Huge Percentage Gains — “Robinhood Soars 25%,” “Coinbase Soars 35%.” But You Can Barely See it on the Stairway to Heck

This is now a common phenomenon with these Imploded Stocks.

By Wolf Richter for WOLF STREET.

The headlines were everywhere last night and today: “Robinhood Soars…” or Robinhood Stock Soars…” because it soared, currently by 25% or so from the close last night, on the news that a “crypto billionaire,” namely Sam Bankman-Fried, the  founder and CEO of crypto exchange FTX, bought 56.3 million shares of Robinhood [HOOD] for a 7.6% stake for about $648.3 million, according to Robinhood’s 13D filing with the SEC late yesterday.

He bought those shares during the selloff, paying an average of $11.52 a share. When the filing came out, it was seen by the market – whichever algo or person is trading HOOD – as a sign of approval from a “crypto billionaire.”

That’s fine and dandy. But the headlines made it seem like Robinhood rebounded in some huge way, when in fact, those 25% came off a very low stock price, and represent a very small amount of actual dollars. At the current price of $10.68, that 25% bounce amounts to $2.12 for a company that once traded at $85.00 and is now still down 87% from the high last August. And that huge surge in price is just another minor step in the uneven stairway to heck (data via YCharts).

But here is the problem with “soars” off very low levels: When a stock plunges 90%, from $100 to $10, and then it soars 25%, it’s only back to $12.50, maybe where it had been a day or two before, and still down 87.5%, instead of down 90%. To get back to $100, the stock would have to “soar” by 900%.

These kinds of things are now happening constantly to the Imploded Stocks. Some news comes out, or no news comes out, or an analyst that had been hyping the stock all the way down during the implosion comes out with a piece of how everyone is wrong, and the stock that has been crushed suddenly spikes by a huge percentage, such as 25% or 30% or even 50%. But when you look at a one-year chart, you can barely see that “spike” which is just another little step on the uneven stairway to heck.

This also happened to a bunch of other Imploded Stocks today, including Coinbase [COIN], when an analyst at Oppenheimer, who’d been touting Coinbase all the way down, came out and said everyone was wrong after the company’s shares kathoomphed further, following its disastrous earnings and outlook, a 10-Q disclosure of its account holders being “unsecured creditors” in a bankruptcy filing, and a subsequent tweet storm by its CEO that informed the frazzled account holders that “We have no risk of bankruptcy…”

So the Oppenheimer analyst that had been hyping Coinbase all the way down with an “outperform” rating and a $197 price target then came out yesterday, saying that the new language in the 10-Q filing and the CEO’s tweets are “grossly misunderstood and being taken out of context.” And WHOOSH goes the stock in percentage terms, from the closing price on Wednesday of $53.72, up by 36%, to $71.65 currently, but on the chart since its IPO in April last year, it was just another small step on the uneven stairway to heck (data via YCharts):

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  104 comments for “Huge Percentage Gains — “Robinhood Soars 25%,” “Coinbase Soars 35%.” But You Can Barely See it on the Stairway to Heck

  1. phleep says:

    Love the quote-marks around “crypto billionaire.” A very contingent thing, at present.

    Swifties might dangle a little bait to suck in the last dip-buyers. But the whole zeitgeist was floating on gross oversupply of cheap money and credit. That hasn’t changed. Au contraire.

    A favorite book title on this sort of volatility: “Juggling with Knives.”

    • Kunal says:

      No billionaire keeps all high net worth in worthless USD or worthy Gold. They are all tied in assets and stocks and bonds. So technically they are no different from crypto billionaire.
      In the end those whose assets are well diversified are relatively safe from market fluctuations and I always wonder why these Billionaires do not diversify when they can. Its probably because they have strong conviction in heir asset holdings. That’s what made them Billionaires in the first place.

      • Wisdom Seeker says:

        Re “So technically they are no different from crypto billionaire.”

        Uh, no. Ownership of the rights to profits from productive assets such as factories, farms, buildings and so on is very different from ownership of cryptocurrency digital tokens.

        • Halibut says:

          Well said. Crypto produces nothing.

        • nick says:

          That’s standard orthodox that people like Buffett have said before, but I don’t know. My brokerage account saying I own x shares of company XYZ seems no less abstract to me than my crypto brokerage saying I own x amount of BTC. Currencies, corporations, etc are all arbitrary constructs by man. The difference is in degree, not kind.

        • Augustus Frost says:

          Stocks representing companies of substance produce goods and services people need or at least find useful. Necessities by definition aren’t human constructs. Try doing without it and see what happens.

          “Wants” are different but it’s still “useful”.

          The values are human constructs but eventually, reality wins, every single time. I’m the biggest advocate of the importance of the effects of psychology on markets here (that I can see) but I will flat out tell you that crypto is a result of the asset mania.

          It wouldn’t exist otherwise because it is literally nothing. No amount of psychology can maintain permanent value for nothing. This is the same reason this mania (the one we are in now) will ultimately collapse. The disconnect between fantasy and reality cannot hold forever.

          Crypto (and metal advocates) try to say the same thing about fiat currencies but these have the “hard power” of the state behind it. That’s something and anyone who believes it isn’t can test it. Many have, to their detriment.

        • Happy1 says:

          @nick,

          Shares of stock in companies that produce goods that people desire are ownership in the future profit of a business. Crypto is 0s and 1s, it’s not worth crap except as long as people will trade it for actual things of value. And lots of people are now trading it for things of value while they can.

        • Spud Power says:

          Augustus posted:

          “and metal advocates) try to say the same thing about fiat currencies but these have the “hard power” of the state behind it.”

          Is that hard power of the state of Zimbabwe, Venezuela, Iran, or Turkey you are talking about?

          Or maybe recently Japan as well?

          We get it: you hate gold. Good for you. And you’ll come up with every ridiculous argument and cherry pick a time frame to prove your point.

          Here are some facts for you:

          The purchasing power of the US$ has lost over 90% since 1913 and about 50% in the last 20 years.

          Yeah, we’ve read all about your price comparison of gold with cars, but that is another ridiculous construct as technology has changed the parameters over time. A car in 2022 is not the same as a car in 1920.

          You need to look at goods that haven’t changed their characteristics over time and are the same as they were 10, 20, 50 or even 100 years ago.

          For example, bread, potatoes, gasoline,flour or sugar. They are the same now as they were 100 years ago.

          Spuds varied between 4 and 6 cents a pound in the 1920’s so your could buy around 400 pounds with one ounce of gold or so.

          In 1987 spuds were about 25 cents a pound and the price of gold was around $480 an ounce. So you could buy about 2000 pounds of spuds with one ounce of gold.

          Using just the US dollar in the same above examples you could get about 20 pounds for a buck in the 20’s.

          In 1987 that same dollar would only buy you 4 pounds of spuds.

          Today Statista shows spuds in the USA at around $1.10 per pound. The price of gold is around $1800 an ounce.

          So you could get less than a pound of spuds for your paper dollar in 2022 and around 1800 pounds for an ounce of gold.

          Now tell us that gold hasn’t done what is is supposed to do: provide purchasing power that remains constant.

          Paper money has lost purchasing power. In many cases gold has even improved the ability to purchase more items for the same ounce of gold.

          You can do the same with other similar products as well.

      • andy says:

        They do not diversify because they cannot exit (for the most part) without crashing their stock 90%.

        Kunal, I predict we will Tesla up 40-50% in a day. When it bounces off $200 or so.

      • Augustus Frost says:

        No, what made the lopsided percentage billionaires is the greatest asset bubble of all time. That’s the real root cause behind their billionaire “wealth”. 735 billionaires in 2021 versus 13 in 1982 or 1983.

        Most billionaires own assets that are mostly bags of hot air. See Wisdom Seeker’s post above mine.

        Compare what most of these people own now and its “value” to the few billionaires and actual superrich a half century or more ago. Most of the supposed “value” increase isn’t from additional real production, but from the credit mania which provides leverage to inflate financial values higher.

        There are exceptions to what I am telling you here where these more recent very wealthy own meaningful ownership stakes of actual substance (such as in Oracle and MSFT) but the price level is still exponentially inflated by the mania.

        • polistra says:

          Wonderful discussion. Historically some of the most durable fortunes came from patents on unexciting things like safety pins and bread-bag ties. Things we don’t think about but can’t do without.

          Patents aren’t as important now, but the principle is the same.

      • sunny129 says:

        Kunal

        1. ‘worthy Gold’ ?

        Look at GLD price it is sliding towards $1800 and may be, under next week!

        My GLD Puts are smiling!

        2.’those whose assets are well diversified are relatively safe from market fluctuations”

        This a great myth being re-circulated by brokerages and the Wall St.
        Look at the bear mkts of 2000 and 2008 (GFC) S&P down by nearly 60%. Look how many were ‘diversified’ and still lost!

        The missing detail is a portfolio mixed ‘UNCORRELATED’ asets in ref to S&P that means negative correlation minus(-)1 to +1.
        This includes going against the mkts, which many investors don’t know but more importantly it is anethema to short the mkt by many especially since stock kept growing to wards the until this February!

        It takes guts to go against the mkt since financial media is repeatedly potificating that bottom is near!? Is it?

        One can protect the portfolio by completely going to cash UNLESS one knows how to hedge, includingn option trading (which majority don’t) Or by inverse ETFs (1x 2x or 3x) or BEAR MFunds!

        Most of the retailors will end up holding the bag, just during GFC!
        Considering homongous levels of DEBT (public & Private) world wide, GFC will look like a ‘walk in the park’. Being in the mkt since ’82, the on coming BEAR is a life time for many young investors!
        I hope I will be wrong!

        • Augustus Frost says:

          Problem with conventional diversification is that when conventional wisdom fails, the “investor” can end up as a huge loser.

          Up to the GFC as you pointed out, most asset classes were highly correlated. About the only ones that didn’t lose in the decline were the USD (which Americans already own) and highest quality debt.

          This year, (US) stocks and debt have both lost noticeable value. First time in a long time. So has crypto and now metals. Looking at a silver chart yesterday, it’s lost over 20% in about a month and it’s not even in a mania.

          I prefer being short vs long but have avoided it because of the long term mania psychology. Buying these unconventional instruments also poses it’s own risks. Presumably not as bad as Luna but there is always the potential that it will not perform as the buyer thinks, even if they get the direction right. I avoid it for this reason.

        • VintageVNvet says:

          I think we differ only in that I have been OUT of the SM since the mid ’80s sunny!
          This certainly appears to be a very much worse situation than ever seen before,,, and in spite of Wolf’s Wonder,
          IMHO WE, the hopeful investors WE in this case, really have very little or no ”reliable” information about the very likely massive influences of the really incredible quantity of ”derivatives” out there.
          Before this article and comments, I was reading that the known derivatives were approximately $600 TRILLION. But maybe the number is $1,500 TRILLION???
          This MUST be considered as one of if not THE most important ”known unknown.”
          And, most likely another entire layer of ”unknown unknown” awaits us, eh?

      • Craig says:

        Stocks and bonds have fundamentals where crypto just relies on number go up! Totally different, one is gambling the other investment.

  2. Wisdom Seeker says:

    I haven’t done a quantitative study but I suspect that “Short-Covering Fridays” are fairly common in nasty bear markets.

    My sense is that many traders don’t want to be too short over any given weekend: markets are closed, so short positions are sitting ducks facing desperate policymakers coming onto the Sunday talk shows to float trial balloons for new options to try to prop things up…

    • Seattle Guy says:

      Desperate policymakers trying this…Trying to declare OPEC an anti-competitive monopoly/ cartel and to open them to lawsuits/damages in US courts. NOPEC legislation – A replay of the 1973 oil embargo is a logical response. Sue That!!
      Also on the table is PRICE CONTROLS for energy companies in the USA ….a huge success in times past…

    • Robert Bloch says:

      or real news

    • Propheticus says:

      Traders covered their shorts on Thursday morning on the gap down at the open. Tesla would be a good example. Traders know gaps generally get filled after a decline. This, following the CPI print.

      • Wolf Richter says:

        A lot of shorts have fairly tight stops in place just for this type of event. And when shares rise 5% or 10% or whatever, those stops (if they even work) will automatically buy shares and cover the short. That kind of buying doesn’t even require trading. It happens automatically throughout the ascent of the shares as they hit various stops along the way. Since all of these Imploded Stocks are heavily shorted (“biggest no brainer in the history of mankind”), there is a lot of this kind of automatic buying going on that gets triggered when shares hit the price of the stop. This automatic buying when shorts get stopped out is a really powerful driver of those rallies – hence the name “short covering rally.”

        And then it stops. And the descent continues anew.

        • Propheticus says:

          And now it is simply a matter of having the self-discipline to wait and see how far, and for how long, the assumed short-term bounce will go, that is, in terms of percent retracement of the previous leg down. Sometimes, one gets lucky and initiates a position at, or very near, a short-term top. It truly is the “biggest no brainer in the history of mankind,” but the problem for so many market participants is that they have “too many brains” and tend to over-complicate things. Self-discipline is the key, in my opinion, to keep from blowing out one’s account. Perhaps that is one reason why market participants don’t last. That, coupled with, the need to be right on every trade.

          Regarding last Thursday, market internals were approaching extreme levels (the indicators I track, anyways), so the proverbial rubber band was stretched fairly tight, signaling an impending rally.

          As your imploding list of stocks demonstrates, on an individual basis, many stocks certainly have been “thackamuffled” to date. But in terms of the averages, I’d have to say they’ve been fairly well-behaved in this down market, thus far. Makes me wonder if there really is a “wizard,” tracking the VIX? Really, no kidding!

          It seems some of the semiconductors might be coming back to life, that is, a reversal in trend, from down to up, so something to pay attention to. As a group, semis are still weak.

        • Francis E Reidy says:

          Just found your site a few weeks ago. Love your data ,analysis, and insights.
          Thanks a bunch.

        • 91B20 1stCav (AUS) says:

          Propheticus-it might be said that a general decline and devaluation of ‘self-discipline’ could be the mark of a decline in any society…

          may we all find a better day.

        • cb says:

          Wolf said: “Since all of these Imploded Stocks are heavily shorted (“biggest no brainer in the history of mankind”)”
          ____________________________________

          How many of these stocks did you short? How many times?

        • Wolf Richter says:

          I don’t short individual stocks anymore. I think I pointed that out a few times before. For individual stocks, I’d use options. The potential loss is capped at 100%, but I can make more a lot more than 100% if things go right. Shorting actual stocks, you max gain is 100% and your max loss is sort of unlimited. So this can get ugly during bear market rallies.

        • cb says:

          Propheticus said: “but the problem for so many market participants is that they have “too many brains” and tend to over-complicate things.”
          ————————————————
          the market is very complicated for most, including me …………..

          hence the lack of mega-millionaires

        • Propheticus says:

          cb,

          Yes, the markets are complex, indeed. But if one can develop – or borrow and adapt – a systematic approach to analyzing the markets under all market conditions, and applying the KISS principle to the nth degree, simplification is quite possible.

          But again, I hold that it boils down to not breaking one’s rules – self discipline – that determines one’s longevity in this most treacherous of endeavors.

      • andy says:

        Propheticus, the trade seems to be – bet against 3-5 richest guys on paper. 12 months out.

        • Propheticus says:

          andy,

          But in reality, I’m betting against my broker/dealer, and my broker/dealer is betting against me. Sleaziest game in town.

  3. phleep says:

    It’s a run on shadow-assets and issuers (and firms balanced on them). These aren’t the MOST shadowy, but close enough.

  4. Phoenix_Ikki says:

    I would like to take a moment to thank PPT for their hardwork….now can you all please stop getting drunk and do the same for the rest of the market please? We need you more than ever and if you guys have some free time, please work your in the altcoin market…those lunatics are losing their mind for real this time.

    • phleep says:

      October ’29 during the plunge, one of the grandees of NY finance stepped up and placed a loud bid for shares of US Steel at an elevated price, trying to psych the market upward. No go. If enough people sense a sudden need for cash, the cascade can be overwhelming. Now, as then, the Fed is not standing there with outstretched arms.

      Could become a game of chicken, though.

      • Phoenix_Ikki says:

        Wonder if our favorite Cathie Woodshed has something to do with the coinbase coinpop..

        She must be thinking to myself, I am following exactly what Buffet said, be greedy when others are fearful…

        “Ark funds bought 240,791 shares of Coinbase (COIN) , the largest U.S. cryptocurrency exchange, valued at $14.1 million. The stock has plunged 72% year to date amid weakness in the cryptocurrency market. To be sure, Coinbase has rebounded on May 13.”

  5. 2banana says:

    It’s not even a dead cat bounce.

  6. Old Ghost says:

    Granny has a cat that talks to her when she eats too many of those CBD gummies (not granny, the cat).

    She says the cat told her to tell me that I should buy crypto when it goes to zero. And if it moves into negative territory, like oil did some time back, that I should double down.

    I have never had a bad tip from that cat.

  7. billytrip says:

    Thus again proving there are lies, damnable lies and statistics. :)

  8. Frank B says:

    The only thing that’s sore, is investors’ rear ends…

  9. John Apostolatos says:

    “But here is the problem with “soars” off very low levels”

    Yes, Wolf, and ZeroHedge is terrible at using words like Soar, Crash, Tumble, Explode, etc. Their tactic is to use 1 minute charts for clickbait articles.

    What your article shows is that now everything smacks of desperation when the market makes these huge moves based on headlines and no context.

    I believe the announcement was mainly timed to bounce up cryptos today so that holders will not be afraid to liquidate their coins that are in the hands of their “custodian” Coinbase. It seems to have worked, for now.

  10. cg says:

    Best outcome for Schadenfreude-enjoyers like me would be a bounce in $BTC back to $40K.

    If this happens, I guarantee you that everyone out there + Mom will HODL their precious cryptos all the way down to $zero where they belong. I would love to see this; you should, too.

    • Wolf Richter says:

      cg,

      In reality, someone always owns them. As we’ve seen with Luna which essentially went to zero, and which we see with all cryptos and stocks that go to zero: every single one of them is held by investors when they hit zero, whether that’s a long-time investor or a trader, and they become end users and cannot get rid of them because buyers have vanished. There is no “house” you can sell those back to.

      I ended up with a couple of stocks that went to zero during the dotcom bust. After looking at them in my account for a few years and getting mad each time, I finally called my broker and asked them to remove them manually, which they did… happens all the time.

      • cg says:

        The market may have one more leg up left in it. Despite the 35 $vix, this decline is not feeling jerky and dangerous just yet.

        Need to take out the shorts for an impulsive, liquidation decline. But how?

        Putin said he wanted to end the special operation in May. Maybe he will, and equities will soar, because no one expects this to happen. The West has promised another Forever War in the Ukraine.

        Putin declaring Mission Accomplished short-circuits the neocon FA establishment OODA loop, and sends equities to the moon. You heard it here first.

        • Happy1 says:

          I guess we should stand by while Russia brazenly invades a peaceful neighbor. Worked great in the late 30’s

      • Flea says:

        I had same problem,but my broker bought them for 1$ problem solved

  11. Difficult to understand investors are not “selling” this market. The volume on COIN was normal until about three days ago and the buy volume on this rally matched the capitulation selling. Its the same everywhere. The buyers and sellers in this market are choosing to set their exchange price lower, but very few are letting go of their stock. There are plenty of strategies to hedge losses, the more money you have the more sophisticated they are. The bad news for the bulls is that the rush to buy those shares back isn’t likely to happen, these are investors with plenty of stock already. The so called cash on the sidelines is bank reserves hemorrhaging OUT, 2 trillion rolled over every day. The fails are going to happen. There could be a liquidity event, nobody wants the stuff, but those things are very difficult to understand. 2008 happened when collateral was gutted from the system, and this looks very similar. RRPO is the hunt for collateral. A lot of these TECH stock plungers are sitting on some large losses, and maybe they covered themselves for a little while with put insurance. They still own the stock and the cost basis is still X + 50% in some cases. Bitcoin is a poster boy for liquidity traps, but its money isn’t it? No its company assets and they will liquidate it at bankruptcy. The difference between a dollar and a share of stock is exactly what? Sitting in cash is not a priority. Next stop the value bubble.

  12. SpencerG says:

    1) If a “Flash Crash” is seen as not being worthy of a mention in comparing a stock’s movement then let me propose that a “Momentary Spike” isn’t either. That said… looking at Robinhood’s August 2021 IPO price of $35 (or if you prefer… its price in November of 2021… also $35 or so) then it is STILL down by 70% or so.

    2) Why would a large stock purchase by a “Crypto Billionaire” be “a sign of approval” that matters to anyone? Can’t a billionaire make an investment mistake? Of course they can– Warren Buffet is quite open about how often he whiffs on a pitch.

    3) Wouldn’t it be of more value to Robinhood if the billionaire’s investment was going into its own coffers to shore up its Balance Sheet rather than into the market? In fact… wouldn’t that be of more value to current Robinhood shareholders?

    • joe2 says:

      Yes the language rules are interesting. I for one never buy the dip, I only buy the drop.

      On a long enough timeline, everything is transitory on it’s way to heck.

  13. John H. says:

    Just read a strategist report from Barry Bannister’s team at Stifel on recent bitcoin swoon. It correlates Global Money Supply (Bloomberg), US Financial Conditions Index (Goldman Sachs), and PMI for Manufacturing index, to price movements of Bitcoin.

    They conclude that “Bitcoin is over-priced relative to tighter U.S. financial conditions” and they “believe [it] still has downside to about $15,000.”

    Finally, they use the amusing term “WWJD” (What will Jay do?) which I hadn’t seen before, putting a spotlight on the near religious belief in the omniscient powers of our Fed policy-makers to order economic outcomes.

    • Depth Charge says:

      Valuing Bitcoin at anything other than zero is a foolish endeavor, and so saying it’s worth $15,000 is no different than saying it’s worth $10 million. They’re both ridiculous. It has zero intrinsic value so to try to assign fundamentals is like playing make-believe as a child

      • John H. says:

        Point taken DC.

        It’s a matter of timing, though, IMO.

        Given today’s seemingly irrational valuations and the sometimes glacial pace of shifts in investor psychology, I’d make a friendly bet that his prediction will be closer than yours at year end. $50 donation to charity of Wolf’s choice?

        I’m in agreement with your prediction; but I’m guessing it’ll take a while to unfold (heavy emphasis on guessing!)

        • Depth Charge says:

          By year’s end I’d bet it would be closer to $15,000 than zero, too, so that’s not a bet I would take. And I was just pointing out the folly of their valuation system, not your post.

        • John H. says:

          DC-
          Your comment about the intrinsic value of bitcoin being zero made me think: I’m confident that the eventual value of the U.S. dollar will effectively be zero some day, yet $1 still buys 3-4 eggs today.

          “Money-ness” is sort a wasting asset, I guess.

          Maybe that’s why goldbugs are goldbugs.

      • Swamp Creature says:

        What the heck is going on with Silver? Looks like its heading for a price below $20/ounce. With all this inflation going on I don’t understand why it hasn’t gone up to $50/ounce like it did in 1980. I think it might be telling us that deflation is just around the corner. Its an industrial metal and will not do well in that kind on environment. I’m glad I laid off of it.

      • Costs about 34K to make a bitcoin and 5.4 cents to make a dollar. Your premium for being able to buy or sell anything without the regulatory agency scrutinizing you, is considerable. At some point it’s cheaper to just pay the sales tax. Although I recall another industry which caught a break when they were not charging state sales tax, and they did quite well.

    • c1ue says:

      What’s happening in cryptocurrency is partly overall markets falling, but mostly Terra getting attacked and both dumping billions of BTC to defend its stablecoin and having depositors withdraw BTC from that setup.
      It feels like we’re near the point like in 2017 when most people just stopped looking at their cryptocurrency accounts.
      However, it is possible someone is going to take a shot at forcing a margin call on Microstrategy. We will see.

      • Flea says:

        Micro strategy leader ,a believer will get leveraged ,the wolves eat there own . Archegos,Cathie wood headed ,I also believe market bottom will be when brk-b hits 270$

  14. Matthew Scott says:

    Meanwhile, what’s going on in comercial real estate these days?

    • jon says:

      Real Estate both Commercial and Residential is hot! Don’t yet see any dent to these two.

    • MarkinSF says:

      Exactly

      • Byron says:

        ATT building in St. Louis just sold for $4.1 million. It was last sold for $204,000,000 in 2016.

        • Flea says:

          Worse than during Great Depression,WOW

        • JJ says:

          Byron, yes I remember researching that building’s troubles and relaying some of the details to Wolf a few months ago during his last office rental blog.
          $4.05 million seems like a steal for such a huge building….but I think demolition would be best to move things forward.
          It does take up an entire city block in the heart of downtown St. Louis, so there might be hidden virtuous value in the land space.

    • Wolf Richter says:

      Update on the office market coming soon. The short answer is: the office market will take years to get sorted out. Lots of restructuring ahead. The amount of empty office space on the market is just stunning.

      The once red-hot industrial segment (warehouses, Amazon fulfillment centers, etc.) has suddenly gotten cold feet after Amazon said it would not need all that space it now has. This is a very new development — very new in terms of CRE where everything takes quarters and years.

      • joe2 says:

        How do interest rates play in commercial market valuations compared to residential? The only experience I had was looking at a commercial mortgage with a balloon after 3 years which makes it effectively a variable rate. Looks dangerous if interest rates are rising. I chickened out.

        • Wolf Richter says:

          A lot of CRE mortgages are fixed rate, interest only, for a term of 10 years or 15 years. You can get other mortgages too, but that’s kind of a standard setup. The problem we have with older office properties is that their values have collapsed to just a small fraction of the mortgage as the market for older office buildings has collapsed. I’ve described some of the foreclosures. They’re very ugly. Many of these mortgages are in CMBS. Others are held by banks, insurance companies, etc. When these older office buildings go through a foreclosure sale, they dish out huge losses to the mortgage holders.

  15. Brewski says:

    “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

    Albert Einstein.

    PS. Negative compounding can get very ugly.

  16. polistra says:

    Percent up and percent down are tricky at best. It’s an area of math that doesn’t serve reality very well, and could use an improved way of expressing a change, so it works the same in both directions.

    It’s worst of all when the base number is a percentage.

    “Inflation just went up by 8%. ” This could mean that prices increased by 8%, or it could mean that inflation went from, say, 10% to 18%, or it could mean that inflation went up from 10% to 10.8%.

    The last choice is never what the headline means, but the last choice is actually consistent with other uses of percent. If we say the PRICE increased by 8%, we mean the price was multiplied by 1.08.

    • Sams says:

      The difference between monetar inflation and CPI is lost to most too. People «investing» in money may have confused some terminology and lack knowledge about what money is.

  17. R2D2 says:

    Crypto is the new dotcom.

    Gonna take years to recover.

    And many will never recover at all.

  18. Swamp Creature says:

    According to Buffet, Crypto is heading for zero. I believe it will actually go below zero, as you will have to pay a commission to get out of your position and write off the losses. Buffet is right on the money. Crypto is for suckers.

  19. Augustus Frost says:

    Two stocks ultimately heading for zero, exactly where both belong.

    • HowNow says:

      A F, I always like reading your comments. You close with some sort of moral judgement: “their foot shall slide in due time”, or similar. And I agree, those dissolute stocks should be reduced to zero, “exactly where they belong”. “Hellfire” or just “Frost”.

  20. Depth Charge says:

    BTFD is still alive and well. There are way too many reckless gamblers out there, still. With every crash it’s just “buy, buy, buy!” ad nauseam. We have never needed an economic depression so badly as we do right now. Millions need to be humbled and sent back to work instead of gambling. It’s just sickening that getting high and trading crypto is considered an occupation.

    • Propheticus says:

      “It’s just sickening that getting high and trading crypto is considered an occupation.”

      I know you’re being serious, but when I read that I “make mess” all over my keyboard.

  21. Depth Charge says:

    By the way, I think these massive moves down in crypto followed by huge spikes are rigged dump and pump then dump again schemes by wealthy insiders.

  22. hood wont survive much longer

  23. Immenuru says:

    It is often noted that a stock that has dropped 90% has first dropped 80% and then dropped an additional 50%. Something similar (not identical) works in reverse as Wolf is observing.

    • Immenuru says:

      A more direct observation is that if a $1 stock drops to 10c, then to get back to $1 requires a 10 fold increase in price, ie a 900% increase. So a 50% increase off the bottom when you bought at the top is essentially worthless (unless you’re a journalist :-) ). If you bought at the exact bottom you have doubled your money and if it was possible to do that systematically…….

  24. Sigmund Fraud says:

    Hi Wolf,
    Thanks for all your hard work. Your articles will be helpful someday when they bring RICO charges against the Fed (in our fond dreams. ). If that happens and you end up being quoted on the evening news, you will want to be prepared by becoming more hip about those popular song titles. The titles you are searching for are “Highway to Hell” and “Stairway to Heaven.” Now you can sling it like a real hipster!
    Cheers!

  25. TK says:

    And thus the larger lesson is that the HOOD and Company need an 800% gain to get back to the hype and hoopla days. I was once a believer that those awesome stocks will come back – stay the course. But I also learned from a veteran in our investment club, that ROI and cash flow matter, a lot. Hype, hoopla and even “goodwill” are suspect. Oh but maybe the HOOD is the next Microsoft or Amazon! Uh OK.

  26. Flea says:

    Amazon and Tesla =watch out below Amazon makes very little money ,was is a gold mine .Will probably be broken up one fails one succeeds. It’s a overpriced logistics company ,keep eating the soup

  27. Depth Charge says:

    “…because it soared, currently by 25% or so from the close last night, on the news that a “crypto billionaire,” namely Sam Bankman-Fried, the founder and CEO of crypto exchange FTX, bought 56.3 million shares of Robinhood”

    “Bankman-Fried describes himself morally as a “Benthamite” and “a total, act, hedonistic/one level (as opposed to high and low pleasure), classical (as opposed to negative) utilitarian”.”

    Wonderful…..

  28. Flea says:

    Funny name Batman fried ,I crack myself up ,hahaha

  29. Sigmund Fraud says:

    Hi Wolf,
    For the current bear phase, to be hip, it should be “Highway to Heck”! Save “Stairway to the Stars” for the next bubble. You should copyright them now before someone else grabs them, you earned it :-)

    • Flea says:

      Wolf then u could sell hats,shirts, for your proud followers, better source of income than Donations. Just my thoughts

      • Wolf Richter says:

        I’m not a retailer. I don’t sell anything. Retail is a bitch. No thanks. I love what I’m doing. Not gonna change jobs. Lots of people are very generous and support this site with their donations. Thank you!!! This site has something like 350,000 readers a month.

        • VintageVNvet says:

          Wolf,
          Yours came up while I was typing my reply to Flea,,, but I absolutely think ”your team” could do what Flea suggests,,, and IMO, you could just ”sign off” on a couple or a thousand ”things” that your teammates could take from there…
          OK Wolf,,, absolutely OK with YOUR decision/choices.
          YOU will get MY donation, as mentioned, in any and every case, direct to you as usual…

        • Your readers actually read and think about the articles.

      • VintageVNvet says:

        YEAH Buddy,,, thanks small bug!
        Wolf,,, in spite of your reluctance to ”profit” from your Wonderful site and the very helpful insights therein,,,
        IMHO, you and your team could really do some MORE Wonderful outreach including what Flea suggests…
        While I am willing and able to ”donate” twice a year, the amount very much depending on ”THE budget” because of only ”income” from SS and trying my best to do the same as grandpa who swore he would live ONLY on his SS,,,
        WE, in this case the family WE, are in better shape, I think, than he was at my age in spite of him moving from his home made sailboat in the Bahamas to northern NM to get, in his words, ”as far from salt water as possible in USA.”

  30. Franz Beckenbauer says:

    1. get a “long-term” chart of the S&P 500 + a pencil + a ruler
    2. draw a trendline from the 2009 low (that’s when the fun started, courtesy of Ben Bernanke) through the March 2020 low (yes, that “once-in-a-lifetime-super-special crash”)
    3. You will notice it touches some other lows on the way. Looks like a long-term uptrend !
    4. Draw a parallel line through the highs during that period. Geez, that really looks like a long-term trend !
    5. Currently, we are just correcting the breakout from that long-term uptrend. We are not even back in the channel.
    6. You ain’t seen nothing yet.

  31. LeClerc says:

    Describing SBF as a crypto billionaire is true, but incomplete and misleading.

    He’s a very successful quant.

    Nobody here has any idea what he’s doing, or what insanely complex algos he uses.

    HOOD is a pimple on FTX’s rear end.

  32. drifterprof says:

    Although, if you didn’t own any Robinhood stock, and you’re a genius at playing against the rubes, then if you bought the dip and then sold at the upper arc of dead cat, you made 25% profit.

  33. Island Teal says:

    IMO Crypto was always an alternative to the metals. It was a product designed to eventually part the buyer from their investment. The value is only truly measured when you cash out and walk away from the Crypto table. Research Blythe Masters. 💸💸💸

  34. Nat says:

    Well its all about investment horizons. If you are a long term buy-and-hold investor, yes that 25 or 35% at the end of a collapse is meaninhless. If you are a day trader you could have quickly pocketed 25 or 35% — nice!

    But yes some more universally applicable language and neuance was warranted in the reports you are addressing.

  35. AverageCommenter says:

    Dead cat bounces. Nothing more. These IPO prices far exceeded the worth of the corporations. I don’t advise buying any corporation’s stock that initially exceeds $20/share. And if you do decide to buy a stock that exceeds this amount, you have two weeks to sell.

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