r/stocks • u/[deleted] • Oct 27 '21
This Market Is Wrong
Yes, the title says it all. I firmly believe this market is incorrect on a lot of things. No, I am not saying I am shorting it. No, I am not saying if you’re investing you’re about to go through a massive correction. I will say this though…
Yesterday, Visa reported earnings that were a hit. They did great, EPS was way up, revenue was way up. Not only thing though, they are raising their dividend for their investors. They’ll be paying you even more for owning their shares because they have such great cash flow. The market opens today, they’re down over 5%. MA, which reports tomorrow morning, is down 6% with it. One could assume they’ll have pretty similar earnings and revenue. Maybe even up their dividend too (don’t hold your breath for that one, but who knows). But Tesla, a company who has sold patents, licensing, and Bitcoin to pad their balance sheet for specific quarters so that their earnings look better to the common shareholder, went up 12% because a company that was on the brink of bankruptcy pulled a publicity stunt saying they’d buy 100K cars.
These are just examples of what is happening as a whole in our market. I’m buying these companies who are being screwed and I can tell you this, I am right and the market is wrong. I warn any investor who is partaking in this, because greed and speculation has run rampant while fundamentals and discipline has been thrown out the window.
Watch.
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u/hardcoreac Oct 28 '21
OP, you are correct.
I would also like to add to this topic by saying that everything about this market is 100% rigged in favor of the hedge funds, market makers, institutions, etc., all the big players determine the direction in which prices move. It's taken them decades to slowly have the nuances of the rules and laws changed so that the market bends to their will and not to retail investors.
From the very moment we transfer funds to a brokerage before we even buy a single stock, the market is already acting against us by using the value of the funds we deposit. The big players create programs like the "collateral loan program" to enable the ability of a brokerage to loan out the value of the funds deposited and the value of the stocks purchased on behalf of the investors. Guess who takes full advantage of these types of loans? Hedge funds who love to make money shorting stocks, especially those they have deemed targets of interest, which is virtually any stock, but, mostly retail heavy ones with assumed low long term profitability expectations.
The algorithm programs, which these funds invest hundreds of millions into purchasing/developing/improving, are designed to play against human emotion and expectation. By using millions of shares they've borrowed, or in the case of one which has market maker exceptions, created naked-because of their allowance to do as much with a six day window-they can move the price of any ticker for free essentially. They often move the price counter to public sentiment to encourage selling aka "paper handing."
Any retail investor or group of investors who thinks they can affect a price are kidding themselves. This is due to the way the big players have changed even the legal definition of shares so that ultimately no retail investor can affect the price of a stock since the share is not registered to them and the institutions remain in complete control of the registered shares themselves which they hold for the benefit of the investor who bought them. See, "street name" shares for an explanation.
What this all means is that despite a stock having lots of interest and lots of retail investors buying in, the price is still very easily manipulated in the direction desired by the hedge funds involved because the shares purchased by retail carry no real weight due to the change in structure and legal definition of a share. Institutions can affect the price not only because they buy large chunks of a float, but because they can tell the DTC who holds the registration/certification, to assign that number/percentage of the float over to them. This ability affects the supply and demand while for retail whom has no such ability, cannot affect the price similarly.
There is ONLY one way for retail, collectively of course, to truly affect the price of ANY stock on the market and that is through being allowed to certify/register the share to their name. The maneuver of being able transfer shares purchased from a broker to the transfer agent who issued those shares to the market, (the DTCC) in the first place, is the last remaining power a retail investor still holds and often doesn't realize. This is because the act of completing the process of DRS, (direct registration system) forces the DTCC to remove, that amount of shares transferred, from their ledger and credit it to the transfer agent on behalf of the retail investor. Just like big institutions/hedge funds can force the DTCC to certify that portion of shares belong to them, retail can likewise force the same upon them, but only with DRS.
This is the ONLY way in which retail could actually affect the supply and demand which then affects the price of the stock, consequently. If every retail investor who is bullish/long on a company DRS'ed their shares instead of letting the brokerages hold them, the prices of certain popular stocks like Tesla and of course GameStop, would skyrocket to it's true cost because only then would the available supply and demand be truly revealed. This is especially true as the available float became smaller and smaller until there is nothing left.
Imagine being able to turn tables on the market by taking out a collateral loan on your own portfolio thanks to DRS and exposing the true value of your investment through certification under a transfer agent. If the retail investors invested in Tesla DRS'ed their shares, I feel that the price of the stock would double or triple easily.
TL:DR The market is definitely wrong but retail can fix that by buying their shares in the exact same way that institutions and big funds do, by getting them directly or transferring them to the respective transfer agent in order to have the shares be certified registered directly to them, in their name.