TradeSmith Daily

January 2021

Scenes from an Epic Market Mania: Bull Raids and Meme Stocks

January 15, 2021John Banks

Speculative areas of the market are not just red hot, they are white hot. Initial Public Offerings (IPOs), a barometer of speculative froth, are on fire. In the past few days alone: Petco Health and Wellness (WOOF) jumped more than 63% on their first day of trading. Poshmark (POSH) saw its share price more than double on the first day. Affirm Holdings (AFRM) nearly doubled on day one, then continued to rise. And of course, two big-name IPOs from December,

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Guest Editorial: Five Tech Predictions for 2021

January 18, 2021John Banks

Editor’s Note: The markets and the TradeSmith offices are closed for the Martin Luther King, Jr., holiday, so today we’re sharing a guest editorial from our friend Jeff Brown at The Bleeding Edge that we thought was particularly insightful. We hope you enjoy these predictions for 2021; we’ll be back tomorrow with our own thoughts on the market and the year to come. Each year, I make predictions about what I see coming in the different areas of technology that

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How Jim Simons Built the World’s Greatest Quant Fund

January 22, 2021John Banks

Jim Simons, the legendary mathematician, hedge fund manager, and quant, retired a few weeks ago from board chairman duties for Renaissance Technologies (RenTech), the firm he started with partners more than 40 years ago. He is stepping back at 82 years old. Simons and his firm are best known for their Medallion Fund, which first began trading in 1988. The Medallion Fund is the most profitable quant hedge fund of all time. Simons, as chief architect of the Medallion Fund,

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Why the Coming Inflationary Era Could Kill off Passive Investing

January 27, 2021John Banks

Investors, on the whole, seem convinced that inflation will stay low; that interest rates can’t rise very much; and that passive investing is here to stay. All three of those beliefs could be wrong, and the second two statements hinge on the first one. If inflation comes back in a meaningful way, interest rates could rise again. And both of those developments were structural — meaning inflation persists for a decade or more, and interest rates rise for that period

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February 2021

Aftermath Lessons from the Reddit Rebellion

February 9, 2021John Banks

The Reddit rebellion appears to be over, or otherwise headed toward a quiet end. The GameStop squeeze is winding down — the share price of GME has stayed below $100 for days — and the Reddit silver squeeze appears to be winding down, too. In many ways, the GameStop saga was not what it seemed (for reasons we’ll examine shortly). But it was, certainly, one of the wildest market events of the past 100 years. To find a comparable drama,

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Fed Chairman Powell to Inflation Hawks: Chill Out For Now

February 12, 2021John Banks

Inflation hawks need to relax, and perhaps even chill out a bit: The Magic 8-Ball forecast for when inflation roars back is still “Reply Hazy, Try Again.” That was the implied message of Jay Powell, the Chairman of the Federal Reserve, in a not-so-subtle pushback this week against rising fears that inflation will quickly become an economic problem. In no small measure, that is our message, too. As we have previously laid out in these pages, we certainly believe inflation

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America is Winning the Vaccine Race

February 17, 2021John Banks

America looks poised to come from behind, muster its formidable might, and win hands down — just as it has done before, time and time again, in various contests throughout the twentieth century. But this time it isn’t about a World War, a space race, or an arms race; it’s about the vaccine rollout. America winning the vaccine race likely means a faster U.S. economic recovery; an ability to delay inflationary consequences of aggressive fiscal stimulus (because vaccine-powered growth comes

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Crude Has Some Good Years Left (the Oil Age isn’t Over Yet)

February 18, 2021John Banks

“The stone age did not end because the world ran out of stones, and the oil age will not end because we run out of oil.” The Economist attributed that pithy statement to Don Huberts, the head of Shell Hydrogen, in 1999. According to New York Times columnist Tom Friedman, it was first said by Sheikh Ahmed Zaki Yamani, Saudi Arabia’s Minister of Oil and Mineral Resources from 1962 to 1986, as far back as the 1970s. Either way, this

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