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Dear Reader,
Mid-May is always an important time for me - and the markets. It's when we get a look at the 13F filings among the big hedge funds. This is historically an opportunity for some of the best stock pickers to display their grit, prove their mettle. I remember first hearing about Bill Ackman's big bet on Chipotle Mexican Grill Inc. (CMG) a few years ago through a 13F.
He took his stake with a big bet on steak burritos. And the company, through innovation and great leadership, created an incredible brand and grew solid fundamentals that built sustainable business success.
And that is what it's supposed to be about in this world of finance. It was supposed to rely on good money investing in great businesses - strong fundamentals, great financial discipline, and real assets.
Well... we can throw that out the window now.
Because two 13F filings show that actual business models don't matter anymore - only insane day-trading models fit into the world's meme craze.
These People Are Professional Bag Holders
Today's 13F filings showed that Ray Dalio's Bridgewater Associates had been buying and selling Gamestop Corp. (GME) and AMC Entertainment Holdings Inc. (AMC) - the two archetypal meme stocks that have ping-ponged around the markets for the last two years since the meme stock craze began.
This isn't about good businesses - it's about exploiting the never-ending whirlwind of momentum in junk stocks.
But it gets worse - one of the best-performing hedge funds of all time - Renaissance Technologies - is taking up stakes in Bed Bath & Beyond Inc. (BBBY), a bankrupt garbage stock, and Tesla Inc. (TSLA), which has outrageous valuations heading into a recession.
Maybe they see in Tesla what I do: a long-term electricity arbitrage company via batteries. Maybe they don't.
But it's clear that they have moved into the world of pure momentum without any interest in the underlying company or its business survival.
This is a warning sign of something worse to come and a tacit admission that this is no longer about building great companies in America. It's about playing a casino, with the hope that you're not the last person holding the bag on zombie stocks that will ultimately die off in the years ahead. They're now preying on the suckers... and that's brutal to watch. (learn how NOT to be the sucker with me in flashpoint trader)
Today's Momentum Reading
WORLD'S BIGGEST INDICATORS
Broad Market: Yellow
S&P 500: Yellow
Recap: The World's Biggest Indicator (Momentum) is Yellow...
We have no clear trend in this market, despite the fact that we are barreling to a recession. Indicators for a recession are the worst that we've seen since 1982 - and the government is simply trying to borrow and spend more to avoid our growth from being negative. How insane is that... Borrow, spend, deliver 1% growth on borrowed money that creates depreciating returns, and then claim that you're doing a great job. It's completely insane. (trade it til…
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.