were short the stock began to panic and were forced to buy GME shares by the millions of dollars. And that is how this happened: “Short Squeezes” are Felt Through the Entire Market Now, most hedge funds typically invest more than 100% of their total assets under management by borrowing money. So, when they are FORCED to buy a stock they are shorting (meaning it’s not a planned move), they have to come up with capital from somewhere. That usually involves selling some other long positions to free up cash. And if the situation is extreme enough, involving enough large hedge funds, this can mean forced liquidations across the stock market. Which is what happened last week. I realize this is getting complicated, so let’s break it down in bullet form: Wall Street took massive, borrowed bets that GME stock would collapse. Individual investors took Wall Street to the cleaners by driving GME shares higher. This forced Wall Street to PANIC and BUY GME shares. In order to do this, Wall Street had to sell other positions to free up cash. The market was hit with a wave of sell orders from Wall Street which generated the sell-off last week. This appears to have been why stocks “took it on the chin” last week. By the look of things, it is now ending. Is it time to buy? I’ll outline my thoughts on the big picture tomorrow. Best Regards, Graham Summers Editor, Money & Crisis The Biggest Transfer of Wealth in History? He’s the man who predicted the 2008 recession… Recognized as the #1 personal finance expert in the world… Author of Rich Dad Poor Dad with 41 million copies sold… Now, he’s coming to you to reveal EXACTLY what’s going on under the nose of every American… an urgent warning to every single American… The biggest transfer of wealth in U.S. history… It’s a disturbing new movement set-off by a group of 12 unelected officials… “secretly” siphoning money from the poor and middle class to the wealthy.  Unfortunately, nobody will be able to stop this new movement… Not Democrats. Not Republicans. Not Congress… Not even the president. Unfortunately, 99% of Americans don’t understand what’s going on… But today Robert Kiyosaki will blow the lid off the entire operation and help you take 5-steps to protect & grow your wealth during the coming weeks.  There’s not much time, click here to get all the details.  To end your Money & Crisis e-mail subscription and associated external offers sent from Money & Crisis, feel free to click here. If you are having trouble receiving your Money & Crisis subscription, you can ensure its arrival in your mailbox by whitelisting Money & Crisis. Money & Crisis is committed to protecting and respecting your privacy. Please read our Privacy Statement. For any further comments or concerns please email us at MoneyAndCrisis@threefounderspublishing.com. Three Founders Publishing, LLC. 808 Saint Paul Street, Baltimore MD 21202. Nothing in this e-mail should be considered personalized financial advice. 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