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Ray Dalio’s bubble indicator finds US stocks aren’t dangerously high – but 50 of the 1,000 biggest companies are in ‘extreme bubbles’

ray dalio
Ray Dalio.

  • Ray Dalio's bubble indicator suggests the US stock market isn't dangerously high.
  • However, it found that 5% of the top 1,000 US companies are in "extreme bubbles."
  • It also identified froth in stock prices, new buyers, bullishness, and use of leverage.
  • Visit the Business section of Insider for more stories.

Ray Dalio's bubble indicator suggests US stocks aren't trading at unsustainable prices and could climb higher.

The billionaire co-chief of the world's largest hedge fund, Bridgewater Associates, said in a research note this month that his market gauge is at the 77th percentile for the overall US stock market. Its readings for the bubbles in the 1920s and 1990s are in the 100th percentile.

However, Dalio noted that 5% of the top 1,000 US companies - including several emerging-technology players - are currently in "extreme bubbles." Still, that's less than half of the percentage at the height of the dot-com boom.

Dalio's bubble indicator combines six measures of the stock market. They are: 

  • How high are prices relative to traditional measures?
  • Are prices discounting unsustainable conditions?
  • How many new buyers have entered the market?
  • How broadly bullish is sentiment?
  • Are purchases being financed by high leverage?
  • Have buyers made exceptionally extended forward purchases to speculate or protect themselves against future price gains?

The Bridgewater chief's gauge shows US stocks are priced in the 82nd percentile on traditional metrics, and the 77th percentile in terms of the earnings growth required to outperform bonds.

Its reading for new buyers is in the 95th percentile, largely due to the boom in retail investing. Bullishness is in the 85th percentile, partly due to the "exceptionally hot" IPO market, which has been supercharged by a flood of special-purpose acquisition companies or "SPACs."

Dalio's yardstick found that leveraged purchases, fueled by day traders snapping up record volumes of call options on single stocks, are in the 79th percentile.

In contrast, forward purchases are in the 15th percentile - compared to the 100th percentile in the late 1990s - as the pandemic has depressed corporate investment and weighed on the number of mergers and acquisitions.

The hedge-fund billionaire's indicator is flagging some froth in stocks. However, it's positively optimistic compared to Warren Buffett's favorite gauge and "The Big Short" investor Michael Burry's recent warning that the stock market is "dancing on a knife's edge."

Read the original article on Business Insider

Warren Buffett and Elon Musk are shaking up markets this year. Here’s a look at the ‘Buffett Bump’ and the ‘Musk Move.’

Warren Buffett and Elon Musk
Warren Buffett (left) and Elon Musk (right).

  • Warren Buffett and Elon Musk are moving markets this year.
  • Berkshire Hathaway's bets on Verizon and Chevron boosted both stocks this week.
  • Musk's tweets have lifted GameStop, Dogecoin, Etsy, bitcoin, and other assets.
  • Visit Insider's homepage for more stories.

Warren Buffett famously moves markets with his decisions, as many investors trust the Berkshire Hathaway CEO's judgment and race to buy what he's bought and sell what he's sold.

Other investors anticipate that behavior and rush to take advantage by buying or selling before the Buffett faithful, making the process somewhat self-fulfilling.

Tesla CEO Elon Musk has showcased a similar ability in recent weeks, driving stocks and cryptocurrencies skyward with his tweets.

The "Buffett Bump" was on full display this week after Berkshire disclosed multibillion-dollar stakes in Verizon, Chevron, and Marsh & McLennan after markets closed on Tuesday. The telecoms titan's stock price jumped 5% on Wednesday, while shares in the energy giant and the financial services group rose about 3%.

The rallies added about $19 billion in total to the three companies' market capitalizations.

Similarly, there have been "Musk Moves" in numerous securities this year. The Tesla chief's tweets about GameStop, Dogecoin, and Etsy helped to - at least temporarily - drive their prices higher.

Musk's tweets about the encrypted-messaging app Signal and the techno song "Sandstorm" have been linked to run-ups in entirely unrelated securities.

Moreover, Tesla's purchase of $1.5 billion of bitcoin this month has been a key catalyst in the digital coin's latest rally. Musk's endorsement was hailed as a milestone in mainstream acceptance of cryptocurrencies.

It's clear that Buffett's backing continues to translate into billion-dollar increases in companies' market values. He  has some competition from Musk, whose stamp of approval has a similar, albeit less precise and sustained, effect on markets too. 

Read the original article on Business Insider

Howard Marks and Joel Greenblatt discussed market bubbles, tech stocks, and investing tips in a recent interview. Here are the value investors’ 9 best quotes.

Howard Marks
Howard Marks
  • Howard Marks and Joel Greenblatt discussed bubbles, tech stocks, and investing tips.
  • The value investors suggested some companies deserve their lofty valuations.
  • Here are Marks and Greenblatt's nine best quotes from the interview.
  • Visit Business Insider's homepage for more stories.

Value investors Howard Marks and Joel Greenblatt discussed market bubbles, tech stocks, and the key things they've learned during their careers in a recent RealVision interview.

The Oaktree Capital Management co-chairman and the co-chief of Gotham Asset Management agreed there were signs of irrational exuberance in markets.

However, they argued that some technology companies deserve aggressive valuations, and rock-bottom interest rates are limiting investors' options. They also questioned the long-term consequences of the US government's efforts to prop up asset prices.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them - and the group has already nearly doubled over the past 3 months

Here are the nine best quotes from Marks and Greenblatt, lightly edited and condensed for clarity.

Marks: "We are definitely in a time of optimism that is largely man-made, stemming primarily from the actions of the Fed and the Treasury to counter the economic weakness of 2020. They produced a resurrection of risk-bearing. FOMO took over from fear of losing money. And it really led to very strong demand for securities. So that's worrisome."

Marks: "We see risky behavior ranging from the rapid acceptance of SPACs, to the ease of doing IPOs, phenomena like GameStop, and the heavy involvement of retail buying, margin buying, and option buying. A lot of these taken together could be signs of a bubble. But I think that most asset valuations are reasonable relative to the level of interest rates."

Marks: "A 'bubble' connotes unreasonably optimistic psychology and a belief that there's no price too high for the bubble asset. I don't think that those are going on today. I just think that all prices are up because of all the demand, as well as returns being down."

Read more: Tom Finke recounts how he went from running a $345 billion money manager to joining in the SPAC boom as a sponsor - and shares 3 characteristics investors should look for in an ideal blank-check company

Greenblatt: "I do not believe there will be hundreds of other Amazons, Googles, Microsofts out there. Many companies are priced as if they will be. I think that's an element of froth."

Marks: "The 40-year tailwind of declining interest rates that has lifted the price of all assets is at an end."

Greenblatt: "If you take a business like Microsoft, Amazon, or Google and actually put a reasonable growth rate on them for five years, and then look at where you are in five years, it's 30 or 40 times earnings. Your results show that they're not astronomically priced. They're, in many cases, reasonably priced."

Marks: "I always say that if you stand at a bus stop long enough, you'll get a bus. But if you run from bus stop to bus stop, you may never get a bus. And I think that's an important thing for people to accept -  nothing will work all the time." - advising investors not to switch from one strategy to another.

Read more: Short-seller Carson Block says the day-trading revolution that hit GameStop and other stocks is changing the playing field for investors like him. Here's how his firm is reinventing itself - and what he's betting against today

Greenblatt: "The people who are really successful at investing do it for love, do it for the fascination, do it for the challenge. And those are the people who are most successful. They, as Warren Buffett would say, tap dance to work every day. And that's really the secret."

Marks: "It's not what you buy, it's what you pay for it. Investing is a matter of buying things well, not buying good things."

Read the original article on Business Insider

‘Big Short’ investor Michael Burry says Tesla stock could plunge 90% without major fallout – and a slump could reduce speculation

Michael Burry
Michael Burry.

  • Michael Burry says Tesla stock could plunge 90% without crashing the financial system.
  • "The Big Short" investor suggested a slump could temper speculation.
  • Burry, who is short Tesla, has criticized reckless investing in recent months.
  • Visit Business Insider's homepage for more stories.

If Tesla stock plummets 90% this year, it would put a stop to cult-like support of certain companies without endangering the financial system, Michael Burry tweeted on Monday.

"$TSLA below $100/share by later this year will not crash the system," the investor said. "There is no reflexivity in such a fall," he continued, dismissing the risk of a positive feedback loop where investors lose confidence and hoard their money, hurting the economy and scaring investors even more.

"But it would trigger the end of an era for a certain type of investing," Burry added. His latest comments echo his recent criticism of speculative betting on Tesla, bitcoin, and GameStop, and his warning of "dangerous" bubbles in markets last week.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them - and the group has already nearly doubled over the past 3 months

Burry is best known for his billion-dollar bet against the US housing market in the mid-2000s, which was immortalized in author Michael Lewis' book "The Big Short." The Scion Asset Management boss also laid the groundwork for the recent GameStop short-squeeze when he invested in the video-game retailer in 2019.

The investor has been skeptical of Tesla since at least last fall, when he began tweeting about the automaker's limited profitability, reliance on sales of regulatory credits, and sky-high valuation relative to its industry peers.

Burry revealed he was short Tesla in December and called its stock price "ridiculous." Elon Musk's electric-vehicle company has soared in market capitalization by 37% to north of $780 billion since then.

Read more: Tom Finke recounts how he went from running a $345 billion money manager to joining in the SPAC boom as a sponsor - and shares 3 characteristics investors should look for in an ideal blank-check company

The Scion chief compared his bet against Tesla to his wager on a housing-market collapse in a January tweet. "My last Big Short got bigger and bigger and BIGGER too," he said. "Enjoy it while it lasts."

It might seem extreme for Burry to suggest a drop in Tesla's stock price from more than $815 as of Friday's close to less than $100. However, the company's shares traded at that level as recently as last April.

Here's a chart showing Tesla's remarkable stock performance over the past year:

Tesla_stockchart_150221
Read the original article on Business Insider

Warren Buffett’s Berkshire Hathaway has quietly racked up a $6 billion gain on GM and BYD in under 5 months

warren buffett
Warren Buffett.

Warren Buffett is a surprise winner in the electric-vehicle revolution.

Berkshire Hathaway owns stakes in General Motors and Chinese automaker BYD.

Buffett's company has scored a $6 billion gain on the two stocks in less than five months.

Visit Business Insider's homepage for more stories.


Warren Buffett's Berkshire Hathaway is often associated with insurance, railroads, and other humdrum industries. However, the famed investor's conglomerate is quietly cashing in on one of the hottest sectors around: electric vehicles.

Buffett's company has notched a $6 billion gain on its General Motors and BYD bets in the past five months alone, as shares in the US and Chinese automakers have surged to record highs.

Read More: Barclays says buy these 33 beaten-down stocks that are perfectly poised to capitalize on the reopening of the economy in the years ahead

The investor enthusiasm reflects GM's plans to roll out 30 new electric vehicles worldwide by 2025, and BYD's rapid growth and status as the world's largest electric-vehicle manufacturer.

Berkshire first invested in GM in 2012, then gradually grew its position to 80 million shares worth $2.4 billion as of September 30 last year.

The automaker's shares have soared more than 125% since then, boosting the value of Berkshire's stake to $4.3 billion as of Thursday's close, assuming the size of its holding hasn't changed.

Buffett and his team bet on BYD even earlier, snapping up 225 million shares at a cost of around $1 per share in 2008. BYD's Hong Kong-listed shares now change hands at the equivalent of $34 each, valuing Berkshire's position at $7.8 billion today.

Read More: Bank of America shares 9 stocks to buy as the pandemic prompts consumers to shift their spending habits towards 'solitary leisure' activities like golf and biking

The Chinese carmaker's stock price was under $16 at the end of September, meaning Berkshire's stake has jumped in value by $4.2 billion, or almost 120% since then.

Combine the $1.9 billion gain on GM with the $4.2 billion gain on BYD, and Berkshire has racked up about $6.1 billion in unrealized gains on those two stakes in under five months.

Buffett has been criticized for not investing in high-flying technology stocks such as Amazon and Alphabet over the past decade. Between Berkshire's massive Apple stake and its exposure to the electric-vehicle revolution via GM and BYD, the investor won't be too worried.

Read the original article on Business Insider

‘Big Short’ investor Michael Burry blasts trading apps, calls Robinhood a ‘dangerous casino’

Dr. Michael Burry
The "Big Short" investor Michael Burry.
  • The "Big Short" investor Michael Burry criticized zero-commission trading apps on Tuesday.
  • Some sell order flows to Wall Street and encourage risky, short-term bets, Burry said.
  • Burry also blasted Robinhood's gamification of investing, calling its app a "dangerous casino."
  • Visit Business Insider's homepage for more stories.

Michael Burry on Tuesday dismissed the idea that Robinhood and other trading apps were empowering retail investors and disrupting the financial industry.

"The #mainstreetrevolution is a myth," the Scion Asset Management boss tweeted. "Zero commissions and gamified apps were designed to feed flows to the two most influential WS trading houses."

Burry, best known for his starring role in Michael Lewis' book "The Big Short," was referring to Robinhood and some of its peers selling their order flows to Wall Street firms such as Citadel.

Read more: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold - here's why the bank says it could end up 'worthless'

"A few HFs got hurt," Burry said, referring to short-selling hedge funds such as Melvin Capital losing money during the meme-stock boom in January.

"But if retail is moving toward more trading and away from fundamentals, WS owns that game," he continued. "#Stonks by design."

In other words, Burry's view is that the new generation of cheap, fun, and easy-to-use trading platforms are helping Wall Street instead of upending it. Specifically, they send order flows to the likes of Citadel and push people into day trading instead of long-term investing, playing to the strengths of professional operations.

Read more: Credit Suisse says to buy these 16 'highest-conviction' stock picks that are set to outperform despite the market's contrarian view

Burry singled out Robinhood in a tweet last week, sharing screenshots from the app to argue it turns investing into a casino game.

"If this looks like a serious investing app to you, and NOT a dangerous casino 'fun for all ages,' you've been #gamified," he said.

Robinhood didn't immediately respond to a request for comment from Insider.

Burry's comments may carry extra weight, as he's most likely been a major beneficiary of the retail-investing boom. Scion owned 1.7 million GameStop shares at the end of September, which it could have sold for more than $250 million during the buying frenzy last month.

Read the original article on Business Insider

‘Big Short’ investor Michael Burry blasts trading apps, calls Robinhood a ‘dangerous casino’

Dr. Michael Burry
The "Big Short" investor Michael Burry.
  • The "Big Short" investor Michael Burry criticized zero-commission trading apps on Tuesday.
  • Some sell order flows to Wall Street and encourage risky, short-term bets, Burry said.
  • Burry also blasted Robinhood's gamification of investing, calling its app a "dangerous casino."
  • Visit Business Insider's homepage for more stories.

Michael Burry on Tuesday dismissed the idea that Robinhood and other trading apps were empowering retail investors and disrupting the financial industry.

"The #mainstreetrevolution is a myth," the Scion Asset Management boss tweeted. "Zero commissions and gamified apps were designed to feed flows to the two most influential WS trading houses."

Burry, best known for his starring role in Michael Lewis' book "The Big Short," was referring to Robinhood and some of its peers selling their order flows to Wall Street firms such as Citadel.

Read more: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold - here's why the bank says it could end up 'worthless'

"A few HFs got hurt," Burry said, referring to short-selling hedge funds such as Melvin Capital losing money during the meme-stock boom in January.

"But if retail is moving toward more trading and away from fundamentals, WS owns that game," he continued. "#Stonks by design."

In other words, Burry's view is that the new generation of cheap, fun, and easy-to-use trading platforms are helping Wall Street instead of upending it. Specifically, they send order flows to the likes of Citadel and push people into day trading instead of long-term investing, playing to the strengths of professional operations.

Read more: Credit Suisse says to buy these 16 'highest-conviction' stock picks that are set to outperform despite the market's contrarian view

Burry singled out Robinhood in a tweet last week, sharing screenshots from the app to argue it turns investing into a casino game.

"If this looks like a serious investing app to you, and NOT a dangerous casino 'fun for all ages,' you've been #gamified," he said.

Robinhood didn't immediately respond to a request for comment from Insider.

Burry's comments may carry extra weight, as he's most likely been a major beneficiary of the retail-investing boom. Scion owned 1.7 million GameStop shares at the end of September, which it could have sold for more than $250 million during the buying frenzy last month.

Read the original article on Business Insider

‘Big Short’ investor Michael Burry says Tesla’s $1.5 billion bet on Bitcoin was a distraction – and Dogecoin’s record price signals a massive bubble

Michael Burry
"The Big Short" investor Michael Burry.
  • "The Big Short" investor Michael Burry suggested Tesla bought Bitcoin to distract from regulatory issues in China.
  • Burry also pointed to Dogecoin's record price as evidence of a huge market bubble.
  • The Scion Asset Management boss revealed he was short Tesla in December.
  • Visit Business Insider's homepage for more stories.

Michael Burry questioned Tesla's Bitcoin investment and sounded the alarm on Dogecoin's record price in a series of now-deleted tweets on Monday.

"Chinese regulators summon Tesla on quality issues as consumers complain about quality ... but $TSLA bought $BTC," the Scion Asset Management boss tweeted, using the tickers for Tesla and Bitcoin. "In my mind's eye, so much #digitalconfetti."

In other words, Burry thinks Tesla may have timed its $1.5 billion purchase of Bitcoin to distract from its China troubles.

Burry, whose billion-dollar bet on a US housing-market collapse was chronicled in Michael Lewis' book "The Big Short," revealed he was short Tesla in December. He poked fun at Tesla CEO Elon Musk and the fact his company's stock price has moved in tandem with Bitcoin in another tweet on Monday.

"$TSLA and $BTC correlation coefficient is 0.951967 over the last six months," Burry said. "@elonmusk going for perfect unity? Nah, Elon dreams the impossible. He is determined to break unity. Correlation > 1. And he has history on his side. $TSLA and $BTC investors can make anything happen."

Tesla was not immediately available for comment when contacted by Insider.

Read more: Credit Suisse says to buy these 16 'highest-conviction' stock picks that are set to outperform despite the market's contrarian view

Burry, who unknowingly laid the groundwork for GameStop shares to skyrocket as much as 2,500% last month, took aim at Dogecoin in another tweet. The cryptocurrency, which was created as a joke, soared to a record high this week after Musk tweeted about it. It now commands a $10 billion market capitalization.

"A doge's breakfast maybe," Burry said. He linked to a Wall Street Journal story in which Dogecoin's creator said its current price of 8 cents was as absurd and nonsensical as GameStop stock being worth $325 at one point last month.

"We are in a blow-off top in all things," Burry continued, referring to a chart pattern that shows a steep increase in an asset's price and trading volume, followed by a rapid price decline.

"Markets have now bubbled over in a dangerous way," he said in an earlier tweet.

Burry hinted in yet another tweet that he expects a market crash in the coming months. He linked to "When The Levee Breaks," a Led Zeppelin song, and said, "This time we'll play it at the beginning, not at the end."

Read more: Tesla just invested $1.5 billion in bitcoin. Here are the bull and bear cases for the crypto, according to legendary macro trader Mike Novogratz and Goldman's wealth management CIO.

Read the original article on Business Insider

Meet the GameStop investor upending the stock market with cat memes, reaction GIFs, and fundamental analysis

GameStop millionaire u/DeepFuckingValue
GameStop investor u/DeepFuckingValue.

  • Reddit user u/DeepFuckingValue is a leading figure in Wall Street Bets' clash with short-sellers.
  • The value investor, who loves cat memes and reaction GIFs, claimed to have turned a $54,000 bet on GameStop into a $48 million fortune.
  • Ten of his Wall Street Bets peers shared their views of him with Insider.
  • Visit Business Insider's homepage for more stories.

An amateur investor who goes by u/DeepFuckingValue on Reddit and the name Roaring Kitty on YouTube has become an overnight celebrity in the battle between Wall Street Bets and Wall Street.

DFV's real name is Keith Gill, a 34-year-old financial educator for a Massachusetts insurance firm, according to the New York Times. He shot to fame this week for turning an initial $54,000 investment in GameStop in 2019 into a $48 million fortune as of Wednesday, according to screenshots he posted on Reddit that Insider was unable to verify.

Members of Wall Street Bets - a retail-investing subreddit - have led the charge in driving GameStop shares up as much as 2,000% this month. They have also worked in concert to spike the stock prices of AMC, BlackBerry, Bed Bath & Beyond, and other heavily shorted stocks. Their goal is to score quick profits and squeeze short-sellers into covering their positions, sending the stocks even higher.

DFV didn't respond to multiple requests for comment from Insider. However, several of his peers on Wall Street Bets shared their insights into his character and explained why he's earned their respect and admiration.

Cat memes and cash flow

DFV is a far cry from the stereotypical day trader many associate with Wall Street Bets. Rather than flitting from hot stock to hot stock, his only posts on Reddit have been screenshots showing the value of his GameStop position, dating from September 2019 to this Thursday.

His Reddit comment history and Twitter feed may be littered with cat memes and reaction GIFs, but DFV has repeatedly stressed that his goal is to invest shrewdly and maximize his long-term returns. 

He's calmly and confidently defended his GameStop investment thesis since his first post about it. He's dismissed daily price moves, trumpeted the video-game retailer's free cash flow, touted its cheap shares, highlighted its competitive moat, underscored the opportunity for share buybacks, and celebrated its shareholder-aligned management.

"I'm a fundamental value investor through and through," he said in a Reddit post in December 2019.

Read more: Value investor Adam Mead shares 7 key insights into Warren Buffett's Berkshire Hathaway after writing its complete financial history

On his Roaring Kitty YouTube channel, he even described GameStop as a "a roach not a cigar butt a la Warren Buffett," referring to the famed investor's analogy that buying cheap businesses in terminal decline can be like picking up a discarded cigar butt and enjoying one final puff.

"GameStop is an established, uniquely positioned player," DFV said. "Its final puff is a legitimate opportunity to reinvent itself as a premier gaming hub. That last hit might not be the prettiest or the cleanest, but it could get the job done."

Making the case

DFV laid out his investment case for GameStop in an hour-long YouTube video in July 2019, the month after he made the stock the biggest holding in his portfolio. The shares were trading around $4 then, giving the retailer a paltry $260 million market capitalization (it surged past $20 billion on Friday).

The amateur investor said he was bullish on GameStop because he viewed the threat of an industry-wide shift to digital game purchases as overblown, thought the negative sentiment around the company was overdone, and believed the value of its business was being overlooked.

While DFV takes investing seriously, he also plays to his audience. He often pairs a bandana with sunglasses, and recently dunked a chicken tender into a glass of champagne to celebrate his massive windfall - a reference to "tendies" being the slang for investment gains on Wall Street Bets.

Moreover, he has a self-deprecating sense of humor. When a commenter pointed out he had made a profit on his GameStop position in December 2019, he replied, "SO FAR BUT THAT IS IRRELEVANT YELL AT ME FOR BEING DUMB OR BE DOWNVOTED."

Read More: A chief investment strategist breaks down how the GameStop saga could upend long-standing practices on Wall Street - and shares her 4-part advice for navigating the frenzied trading environment

Yet DFV has been unabashed about the money he wants to make.

"Given the risk I've taken on, I'm shooting for at least 10x on the position," he said in a Reddit comment on November 2019. "15-20x would be terrific. 20x+ is possible but not worth seriously entertaining right now."

When GameStop shares hit $20 last December, he uploaded a screenshot to Reddit showing he had $1 million in cash and $2.5 million worth of stock and bullish call options.

DFV downplayed the rigorous research behind his lucrative bet in a Christmas Day video.

"When you have a thesis and by and large it unfolds as you hope that it could, that's nice," he said. "This was a true YOLO for me. I don't know what I was doing, I still don't."

He also underscored what the gains meant to him.

"When I was building this position last year, we had nowhere close to $1 million," he said. "I certainly do not drive a lambo, we rent this house that you see, so it's been a wild ride for us as a family."

Other Wall Street Bets members praised DFV's diligence, humility, and unwavering self-belief in interviews with Insider.

They also compared him to Michael Burry, the Scion Asset Management chief who was widely ridiculed for making a billion-dollar bet on the US housing bubble to burst in the mid-2000s, but ultimately proven right.

Here's what 10 Reddit users said about DFV:

"He was never arrogant. He was the quirky guy doing his thing until people started to ask him what he saw." - SoDakZak

"I don't see him as a leader. I just see him as a guy who made a decision and stuck to it." - Auslander

"He genuinely cares about helping people and showing the resources available to individual investors so they can study the market. He's created the spark and now there's a lot of momentum behind it." - Dancinrobot

"DFV ultimately showed people that they can make it in the stock market just like the big hedge funds. He's started a revolution." - 360T-Posed

"DFV is the Michael Burry of this story. He believed in GameStop since 2019 and held despite all the bullying he received and all the losses he endured. He became a legend." - mad-max-308

Read More: MORGAN STANLEY: Buy these 17 stocks with strong earnings that are expected to outperform into 2022 even if the broader market sinks

"A lot of people laughed and thought he would lose it all until a few months ago. He's basically WSB's Michael Burry. He had an impact on all of us." - mEDo4

"DFV is an example of learning the ropes of trading, putting in the hours to gather all the relevant information for an investment thesis, and ultimately having the strength of willpower to stand by your plan." - BarTendiess

"He's been harping on about GameStop since it was $4 a share and was being laughed out of Wall Street Bets. He never faltered in his conviction. His ability to take criticism and roll with it is incredible. He would just reply with memes or little quips. I'd say he's the Michael Burry of this generation. He saw an opportunity and he capitalized on it when no one else would even listen." - Xylosoxidans

"Most of Wall Street Bets just wants to get a lucky lotto ticket, so when someone like DFV comes along and shows them a different way of doing things, it's like seeing a shining star in the darkness. People tend to gather around the light and the light DFV gives off can't be ignored." - Xylosoxidans

"DFV taught a lot of people in this sub to be patient if they want to play out a thesis. You would think he is some arrogant douche that only flaunts his gains. Far from it. If you see his videos, he might be the most mild-mannered dude you might ever come across. And very humble too." - GadnukBreakerOfWrlds

"He is the quintessential WSB member that we all aspire to become." - I_shah

Read more: As Redditors flood the stock market, UBS breaks down 6 options strategies investors can use right now to protect their portfolios

Read the original article on Business Insider

Tesla sheds $66 billion in market value after 4th-quarter earnings fall short of forecasts

Elon Musk SpaceX Tesla CEO holds hand to face thinking
Tesla CEO Elon Musk.

  • Tesla stock dropped as much as 8% on Thursday, wiping up to $66 billion off its market value.
  • The electric-vehicle company's fourth-quarter earnings fell short of analysts' forecasts.
  • Elon Musk's automaker also benefited from $401 million in sales of regulatory credits.
  • Visit Business Insider's homepage for more stories.

Tesla shares fell as much as 8% on Thursday, after the automaker reported fourth-quarter earnings on Wednesday that fell short of Wall Street's forecasts. The slump erased as much as $66 billion from Tesla's market capitalization.

Elon Musk's electric-car company grew its revenues by 46% year-on-year to $10.7 billion. However, its adjusted earnings per share were $0.80 - below the $1.01 expected by analysts.

Read more: Value investor Adam Mead shares 7 key insights into Warren Buffett's Berkshire Hathaway after writing its complete financial history

Moreover, Tesla's financials were flattered by sales of regulatory credits to rivals tripling year-on-year to $401 million. The company's entire net income in the period was $270 million.

Tesla stock skyrocketed an astounding 700% in 2020, and was up another 22% this month as of Wednesday's close. The breathless rally has boosted its market capitalization to north of $800 billion, making it one of the highest valued companies on the US stock market despite delivering only 500,000 cars to customers last year.

The automaker has benefited from immense enthusiasm around Musk and the electric-vehicle industry, notably among members of Reddit's Wall Street Bets forum, who have boosted other stocks such as GameStop and AMC to eye-watering highs in recent days.

Read More: 'We're very surprised we didn't underperform in the 4th quarter': Cathie Wood and her analysts break down their stock-selection process and the top 10 picks that contributed to the outperformance of ARK ETFs in Q4 2020

Tesla's heady valuation has attracted prominent short-sellers such as Jim Chanos, best known for shorting Enron, and Michael Burry, the investor whose billion-dollar bet against the US housing market was chronicled in Michael Lewis' book "The Big Short."

Read the original article on Business Insider