An Important Message from Andy Krieger
Andy here. I’m writing to let you know we will be discontinuing our Money Trends e-letter. Today’s issue, which you will find below, will be our last.
When we launched Andy Krieger Trading in February of last year, we did so for two important reasons…
First, I saw a number of key signs in the foreign exchange (or “forex”) markets, which indicated the potential for a big “black swan” event. And second, I was driven by an urge to alert everyday American investors about that event, and furthermore, to help them profit from it.
On the first matter, we were 100% right. I predicted a major event, and I even warned that the coronavirus outbreak in China (which had yet to fully develop in the U.S. at the time) would almost certainly be the cause of that big event.
The event created enormous swings in the currencies, and an absolutely vicious collapse in the equity markets. Thankfully, our readers were well-advised beforehand. We even notified our readers in late March that the bottom was likely in for the stock market, and we were outright bullish for a major recovery.
As I look ahead, I see many major events and profit-making opportunities in the markets, including forex. In fact, I believe that the movement in the markets we had last March will prove to be a mild version of what is to come.
I hope I’ve been able to throw some light on world markets in these pages, and to explain the economic and financial implications of various events… and that what you’ve learned from Money Trends will help you navigate the markets in the years to come.
As for me, I will continue managing funds and working with my institutional clients. It’s something I’ve done for the past 36 years, and I hope to continue doing it for many more.
Finally, I hope you find our last issue below insightful. Thank you for following Money Trends.
By Andy Krieger, Editor, Money Trends
2021 is off to a chaotic start, with bizarre fluctuations in a handful of stocks capturing the public’s attention. You’ve likely heard the story by now…
Earlier this month, the Reddit WallStreetBets gang of retail traders brought one hedge fund to its knees with an historic short squeeze on GameStop, and the authorities are howling in alarm.
It’s remarkable that a small company that sells video games could create so much commotion. But the story underlying the short squeeze is far more interesting.
A dying video game retailer moved front and center in what is going to surely become a battle royale between the haves and the have-nots.
For the most part, the WallStreetBets traders were operating through the Robinhood trading platform.
Robinhood presents itself as a unique platform designed to help out the “little guy.” It is no small irony that Robinhood has turned out to be largely financed and supported by the big money guys.
What is most interesting about this scenario is not the massive losses inflicted on giant hedge funds by a group of retail traders who theoretically didn’t know what they were doing… But rather the underlying significance of this development.
We have a motley crew of 8.4 million traders (the number of members on the WallStreetBets group) who have banded together to try to level the playing field and take down the big money guys.
This is really a manifestation of something much deeper and far more sinister that relates to the growing disparity in wealth between the rich and everyone else.
As I’ve written before, this disparity has never been bigger. And there is a growing tension in society that could become dangerous.
There is something very wrong in a society that had over 8 million people – including many children – slide into poverty as the mega-rich were making trillions from the stock market’s wild rally.
In fact, the disparity has become so embedded in society that the mega-wealthy and elite don’t even bother trying to conceal their explicit conflicts of interest, as they did in the past.
Consider the following headline from the financial website ZeroHedge:
Yellen Gets Ethics Waiver to Lead Regulator Meeting on GameStop Insanity After Taking $810k From Citadel
This magnanimous offer by Treasury Secretary Janet Yellen to investigate the matter is one of the most conflict-laden efforts by a government official that I have ever seen.
Yellen has deep and obvious conflicts of interest with the Wall Street elite. Over the past couple of years, she’s raked in millions of dollars in speaking fees from various companies – including Citadel, the Wall Street titan at the center of the GameStop story.
Citadel is a major investor in Melvin Capital, the hedge fund that suffered the largest losses due to GameStop over the past few weeks.
And Yellen isn’t the only one with troubling conflicts of interest in the GameStop story. Citadel also pays about 40% of the income Robinhood earns when they effectively buy the order flow.
So is it surprising that Robinhood arbitrarily changed the trading rules for its little guys, preventing them from buying more shares in GameStop… blatantly favoring the big hedge funds as they continued to trade on an unrestricted basis?
In case people had any doubt before about corrupt business practices and ties of the elite, this settles the issue. There is no way this story ends well.
Depending on how things play out, it may only be a matter of time before the 8.4 million traders in WallStreetBets become a de facto symbol of the oppressed and a mouthpiece for the have-nots.
They will demand transparency and fairness where none truly existed before.
They will demand answers from Federal Reserve Chairman Jerome Powell as to how much his stock holdings have increased in value since he began his mad, money-printing exercise that has inflated equity valuations beyond reason.
They will ask House Speaker Nancy Pelosi about her recent purchases of call options in a variety of popular companies. The demands could extend deep into the halls of Congress.
The other obvious point here is how this will come to be seen as a perfect example of how, when services are provided for free, the customer is the product.
Reddit traders who used Robinhood are learning the hard way that they are the product. Their so-called free trading comes with a very heavy cost.
The democratization of the stock market, powered by a commission-free model, is laden with hidden risks. Not least of these is that the system isn’t democratic, and it won’t become democratic without a major fight.
Editor, Money Trends