In today’s Exponential Investor…
- Moderna’s rising star
- AMC defies all
- Speak “trend”, and enter
Do you remember thinking, after “pandemic stocks” like Zoom and Moderna had doubled in the weeks and months after the pandemic struck, that it was “too late”?
Take this chart, for example, of Moderna – which became a key player in the vaccine programme.
In the spring of 2020, it jumped from below 20 to the 50-70 range. Then over the next few months it… kept going…
At 50, I know I would’ve looked at that chart and thought, “Too late”. Definitely, at 80 and at 100, I’d be thinking, “Bubble?”
Here’s what happened next:
Investment is so much about psychology. It’s one of the most interesting aspects in my view.
This is a lovely case where I can actually remember thinking, and saying, “It’s already priced in. It’s too late” with stocks like Moderna and Zoom.
Zoom tripled in the first six months of 2020.
Then it doubled again.
These are powerful things. My instincts are always towards mean reversion and cyclical understanding of price swings (“trees don’t grow to the sky”) but perhaps I need to be more open minded, or moderate that approach sometimes.
Another wild pandemic story was the “meme stocks”, of which AMC Entertainment was one of the leaders.
If you missed it, this was a group of badly performing stocks like GameStop and the then-bankrupt Hertz which social media user groups, mainly on Reddit, hyped up and bought en masse, pushing their prices up ridiculous amounts (almost to the moon, you could say, on a rocket ship).
These social media groups especially targeted stocks with large short positions by hedge funds, believing (or just claiming) that short-selling is an evil thing to do.
Short squeezing Wall St was made to be a kind of noble social cause.
AMC is a cinema chain, and it has a place in this story because its CEO really embraced meme stock status.
He likes his nickname, Silverback (leader of the pack of apes/investors who are “together, strong” – a reference to Planet of the Apes).
And now, he’s announced that the chain, which raised hundreds of millions from the pack to stay afloat, will start accepting bitcoin as payment.
You’re probably thinking, why not Dogecoin? That’s a good question. Maybe one day…
Similar to the above, the fascinating thing about meme stocks like AMC is that they didn’t just go away:
It all kicked off in January/February this year, and headlines screamed white fury.
More specifically, the headlines predicted devastation and loss for the poor, innocent/stupid retail traders/bros who were pumping this stuff up.
AMC did fall back, a bit, and then it went significantly more mental a few months later.
As you can see above, it went from $2 at the start of 2021 to above $70.
Even after its 50% pullback, it’s still up 50% from the peak of its first manic episode in January, and up 1,400% from the start of the year.
There’s a reason why people say that “The market can remain irrational longer than you can stay solvent.”
Moderna and AMC are two good reasons why shorting is a dangerous game, why market timing is nigh on impossible, and why betting against the madness of crowds might drive you insane yourself…
Will the same be true of inflation?
Central banks are looking soaring inflation data in the eye and saying, “It’s transitory”.
Just as I did about MRNA and AMC, the central banks are saying that inflation will pull back to “normal” levels. That it’s not here to stay. That it’s not a new trend, it’s just a flash in the pan.
Well, as we’ve seen, and as I have learned over the past 18 months, once a trend starts picking up steam and the ball starts rolling… things can often go on far longer than you think.
For investors, knowing where to invest if inflation picks up is crucial. And having someone tracking it in real time, guiding you through the highs and lows of post-Covid inflation…
Well that would be a dream come true.
Luckily, I know such a man.
Charlie Morris, guided by his brilliant, successful, innovative Money Map, can navigate the murky waters of inflation and interest rates as well as anyone.
If you too would like to be ready for either scenario – transitory or sticky inflation – then you need the Money Map.
All the best,
Co-editor, Exponential Investor