Some market movements I’m incredibly excited to watch unfold in 2021:
Robinhood users trading Robinhood stock on the Robinhood application. The euphoria is off the charts (see chart on market sentiment) and the pump could very well trump Tesla’s unless the SEC decides on excluding Robinhood’s ~12million users from participating in the market.
How Michael Burry’s Big Short on Tesla plays out: Dr. Burry, famous for having shorted the housing bubble at its peak, reiterated his short bet on Tesla. With a ~15% rise in 2021 alone, Tesla’s stock has zoomed past the stratosphere, and currently carries a P/E of 1635. Much of this price action could be attributed to very bullish options activity and reactionary delta hedging mechanisms from market makers, the sustainability of which remains a hot topic for debate.
How the $VIX behaves: The volatility index is near pre-pandemic lows while COVID deaths skyrocket and index funds gain incredible exposure to volatility as potentially competing firms weigh heavier than ever on the index (Tesla v Apple, Azure v AWS, Netflix v Apple v Disney ) - this introduces quite some risk to “perceived safe” index funds in addition to the bubble-like valuations we’re seeing as a result of the fed fueled liquidity flood.
All in all, the markets could be very choppy this next week as Trump’s political career reaches endgame and Biden introduces another 1.9 trillion in the stimulus. The market is currently pricing in a smooth transition to the Biden presidency. I reckon the market could react otherwise should it sense a delay or derailment in either one of these market events, which remains a possibility (however bleak) as Trump strives to save what’s left of his presidency.
Thoughts personal, not to be construed as investment advice.
What are your thoughts on this?