Hi, I’m Dr. Parik Patel, BA, CFA, ACCA, Esq. If you don’t know me already, I’m a Chartered FinMeme Analyst (CFA) with a particular expertise in #stonk valuation (pro-tip: just multiply by two). Anyways, I’ve been told that I have a particularly special insight into the world of finance and memes, so the team at Bullish asked me to create a regular round-up to help explain what the hell happened this week… and then offer my “diagnosis” of the virality.
This week was filled with pain in the stock market, with treasury yields climbing higher and tech continuing to sell off. Non-fungible tokens (or NFTs) are also hot in the press (yet I still don’t know what they are...), and meme king Elon Musk launched yet another rocket into space — but this one exploded after landing. To add to the insanity, Dave Portnoy, aka Davey Day Trader, is lending his image to help launch VanEck Social Sentiment’s ETF called $BUZZ, which seeks to invest in companies that are hot on forums like r/WallStreetBets.
Once again, big stuff is going down, but what does it all MEME? Without further ado, let’s dive into Dr. Parik’s Meme Diagnosis of the Week…
Summary: Treasury yields are once again at the forefront of investors’ minds with the 10-year yield testing 1.5% again as the bond selloff continues. Investors are betting on rising inflation with a fresh stimulus package ready to be rolled out and the 10-year breakeven rate hitting the highest level since 2014.
Dr. Parik’s Diagnosis: The theory would suggest that rising treasury yields could influence valuations because a company’s cost of capital goes up, but who does valuations anymore?! Imagine wasting your time on DCF models when we all know that stocks only go up…
Summary: On that last note, maybe stocks don’t always only go up… The tech selloff seems to continue with popular names like Tesla down more than 20% in the last month. Previously out-of-favor sectors like energy have made a strong comeback, with Brent crude nearing $70/barrell and the S&P 500 energy ETF $XLE up more than 20% in the last month.
Dr. Parik’s Diagnosis: Ordinarily I would always suggest buying the dip, but as Warren Buffett so astutely observed, “You can’t buy the dip if you spent all your money buying the dip.” He was a man ahead of his time.
Summary: Non-fungible tokens, or NFTs, are hot in the press as other digital assets like Bitcoin have rallied spectacularly over the last year. NFTs are different. They’re totally unique digital assets with ownership recorded on a blockchain. Think of them like a digital version of a rare baseball card. Sales of these assets have been through the roof, with NBA Top Shot — a platform which allows users to buy and sell basketball match highlights — facilitating over a quarter billion dollars worth of sales to date.
Dr. Parik’s Diagnosis: I’m yet to be won over by these mysterious assets, mainly because I don’t understand them. You spend hundreds of dollars on digital art; I just take a screenshot for free. We aren’t the same, bro…
Summary: The news has been pretty mixed on the rocket front, with mortgage company $RKT skyrocketing 109% between Feb 25th and March 2nd before plummeting 30% back down to earth. As for actual rockets, Elon Musk’s SpaceX launched yet another rocket into space, delivering 60 Starlink satellites into orbit, but then the rocket subsequently exploded after landing.
Dr. Parik’s Diagnosis: If you really want to go to the moon, ditch the fake rocket and go long on a company with a real rocket ready to fly.
Summary: To finish off this week, Dave Portnoy, aka Davey Day Trader, has announced that he’s lending his image (and marketing savvy) to help launch a new ETF called $BUZZ that tracks social media chatter. After the epic rise of meme stocks like $GME, $AMC, and others, this project could possibly work and yield some serious returns. Or it could crash and burn after buying these stocks at the top. Who knows?
Dr. Parik’s Diagnosis: As the great Ben Graham says, the best entry point for any stock is after it has already rallied by 1,000%. Not many people know this, but it was actually Ben Graham who coined the term “diamond hands” in his book The Intelligent Investor.
So there you have it! This was the week in memes. Now here’s what the doctor is prescribing:
- Always BTFD (or, “buy the fucking dip”) because stocks only go up
- Forget the above because apparently stocks don’t only go up...
- The best entry point for any stock is after it has rocketed 1,000% to the moon
~ Dr. PP out