Comment by fakedang | Hacker News Reader

Comment by fakedang | Hacker News Reader

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I think it's safe to say that SoftBank was the trigger, by buying up the meme stocks that are relatively safe bets (Tesla, Amazon, etc), which WSB/Robinhood traders had their eyes on. The Tesla/Amazon traders amplified the signal, and their gains posted everywhere on Twitter, Insta, Reddit, etc. encouraged people to plow more money into the markets, especially in the direction of the meme stocks. Then as S&P started gaining, people noticed and just continued plowing money into the index. Which is why outside of Nasdaq, tech and S&P, there are hardly any movements in the market.

Buying options is still visibility, encouraging would-be traders to register on Robinhood and buy some amount of stock. For instance, my old college mate, a current PhD candidate, joined Robinhood and started trading around March. And of course, when he asked me for recommendations, I told him to play safe and go with the S&P stocks and resilient tech stocks. Then of course, he went full on WSB mode, and now he's "eating tendies while his wife is hanging out with her boyfriend".

I wouldn't put both Tesla and Amazon in the category of "Meme stocks that are relatively safe bets".

Amazon's not a meme, and Tesla's not a safe bet.

They both have in common that they are a technology stock with a familiar name, particularly ones that have had a very good stock market run in the last 10 years.

I agree though that due to what appears to be a bubble, these investments aren't that safe at the moment. It appears that these type of stocks have benefited recently by retail investors entering the market and piling in. ( https://thehill.com/policy/finance/510796-are-trading-apps-p... -- though, as the article points out, the Robinhood investor bubble is smaller than the effect of the Fed's QE etc. ) Under normal valuation, Tesla at this point I don't think would be considered "speculative" -- risky, but not as risky as some. But a P/E ratio of 1000+ even after this recent dip is IMHO pretty difficult to justify.

r/wallstreetbets is pretty unreal to me -- many people are focusing on high-risk options on these heavily valued stocks, and (by the comments) appear to be putting a lot of their "eggs" in only one or two "baskets", to use the popular phrase. It's not ending well for some of them, judging from some of the posts.

And the feedback loop for loss porn doesn't help either. Oops, I lost 10k, can I have karma pls¿

Tesla was growing before the crisis. Largely due to their Chinese gigafactory, which is a pretty big deal, since it shows a.) They will be in the good books of China for the time being. Till their eventual tech ripoff at least. b.) They have the potential to gain the same brand value that Apple accrued in China. Definitely don't deserve the current valuation though - I was lucky I happened to be holding some when we bought some after buying my first car.

The kind of options plays on WSB are insane tbh. I don't mind putting my eggs in one or two baskets, as long as they are stocks of steady companies, but options? No way.

I doubt they care much about the "eventual ripoff". Their strategy is to out-pace competitors through innovation. It is the same reason they open sourced almost all their patents.

I guess so, you're right. I didn't know their patents were open-sourced.

From a value perspective, apart from the price, they do have everything one would expect from a "quality" firm - significant brand moats, strong management, recent developments, etc.

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