In-house analyst Daniel Creech joins me to discuss the craziness going on in today’s market… including the buying frenzy around special purpose acquisitions companies (SPACs).
Even if you don’t know the story behind the massive surge in GameStop, no doubt you’ve heard it’s up hundreds of percent in one week. Daniel and I share our thoughts on this David vs. Goliath investment.
I explain what short selling is… and how Main Street investors are shifting the playing field on Wall Street.
With earnings season in full swing, we also look at Microsoft’s incredible results… and share some companies on our radar right now.
- The buying frenzy in SPACs… the massive surge in GameStop… how Main Street investors are shifting the playing field… and a look at Microsoft’s incredible earnings results.
Wall Street Unplugged | 758
Wall Street vs. Main Street: How GameStop just leveled the playing field
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street, right to you on Main Street.
Frank Curzio: What’s going on out there? It’s January 27th. I’m Frank Curzio. the host of the Wall Street Unplugged podcast, where we break headlines and… Tell you what’s really moving these markets. My daughter had her first gymnastics competition, which was last weekend. She goes to St. Augustine, World Golf Village. We wake up at 5:30 AM. It was an eight o’clock event, an hour’s drive from my house. I have to admit, it was pretty cool, well-organized, awesome. And there were different levels in terms of experience and talent. My daughter is mostly a beginner. By beginner, she’s been going there for six months, three times a week, three hours a session.
Frank Curzio: She’s a beginner. That’s how serious it is. It’s a really, really good place, and they go into competitions. My daughter has been doing great. She has huge potential. She’s small, strong, fast, and competitive as hell, and she’s really dedicated. Those of you who have kids, sometimes your kids are all over the place, where they like to do 20 different things. This is what she loves to do, and it’s cool. She’s focused. Her teacher, one of the best around in this region, told her, said, “Hey. You should do the competition. It’s your first competition. It’s okay. You’re probably going to mess up or whatever, but go ahead and do it and get used to it.” My daughter was like, “I’m in. I’m definitely doing it,” which was really cool. You’re performing for a lot of people. Now, there’s six teams, I believe, and 75 girls in total for her level.
Frank Curzio: My daughter’s team, specific team, had four members on it. It’s similar to Olympics, where you have four events. It’s the vault floor exercise, balance beam, uneven bars… And keep in mind, there’s a ton of people in the room. It’s a giant room. Think of… For those of you who attend conferences in the main conference hall, that’s how big it is. I know you probably can’t remember that because we’re not allowed to go outside and go to conferences still. It’s changing though. It’s changing a little bit. But due to COVID, I know there’s been really no conferences in the past 12 months. But think of something like that, if you’ve been to one. You’re performing in front of judges. You have music playing loud. Lots of pressure, and my daughter handled it well. She needs to learn the technicals, the fundamentals, things like that, full leg extensions, raising your arms when you finish.
Frank Curzio: That’s where they deduct points. They take points here and there, but she didn’t mess up. She didn’t fall off the beam. We saw a few girls fall off the beam, make mistakes and fall, and she didn’t, which is cool. She just didn’t forget the routine. The only thing, she was tentative. It was her first competition. By tentative, she was really focusing on just not messing up instead of really being free. They finished the ceremony. I think it was an hour and a half. They finished the competition, and then they have an award ceremony, where the best performers get medals. We go to a different area. The award ceremony is almost longer than the competition, and there’s a reason why. Here’s what I’m getting to: Keep in mind, around six teams, 75 girls, and just those four events, vault floor exercise, balance beam, and uneven bars.
Frank Curzio: I’m figuring, I’m a math guy, there’s four events. That’s three medals each, gold, silver, bronze, so 12 medals. Then you have the overall combined event, the combined winners, which is maybe another three medals. That’s 15. Maybe you throw in sportsmanship, most improved, I don’t know, maybe 20 medals in total. They gave out over 150 medals, 150 medals. It could have been 200, but several kids had four or five around their necks. They called one at a time, one at a time. There was 20 different categories, and I didn’t get it. I’m like, “This is just for events.” Some girls had so many medals, they were jingling around the neck when they got up to get the next one, and it was loud. They were banging against each other because they had so many medals. I was like-
Frank Curzio: I’m not joking. It was crazy. My daughter’s team, which includes three other girls who have done a competition before, they won, I think, four medals each, and my daughter just won two medals. I said, “Just two medals?” Just two medals: one for fifth place, one for eighth place. Now, my daughter, competitive, got upset. She only won two medals. I was surprised she even won one. It was her first event ever. Many of these girls have been in numerous competitions, lots of pressures. They’ve been training for years. She’d only been going for six months. But the issue, how are you giving out 150 plus medals? How does this promote competition? How does this prepare these girls for real life, where so many of them get rewarded for mediocracy? Because having my daughter get upset because she only won two medals-
Frank Curzio: She got up from the floor. All the kids were sitting on a floor together in their teams. She got up and then she went to sit by me because I was on the side standing up. She had this look on her face. I told her, “Get your ass back on that floor with your team right now. Congratulate them and support them.” Then, when we got into the car, on the way home, I told her, “Remember that feeling that you want to do better. If you want to be great, if you want to be better than everyone, if you want to have five medals hanging from your neck, you have to work your ass off.” It’s what I did as a kid. It’s what a lot of you did as kids. I was the fat guy playing basketball. People made fun of me. I couldn’t keep up. I didn’t get any trophies as a kid. Then I said, “You know what? F-that. I need to get better.”
Frank Curzio: I made it my mission to destroy everyone that made fun of me. I shot 100 shots a day: Rain, shine, hot, cold, 30-degree weather, it didn’t matter. I lost weight, got faster. I started shooting better, worked on the things that I wasn’t good at to better compete with these guys. Then, I started getting trophies. My team started winning a lot of championships. That feeling of winning, especially when you put in that hard work, or you put in all the hard work, the dedication you put, that feeling… You can’t really describe it for anyone out there, just winning something. Even if it’s a team event, or if it’s tennis and it’s single, or golf, the amount of work that you put in and you achieve that, it’s a feeling you can’t describe: the pride, the confidence, the will to keep pushing and get better.
Frank Curzio: I remember we had a league right across from my park, and it was one of the biggest leagues in Queens, New York. It was across the street from my house, actually, the park, in Ridgewood, New York. The park is called Farmer’s Oval. Anybody knows it? When I was a teenager, probably around 17, I started playing this league, which was one of the best in Queens. There was a team called The Wrecking Crew, and they were called The Wrecking Crew because they wrecked everybody. They destroyed everybody. Their point guard was 6’3″. If you don’t know basketball, that’s the smallest guy at the starting five. They had two forwards. I was 6’8″, 6’9″. The point guy used to rip me all the time. They dunked on us, beat us by 40. Our team was young, but we were driven. We were confident.
Frank Curzio: It took about three years, but that one year, we played them in the playoffs, tons of people watching. We all played great steals. The team played awesome. Our forwards had several blocks on their big men, and we beat them. We beat them. You guys know how old I am. I’m pushing 50 almost in 2021, but I have to tell you, I still remember almost every possession of that game. It’s one of the most remarkable achievements for me because of working hard with your team to beat that team, the dedication. When the guys shake our hands at the end, they gave us a lot of respect. We were with them 10 years ago. They were a young team trying to make a name for themselves. It’s like passing the torch. Man, I still can’t believe we won, that feeling. Let me tell you something about winning.
Frank Curzio: People who say, “Winning isn’t everything,” have never won anything in their life. It’s not every single thing or everything, but winning is fun. It’s awesome. It gives you confidence. It teaches you how to deal with pressure. It builds character. This is a talk I had with my daughter on the drive home. I was just surprised how everyone, every single person, who competes gets a medal at these events. I can see maybe a fourth-place medal, maybe, but eighth and ninth place? We have to get out of this mentality in America. It’s how we’re treating our kids. I’m not perfect. I’m guilty of some of this stuff too. But we’re totally engulfed in their lives. I don’t mean you being a good dad, a good mom, and you’re going to get… I’m talking about going over-the-top and making sure every single person at school they’re talking to, looking up them on their social media accounts, make sure they’re okay.
Frank Curzio: Seeing what they’re doing every second of the day… How do you track your kids on iPhones? You track your kids on iPhones. You call them. What are you doing over here? Why are you riding your bike on this block? You’re not supposed to… We were never like that growing up. You feel bad for them when they fail, even though they’re going to learn more from failing and from those mistakes than winning any day of the week. That’s why I tell them, “My losers are more than my winners on this podcast.” That’s how you’re going to learn, but we have to get out of that mindset of rewarding our kids for just doing okay. I’m not being a hardass here. I don’t know all the answers. But I do know if my parents, who were really cool growing up, I’m fortunate, but if they treated me the way we’re treating our kids today, where, “Hey, it’s okay to fail,” and reward them for mediocrity, I wouldn’t be the person I am today.
Frank Curzio: I don’t even think I’d start my own company today. There’s something to be said for that. It’s going on. It’s getting worse. It’s getting much, much worse. We’re really engulfed in our kids, every single thing they do. It’s not a knock on those girls who really work their asses off to compete and did amazing, and no knock on the families who do so much for these kids. It’s a lot of dedication, especially when we have traveling baseball teams or basketball teams or whatever. My wife is driving my daughter to gymnastics three times a week. It’s 45 minutes each way, and there’s a three hour in between. She always drives home and then goes back there to pick her up. It’s located in Georgia. I live in Florida. I’m right on the Georgia border, I-95 on East Coast. She drives to Georgia so my daughter could work with one of the best coaches in the region.
Frank Curzio: I tell you, she’s going three times a week. A lot of these girls are going five times a week, three hours a day. Kudos to those parents. But we really have to rethink how we’re teaching our younger generation because just rewarding them for doing okay, it’s not the real world, man. It’s really tough out there. I went to Wall Street. It’s tough. It’s cutthroat, and people take what they want. You’ve got to stand up for yourself in the battlefield. If these kids are not prepared, they’re going to give up on almost everything they try, give up immediately, refuse to even compete with people who are better than them. I’m not just talking about sports here: in college, your career, everything you do. But it needs to change. Well, probably not, but it does. Trust me. If it does, our kids will be much better off.
Frank Curzio: They will work harder, be more passionate about things, and definitely be more prepared to get out there in the real world, which is what we want for our kids. We want them to be able to succeed. That’s the goal. Parents, sometimes you can’t be their friend. You have to be their parent. You have to tell them, “No. You have to get out there.” Again, I’m guilty of this too. We like to spoil our kids. But man, it’s really, really over-the-top now, really over-the-top. Now, speaking of the younger generation, a lot has been going on with the markets. I’m not sure if you saw what’s happening with GameStop. I’m sure you have if you listen to this podcast, about stocks, but GameStop, basically, the past three weeks, it’s incredible.
Frank Curzio: I’m going to bring in our buddy, Senior Research Analyst, Daniel Creech, and we’re going to dig into a lot of topics, including SPACs, including latest earnings. Microsoft, Intel, very strong for Microsoft. It was up, and then it came down. Open today, but yesterday, they reported it was great, but we are going to really dig in deep, again, to things that people aren’t talking about when it comes to GameStop. More than that, the stock went from single digits in September, and it’s now 300 and change, as I speak. Last I looked, five minutes ago, it could be 250. It could be 350. It could be 400. Who knows? Daniel, thanks so much for coming on, man. Let’s talk about it.
Daniel Creech: Well, I’m glad to be back. This will be the Las Vegas edition. Too bad we’re not hosting or broadcasting from Vegas, but basically, this is with GameStop, which is 355 even, which is up 362% today. I’m looking at GameStop right now.
Frank Curzio: That’s a bad day for GameStop.
Daniel Creech: If you bought it yesterday, you have 362%. Not bad.
Frank Curzio: Now, I’m going to explain what’s happening with what GameStop really quick and then we’ll get into it, just to bring everyone here, which I like to do with this podcast because a lot of people do not know what a short squeeze is. A short squeeze is when someone’s short. If you buy a stock at 10 and you sell it at 20, you have to sell it at 20, or 30, 40. You have to sell it eventually, and that’s how you book your profit or loss. If you put $10,000 into the stock and you buy it at 10, your risk is $10,000. If it goes to zero, that’s how much you lose. When you go short, I’m talking about you if you go short at a stock, your losses are infinite because you’re shorting the stock at 10, and then go to 20, 50, 100, or 300. What did you say was Game… 300 what?
Daniel Creech: It was 355.
Frank Curzio: 355. That’s amazing. It was 240 this morning, I think, when we walked in. In a short sell, what happens is, just like when you buy it in order to lock in the gain, you have to sell it. With short-sellers, they just take that step first. They sell it first, and they need to buy it back. Now, when this stock gets out of control and goes higher and higher and higher and higher, it forces the short-sellers to immediately buy the stock at whatever price. It’ll go to 20, 30, 40, 50, and they keep buying them because they need to get out of their position. Because if it goes to 200, 300, 400, they’re wrecked, which is what happened with GameStop.
Frank Curzio: We see short squeezes all the time. However, we’ve never seen anything this coordinated. Daniel, I guess we’ll start with you. Hopefully, I explained that well because a lot of people… Again, I’m getting questions of a short squeeze, just to bring everyone on the same page of what’s going on, but it’s pretty crazy.
Daniel Creech: It’s beyond crazy, and it’s morphed into basically the mindset of divisiveness. It’s the little guy versus big greedy hedge funds. Do you want to talk about the WallStreetBets? Because it’s all over CNBC and everything, Reuters.
Frank Curzio: Go ahead. That’s the Reddit Crowd that started this blog, I think a couple of months ago, I think in April, and really started attacking specifically this company and Melvin Capital.
Daniel Creech: I honestly don’t know what started all this off in the sense of… Because WallStreetBets has been around since… I don’t know when. I’ve heard about them several times, and I’ve checked their message board a few times here and there, but nothing regularly. I’m not exactly sure what got them so upset or targeted, and if that’s the case… I’ll be honest, I don’t know all the details here. I don’t know. There was two million users on the WallStreetBets Reddit feed. I’m sure that that’s grown to a silly number in just the last few months. It’s a neat thing because you have high-frequency traders and hedge funds that are blamed for a lot of market manipulation by the little guy, in general. Then you have things like Robinhood come along.
Daniel Creech: The disruptive markets basically get everybody down to free trading, easy access to it. Then, when that turns on you, and people get the idea of trying to squeeze you out of a position, you can push stocks high enough. Hey, this goes well though because fundamentals don’t matter, and this is the perfect example. The funny thing is, there’s so many different angles we can talk about this, that I’m interested by. One of them is the fact that people are literally just pointing out the fact that they’re trying to hurt somebody else to buy this. It’s a free stock market. You can do whatever you want. It doesn’t have to make sense. That’s an interesting thing going on right now.
Frank Curzio: We’re going to go a lot of different places with this because it’s very important because there’s something much bigger taking place in just a simple short squeeze, but let’s get to the details. Melvin Capital is a 12 and a half-billion-dollar firm. They were short GameStop for a while. Now, when you disclose… For funds who have over $100 million in assets, they need to disclose all their positions on the long side. You don’t have to disclose your shorts. Every quarter, they do that. It’s called 13F. It’s a filing with the SEC, and you get to see what Buffett owns and what they bought, what they’re selling out, and all this stuff.
Frank Curzio: It’s pretty cool. I’ve covered that a lot in this podcast. But when it comes to options, as soon as you put options, money managing over 100 million in capital, they must disclose that. Melvin disclosed that it had 5.4 million puts on GameStop last quarter and it was worth 55 million at the time. It’s short towards zero now. Forget it, but it’s a position they increased by nearly 60%. Daniel, you’re talking about the Reddit crowd. They all got together. WallStreetBets, it’s called. All of a sudden, they have over two million subscribers, and it started with one group. It said, “Hey. Melvin Capital is short this stock. Let’s try to get a short squeeze here.”
Frank Curzio: I actually went on that account. I’m going to read you some of these things because now it’s probably three million users, but I screenshotted a couple of these things, just a couple of them. It’s freaking awful. It said, “It took nine years for this blog to reach two million subscribers. There’s 500,000 that joined in the last three days.” Yesterday, probably another million people joined. You have Jimmy Ripping. “I’m in tears already. Life-changing money is turning into destiny, just life-changing money, 10,000 into 750,000.” This person says he’s still holding, when I did this, to stop closure. What did it close yesterday?
Daniel Creech: Well, it’s up $286, so it’s 363.
Frank Curzio: I think I closed, whatever the closure is today, 140 or something, and he’s still holding today. He’s probably a happy guy, a little bit. You got to think that 750 is now a few million dollars. Melvin is down another 25%. They’re targeting Melvin Capital. Again, it’s a 12 and a half-billion-dollar firm, the best hold I have ever effing seen. “LMAO.” For those of you who are older, Laughing My Ass Off. “Someone is actually driving attention to non-GME posts on Reddit. Don’t be fooled.” All these guys are really together though. “Yesterday, I posted a two and a half-million-dollar loss on GameStop. But today, I’m posting a $7.8 million gain.”
Daniel Creech: Geez.
Frank Curzio: A guy posted that on Reddit. Some of these things are just absolutely amazing. The hedge funds are bad and they’re going to be fighting dirty. “Ladies and gentlemen, the man behind MarketWatch is calling you conspirators of crime. Someone, call Elon. We’ve got to take a rocket to the moon before the SEC comes knocking.” It is really entertaining. “We did it by the rip. Continue to buy the rip. We made it, boys. Keep going.” It’s incredible. If you rally them, it’s incredible. They’re all together. And now, Melvin Capital lost 30% of its value, got crushed, and it required a bailout to stay afloat. Yet, two major guys who have ties to Melvin, Steve Cohen and Citadel and Point72 Asset Management, they injected $2.7 billion into the firm. That was yesterday morning. What’s the percentage again? How much is the high gain?
Daniel Creech: It’s actually 373 now, so it’s almost 296. It’s up 385% today.
Frank Curzio: That’s incredible. The thing is… I’m going to try it because if you watch CNBC, you guys know the story. I’m going to dig in really deep into a couple of topics with Daniel here, but Melvin Capital, it was a coordinated effort to really… This is a large Wall Street firm, 12 and a half billion dollars. I would say, I wouldn’t even call them kids, they are professional traders on there, but most of these kids are young, were able to leverage the hell out of everything. We’re seeing outages at Ameritrade, E-Trade today, of course, Robinhood’s five or six platforms because the volume is insane and not just on Game… Just across the platforms.
Daniel Creech: It’s pretty ridiculous. The idea that you would regulate a blog like that, you’re just going to have to take away opinions, period, if you do that. If you’re of the camp and you’re a negative mindset in the stock market in general, and everybody knows people like that, they think it’s rigged or they think it’s rigged against the little guy. In a lot of ways, you could point to certain things and make that argument. Or some people just think it’s total gambling, it’s like Las Vegas. This is something you can point to and say, “It’s silly.” It’s not based on fundamentals. Nobody cares about what the company does for a business, whether the business is growing or dying.
Daniel Creech: That’s irrelevant. The thing for me about regulation is no because I checked it a few days ago on the WallStreetBets blog, and it was really cool because a couple of people were showing… They were taking screenshots. Of course, I take everything with a grain of salt. I don’t know if all this is 100% true, but some of the people were putting screenshots of them paying off student loans or other types of debt. Now, they’re kicking themselves because they’re emotionally investing. You think, man, if I would have held, I could have had a lot more.
Daniel Creech: You can always do that, but to take some off the table and to get out of debt and actually put that to use is awesome. I’m sure people were going to get hurt, but it’s not illegal to gamble. Who cares if you’re gambling here? The idea of regulation and bailing out the hedge funds or protecting them or whatever is beyond silly because they do the same things. It’s turned against them right now and a lot of people are going to get hurt. On the bailout, real quick, Citadel is supposedly the biggest purchaser of Robinhood trades to execute. Is that right, Frank? Have you seen that too?
Frank Curzio: Well, basically they’re the high-frequency firm that’s behind Robinhood. Remember, Robinhood came out and said, “Hey. We started a free trading platform and that changed the landscape of the entire industry. Everybody had to go free.” Obviously, Robinhood has to make money in some way. Citadel is basically-
Daniel Creech: They’re one of the companies that purchased to execute those orders.
Frank Curzio: Purchases to execute the orders.
Daniel Creech: What’s interesting is that they get most of the Robinhood volume, it was my understanding. I was reading through Zero Hedge and a couple of different sites, but that’s funny because you see a lot of the backend stuff. And then you turn around and you put more capital into somebody that you know is suffering from that. If you want to talk about regulation, as the article pointed out, is that legal or should that be looked at? Are you allowed to buy the orders on Robinhood and then turn around and bail out the guy? We’ll see.
Frank Curzio: Well, it hasn’t really worked for them, the bailout because I think they tried to short again. There’s a couple of things here. One of the things is that it’s ironic that these Wall Street guys… Citron’s Andrew Left has posted on his Twitter account and this was just a few days ago, the 19th. He’s like, “I’m doing a whole presentation on GameStop.” I think GameStop was at 40s, maybe 45 or something around there. He’s like, “Why the stock is going back to 20? I have a live presentation I’m going to do. Make sure you watch it.” This was on the 19th. What happened is, this Reddit blog and everything, they were like, “All right. Let’s just blow them out of the water.” Again, it was at 40. It’s over 300 now. I have a lot of respect for Andrew Left. He’s been right when he shorts a lot of stocks. I’ve spoken to him personally and met him personally.
Frank Curzio: He knows his stuff, but there’s other short-sellers out there that are complete garbage and I’ve covered this before too, where they’ll come out with a short report. Of course, they load up ahead of time. They load up on the short ahead of time like Citron did. They’ll post something and say, “Hey. We’re going to come out and tell you why GameStop is short.” Right away, you’re going to see GameStop stock start coming down. They do a presentation. It comes out even more, but when you read the disclaimer, these guys are allowed to get out of that position whenever they want. They could be out of it before you even watch the presentation. They’re going to make money. They’re loading up on it and then they let everyone else know.
Frank Curzio: It’s almost like front-running. That’s what they do, front-running, which is perfectly fine. You could do that all day. It’s legal. I don’t know why it’s legal, but you could do that. Then what these short-sellers do is… In the disclaimer, it says, “All this information we provided, we believe to be as reliable, but may not be,” meaning that it could be complete horseshit. Everything that they said could be complete lies and because they put it into a disclaimer, it doesn’t matter. Now, after they launched these massive short campaigns, now they have these ambulance-chasing lawyers that will launch investigations and it goes right up on the Yahoo blog. “This company’s being investigated, investigated, investigated, investigated, investigated.” Again, this is all common.
Frank Curzio: They are all together. They’ll also launch this on numerous platforms. You’ll see it on MarketWatch. You see all this, the short-selling that. Again, everyone gets a piece of this, and they have this massive campaign that they launched, and they all make a fortune. Usually, a lot of these stocks don’t deserve to go down. A lot of bullshit is being said about them. They’ll get crushed 60, 70%, and eventually go back higher, as all these guys are out of their position. This is the system. This is how it is out there. Again, it’s mostly Russell 2,000, small-cap stocks for 25 years. Now, you have a coordinated effort, Daniel, where everyone on Reddit… There’s no one that you’ll find on Reddit that says, “GameStop is worth 100, 200, 300.”
Frank Curzio: They’re not saying, “Oh, they’re going to open up stores. It’s a game-changer.” They specifically said, “We know that a guy has major shorts here, and if we buy this stock, he’s going to be forced to cover, and this thing is going to hit the freaking roof.” They didn’t know it would be this big. They have two million people on their blog, now probably three million, like I said, but they’re specifically saying, “This is public information, and you know that you could start a short squeeze if you stop buying these things and you have enough money to put behind them.” Usually, you don’t against a billion-dollar hedge fund. This time, they do. That’s pretty scary, but it’s perfectly legal. I don’t have anything to come after them.
Daniel Creech: Like I said, so what? They’re putting their opinion out there and some of them are making money. Some of them are going to lose money, but that’s a market. There’s nothing wrong with being silly. What’s the difference of going to Vegas and putting your money on red or black on a roulette wheel? You’re gambling at this point. I’m okay with it. I hope that… Andrew Left from Citron, they put out a video today, he said he covered the majority in the 90s.
Frank Curzio: He covered the 90s.
Daniel Creech: A big loss, he said, but he said he has a manageable position. He’s not blown up or anything like that. Kudos to him. He did offer some advice and said, “Hey. If you take some profits, put some back for the IRS,” because if you hit our losing streak or invest that money and then lose, you’re still owed. Interesting. It’s entertaining from a lot of perspectives, to me, because it does have that David and Goliath mindset. I think you can apply this kind of mindset and division across basically anything.
Daniel Creech: This is just the stock market’s version. We’ll see what happens, but the interesting thing is if you’re up millions of dollars or hundreds of thousands of dollars, at what point do you say, “All right, I’ll take a little off the table?” That’ll be interesting from an emotional and a psychological level, for me. We’ll just watch it. Hey. I’m on the sidelines. I wish I bought it like everybody else, but it doesn’t intrigue me enough to go fish and try to throw this out.
Frank Curzio: I know it is intriguing for you guys out there. If you want, put a couple thousand dollars in, that you could afford to lose. You can look at a lot of… It’s easy to find a list of companies that are being sold short, but you could easily attack these guys. You could see the percentage of float on that short. There’s a lot of places you could look at that, a ton of places, but not individually who’s shorting the stock, but a lot of these guys come out and say they’re shorting the stock. Right now, you could target a lot of these companies. Again, you’re just telling everyone to buy something, resulting in more artificial buying because these guys have to cover their stock or cover their shorts. More to the point here, and this, I think, is the biggest takeaway, which I think is being lost out there.
Frank Curzio: This is a fundamental change in the stock market. This is something that’s changing the landscape of the entire market. You had the old guards on Wall Street, billion-dollar funds. They did what they want. They do it. They go where they want. Now, look at the big stories here, Bitcoin, a younger generation. Then you have… Look at the guys who we’re supporting. Look who’s tweeting about this, about GameStop. You have Chamath, who’s a young guy, a billionaire, very, very successful. Winklevoss twins, again, Bitcoin guys, and Elan Musk. Wall Street almost hates this guy, just all the way up. The fundamentals are terrible. He’s the richest person in the world. These guys are getting on board and you see that old guard of the multi-billion-dollar hedge funds and high-frequency firms.
Frank Curzio: I don’t know if you saw that performance of the high-frequency firms. Guys, I think Renaissance in something like 15 years had three losing quarters. They’re down tremendously now over the past… Pretty much since COVID. What these guys are doing, these young guards… You can never really challenge Wall Street. But when you all come together, and you see all of them come together and the power that they have, you can’t ignore it. If you want to have fun with it, have fun with it. If you want to buy calls, you never know because if you hit, the risk-reward is worth it. You buy calls, you put $1,000 and it could be worth 50,000, a million dollars. If you bought them at 20, it’s at 300, so it’s worth it to gamble with it. Don’t get stupid though because you’re going to get crushed, eventually.
Frank Curzio: Everybody keeps saying that. GameStop is going to 700 and stay there for three, four months before that happens, but for me, it’s the changing of the guard. You’re seeing the volume. You’ve seen the contracts on an asset, record highs, option contracts, but old Wall Street used to run the show and we’re seeing that changing of the guard where these… We say that they’re young and they’re traders. They have incredible power, Daniel, incredible power. You could see them putting this… Melvin Capital, they were going out of business if they didn’t get 2.7 million in funding. This is a 12 and a half-billion-dollar firm. This is a guy who has $300 million, and he should know. These guys are highly leveraged. He got caught out there. Everyone knew his position, but to me, that’s pretty amazing. There’s something to be said about that.
Daniel Creech: I totally agree. I think it’s incredible, what’s going on. You can claim victory for them because obviously, the price of the stock is up tremendous, AMC, Blackberry. Although, they’re getting some tailwind, I think from a settlement with Facebook or something in a lawsuit, but they’re heavily shorted stocks. I think it’s pretty neat in a lot of ways because it’s showing people that, hey, the little guy can fight back, essentially. It’s a crazy tug of war. Just like you said: If you want to gamble and use that mindset and have fun with it, great, but I wouldn’t get in the habit of this tug of war on regular investments. But for speculations, it’s a lot of fun.
Frank Curzio: It is a lot of fun. Just Capital coming into this market is insane. We’re looking… We could turn a page here because we’re seeing GameStop… Again, guys, if you want the risk-reward, you just have to realize that you could lose all your money, but the risk-reward here is incredible, the amount of money you can make if you do get involved. Again, you want to look at the markets and you want to say, “I’m not going to buy GameStop for 200.” That has nothing to do with the fundamentals, but you have to be willing to adapt to where certain things are working. Adapt to Bitcoin, adapt to some of the short-selling stuff, just like you’re adapting… Where we’re seeing large-cap tech do better and start to come back. People don’t realize this, but since November, large-cap tech is significantly an underperformed market until two, three weeks ago.
Frank Curzio: We have some big earnings, the majors of Facebook and Google and Apple this week, but I don’t know. Just to see the rotation of money and cyclicals and small caps surging 25% a month in November, the highest ever in a month, just understand this is the new market… This is where volatility is. Who’s going to do great volatility? What sectors are going to benefit from the new administration? It’s not so much where, “Oh, the market’s going to crash.” Certain sectors are going to do bad, and certain sectors are going to thrive. Anything climate change… Have you heard? Daniel, you’re going to love this. We’re talking about climate change, but every single company under Biden is coming out and they’re saying how they have initiatives for climate change. They have to. They’re almost mandated.
Frank Curzio: You have to do that or they’re going to come after you. The mob will come after you. When I say, “Mob,” it’s social media. They’ll attack you. “This company is terrible.” Your own employees. We’ve seen it at Facebook, attacking Zuckerberg. Every single company is announcing that initiative. They’re putting money into it. They’re allocating money. That’s what you need to understand. Whether you believe in climate change or not, every company is allocating money to it. It doesn’t matter if it makes sense or not. It’s up to you to be pissed off if you don’t believe in climate change, or be happy with it, or you can make money on it. That’s what we choose to do here.
Daniel Creech: Absolutely. I think there was a SPAC, an ESG SPAC that went live today, it was across the CNBC this morning, before we started taping the podcast. That’s definitely the trend that we’re heading. That’s the roadmap you want to follow and at least look into that so when there’s some executive orders coming out that are making the oil markets volatile, you could argue with them. No more drilling on federal lands and all that kind of stuff. Companies are going to front-run that. They’re forward-looking as well. If capital can flow into there in a good risk-reward way, then we’ll look for that as well and hopefully benefit from it.
Frank Curzio: Absolutely. You said something about SPAC. SPAC is another thing. It’s a vehicle that’s created … Special Purpose Acquisition Company, what they do is they hold a company that trades publicly and then they’ll go after a private company and purchase it, and then it immediately becomes public. Now, so many of these … It’s insane. I got some numbers here. 194 traditional IPO deals raised $67 billion. This was as November 30th. I think it’s 90 billion now, in total. That’s the best since 2014.
Frank Curzio: 194 traditional IPO’s deals raised $67 billion. That’s IPOs. There was 200 SPACs in the same timeframe that raised 64 billion. 200 SPACs compared to 194 traditional IPOs. SPACs raised 64 billion as of November 30th and traditional IPOs raised 67 billion. We’re looking at taking half the market right now. Again, it’s going to explode this year coming up, but there’s a lot of things that people don’t understand with SPACs. It’s basically a pyramid scheme. That’s what it is. You have the early investors.
Daniel Creech: Oh boy. This is going to get some attention.
Frank Curzio: It really is. You have the early investors. That’s why, all of a sudden, you see Goldman Sachs. You see all the major players are getting involved. It’s not just… You have Bill Ackman, Chamath, now you have private equity. Apollo Group, all these guys, and TPG Capital.
Daniel Creech: Shack.
Frank Curzio: Shack.
Daniel Creech: Shack is involved in some of it, a lot of it.
Frank Curzio: Now, you also have the Goldman Sachs, Fidelity, all these guys are getting in because the fees that you make upfront, when you create these things, are enormous. When they go… They’ll raise $200 million, just saying. What they want to do is try to purchase a company, 4X to 5X larger. That’s what they’ll do. It’ll immediately become public. You bypass the entire IPO system, which basically tells you it’s broken. That’s why they’re allowing SPACs to do this, and everything’s cool with SPACs. It’s fine. It’s awesome because everybody is making money. Everything is always cool when everyone’s making money. The only way SPACs work is if you have an amazing retail market that’s willing to buy after the fact, and they’ll buy… A lot of these things come at $10. There’s no reason why.
Frank Curzio: Most of them come out at 10. They’ll go to 15, 20, and you have the retail crowd by at 20, 35. As long as you have that, everyone’s happy. Just realize that retail crowd is buying it at 15, 17. These guys are running it at a dollar, $2, and they make an absolute fortune. That lock-up period is only four months. What we need to see about these SPACs, Daniel, is how are they going to perform after that four-month period, after 12 months, after two years? Because these guys that are… That’s what pisses me off when I see some of these guys. “We’re creating an alternative energy, SPAC.” These guys are in it for the short-term. You put all your money. You put a ton of money in there.
Frank Curzio: You get out in four months. Now you’re liquid, and you get into the next SPAC. That’s the goal of these guys. You want to be liquid and you don’t have to worry about buying private companies, where you’re going to be in them for an average of seven to 10 years. Think about if you invested early in Facebook. Peter Thiel couldn’t sell out of his full position. There’s a few ways you could do it if you’re raising capital in seed rounds and stuff like that, but it would take six, seven, eight years, whatever it was. Same with Airbnb. That company has been around forever, 2007, ’08, or whatever it was. It’s just public. You’re locked up. Your money is locked up. With this, it’s four months, and you’re gone.
Frank Curzio: More to the point here, Daniel. Sorry to be talking. I just want to bring any SPAC. They look for companies that they’re going to buy at 3X, 4X greater. When they buy them, now they still have to get that capital. You know how they do it? They do it through PIPEs, Private Investment in Public Equity. They have to get individual firms and say, “Hey. We just bought this. Do you want in?” They’ll be like, “Yeah. What are you going to offer me?” “Well, we’ll offer you warrants. If you want to come in for 50 million or 100 million, you get warrants, you get special deals.”
Frank Curzio: They don’t disclose what these deals are, so we don’t know the warrants outstanding. We don’t know anything on these SPACs, but yet, all these guys are getting deals to where they’re making money almost upfront right away. It only works if the retail crowd continues to buy because it goes higher and no one’s bitching and complaining. That’s going to change. It’s going to be interesting to see what happens within the SPAC industry. But again, this is something that we talked about. I just want to throw the points out there. I wanted to get your thoughts on it. I was just talking a lot there, but go ahead.
Daniel Creech: The numbers you threw out there and stuff, I think there’s been over 60 of them this year. We’re not even through January. They’ve raised billions of dollars already. I saw on the Stock Market MBA website, there’s over 250 SPACs out there looking for deals right now. It’s just incredible. You’re right. You do need a strong retail base to continue buying it. I do understand the emotion behind it because what I like about SPACs, it’s just a fact, it’s a better alternative to an IPO. We don’t have to get off on a tangent here, but it’s like a security token. It’s a better way and a faster way, and a more efficient way to go public. The SPAC idea, I really like. Can it get abused? Is it being abused? Yeah, probably.
Daniel Creech: A lot of these guys can get out. Like I said, I hate the fact that it’s very hard to find information on the different PIPEs, investments, and levels like that. That’s what sucks, but the idea is just another example of how capital is going to go to where it’s treated best and be as efficient as possible. It is better than the IPO in that traditional sense for lockup periods and everything else. The interesting thing, on the other side, Frank, is Goldman Sachs, which is a Curzio Research Advisory holding. Benton are the worst of the people. If you can’t beat them, join them, type of attitude there.
Frank Curzio: Absolutely.
Daniel Creech: A little tongue in cheek, but on the recent conference call, it was interesting because they said, “Hey. Even if this slows down,” and I’m paraphrasing here, “These companies are going to have to continue to raise capital.” Goldman Sachs is in on a lot of these SPACs, getting fees, investment banking fees, and all that. Well, going forward, if they’re not working out as well as they think, they’re going to have to raise more capital, which is just another pipeline and income stream for more Goldman Sachs and investment banking. Again, pay attention to what’s going on. If the retail keeps bidding them up, that’s great, but this is going to be another positive for banks.
Frank Curzio: Investment banks, Morgan Stanley, Goldman Sachs… These numbers are going to be blown out. They’re going to raise a dividend. They’re going to be buying back their stock. These are names that have tremendous liquidity. Now, I want to tell you something. This just came up. We have a site that we use, briefing.com, really, really cool. A little bit expensive. It used to be a lot cheaper, but anyway, it gives you just headlines. I’ll show it to you. The headline just came out, you’ll see.
Frank Curzio: What time are we doing this? It’s 11.56, but one of the latest headlines is 11.46 for AMC Entertainment, which is up $10 today. It’s a $15 stock. It’s 200%. TD Ameritrade just came out and said, “In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in GameStop and AMC and other securities. We made these decisions out of an abundance of caution and unprecedented market conditions, and other factors.” That’s a freaking crazy statement. That just happened right now.
Daniel Creech: I saw that. It’s ridiculous.
Frank Curzio: Stocks are going higher, higher. “Out of caution for investors…” Basically, it should be a free system. Again, these things are going higher, but if you disagree with it and the short-selling, you have to disagree with the hedge funds who throw these… They go on Twitter and say, “Well, can I short it?” They’re already short, this whole freaking game that they play. Now, these are the people that are bitching because they’re getting wrecked because people found a way to wreck them. You’re seeing companies being halted. I don’t know. It says, “We made these decisions out on caution on present market volatility, but to mitigate risks for our company and clients.” What does that mean? Who is at risk here?
Frank Curzio: Because 95% of the people, they’re buying calls, and if they lose money, it’s money in the account. What TD Ameritrade is saying here, Daniel, is there’s probably a massive amount of margin here and they’re worried they’re going to get smoked somehow. Why would you stop that? Because people are making money on this. If they don’t, they’re going to lose the money that’s in their account. But for them to come out like this, it’s going to be interesting to see throughout this day. We’re taping in the middle of day, guys, Wednesday, how many more brokerages say the same thing. Robinhood is not going to come out with a statement like this. No way. Robinhood-
Daniel Creech: You’d hope not.
Frank Curzio: I bet you Fidelity. I bet you all these other platforms, if it’s E-Trade or Ameritrade, whatever. Ameritrade’s here, but E-Trade. They’re all going to be coming out with this, and I don’t get it. I don’t understand what they’re trying to do here.
Daniel Creech: My gut reaction is scary because I read that as, saying, “Hey. You’re too stupid and you don’t know how to make good decisions, so we’re going to limit the decisions you can make.” Like I said, there’s nothing illegal about being silly or gambling with your money. There’s nothing… It might not be a good idea. It’s not a good idea in a sense, but that’s not for Big Brother, in my opinion, to say… The crazy thing here is hedge funds are blowing up, but what if you’re a trading desk and you’re caught on the wrong side or, like you said, you’re too wrapped up in a margin or something isn’t square and maybe you’re worried about liability on that end? That’s a big move. This is crazy. We’ll continue to watch with popcorn, I guess, but-
Frank Curzio: Remember, guys-
Daniel Creech: That’s impressive.
Frank Curzio: When you see the kids on Redditt, some of them, they’re all basically saying, “Hey. This is why we’re doing it. It’s a short squeeze buy.” They’re not saying, “GameStop is going to come out with news that you don’t know about yet.” They’re not putting out false stuff out there. Some of them are, so you have a few, but basically, this is about, “Hey. We have information. This is public information. We know guys are incredibly short and they’re probably leveraged out. So if we all buy, it’s going to go higher and it’s going to trigger these guys to buy their stock and create a short squeeze. We are all going to make money.” They’re saying that on the blog, it’s a lot different than making up a complete… Fabricating a story that doesn’t exist, and then you have Elon Musk tweeting about it.
Frank Curzio: You have Chamath tweeting about it. He’ll say, “Well, the call is at 70 or 80,” and showed everybody. This was a couple of days ago, against 300. It’s just interesting to see what’s going on, Daniel, and it’s going to continue. I wonder what the SEC could do. How could they bring charges? There’s some people that are probably making up stories and stuff, but the majority, they’re all on the same page and they all have the same thesis, so it’s hard to argue. If the SEC does take action, they should be taking action to short-sellers too and do it both ways. It shouldn’t be just one-sided. That may happen or may not happen, but again, if you guys get involved, just be careful. You’re seeing a lot of… I get IT. TD Ameritrade, I’m sure it’s not going to be limited to them, to just limit what you could buy and sell what’s going on. But Daniel, you said you looked at the calls yesterday. What were they?
Daniel Creech: I was trying to look at just some different calls and puts and just see the bid and the ask, the difference between a bid and ask and the price. It was just hilarious. It is.
Frank Curzio: Buy and sell.
Daniel Creech: Which is why there were several dollars in between different strikes and all that.
Frank Curzio: What was it? How much?
Daniel Creech: Oh, there were several, a couple of them. There could have been a lag and some were behind because when things are going up and down hundreds of percent, I can’t imagine everything that goes into those, but there was calls and puts that had five, six, $8 spread differences. That’s just unbelievable. Be careful if you’re going to wait in there and have fun.
Frank Curzio: I know. Expect to lose your money, but still, it’s crazy times now. I wanted to talk about some of the earnings. We saw Microsoft’s report, which was… Microsoft is unbelievable. It blew up the numbers. The stock initially went up and then it’s flat, as I’m talking right now. I think it’s up a little. It bit went back up, but the numbers that they reported, Azure, is the cloud platform, a 50% rate in growth. I want to talk about a small-cap company. You grow 150%, 100% of that. This is one of the largest companies in the world, growing sales of their biggest division by 50%, meaning that they definitely have pricing power, and they definitely have more customers coming online. Guys, when you think cloud, it’s simple, you just think that they’re tracking every single step of you.
Frank Curzio: They’re keeping all this data into the cloud. Now, if they have the cloud, they have this massive amount of storage. Now, you can throw AI on it, artificial intelligence, and artificial intelligence only works when you’re able to analyze data for very, very long period of time, which they’ve been doing for 10, 15 years now. We just didn’t know about that long ago, but it’s not so much where people should be scared. “Oh, they know what I’m doing.” Listen. They know exactly what you’re going to do right now. They know where you’re going. Listen. We’re creatures of habit. We drink coffee at the same time. We go to the bathroom at the same time.
Frank Curzio: We go on vacation at the same time. We do the same things. We work same hours, so they know everything we’re going to do before we do it, how we buy, what we spend on, what we need. That’s gold to any company in the world that wants to have a massive return on ad spend because you know exactly what they’re going to buy. Just seeing these numbers… AWS is going to come out. I guess Amazon, they’re going to report similar numbers, massive growth. Those are the two kings of the cloud. Pretty incredible. It wasn’t just them. It wasn’t just that division. It was divisions all across the whole company.
Daniel Creech: They are basically just beating across the board handily. Advertising revenue jumped 2% year over year. It’s not a huge increase, but it’s a big deal because in the previous quarter of this year, ending in September, it declined 10%. You pointed out the cloud revenue jumped 50% year over year. That’s up from 47 and 48% growth in the last couple of quarters in this year. It’s amazing. It’s around 1.8 trillion, almost $2 trillion market cap and they’re growing those divisions that fast. It’s incredible. You’re going to see more separation.
Daniel Creech: Anytime they talk about… I don’t want to beat a dead horse here because I’ve talked about it several times. We’ve joked and said Microsoft, Apple, and Microsoft, Facebook, they’re such great businesses as far as the Return on Capital and Return on Investment. It’s hilarious. The headlines about breaking them up and stuff, I think should be ignored and/or bought on weakness. This report is another one of those. They’re huge conglomerates and growth is still… If you’re growing everything at 15 to 50%, why not have a 30 P/E, price-to-earnings multiple?
Frank Curzio: It is really incredible. I’m just looking at Xbox. It grew 40%. It came out with a new one. You have… LinkedIn grew tremendously. Every single division of this company is just on fire right now. I’m trying to bring this up here just to see it. It’s flat today. It was up a lot more, but the market cap is $1.7 trillion. Have fun. Go on Google. Look at the GDP of certain countries. I’d say that’s bigger than 80%, at least. $1.7 trillion is their market cap. That is unbelievable. You know what? They’re going to get bigger and bigger and bigger. Based on the numbers that they reported, it’s not even trading at 30 price-to-earnings. It’s trading at a cheaper multiple than that, so they grow a lot faster. Also, we have Apple.
Frank Curzio: Apple is coming out. I expect Apple numbers to be really, really good. It’s run-up to a new high. Now, they’re coming back favored, a lot of these large-cap stocks. Microsoft has run-up, and I got a thing here. Here, you see a Microsoft run-up from 212 to 230 before they reported and Apple. You saw that rotation out of cyclicals and things like that, which were doing fantastic in the past few months, since September to beginning of January. Now, we’ll see what happens going forward. Guys, just be… That’s why you have our newsletters from Curzio Research.
Frank Curzio: We’re aware of these trends. We see what’s going on. We’re trying to position you in them. We’ve done a very good job getting cyclicals early, getting it before everybody was telling you cyclicals are great. We bought Goldman Sachs and a couple of guys made fun of me three, four months ago, over 40%. Now, everyone loves the banks. Just getting into these different sectors ahead of the crowd, it’s not that difficult to see. We’ve been able to do it. It’s a lot of fun right now, but I’m sure Apple’s going to blow the numbers, right, Daniel? I can’t picture them not blowing out the numbers.
Daniel Creech: Of course, anything could happen, but I would expect huge growth. I’d expect them to impress us. They always do. They’re just one of those goofy machines. It just seems like they’re going to keep taking over and taking over. They’re over two trillion, their market cap. Do you have it up, in front of you?
Frank Curzio: Let me see.
Daniel Creech: I think it’s already over two trillion because I think they have the-
Frank Curzio: It might be. Let me see.
Daniel Creech: They hold the number one spot.
Frank Curzio: I’ll take a look right now. Let me bring this up for you guys. This is Curzio Research’s YouTube page, guys. We’re getting a lot of traction now. We show a lot of charts and figures and how we do our research. Everything’s in video format. We’re going to be doing everything in video format. My newsletters are video format, but a lot of this stuff, especially daily reports and stuff like that, I do your live streaming and everything. That can be found at Curzio Research’s YouTube page. I know a lot of you listen to this on iTunes, but if you want to see my face, my ugly face, and Daniel’s pretty face, you could actually do that, and you’ll see everything on YouTube, but let me see the market cap. It’s only 2.4 trillion.
Daniel Creech: There you go.
Frank Curzio: 2.4 trillion. Do you know how much money that is?
Daniel Creech: Nope. Can’t even fathom it, to be honest with you. It’s crazy.
Frank Curzio: 2.4 trillion. I want to show you guys one last thing here. This is the briefing platform, which is really, really cool. It just gives you… It’s almost like a CliffsNotes version of everything that’s going on, but it’s not all in your face where it’s very difficult, but this is a lot of things they do. This is Apple’s first-quarter earnings preview. I can look through this and it says, “Estimates calling for $1.41.” Revenue of over $100 billion in sales for the quarter. Gross margin is 38%. You’re looking at iPhone revenue of 60 billion that they’re expecting, but I’ll go through this and it’s quick. Then I can really dig in and say, “What numbers do I expect to make or miss? Is it iPad, Apple? What are they going to say?” It’s a good start, but it gives you… This is what they do. Then after earnings, they’ll give you all bullet points on the conference call and what they said, but expect Apple-
Frank Curzio: It’s trading that way because it’s run-up tremendously. That’s going to really blow out the earnings, guys, and that’s expected, but that’s briefing.com. I don’t get paid by them. They raise the prices and stuff like that. I guess they should. It’s a really good system that we use every day. It just gives you really a CliffsNotes version of everything that’s going on, non-biased. You don’t have to worry about listening to a commentator that has a bias or whatever, an anchor or whatever. It’s really, really cool, just to have all this information, calendars, and all kinds of stuff on it. It’s one of the research tools we use. Dan, I know you wanted to talk about it because since we have two upcoming guests that are fantastic. I’ll give them to you. Marc Randolph is next week. He’s the co-founder of Netflix. Awesome.
Daniel Creech: That’s awesome. That is great.
Frank Curzio: He’s going to be on two weeks from now. Next week, we’re interviewing Spencer Abraham, who’s a former Secretary of Energy. I interviewed Mark and that’s coming out in two weeks. I was going to put out that interview. He wanted me to push it out a little bit further because he’s launching an amazing podcast. We had a great conversation, and I told him what I tell everyone else, which is there’s hundreds of people that come to me with podcasts. It’s not competitive or anything because you can listen to whatever you want. I said, I told him, “Listen. Over 100 people coming to me and zero have stuck with it,” because they don’t realize the work you have to put in, the dedication you have to put, the guest you have to interview them.
Frank Curzio: You have to get every guest that we interview or I interview vetting, going through everything that they wrote, everything they settled the past six months, which is great because I get to learn. After these interviews, they all say the same thing, like, “Wow. That was really great. That was awesome,” because I actually let them talk and don’t cut them off every two seconds. I told them that. “Stick to the program. Make sure you have podcasts, whatever day it is.”
Frank Curzio: If it’s weekly, I think it says weekly, I said, “Make sure you do it at that time. It’s available because it’s like a TV show. If you don’t do it for a week or two, people are going to leave. They’re not going to come back.” I tell everyone the same story, how difficult it is, but you have to be passionate about it. You can’t just do it as, “Hey. I want to do it for…” No. Most people do for months, weeks, and then they stop, but he’s coming out with his podcast. Anyway, what I was getting to, which is long, very long-winded, is that we’re going to have a guest. We usually take a pick from our guests. I’ll start a club. I got bad news for you, guys, because we’re going to get a pic from Daniel today. I’m just curious.
Daniel Creech: Well, maybe not today. You’ll get it tomorrow.
Frank Curzio: It’s coming out tomorrow. We’re going to mention a couple of stocks. We’ll take one of those, I guess, but I’m just curious to know what it is. This way, I could short it.
Daniel Creech: Get it on WallStreetBets.
Frank Curzio: We don’t want this guy, Daniel, on Wall Street’s blog.
Daniel Creech: Good publicity, I guess.
Frank Curzio: All kidding aside, the last pick, because sometimes… I try to have a pick every week, but sometimes we’ll have guests that are not analysts and we might not have a pick, but we try to have one. Maybe I’ll throw one to Dan, but the last pick Daniel threw in was Chubb.
Daniel Creech: Well, no. That was for CRA.
Frank Curzio: Oh, CRA.
Daniel Creech: No. In fact, my last pick, $4 stock, was Toll Brothers, which we got out for a small 2% gain and it’s rallied significantly since then. It was bad timing. We got out for a 2% gain.
Frank Curzio: Chubb was one of the ones that you recommended in CRA, which is up how much? This is just a couple of months ago.
Daniel Creech: 27%. It’s a half position, so it ran away from us a little bit, but it’s coming out with earnings soon, so we’ll reevaluate maybe at the second half.
Frank Curzio: This is, again, I think two, three months ago.
Daniel Creech: Toll Brothers is aggravating because, like I said, we got a 2% gain, but if you forgot that or missed that update, congratulations, because now you’re up probably 15, which is nice. For tomorrow’s pick, it’ll be somewhere between… I’ll tease it a little bit. I’ve been looking at gun stocks, Sturm, Ruger, & Co., and Smith & Wesson, some ammo stocks. I also like oil and energy stocks. I wish they were pulling back oil when everything was down earlier, but those things are rallying. We want to look at momentum, and it’s not just about fundamentals. This is a fun trading newsletter, so we’ll see something about volatility. I’ve run several screens. We’ll come out with something tomorrow for everybody.
Frank Curzio: You like gun stocks. Why?
Daniel Creech: Two reasons. One, I think they are solid businesses and we are moving in a direction of the country towards being more aware of everything. I think there’s a lot of political unrest. There’s obviously calls, not both sides, but political headwinds about defunding police and lack thereof. You also have riots and more unrest and all kinds of stuff going on, so you don’t have to look very hard to think, man… To have the news paint a negative picture. If you look at FBI’s background checks and things, they’re up 30, sometimes 30% year over year, depending on when they report and a lot of first-time gun buyers. Those are good businesses. I’m a gun guy. I’m from a small town. I like the Second Amendment. There’s been talk about taking that away. I think there’s some headline risk-reward there around a good business, that you can really look at.
Frank Curzio: Well, I just pulled up the chart for Sturm, Ruger, & Co. here… No, I’m sorry, for Smith & Wesson, and these things ran really higher since December. You’re looking at, at least $15. It went to 22 and it’s pulled back significantly. It’s $16 right now. I did ask one of my friends who shoots. I bought my first gun as well. I shoot, which is really cool. I wouldn’t say I shoot because I’m disrespecting everyone who does shoot because I really didn’t know anything about guns. I was a subscriber who is in that business. I came down. I was visiting anyway. We went to the shooting range with him, and it was pretty amazing. I wanted to buy a gun, but this person, first of all, has lots of guns and everybody wants to buy them off him. Second of all, he said he has two shotguns. The shotgun shells, he said that someone was quoting him at $5 for one.
Daniel Creech: Ammo is going crazy right now. It’s nuts. You can’t blame them. When you look around, like I said, there’s a lot of unrest, a lot of nervousness out there, and it’ll play on what you think is going to happen. Why would that momentum stop? It’s one of those things
Frank Curzio: It just makes you think too. If someone robbed your house, you better make sure you hit them. It’s five bucks for every time you miss them.
Daniel Creech: It’s cost-effective.
Frank Curzio: It could be 50, 100 bucks before you shoot the guy.
Daniel Creech: I know.
Frank Curzio: It’s pretty crazy. This price is insane. We covered a lot. There are earnings coming out. Any final thoughts Daniel? The SPACs and GameStop, we covered, but any parting thoughts here?
Daniel Creech: Enjoy the entertainment side of it. Don’t lose faith or hope or get aggravated with it. Just enjoy that. If you’re participating, do it in a risk-adjusted manner. Fundamentals will matter at some point, but we’ll try to call out the environment we’re currently in and help you navigate through that. It’s entertaining, but there’s nothing crazy or ordinary that needs regulation here, in my opinion.
Frank Curzio: I don’t think so either, but I do think that there’s a fundamental change that is taking place right now in the markets. When I say… It’s structural. This isn’t a trend. This isn’t something, “Oh, it’s going to go up. It’s going to disappear.” You have all these people who are trading getting together, speaking to each other, massive groups. Again, they’re not targeting anybody. It’s not that. They took down a 12 and a half-billion-dollar firm. They took it down. They got to get bailed out, a 12 and a half-billion-dollar firm. It’s going to change the landscape for short-selling forever because you used to be able to go on TV. All these guys say, “What channels?” I went to so many different conferences, Daniel, the Ira Sohn Conference, the Value Investing Congress Conference. That was used as a platform for David Einhorn, who loves to short a lot of stuff and also channels.
Frank Curzio: They used to go up there, and now they broadcast on CBC, which means you never have to go again because it was $5,000 a ticket. They used to go up there and say, “Here’s what we short.” As soon as they put that name on there and they do a 40-minute presentation, 30-minute presentation, you can look at your phone, and five, 10, 15, 20% was down. Those days, I think, are over. Now you’re looking at… If you’re going out there saying what you’re shorting, especially if it’s a small-cap name… Large caps are a little different. It’s just much more volatile, a lot more volume in them, but when you’re looking at small-cap names where… I don’t even know GameStop’s marketing cap. What’s GameStop’s marketing cap? Do you have any idea? Do you have it there, Daniel?
Daniel Creech: No. It went from two billion to 10 billion. I’m not sure.
Frank Curzio: It’s much more than that.
Daniel Creech: I’m getting mixed readings now.
Frank Curzio: It’s much more than that.
Daniel Creech: If you check two different sites, you get different percentages and everything, but-
Frank Curzio: I’m trying to-
Daniel Creech: This says, “10 billion,” but that can’t be right because that’s what it was a couple of days ago.
Frank Curzio: Let me see. It’s amazing. Guys, you got to be careful. It’s 22 and a half billion dollars. This is a market cap that was a couple of hundred million dollars. It’s $22 billion right now. That is absolutely insane. Let me bring this up for you guys. If I was GameStop, I’d raise $10 billion right now. I’d raised 5 billion at 200. That’s what I would do. That’d be great. Now, you changed the whole landscape of your company. It’s insane. But that’s the market we’re in if you want to play around. I’m not going to say, “Stay away from me. You’re crazy,” or criticize the kids, or even criticize Wall Street. This is the way it is. This is what we do here at Curzio Research, guys. You can bitch and complain and you can hold up a sign.
Frank Curzio: You hate what the Feds are doing. Go ahead. That’s your right. But if you want to become wealthy, create generational wealth, put your feelings aside, which is very hard for everyone to do, even for guys like me who have been in the business for 25 years. Put your feelings aside. See what’s working and put a little money into it, something like this, with all these companies that have huge short ratios. It’s not too difficult to find. You can find that at Yahoo Finance, which is a free site. I was just bringing up a free site, CNBC, so everyone could follow along. Not that I use them for charts or anything. We have professional services here, but if you want to dabble in that, dabble and just understand, only use capital that you can absolutely lose because if you can lose three, four, or $5,000, you’re not looking at 3X gains.
Frank Curzio: You’re looking at 20 50, 100X gains right now. That’s a good risk-reward if you could afford to lose that money. It’s not for someone that only has 10,000 in their account and going all in. No, but worth it. You’ll see more interest than ever. That’s why this is fundamental. So many more people are asking me about stocks, how to trade, how to get in, which is a good thing, but it will come to an end. It hasn’t yet. Valuations will matter eventually, but right now, they don’t and you just got to stay ahead of the crowd. I guess we’ll end it there. Daniel, I want to thank you so much for coming on. I really appreciate it, man. We covered a lot today. Really great stuff. Great work. Thanks, buddy. I really appreciate it.
Daniel Creech: A lot of fun. Have a great week, everyone.
Frank Curzio: All right. Guys, that’s it for me. Be sure to check out Curzio Research’s YouTube page. Again, all this is on there. It’s really cool. I’m bringing up charts and figures. This is for you. I like watching those podcasts and video formats on ESPN and Pardon the Interruption, things like that. We’re just getting really, really great feedback. The fact that I could share my screen, show you what I’m doing, it’s more than just giving out stock picks, which we do, especially through our newsletters, but it’s educating, trying to help you become a better investor long-term.
Frank Curzio: Again, that’s what we all want to do. We want to make sure our kids have better lives than us and make sure we have a nice nest egg to give them. We really focused on that here at Curzio Research. Again, you can find all that stuff at Curzio Research’s YouTube page. Subscribe, like it, again, it’s starting to get a lot of traction, and we’re going to have content on there, that you’re not going to see anyplace else, so definitely take a look at that, especially for daily content. That’s it for me. As always, I’ll see you guys in seven days. Take care.
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