🗞️The Wrap: Digital

What does a day off mean for markets? What was the biggest fraud in market history? And who’s winning the corporate space race? These questions, answered.

5 most traded ETFs on Stake in the last week

  • Credit Suisse 3x Long Natural Gas (UGAZ) -19.2% in the last week
  • Credit Suisse 3x Short Natural Gas (DGAZ) +20.9%
  • Direxion 2x Oil and Gas Bull (GUSH) -2.9%
  • Direxion 3x Gold Miners Bull (JNUG) -0.4%
  • ProShares 3x Nasdaq (TQQQ) +1.7%

Happy Holidays

We made it out of the 3-day weekend. While our American friends enjoyed a day of socially-distant grilling and drinking, the rest of us sat bored, eagerly watching futures tick upwards.

What effect does a long weekend have on the market?

Trading days before a holiday are vastly more profitable than regular trading days. This is the “Holiday Effect”. Perhaps it’s a psychological thing; traders and investors are day-dreaming of Miller Lites, hot dogs and their holiday house in the Hamptons and buy stocks on the back of their serotonin rush. Moreover, short sellers may look to close out their positions out of fear that good news will emerge over the weekend.

It’s also noted that trading days before religious holidays perform better than any other holiday.

Mad as a Hatter

Bernie Madoff. We’ve all heard the name but what’s the story behind the rumours? In short, Madoff was responsible for the largest Ponzi Scheme in world history; US$64.8b worth of fraud to be exact, losses totaling US$20b.

From the late 80s, Madoff would accumulate billions in FUM by boasting false returns. It was a self-fulfilling cycle; the more funds he attracted, the higher returns he would report and even more funds would be directed towards Bernard L. Madoff Investment Securities.

In reality, these funds sat in one big account with redemptions financed by the big pool of idle cash. When your brother and niece are your compliance officers, this is very possible.

Come the close of trading each day, Madoff’s team would simply pick the top performers of the day and create fake trade reports filled with these names. Even though the reports were littered with trades on weekends and holidays, no-one ever caught on.

In the end, it was Bernie’s sons who reported him to the feds once he admitted the asset management side of his business was a sham in 2008. His sentence, which extends to 2139, has been reduced for good behaviour.

Top 5 Gainers

  • Maxar Technologies (MAXR) +37.1% in the last week
  • Tilray (TLRY) +35.8%
  • Dycom Industries (DY) +34.5%
  • Red Rock Resorts (RRR) +33.2%
  • Realogy Holdings (RLGY) +31.3%

Top 5 Fallers

  • Moderna (MRNA) -27.8% in the last week
  • Weibo (WB) -18.5%
  • Opko Health (OPK) -16.4%
  • Vir Biotech (VIR) -16.0%
  • BioNTech (BNTX) -15.4%

Spacebound

NASA is sending humans to space again! It’s the first time in nine years an American made rocket will lift off from US soil. That’s right, at just about the time this Wrap hits your inbox, a SpaceX designed capsule will be en route to the ISS in a test flight. Of course SpaceX is another one of Elon Musk’s creations. Set up in 2002, Musk’s grand plan involves colonising Mars.

While there are no plans for SpaceX to go public, their internet subsidiary SpaceLink may split off and IPO. VC-backed SpaceX is estimated to be worth US$33b.

A former darling (or vicious ex depending where you bought) of Stake traders, Virgin Galactic (SPCE) hasn’t had so much success. Richard Branson’s project company tried and failed to launch an aircraft into orbit last week. The commercial space travel company is valued just north of US$3b. Hopefully it comes together and our first post-quarantine holiday can be to the atmosphere.

What We’re Listening To | We Study Billionaires Podcast

Few podcasts have the diversity of experts that this nugget of wisdom does. While the investing and trading interviews they put together are great, I really like the breadth of topics from real estate investing to macro level economic trends and even investing in fine art.

I particularly enjoy the portfolio management episodes. There’s a huge emphasis on stock picking, be it through technical or fundamental analysis, but a higher level analysis of how to effectively manage multiple stocks doesn’t get the emphasis it deserves especially amongst beginner traders.

I guarantee there’s an episode that will interest you. Have a look for yourself here.

Trader Teaser

It’s about time we put the maths teasers away and gave one to the wordsmiths. What do the following words have in common:

Uneven, Revive, Potato.

Best Buy | $PENN +441%

I admit that the short term traders get far too much attention in this section. Here’s a trade that shows the power of holding on to your winners. This investor bought into $PENN at $8.59, let it fall to $4 and is reaping the rewards of patience as the stock dances around $30.

Tolerating a 50% drop is understandably not part of everyone’s strategy but it paid off here.

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