‘Big Short’ investor Michael Burry teases a bet against crypto – and warns market speculation has reached historic levels

Dr. Michael Burry
Michael Burry.

  • Michael Burry is considering placing a wager against cryptocurrencies.
  • “The Big Short” investor asked on Twitter how he could bet against the digital coins.
  • Burry warned that market speculation has likely reached unprecedented levels.

Michael Burry, who made his name and fortune by betting against the housing bubble, has set his sights on a new target: cryptocurrencies.

“Ok, I haven’t done this before, how do you short a cryptocurrency?” he said in a now-deleted tweet this week. “Do you have to secure a borrow? Is there a short rebate? Can the position be squeezed and called in?”

Burry, whose massive wager against subprime mortgages was immortalized in the book and the movie “The Big Short,” emphasized that he was only considering taking a position against crypto.

“In such volatile situations, I tend to think it’s best not to short, but I’m thinking out loud here,” he tweeted.

The Scion Asset Management boss, who routinely deletes his tweets, recently locked his Twitter profile to new users. He cited the army of meme-stock and crypto zealots and bots commenting on his tweets to drum up interest.

“Crypto/Meme bots and pumpers reply to big accounts in huge numbers for the promotion,” Burry tweeted. “Deleting tweets knocks it back. Going Private allows tools to discourage them.”

“But it’s breathtaking, this religion of real and fake people,” he continued. “The speculation probably tops anything in history.”

Burry has repeatedly criticized crypto this year. He’s dismissed shiba inu coin as “pointless,” ridiculed dogecoin’s surging price, and warned bitcoin is a “speculative bubble” that’s fueled by huge amounts of leverage and vulnerable to government crackdowns.

The fund manager also compared the excitement around bitcoin, meme stocks, and other popular assets to the mid-2000s housing boom and the dot-com bubble. He warned they’ve been “driven by speculative fervor to insane heights from which the fall will be dramatic and painful.”

Besides his housing bet, Burry is known for investing in GameStop and inadvertently paving the way for the short squeeze on the stock in January, as well as the broader meme-stock frenzy this year. Notably, Burry’s latest portfolio update showed he was betting against Elon Musk’s Tesla and Cathie Wood’s Ark Invest.

Read the original article on Business Insider

The meme-stock frenzy has turned markets into a ‘casino society,’ says billionaire businessman Barry Sternlicht

Barry Sternlicht
Barry Sternlicht. Craig Barritt/Getty Images

  • Barry Sternlicht said the meme and tech stock craze has created a “casino society.”
  • The Starwood Capital chief compared the current market to the dot-com bubble.
  • It’s a “complete, total speculative bubble,” the billionaire businessman told CNBC.

Starwood Capital Group CEO Barry Sternlicht said a new, highly speculative stock market has emerged amid the meme-stock frenzy.

“You really have two stock markets today,” Sternlicht said on CNBC’s Squawk Box Wednesday. “You have the one I grew up on. I went to business school, and I learned about discounted cash flows and companies’ ability to pay dividends and grow.”

“And then you have a complete casino society,” he said, referring to this year’s meme-stock frenzy. It’s a “complete, total speculative bubble,” he said.

The billionaire businessman, whose firm has about $100 billion in assets under management, compared the boom to the dot-com bubble, saying, “There’s a lot of warnings signs that we are in 2000 and 2001 before the Nasdaq dropped 82%.”

The dot-com bubble and the meme-stock craze both had at least one thing in common: high levels of retail participation.

Meme stocks became a fixture of markets in January when an army of retail traders mobilizing on social media drove epic rallies in shares of struggling and highly shorted companies like GameStop and AMC, among others. Some on Wall Street started warning against meme-stock “gambling,” saying the stock prices are wholly disconnected from a company’s actual value and could crash at any moment.

Sternlicht said meme stocks aren’t the only thing driving the market frenzy, considering some of the multiples on tech companies “are impossible to imagine.” The Nasdaq has risen about 13% so far this year, touching an all-time high in September.

Read the original article on Business Insider

Koss extends 2-day rally to 43% as meme-stock traders cheer patent victory over Apple

Koss Fitclips, $11.99.
Koss Fitclips. Amazon

  • Koss shares have rallied 43% in two days of trading after winning a patent battle against Apple.
  • The patent board declined to review Apple’s challenge to two of the company’s patents.
  • The headphone-maker has been caught up in the meme-stock frenzy this year.

Koss shares have surged 43% in two days after the headphone-maker won a patent battle against Apple.

Trading of the company’s shares, which have been caught up in the meme-stock frenzy this year, was briefly halted Tuesday evening amid a spike in volatility following the patent ruling.

The Patent Trial and Appeal Board rejected to review Apple’s challenge to two of Koss’ patents, Bloomberg Law reported, adding that the iPhone maker didn’t meet its burden to show it could prove that Koss’ patents for wireless earphones and headphones didn’t cover new inventions.

Koss, which has sued the iPhone maker for infringing on its headphone patents, has had a volatile year amid the frenzied trading in meme stocks. In a Reddit post Tuesday that received more than 1,000 upvotes, a Redditor asked if the Koss rally would prompt GameStop shares to “follow.”

Shares surged nearly 2,000% in January as the army of Reddit retail traders drove massive rallies in heavily shorted stocks, including GameStop, AMC, and BlackBerry, among others. Koss has a high short-squeeze score on Fintel.io, as the company’s so-called “dark pool short volume ratio” is 60%.

Koss closed at $64 on Jan. 29 at the height of its rally this year. On Wednesday, shares of the company surged 16% to $21.82 at 9:30 a.m. in New York.

A representative from Koss did not immediately respond to Insider’s request for comment.

Read the original article on Business Insider

‘The Big Short’ investor Michael Burry dismisses shiba inu coin as ‘pointless’ – noting the dogecoin spinoff’s supply exceeds 1 quadrillion coins

Michael Burry
Michael Burry.

  • Michael Burry tweeted about shiba inu, the dogecoin-inspired cryptocurrency.
  • “The Big Short” investor dismissed the meme token, noting its supply exceeds 1 quadrillion coins.
  • Burry has warned against buying crypto, labeling bitcoin a speculative, debt-fueled bubble.

Michael Burry, the investor of “The Big Short” fame, isn’t a fan of shiba inu. He dismissed the dogecoin-inspired cryptocurrency, which has more than tripled in price over the past week, because there are too many of the coins in circulation.

The Scion Asset Management boss shared Coinbase’s description of the meme token in a now-deleted tweet, highlighting that its supply exceeds a quadrillion coins.

“Just saying, one quadrillion seconds is about 32 million years,” he tweeted. “One quadrillion days is 2.7 trillion years, or ALL of TIME, from the beginning of the universe, multiplied by 71,000. In other words, pointless.”

Burry’s tweet suggests he doesn’t view shiba inu as a compelling investment because the vast amount of coins in existence limits its possible price appreciation.

The hedge fund manager has been ringing the alarm on crypto this year. He described bitcoin as a “speculative bubble” fueled by huge amounts of leverage.

In addition, Burry questioned its long-term prospects, given the threat of government intervention. He also ridiculed dogecoin’s surge to a record-high price, labeling it “a doge’s breakfast.”

Moreover, Burry has compared the hype around bitcoin, meme stocks, and other popular assets to previous bubbles in housing and internet companies. He warned they’ve been “driven by speculative fervor to insane heights from which the fall will be dramatic and painful.”

Burry is best known for his lucrative bet against the mid-2000s housing bubble, which was immortalized in the book and movie “The Big Short.”

He also inadvertently paved the way for the meme-stock boom this year by investing in GameStop in 2019, and his latest portfolio update showed he was betting against Elon Musk’s Tesla and Cathie Wood’s Ark Invest.

Read the original article on Business Insider

Retail traders are mirroring investments by Nancy Pelosi’s husband, whose stock picks have been strong performers over the last 2 years

nancy pelosi inauguration
House Speaker Nancy Pelosi and her husband Paul Pelosi.

  • Day traders are keeping an eye on what Paul Pelosi, spouse of the Speaker of the House, is trading.
  • Social investing app Iris allows retail traders to track what celebrities, like Pelosi, are doing.
  • His investments, like Crowdstrike, Tesla, and Alphabet, have all been successful, Iris’ cofounder said.
  • See more stories on Insider’s business page.

Retail traders are watching what Nancy Pelosi’s husband, Paul Pelosi, is doing on the stock market to help them decide what to do next.

His stock picks have been quite successful, Christopher Josephs, cofounder of social investing app Iris, told Yahoo Finance, saying that every trade “inevitably turned out to be such a long term winner.”

It started with Crowdstrike in 2020, then Tesla, followed by Alphabet, then Nvidia, he told the outlet, noting that each of Paul’s disclosed positions has gained 20% to 30% since the initial investment.

Last month, Insider reported that Pelosi, the Speaker of the US House of Representatives, and her husband came into the investing spotlight as memes on Twitter and TikTok.

That followed July news that Paul made $5.3 million by exercising call options to buy 4,000 shares of Google parent Alphabet just before the House Judiciary Committee voted on antitrust regulations.

“If they’re the ones passing the laws, it’s probably smart to keep up and see what they’re buying,” Josephs told Yahoo adding that lawmakers may know something retail traders don’t.

Iris, a social investing app, tracks those trades. The app, which has more than 50,000 users according to its website, allows people to connect a brokerage account such as Robinhood to Iris to show what they’re trading and see what others, such as celebrities and influencers, are trading themselves.

“Invest together with your family, friends, and brilliant people all over the world. Get real-time notifications when others make trades and copy their moves,” the website says.

In Paul Pelosi’s case, lawmakers are required to disclose their and their family’s trading activity, allowing the general public too see his stocks.

Iris did not immediately respond to Insider’s request for comment, nor did a representative from Speaker of the House Nancy Pelosi’s office. In a statement to Yahoo Finance, Speaker Pelosi’s office said she doesn’t own any stocks and has no prior knowledge in any transactions.

Read the original article on Business Insider

Citadel’s Ken Griffin said he’d be ‘quite fine’ if payment-for-order-flow was banned and that his firm doesn’t trade crypto because of regulatory uncertainty

Ken Griffin
Citadel founder Ken Griffin.

  • Citadel’s Ken Griffin discussed the payment-for-order-flow model and cryptocurrencies Monday.
  • He said he’d be “quite fine” with a ban on payment for order flow, saying it’s a cost to his firm.
  • As for crypto, he said his firm doesn’t trade in it because of “regulatory uncertainty.”
  • See more stories on Insider’s business page.

Citadel founder Ken Griffin said Monday he’d be “quite fine” with a legislative ban on payment for order flow – the controversial practice used by brokers such as Robinhood to provide free trading.

Payment for order flow is a cost to me,” he said at the Economic Club of Chicago. “So if you’re going to tell me that by regulatory fiat that one of my major items expense disappears, I’m OK with that.”

In the payment-for-order-flow model, market makers such as Griffin’s Citadel Securities execute trades for retail investors on apps like Robinhood and collect on the difference between the bid and ask price.

The practice has come under scrutiny this year after Robinhood halted buying of meme stocks like GameStop and AMC in January. Retail traders renewed their anger over it recently after a new lawsuit was filed, alleging Griffin and Robinhood Chief Executive Officer Vlad Tenev conspired to stop the meme-stock rally. On Twitter, Citadel Securities once again denied the claims.

Despite saying he’d be OK with a ban on the payment-for-order-flow model, Griffin praised Robinhood and other brokers for “democratizing finance in America” and said retail traders have been able to join the markets in part thanks to free trading.

“From my vantage point, we want to hold onto this democratization of finance that’s taken place,” he said. “If payment for order flow helps to maintain that as a reality, I think that’s good for everybody.”

When asked about cryptocurrencies such as bitcoin, Griffin made a jab at the environmental harm. He also said his firm doesn’t trade digital currencies because of the “regulatory uncertainty.”

US Securities and Exchange Commission Chair Gary Gensler has said he’s working with other government bodies to come up with a regulatory framework for the new asset class. Thoughtful regulation around crypto will make it a smaller market with “less people involved who are just trying to make a quick buck,” Griffin said.

Read the original article on Business Insider

#CitadelScandal is trending on Twitter as retail traders express fresh outrage over allegations around meme-stock trading

robinhood reddit citadel hearing
Getty Images / Chris Delmas

  • #CitadelScandal was a top trending hashtag on Twitter as retail traders expressed renewed outrage over Robinhood’s trading restrictions in January.
  • A new lawsuit filed alleges Citadel Securities and Robinhood were in contact ahead of the trading halt.
  • Citadel Securities has said it did not pressure Robinhood to restrict trading.
  • See more stories on Insider’s business page.

#CitadelScandal was the number two trending hashtag on Twitter Thursday amid renewed outrage from retail traders over allegations regarding the January 28 meme-stock trading halt.

The hashtags #ApesNotLeaving and #VladTenevLied were also trending, continuing a Twitter fight between retail traders and Citadel Securities following a class-action lawsuit that was filed in federal court in Miami on September 22.

The lawsuit alleges that market maker Citadel Securities conspired with Robinhood to drive down the price of meme stocks such as GameStop and AMC on January 28 when buying was halted on the trading app.

“On January 27, 2021, the day before the restrictions were implemented, high level employees of Citadel Securities and Robinhood had numerous communications with each other that indicate that Citadel applied pressure on Robinhood,” the lawsuit states.

In response, retail traders on Twitter began tweeting about the Citadel Securities founder, promoting the hashtag #KenGriffinLied on Tuesday.

Citadel Securities fired back in a series of tweets, saying it “never requested, intimated, agreed or otherwise sought to limit or to restrict the trading” of meme stocks.

“It must frustrate the conspiracy theorists to no end that Vlad and I have never texted, called or met each other,” he said in an emailed statement to Insider.

Robinhood’s decision to halt buying of meme stocks such as GameStop prompted a congressional hearing and several lawsuits. During the hearing, lawmakers asked Griffin if anyone in his organization pressured Robinhood to restrict trading, to which he responded, “absolutely not.”

In a previous statement to Insider, Robinhood said Citadel Securities and other market makers didn’t pressure the trading app to restrict trading.

“These complaints attempt to create a false narrative of collusion,” the company said.

Robinhood’s business model relies on payment for order flow, wherein users’ trades are routed to market makers such as Citadel Securities, which then execute the transaction and collect on the difference between the bid and ask price. The practice has come under increased scrutiny since the meme-stock saga, and the Securities and Exchange Commission is considering tighter regulation.

Robinhood’s CEO hit back at critics of the app and of commission-free trading this week in an op-ed for the Wall Street Journal.

Read the original article on Business Insider

Camber Energy spikes 29% as retail traders target the heavily shorted name as the next meme stock

Oil rig
Oil rigs.

  • Camber Energy stock jumped 29% Thursday amid retail-trader hype.
  • The Houston, Texas-based oil and gas company is heavily shorted, according to Fintel.io data.
  • The run-up in shares also comes as oil and gas prices have surged.
  • See more stories on Insider’s business page.

Camber Energy stock jumped as much as 29% Thursday as retail traders hyped up shares on social media while data pointed to a potential short-squeeze opportunity.

The Houston-based oil and gas company was trending among Twitch users on Thursday, according to TopStonks.com. Quiver Quantitative data showed the company was also the fifth most-mentioned stock on the r/WallStreetBets subreddit Wednesday with 91 mentions.

“CEI to Pluto,” one Redditor said of the stock’s ticker on r/WallStreetbetsELITE.

Meanwhile, data from Fintel.io shows short interest in Camber Energy stock rose three-fold to 24.4 million shares from 6.1 million shares in September, giving the company a 23.5% short interest as percent of float.

Retail traders mobilized on social media have been known for targeting companies with high short interest rates in the past. But now, data suggests retail traders have scared short sellers away from most mid-size companies.

Camber Energy, through its majority-owned subsidiary Viking Energy Group, owns a working interest in more than 145 oil and gas fields across Texas, Louisiana and Mississippi, the company said on its site.

The rally in its shares comes as US oil and gas prices have reached multi-year highs amid supply-side issues. Camber did not immediately respond to Insider’s request for comment.

Camber, along with Virgin Galactic and Chinese food manufacturer Farmmi, led gains among meme stocks Thursday, while other well-known memes like GameStop took a backseat.

Read the original article on Business Insider

Citadel Securities hits back at ‘Twitter mobs’ and conspiracy theorists accusing the firm of pressuring brokerages to limit GameStop trading

Ken Griffin
Ken Griffin, Founder and CEO, Citadel, speaks during the Milken Institute’s 22nd annual Global Conference in Beverly Hills, California, U.S., April 30, 2019. Mike Blake/Reuters

  • Citadel Securities rejected claims that it asked Robinhood to halt GameStop trading in January.
  • On Twitter, the firm, founded by Ken Griffin, called the accusations an “absurd story.”
  • Hashtag #KenGriffinLied trended after a lawsuit revealed discussions between Citadel Securities and Robinhood.
  • See more stories on Insider’s business page.

Ken Griffin’s Citadel Securities rejected accusations Tuesday that it pushed Robinhood to restrict trading of GameStop shares amid the record price surge in January.

In a series of Twitter threads, the trading firm called accusations against it an “absurd story” from conspiracy theorists and likened them to those who refuse to believe in the moon landing.

“Internet conspiracies and Twitter mobs try to ignore the facts, but the fact is that Citadel Securities was the pre-eminent market maker to the retail brokerage community in January 2021,” the company wrote on Twitter.

On Tuesday, the hashtag #KenGriffinLied was trending on Twitter after a lawsuit revealed internal Robinhood discussions showing the brokerage communicated with Citadel Securities in the days leading up to the Jan. 28 meme-stock trading halt.

“These complaints attempt to create a false narrative of collusion, and we will work vigorously to continue correcting the record with the facts,” a Robinhood spokesperson told Insider. “In the context of January 28, Robinhood Securities was communicating with market makers in an effort to ensure continued market access for our customers. At no point did Citadel or any other market maker pressure the business to move any securities to position-close only.”

Griffin, the founder of Citadel Securities, said that he and Robinhood CEO Vlad Tenev “have never texted, called or met each other.”

Retail investors on Twitter pushed back on Citadel Securities’ tweets. One prominent investor who runs the YouTube channel Tray’s Trades said, “First tweet in 9 months, and it’s defending yourselves? After months and months of silence?”

After Robinhood halted trading of GameStop and other meme-stock shares in January, the online brokerage faced blowback in the form of outraged retail traders, lawsuits, and a Congressional hearing.

Regulators are also considering a ban on the payment-for-order-flow model in which brokerages such as Robinhood route customers’ trades through market makers who then execute the trades and often collect on the difference between the bid and ask price. Tenev defended the practice in an op-ed for the Wall Street Journal Tuesday, saying it allows the brokerage to provide commission-free, no-minimum services to users.

Read the original article on Business Insider

Veteran investor Jeremy Grantham warns of an epic market bubble, bemoans the meme-stock boom, and touts venture capital in a new interview. Here are the 12 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham warned of a historic market bubble in the US.
  • The veteran investor said domestic stocks, bonds, commodities, and real estate are all overpriced.
  • Grantham sounded the alarm on a global housing bubble and ridiculed the meme-stock trend.
  • See more stories on Insider’s business page.

Veteran investor Jeremy Grantham rang the alarm on an unprecedented market bubble in the US, bemoaned the meme-stock boom, and trumpeted overseas equities in a CNBC interview this week.

The GMO cofounder and chief investment strategist also flagged a global housing bubble, praised the US venture capital industry, and underlined the urgent need to tackle the climate crisis.

Here are Grantham’s 12 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is bigger than any before in the US. Real estate, bonds, stocks, and commodities are all overpriced.”

2. “US equities are in a magnificent bubble. Real estate is magnificently overpriced almost everywhere. The bond market is at a 6,000-year high in terms of low interest rates and high bond prices.”

3. “US house prices are at a higher multiple to family income today than at the peak of the housing bubble in 2006. The multiple is even higher in Australia, Canada, England, Hong Kong, Shanghai, you name it. This is a global housing bubble.”

4. “You knew last year this bubble was going to be the real McCoy, but you didn’t know if it was gonna break the next Wednesday, or a year later. One by one, we’ve checked off every condition that a glorious bubble needs in terms of crazy behavior. This has been crazier by a substantial margin than 1929 and 2000.” – Grantham warned the bubble could burst at any moment, and predicted US stocks would see double-digit losses within a matter of months.

5. “The end of a bubble is like killing off a vampire.” – noting investors are so optimistic that they’re shrugging off bad news such as the prospect of higher interest rates, the Federal Reserve tapering bond purchases, elevated inflation, and pressure on corporate profits.

6. “I do hold some gold and it’s not helping me much. It’s a strange creature, gold. Not as strange as bitcoin, but pretty darn strange, and I feel uncomfortable and always have owning it from time to time. I don’t heartily recommend it.”

7. “The problem in a broad, overpriced world like this is what the heck do you own? I would try and get some exposure to the green world and the VC world – not that they will escape completely, but they will bounce back so much bigger and better than almost anything else. The green side of the universe has an incredible wind behind it so own some of that, avoid the US like the plague otherwise.” – Grantham also touted Japanese and UK stocks and overseas value stocks as compelling investments.

8. “Our forecast is to have a negative return on US stocks over the next seven years. I strongly believe that will be accurate.”

9. “The meme stocks are just a travesty of serious investing. There was nothing that extreme in 1929, nothing like that in 2000. The dollar valuations were in the hundreds of millions, not tens of billions like the crazy SPACs this time. Not to mention all the bitcoins of the world which are a couple of trillion dollars, all based on confidence that other people will pay for what you have.” – Grantham highlighted QuantumScape, a battery startup he invested in that’s still four years away from selling any products, which went public late last year via a SPAC and briefly secured a valuation higher than General Motors.

10. “The US is extraordinarily powerful in venture capital. It raises a lot more money, it has a lot more enterprises. The quality of the whole industry is much higher, the society is more attuned to investing in risky enterprises and forgiving people who fail. The US has a death grip on the great research universities, which are critical to venture capital.”

11. “Venture capital is far and away the most healthy part of modern capitalism. It really does something useful. It’s in full cry, companies starting everywhere. Really important, promising, green technologies are springing out of the woodwork at all the great universities.”

12. “If we don’t address environmental issues, our society as we know it will start to crumble. The weather is going to hell; everybody is beginning to recognize the dangers of climate change. Greening the economy, decarbonizing the whole industrial system is the biggest challenge we have ever faced. It will take many trillions of dollars, and it will dominate the investment opportunities of the future in the public and private markets.” – Grantham blasted oil-and-gas executives for downplaying the climate crisis and potentially costing the world between 10 and 20 years of “absolutely precious time.”

Read the original article on Business Insider