01-29-2021, 08:24 PM
Reddit rebellion is ‘another epic parabolic bubble’ that will burst, investor Peter Boockvar warns
Investor Peter Boockvar is calling the Reddit rebellion “another epic parabolic bubble.”
In a research note out this week, he warns the mania into trades from GameStop to American Airlines will ultimately go bust.
“Let’s break down the investment strategy: Find the most shorted stocks, buy calls, write about it, buy the stocks and jam it higher,” the Bleakley Advisory Group chief investment officer told CNBC’s “Trading Nation” on Thursday.
The result: Prices significantly exceed the underlying value of the companies.
“They always end the same way, and that is a pop in that bubble and a crash right back to where the stock started from,” said Boockvar. “We’ve seen this in the history of markets. [In the] 1920s, they had these stock pools where people got together and manipulated stocks.”
He partly blames the Federal Reserve’s easy money policies for the spike in speculative activity. Boockvar acknowledges the Fed never intended to help investors get drunk on dangerous trades, but he sees a link between retail investors’ mass migration into the market and the speculative craze created on Reddit and other chat rooms.
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