[ad_1]
Wednesday, February 24, 2021
Buffet vice warns of excesses
Gamestop sharing is heating up again
Gamestop stocks are skyrocketing, again. What attracts players is unclear, possibly the announced retirement of CFO Jim Bell. Warren Buffett’s deputy Charlie Munger sees an “irritating bubble” in the financial market.
The excitement surrounding troubled video game retailer Gamestop never ends in the American financial market. After heavy losses in the previous weeks, the US company’s share price, which has become the pawn of speculators, more than doubled on Wednesday without a clear reason being immediately apparent. The stock was temporarily suspended from trading and eventually closed up 104 percent at nearly $ 92. After hours of trading it continued to fluctuate violently, at times the price soared around 100 percent.
The day before, Gamestop had announced the departure of CFO Jim Bell without giving a reason. The US media later reported that the manager had to resign under pressure from influential shareholders because there were disagreements on the strategy. Bell has his silver retirement with a generous $ 2.8 million deal, plus he receives a $ 13 million block of shares. Investor Ryan Cohen is said to have played a key role on the staff, who took a seat on the Board of Directors in January. Many speculators consider him a bearer of hope for a comeback, because he had already successfully turned pet products retailer Chewy upside down.
Reddit users don’t know anything
In light of conditions on US stock exchanges, longtime partner of legendary star investor Warren Buffett, Charlie Munger, warned of excesses. The vice president of Buffett’s investment company, Berkshire Hathaway, appears to be concerned about the recent turmoil in the US financial market. Capricorn prices, like Gamestop shares, are signs of an “irritating bubble” that has to end badly at some point, the 97-year-old said at the annual general meeting of the US media group Daily Journal Corporation.
According to their critics, the speculation frenzy reveals a dangerous new culture in which cheap brokers like Robinhood encourage people to play stocks, as they do at horse betting. In fact, Gamestop has been in crisis for a long time, but spurred on by hobbyist investors organized on the internet, the company’s shares had rebounded impressively in the past month. That, in turn, broke billions in losses for some hedge funds that had bet on a price drop. By the end of January, the stock had hit a record high of more than $ 483, but the rally ended quickly. Users of the Reddit forum, from which the recently arranged purchases began, were surprised by the recent price hike.
Munger disapproves of Robinhood’s business model
The price turbulence around Gamestop and a few other companies on the US stock exchanges has already had consequences that continue. US authorities are investigating the incidents and investigating possible market manipulation. With its easy-to-use app, discount broker Robinhood, which is particularly popular with younger investors, was also criticized. In particular, the fact that Robinhood restricted trading hot stocks like Gamestop during last month’s price explosion so that they could only be sold caused a lot of problems. Robinhood strongly denied any suspicions of hedge fund collusion.
Charlie Munger has now also strongly criticized Robinhood, but not because of the trade restrictions, but because he considers the app to be more of a gambling provider of sorts than a trusted broker. Robinhood runs a “dirty” business, in which users are attracted free of charge, while the company receives money from Wall Street actors for the mediation of its transactions and therefore encourages trade as much and risky as it is possible.
Buffett’s vice president can’t take anything from the heights of electric car maker Tesla and the digital currency Bitcoin. You don’t know which price rally you think is worse, Munger says. Bitcoin is not suitable as a means of payment due to its strong price fluctuations. Tesla boss Elon Musk is a huge fan of cryptocurrencies, the company had last bought bitcoins for $ 1.5 billion and thus boosted the rate of the most famous digital currency.
