Tag Archives: Hedge funds

85% of Hedge Funds Are Monitoring Retail Traders

Retail traders were once an afterthought in the stock market. Those days are over.

Anxious to know retail’s next move, nearly all hedge funds are monitoring retail traders on social media:

Fund managers who might have once derided small-time day traders as “dumb money” are scouring social-media posts for clues about where the herd might veer next. Some 85% of hedge funds and 42% of asset managers are now tracking retail-trading message boards, according to a survey by Bloomberg Intelligence.

J.P. Morgan is offering a product to top clients that helps them predict retail traders’ next move. Those high dollar clients are likely hedge funds:

Data shared with clients include the size of retail flows, the most discussed stocks on social media and companies that are likely to face a retail ‘squeeze’ — when small investors rush to a stock that hedge funds are betting against. 

This comes as retail traders form an ever-larger part of the market. From the WSJ:

Individual traders in 2021 purchased a net $292 billion of U.S. stocks and exchange-traded funds, according to Vanda Research’s VandaTrack platform, which tracks and sells data on the purchases of U.S. equities by individual investors. That is more than seven times the amount in 2019. Individual investors so far appear poised to continue similar levels of buying activity in 2022.

But it will be hard for retail traders to outmaneuver hedge funds if they always know retail’s next move. The solution may be to adopt a tool long used by crypto traders: encrypted messaging.

Applications like Signal, Telegram or Whatsapp make it easy to form groups and send encrypted messages. This could be a good way for retail traders to organize and coordinate trades.

After all, it’s much easier to burn hedge funds in a short squeeze when they don’t know you’re about to start buying the stock.

I’m curious to see if retail stock traders will adopt secure messaging technology as a weapon against hedge funds. In the mean time, remember: Big Brother is watching you.

More on markets:

Citadel Holding Nearly $500 Million in AMC Options

Solana Is the Most Popular Crypto of 2022

Citadel Can’t Beat the S&P 500, Despite High Fees

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Citadel Funds Vaccine, Election Conspiracy Platform

I came across some truly bizarre information today. Hedge fund Citadel LLC is a major funder of Rumble, a video website known for promoting conspiracies on vaccines and elections:

A simple search for the word “vaccine” on Rumble’s homepage returned three times more videos with misinformation than accurate claims, according to research published in Wired Magazine. Rumble’s presentation and distribution of video content amplified misinformation about vaccines and elections more than any other topics, according to the study’s findings.

Citadel is deeply involved:

When Rumble went public on December 1st, 2021, it did so with significant financial backing of Ken Griffin’s Chicago-based hedge fund, Citadel Advisers. The Chicago-based hedge fund pooled together funds in February of 2021 to form a a special-purpose acquisition company or “SPAC” (CF Acquisition Corp. VI VI). The Griffin-backed shell company officially “merged” with Rumble. It holds 826,864 shares in Rumble, which are now worth $8,028,849 and amounts to the fifth largest holding position in Rumble.

Sure enough, when I searched “vaccine” on Rumble just now, unproven conspiracies dominated the results:


If Citadel is anything like most hedge funds, its investors are almost all institutions: university endowments, pension funds, charitable endowments, etc. The last thing they want is controversy.

Citadel is seriously jeopardizing its reputation and investor base by being involved in a company like this. Even as someone who only invests his own capital, I wouldn’t touch Rumble.

This comes in addition to CEO Ken Griffin personally funding lawmakers like Devin Nunes who refused to certify the election.

If you’re one of the richest men in the country, you already have a target on your back. If you use those billions to fund conspiracy theorists and get your investors involved without their consent, you’re asking for trouble.

Expect to see politicians and investors piling on Citadel in ever greater numbers.

What do you think of Citadel investing in Rumble? Leave a comment at the bottom and let me know!

This is the last blog for this week. See you Monday and have a great weekend!

More on markets:

Citadel Can’t Beat the S&P 500, Despite High Fees

How Solana Could Wipe Out Visa and MasterCard

AMC Fails to Deliver Soar Past 400,000

Photo: Citadel LLC CEO Kenneth Griffin

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This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Citadel Holding Nearly $500 Million in AMC Options

Hedge fund Citadel LLC is holding nearly $500 million in options on AMC Entertainment Holdings, Inc., per the fund’s latest SEC filing.

Citadel’s position consists of $191 million in puts and $272 million in call options, along with a small position in common stock. This massive position has not been reported elsewhere, to my knowledge.

Citadel’s position indicates they may be executing a “long straddle” strategy. This strategy involves buying put and call options on the same stock.

If the stock drops, you profit. If it jumps, you profit too.

But there’s a catch:

The risk of the long straddle is that the underlying asset doesn’t move at all.

AMC’s meme stock investors are generally dedicated to holding for the long term. That provides a stable source of demand for the shares.

If AMC shares don’t move, Citadel could suffer substantial losses.

We’ll see who wins this test of wills.

More on markets:

CITADEL SUPPRESSING CRITICS WITH LEGAL ACTION

ROBINHOOD VS. INTERACTIVE BROKERS: SMACKDOWN!

CITADEL SUES TO CRUSH COMPETITORS

Photo: Citadel LLC CEO Kenneth Griffin

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

If Citadel is Trolling on Twitter, Where Else Are They?

Some unusual online behavior from major broker Citadel Securities recently:

“Refuse to believe an American landed on the moon.” Does this sound like a normal PR department of a major company?

Not remotely. With the hyperbole and mudslinging, Citadel Securities sounds like an online troll.

The Financial Times notes that the firm has rarely said anything online. Indeed, its last tweet was from January.

This behavior strikes me as unhinged and speaks to dysfunction within the company. Why would the largest processor of stock trades in America get into online trashtalking?

If this slipped past management’s filter, I’m willing to bet a lot of other things have to.

And that’s where the lawsuit comes in. A suit in the US District Court for the Southern District of Florida alleges that Citadel pushed Robinhood to restrict trades in shares of AMC, GameStop and other meme stocks to benefit its associated hedge fund.

Both sides have already admitted meeting shortly before the restriction, but deny anything inappropriate happened.

Citadel seems to be getting desperate in fighting these allegations. And if they’re trolling on Twitter under their company account, I wonder where else they’re pushing their narrative.

I would not be surprised to see reports of Citadel employees pushing the company line under their personal accounts or pseudonyms. And with botnets available for just a few hundred dollars, why not?

Something has gone wrong inside this company.

It may take a federal court to sort it out.

More on markets:

AMC Fails to Deliver Are 40,000 Times Amazon’s, Per Latest Data

Will Evergrande Spark a Global Financial Crisis?

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

Photo: “Ken Griffin” by DanGPhotos1 is licensed under CC BY 2.0

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

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The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

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Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

AMC Fails to Deliver Are 40,000 Times Amazon’s, Per Latest Data

Throughout the year, shares in AMC Entertainment Holdings, Inc. have had huge fails to deliver. The most recent SEC data, just released today, is no exception.

AMC fails to deliver were 39,976 times those of Amazon.com, Inc. Amazon, with a market cap of $1.7 trillion, is more than 85 times AMC’s size.

Looking at other large stocks, the pattern is similar. AMC’s fails to deliver are 36 times Apple’s, 25 times Exxon Mobil’s and 1199 times Facebook’s.

Fails to deliver occur when a trade is made that is never completed. When there’s a long term pattern of large fails to deliver, it’s often indicative of naked short sales.

This generally illegal practice involves selling shares short without ever borrowing them. The trade never completes because the shares never existed in the first place.

Since you don’t need to borrow any actual stock, you can keep putting in sell orders indefinitely. That artificially drives the price down.

AMC’s fails to deliver go up and down with time. But, they remain consistently far greater than those of much larger stocks.

I strongly suspect hedge funds who have lost substantial sums shorting AMC stock are conducting illegal naked short sales to try to rescue themselves.

When will the SEC act on its own data?

More on markets:

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

Will Evergrande Spark a Global Financial Crisis?

AMC Shares 50% More Likely to be Traded in Dark Pools

Raw SEC data

The most recent data set ends on September 14th. The fails to deliver is the number right before the company name:

20210914|00165C104|AMC|119929|AMC ENTMT HLDGS INC CL A COM S|51.69

20210914|023135106|AMZN|3|AMAZON COM INC;COM USD0.01|3457.17

20210914|037833100|AAPL|3320|APPLE INC;COM NPV|149.55

20210914|30231G102|XOM|4873|EXXON MOBIL CORPORATION|55.37

20210914|30303M102|FB|100|FACEBOOK INC CL A COM STK (DE)|376.51

Photo: “CMI 101: Demystifying Derivatives with CFTC Chairman Gary Gensler” by Third Way is licensed under CC BY-NC-ND 2.0

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

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Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

What a Hedge Fund King Fears Most


Stephen Mandel, Jr., founder of hedge fund Lone Pine Capital, ranks #752 on Forbes’ list of billionaires.

His net worth: $3.9 billion. His fund’s performance is among the greatest in history.

So you might be surprised to hear what he fears most:


In late January, when retail traders swarmed into short targets of hedge funds like Melvin Capital and D1 Capital, commentators and industry experts called the moves unprecedented, but Mandel sees the parallels between the dot-com bubble excitement and today’s Reddit-directed investors.


“The day I feared the most, every year, was the day after Thanksgiving because it was the day when a lot of people were at home, echoes of what’s going on now — retail traders sitting at their desks,” he said.


He said that the firm’s ethos on long positions — investing in change, whether technological, regulatory, or otherwise — is the same, but shorting has become so expensive thanks to the additional competition in the markets that it’s impossible to make the same alpha in that part of the portfolio.


“There was no problem borrowing Pets.com and eToys and Onsale and all these crazy things. Today, when things like that appear in the markets, the borrow cost shoots up to ridiculous levels immediately, the access to borrow is very limited,” he said about the shares funds that bet against a stock have to borrow from shareholders to hold a short position.


He has a reason to be afraid. Other hedge funds like D1 Capital and Melvin Capital lost 20-50% of their fund trying to fight retail holders of stocks like AMC Entertainment Holdings, Inc. and GameStop Corp.

The cost to borrow and sell short shares of AMC and GameStop is not particularly high at the moment. However, in any new rally, that interest rate could easily shoot up, as GameStop’s did in January. This would make holding or adding to short positions very costly for hedge funds.

And all the while, they’d be losing money as the stock moves against them.

I find it fascinating that the most threatening thing for a billionaire hedge fund manager is a guy sitting on his couch.

Thing is though, there are a lot of them.


More on AMC and hedge funds:

AMC in Top 4% of Stocks for Fails to Deliver

AMC Fails to Deliver Up 1088% in Latest Data

Hedge Funds Get Special Treatment During Margin Calls

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

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Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Short Sellers Lost $1 Billion Yesterday in AMC and GameStop

Short sellers have been fighting retail traders all year. Yesterday, they took a major hit:

“Heavily shorted stocks have, for the last month, been less volatile than earlier this year. Today we saw an end to this,” said Ortex co-founder Peter Hillerberg.

The share price gains in AMC and GameStop generated losses for close to $1 billion for short sellers, Hillerberg said.

AMC Entertainment Holdings, Inc. was the most active stock in the entire options market. This is remarkable for a company whose market cap is only $23 billion. Apple, the biggest stock in the market, is over 100 times as large.

The options activity in both AMC and GameStop Corp. was strongly bullish, with call options (the right to purchase shares in the future) going like hotcakes.

No obvious news propelled these stocks upward. Yet hedge funds maintain their risky short positions.

This means using investors’ money to bet against stocks that gyrate wildly at the whims of retail traders. I find that to be irresponsible.

But, to quote one of my favorite movies:

Well, it could’ve been worse, right? Could’ve been my money.

Marv, Wall Street

More on AMC and meme stocks:

CHARTING THE HUGE DROP IN AMC FAILS TO DELIVER

HEDGE FUNDS HIT HARD BY MEME STOCK LOSSES, BADLY BEHIND S&P 500

HEDGE FUNDS GET SPECIAL TREATMENT DURING MARGIN CALLS

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Jim Simons Buys AMC, Bets on Retail Trend

James Simons of Renaissance Technologies LLC is one of the greatest hedge fund managers in history. His fund’s annualized returns are an eye-popping 66% a year since 1988. Lately, he’s been loading up on shares in meme stock AMC Entertainment Holdings, Inc:

Renaissance Technologies, which held approximately 516,000 AMC shares by March this year, has more than tripled its stake in the firm. Cumulatively, RenTech now owns more than 1.8 million shares.

Despite the entrance of some hedge funds, about 80% of AMC’s stock is held by retail investors.

Simons seems acutely aware that individual traders are flooding the stock market and AMC shares in particular. Indeed, the number of retail brokerage accounts has exploded this year. From The Economist:

In 2019 around 59m Americans had accounts with one of seven of the largest brokers. This number has surged since to 95m, as 17m new accounts were opened in 2020 and 20m were set up this year.

Short squeeze or no, that’s a powerful source of demand that Simons and Renaissance can benefit from.

I don’t know whether the stock will go up, down, or in circles. But I do know that I wouldn’t want to bet against Jim Simons.

More on AMC and hedge funds:

HEDGE FUNDS HIT HARD BY MEME STOCK LOSSES, BADLY BEHIND S&P 500

NEW DATA SHOWS BIG DROP IN AMC FAILS TO DELIVER

HOW SHORT SELLERS COULD EVADE THE NEW NSCC RULES

Photo: “Jim Simons” by Graham is licensed under CC BY-SA 2.0

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Hedge Funds Hit Hard by Meme Stock Losses, Badly Behind S&P 500

Losses betting against meme stocks have hit hedge funds hard this year. The latest data from Barclay Hedge shows year-to-date gains for equity long/short funds of 8.51%. (This is the type of fund that would typically take short positions in stocks.)

Meanwhile, the S&P 500 has returned 18%.

One of the largest sources of losses for hedge funds this year is short positions in AMC Entertainment Holdings, Inc. Its shares are up more than 18 fold this year, inflicting billions in losses on short sellers. Other meme stocks like GameStop Corp. have also produced large losses.

This continues a pattern of long term underperformance for this strategy:

Investors are losing patience and rapidly withdrawing their money.

If you’re an investor in a fund with a losing strategy, a weak track record, and a habit of betting against the hottest stocks in the market, I ask you: why not try an index fund?

More on hedge funds and AMC:

SHORT SELLERS LOSE $44 BILLION IN 30 DAYS

HOW AMC IS BLOWING UP THE HEDGE FUND INDUSTRY

NEW DATA SHOWS BIG DROP IN AMC FAILS TO DELIVER

Photo: “the Great Hedge Fund Hei$t” by eyewashdesign: A. Golden is licensed under CC BY-NC-ND 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Why Jim Chanos Is Dead Wrong About AMC Holders

Jim Chanos, Founder and President of the Kynikos Associates hedge fund, has some harsh criticism for holders of AMC and other meme stocks:

What I see on Reddit, Twitter and elsewhere is the exact opposite. The communities have a strong determination to hold and often find the position deeply personal. One very popular Reddit post I saw said that hedge funds killed her father, in that her father fell into despair and substance abuse after the financial crisis, which hedge funds had a hand in:

For many AMC holders, it’s personal. And I don’t doubt the same is true for holders of other meme stocks.

Do they also want to make money? Sure. And I’m also pretty sure that Chanos didn’t start his hedge fund in order to save starving kittens.

In fact, this personalization of the position could be a liability for meme stock holders. As someone who invests for a living, I urge all investors to view an investment as an investment only. It helps you make clearer decisions.

In the future, I suggest listening to this song when you read Chanos’ tweets:

More on AMC:

AMC HAS 35,000 TIMES THE FAILS-TO-DELIVER OF AMAZON

SQUEEZES IN AMC AND OTHERS ARE KILLING OFF SHORT SELLERS

EXPLOSIVE CLAIMS IN LAWSUIT AGAINST ROBINHOOD

Photo: “Notorious BIG by Marv Castillo” by 5AENZ2NEXWNYZRR22ACALR5SWN is licensed under CC BY-NC-SA 2.0

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Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.