Free eLetters

February 2021

Someone Acted Early on Tesla’s Bitcoin Plan (We Spotted Their Footprints)

February 8, 2021John Banks

Call it a strong hunch: There were people with advance knowledge of Tesla’s big announcement — and they used that knowledge to take large positions in Bitcoin, and Bitcoin-related equities, too. We don’t know these people, but we saw their footprints in the charts. A sizable tremor of buying activity rippled across all our Bitcoin-related holdings the Friday before last. For TradeSmith Decoder subscribers, that led us to issue an “urgent Bitcoin buy alert” on Jan. 29. Before getting into

Read now

Has Bitcoin (and the Entire Crypto Space) Been Boobytrapped by Tether? No.

February 5, 2021John Banks

Did you dramatically increase your net worth in 2020, and book “life changing profits” while doing so? If not, you should consider TradeSmith Decoder, because at least one of our subscribers did (and possibly many more). We recently received a wonderful testimonial that illustrates what TradeSmith Decoder is all about: Helping people build real, life-changing wealth through the trading and investing process. The reason TradeSmith Decoder makes that possible is because we provide real and powerful analysis (on a daily

Read now

Access Drives Engagement: Why the Trading Landscape Has Changed

February 3, 2021John Banks

The stock market is both timeless and ever-changing, which makes it a curious paradox. On the one hand, markets look, feel, and behave exactly the same today as they did 100 years ago, or even two millennia ago. We can read stories of a bull market mania or market panic from the early 1900s, or the 17th and 18th centuries, or even dating all the way back to Roman times — in 2020 we wrote about the Roman Financial Crisis

Read now

The Drop in GameStop Short Interest Could be Real — Or Deceptive Market Manipulation

February 2, 2021John Banks

Over the past few days, the level of hedge fund short interest in GameStop fell sharply. Or did it? On the evening of Monday, Feb. 1, Bloomberg reported that “GameStop Short Interest Plunges in Sign Traders Are Covering.” Two separate research firms, IHS Markit and S3 Partners, reported the drop: “Short interest in the video-game retailer plummeted to 39% of free-floating shares, from 114% in mid-January, according to IHS Markit Ltd. data. Data from S3 Partners, another market intelligence firm,

Read now

The ‘Reddit Silver Squeeze’ is Not Likely to Succeed

February 1, 2021John Banks

When writing about the GameStop squeeze last week, we compared it to Fight Club on Wall Street, referencing the 1999 movie with Brad Pitt and Ed Norton. On Friday, Jan. 29, the Fight Club aspect of the game spilled over into the real world, as a Redditor purchased space on a digital billboard in New York’s Times Square. The advertisement said “$GME GO BRR” and showed a stock price candlestick pattern going vertical. In the movie, Brad Pitt’s character gives

Read now

January 2021

Robinhood Ignites Widespread Bipartisan Fury — But the Media Got the Story Wrong

January 29, 2021John Banks

You have likely heard of Robinhood, the zero-commission stock trading app that exploded in popularity during the pandemic. (It was already popular pre-Covid, but lockdown boredom and stimulus checks sent sign-ups to new heights.) On Thursday, Jan. 28, Robinhood ignited bipartisan fury with its decision to restrict users’ ability to buy calls or shares in GameStop (GME), the stock at the heart of an epic short squeeze. The perception was that Robinhood cut off trading access to its retail customers,

Read now

GameStop is a Game that Might Not Stop

January 28, 2021John Banks

In 2018, Elon Musk said reality as we know it is probably a simulation. His basic rationale was that, because the universe is old enough to produce advanced-technology civilizations, there is a high probability those civilizations know how to run advanced computer simulations. The implication is that life on earth, as you and I know it, is one of those simulations. We are all just characters in an alien version of The Sims (a popular life-simulation video game). Neil deGrasse

Read now

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

Read now

How a Retail Investor Army Went to Battle With a $12.5 Billion Hedge Fund — and Won

January 26, 2021John Banks

Ten or 20 years ago, the small retail investor was supposed to be afraid of hedge funds. To put it another way: In the old market ecosystem, hedge funds were the predators and retail investors were the prey. And the bigger the hedge fund — as measured by billions of dollars in assets under management — the more of a predator it was considered to be. The biggest funds were the apex predators, and retail investors were lunch. Not anymore.

Read now

China is Using its Currency to Stockpile Copper and Grains

January 25, 2021John Banks

In the TradeSmith Decoder model portfolio, we have a large position in a top-tier copper miner that was up more than 190% as of last Friday’s close. For that we say: “Thank you, China.” There are other crucial factors driving the price of copper higher — and grains, too — but China is a big one. China has been using its exceptionally strong currency, the yuan, to stockpile copper and grains. This activity means China is exporting inflation to the

Read now

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,

Read now

Implications of the Super-K Recovery

January 21, 2021John Banks

“It was the best of times, it was the worst of times…” You might remember that line from A Tale of Two Cities by Charles Dickens. We reference it now, in 2021, because never before has the line been more true. As the pandemic raged last spring, a debate raged alongside as to what kind of economic recovery the United States would have. This debate provided an alphabet soup of capital letters, each one describing a different “shape” of recovery.

Read now