The Biggest Oof | The Daily Peel | 12/29/21

 

Market Snapshot

Old economy investors continue to receive Holiday gifts from Mr. Market. For the first time maybe ever, the Dow led major U.S. indices on Tuesday. Rising 0.26%, the Dow made its fellow indices look like chumps, with the S&P 500 losing 0.1% while the Nasdaq fell 0.56%. Let's get into it.

Let's get into it.

 

Macro Monkey Says

Platinum Banana: Biggest Oof - It isn't every year that bands of self-identified crayon-eaters join together to successfully exploit, embarrass, and humiliate, not just one but, multiple storied, established Wall Street institutions. Luckily for us, 2021 was one of those years. With no further ado, please join me in a big round of applause for the winner of the 2021 Platinum Banana Award for Biggest Oof: Gabriel Plotkin & Melvin Capital!

For those of you wondering, an "oof" is technically defined as any thing or action that you notice or that occurs that makes you go "oof." It's a feeling, you know an oof when you see one. And I don't know about you guys, as we weren't writing The Daily Peel during all the fun, but I've never oofed harder in my life than watching Melvin Capital CEO Gabriel Plotkin forced onto his knees at the hands of retail traders to beg Steve Cohen at Point72 and Ken Griffin at Citadel for over $2.75bn in cash just to keep his firm's doors open. An absolute embarrassment that only got better in front of Congress.

We all remember the GameStop fiasco that took place earlier this year and kickstarted the whole "meme stock" movement. We may not have known that this brave act of buying the s*t out of GME stock and calls led by the one and only Keith Gill would have taken the crown for Biggest Oof of the year, but it was clear immediately that the time has come to question old-world assumptions of power balances on Wall Street.

What r/WallStreetBets and the world-class traders native to that subreddit did earlier this year was nothing short of a masterpiece. Our ape-minded brethren proved it is not only possible, but extremely rewarding (financially and otherwise) to form a digital-first, decentralized group of pure strangers and take on a titan of Wall Street. While certainly a cool act and idea on its own, this microcosmic example of decentralized, arguably autonomous groups of people challenging societally embedded institutions speaks volumes of what is to come in the future with the advent of DAOs and other decentralized, cryptographic technologies.

See, despite how cool r/WSB vs Wall Street was, something tells me it's just the beginning of a redefining of old norms. What the next institution to be challenged by a bunch of fed up, digitally native individuals could be, we have no idea. We just want to make sure you remember that phrase that got us here today - "apes together strong."

Entrepreneurs to the Rescue - The Land of the Free and the Home of the Brave - add to that expression the place to start a business. Since the nation's founding,  entrepreneurship has been a boon to American capitalism and the bedrock of our ~$21tn economy. The risk-it-for-the-biscut sentiment has never left the U.S., but now, our risk-loving nature is hitting all-time highs by at least one metric.

"Great resignation", "great reshuffling", "great reassessment" - whatever game-like semantic bullsh*t you want to play aside, what we really should be talking about when it comes to the labor market is the great amount of new business ventures American citizens are embarking on. In July 2020, these applications hit an all-time peak of 552,748. Hardly ever in U.S. history had this figure surpassed 300k, meaning this new record and the months following truly are anomalous.

Why does any of this matter? Well, a couple reasons. First, it's representative of the American zeitgeist as we close out the year. The "creator economy" and other routes to self-employment are becoming a more and more popular path to economic security. The pandemic was the spark, but judging by the somewhat sustained uptrend, there's a lot more kindling to burn through. Of course, the past few months have seen a noticeable drop-off, but November was still a 40% cliff over the pre-pandemic record.

Second, this is super bullish for the U.S. economy. New business applications and other metrics tend to spike following a recession, which intuitively makes sense. You can argue that that is what we're seeing here as well, but regardless of the cause, history shows that when new businesses come onto the scene, the economy tend to bring good tidings.

Let's hope that history is right and congrats to any newly self-employed apes reading this. Good luck!

 

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What's Ripe

Krispy Kreme ($DNUT) - As if donuts alone weren't enough of a gift alone, shareholders saw another gift from Krispy Kreme in their brokerage accounts. Shares leaped 10.1% yesterday on announcement of a fat discount for the company's famous donuts. I know you're dying to hear it so fine, the deal is $12 for 24 donuts. But really, a single discount on any product shouldn't move shares much, but investors are apparently still undecided on fair value for this donut slinger after only being public for a couple of months.

Winnebago Industries ($WGO) - A surprising winner of the pandemic, RVs are selling like hotcakes, just look at Winnebago's latest earnings. Shares have been on a steep climb since COVID entered our midst, spiking ~230% after yesterday's 4.3% boost. The stock received some positive coverage from Zacks, but not much other news around the name emerged yesterday, suggesting shares continue to ride the wave of a newfound consumer love affair with RVs. 

 

What's Rotten

Coinbase ($COIN) - BTC giveth and BTC taketh away, a lesson that has become all too clear for investors over the past few years. Aside from all the (psychotic) BTC maxi whales out there, perhaps there is no bigger victim of the whims within digital currencies that Coinbase. Shares popped on Tuesday only to be routed 6.8% yesterday for the same reason - steep movements in currency prices. Realistically, however, should't these wild swings in price be good for Coinbase? Doesn't that mean more trading? Can't say, so for now I digress, until the firm's next earnings report.

Peloton ($PTON) - Is there a more pandemic stock than Peloton? Maybe Zoom, but for now, lets focus on exercise bikes. Shares first rose 725% only to subsequently fall roughly 80% since then, giving a total return of 45% since the start of the pandemic. Not bad, but pretty f*ckin bad considering how things started. Yesterday only added salt to the firm's wounds, with shares falling 4.3% on news of Google search trend analytics showing a steep dive in searches for Peloton bikes. Judging by the chart below, they're not wrong.

 

Thought Banana:

The #1 Top 10 - The Holy Grail for finance students, first-year analysts, and non-financial civilians that overheard some random jargon on CNBC everywhere has published their annual list of most popular terms. Investopedia, aka the true messiah, has released the Top 10 most visited terms on the immaculate website over the course of 2021. It's basically a collective Spotify Wrapped for finance-wannabees, so let's take a look at the result, as I bet that somewhere around 99.99999% of you reading this visited Investopedia over the last year. Did you look up any of these terms?

To review the highlights, because the list is, you know…self-explanatory…let's take a look.

Clearly, President Joey B shook the investment world with his and the Progressive Democrat rhetoric around capital gains / unrealized capital gains tax, putting the term at the #1 spot. Maybe Elon's $11bn tax bill will calm that down going into next year.

Another highlight, in 4th place, was the term "hodl." Something tells me it wasn't you lot searching this term, but more likely boomers making sure they weren't having a stroke while snooping on r/WallStreetBets. Moreover, 40% of terms on the list are crypto based, so there's uh…something.

Lastly, investors were apparently deeply concerned over the state of Britney Spears, putting conservatorship in the #10 spot. How much you wanna bet that most of that traffic is greedy advisors wondering how they can snag some of Britney's millions?

Wise Investor Says

"No person can play the market all the time and win. There are times when you should be completely out of the market, for emotional as well as economic reasons." - Jesse Livermore

 

Happy Investing,

Patrick & The Daily Peel Team

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Comments (1)

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