Obviously, this kind of idiocy should never happen in a healthy stock market. But it has happened a lot.
By Wolf Richter for WOLF STREET.
VinFast Auto, the Vietnamese EV maker that’s part of the Vietnamese conglomerate VinGroup and that went public in the US via merger with a SPAC less than two months ago on August 15, 2023, has now become one of the all-time favorites in my pantheon of Imploded Stocks. The SPAC’s just keep on giving in the most hilarious manner.
On August 25, as the stock price was exploding, I laid out in detail the case of this misbegotten creature in the article, EV Maker VinFast’s Market Cap Spikes to $159 Billion on 9th Day of Trading. This Stuff Would Be Hilarious if it Weren’t so Serious. And I said, “as an extra special for VinFast, I’m keeping a beautiful slot open in my increasingly crowded pantheon of Imploded Stocks.”
And now VinFast has obtained this beautiful slot in my Imploded Stocks. Within 31 trading days, its shares [VFS] have imploded by 92%, and its market cap has imploded from over $230 billion to a still ridiculous $17 billion. But it’s a start. Couldn’t have happened to a better bunch of people. Thoughts and prayers. This is a chart of the stunning idiocy of this stock market:
The SPAC’s shares were at $10 on August 11, shot to $37 on the day of the merger, and then to the all-time high of $90 on August 28, giving the company a beyond-ridiculous market cap of over $230 billion, about five times the market cap of GM, though the outfit just started selling a few hundred imported EVs in the US; and in Vietnam, half of the feeble production was sold to the conglomerate’s own taxi company.
The world, whose EV SPACs had already been shoved into the pantheon of Imploded Stocks starting in 2021 – was simply speechless in front of such a creature – in front of the idiocy of the stock jockeys that were playing this game amid the detritus of EV SPACs, some of which have already filed for bankruptcy.
Having floated 0.3% of its shares in the US, while its chairman Pham Nhat Vuong effectively controls 99.7% of the shares, it was clearly designed to be a meme stock and not much else with a tiny float and a ridiculous valuation to begin with that then, enthusiastically embraced by the meme stock jockeys, shot beyond ridiculous.
Clearly, the company hoped to use this beyond-ridiculous share price to sell more shares in a secondary offering to the meme-stock jockeys, and take their money and burn it. Hopefully, the company can still pull it off – it couldn’t happen to a better bunch of people, thoughts and prayers in advance.
VinFast CFO David Mansfield admitted that it would try to sell more shares “for sure” over the next 18 months, and a market cap of $100 billion would allow it to raise a whole lot more cash from the meme-stock crowd than a market cap of $17 billion, or worse, $2 billion, or worse $50 million.
Obviously, this kind of idiocy should never happen in a healthy stock market. This is just nuts. But then, we live in an era where cryptos, which represent nothing, have no earnings or revenues or use, are driven to beyond-ridiculous highs only to then collapse, and it’s just like a big video game, but maybe a lot more fun. With VinFast it’s the same thing. It really doesn’t matter what the company does or fails to do. And there are essentially no victims here, just a lot of consensual hallucination.
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Thanks WR for this report.
Coincidently, I saw a VFS SUV in my hood today.
“Obviously, this kind of idiocy should never happen in a healthy stock market.” ==> We don’t have healthy and Free market. Everything is governed by FED.
Rising prices of stocks, bonds, fixed assets from the Fed counterfeiting money, and suppressing interest rates, have produced no value for the country. It has only shifted paper wealth to the top, to the very people who already have/had everything they need.
In many ways it has been an economic crime without repercussions to the perpetrators.
yet
Absolutely agree. The market is constantly manipulated by FED, by reckless money printing. They printed absurd amounts of money after 2008/2009 crisis, pandemic and 2023 banking crisis.
“When you have hammer in your hand, every problem looks like a nail.” FED tries to solve every economic crisis by printing money, constantly manipulating the market. They printed so much money in so little time, that they turned the brains of the investors into mush. They believe that money is infinite.
FED through numerous round of QE and interest rate suppression has turned a lot of people into chase the hype zombie…and once you turn zombie there’s no coming back, just like in Walking Dead..
That’s why it’s more hilarious to watch Papa Powell to try in his attempt…it will be hell of a fight to counter conditional behavior build over the last 2 decades…
I do not disagree that the Fed’s policies didn’t instigate American citizens to act zombies chasing the hype under the umbrella of ZIRP. Yes, they’re still going hog wild, what Wolf calls drunken sailors.
However, as the noose tightens from less loose credit, the zombies will stop spending money and begin to save it.
Unfortunately, the FOMC is about to make the same mistake that unleashed Volker’s tantrum. Not raising the interest rate high enough early on creating a sense of inflation tolerance in the producers to raise prices. It got so bad that interest rates had to be raised to a level that restricted the demand function.
The continuing resolutions add to the money printing. They automatically grow spending by 8%. It will be difficult for the Fed to get to 2% inflation, if congress increases spending 8% every year.
Tax receipts are not growing 8% so, the difference will have to be borrowed.
Printed – monetarized – found under the mattress – stolen from the future…….
Does it really matter, you owe it to the World to be the king of debt, the Japanese have you running a vast behind, second place.
You can’t allow that, we are the reserve currency and we will be rich in debt.
see the problem or do I need to give you a recipe for failure
The Federal Reserve has nothing whatsoever to do with the stock markets in the United States and doesn’t own even a single stock.
What are you all taking over there in Southern Cali? Is it the same stuff that makes you think housing will go up forever?
Of course the Fed has everything to do with the stock market. Where does the money come from for these idiots to buy SPACs?
Bahahaha
ZIRP inflates stocks as people leave treasuries to find yield.
QT deflates stocks as people leave to find yield
Not to mention half a dozen other mechanisms like stock buybacks performed with defacto free money
Evidently too much SoCal saltwater is corrosive to the brain.
Thank you for pointing out the obvious. I don’t know why so many people here want to blame the Fed for EVERYTHING that happens under the Sun. I mean seriously… if the Fed is to blame for SPACs skyrocketing upwards… how come they don’t get the credit for those same SPACs plunging downwards shortly thereafter.
At some point INDIVIDUALS have to take responsibility for their own stupid decisions.
The exact way Ronnie showed you, right?
You need a different hero, I think…….how about Max Weber or Bertolt Brecht? (he really understood SCIENCE and it’s purpose. look up the quote)…everyone should before the swallow their Prevagen or Ageless Male or most Rx stuff and ALL OTC.
Add Veblen and Korzybski….much to learn, and it’s proven good for one to exercise the brain.
Ronnie could only act at kiddie level, and his script writers were just Ayn Rand cult members.
It just occurred to me that one could say Calvin synthesized her type of thinking with the teachings of Jesus…….and HERE we are!
Um were did the money get printed ?
I think your next one will be Birkenstock. When I heard they make luxury sandals and valued at 8B. I was thinking of Vin and Imploded Stocks.
LOL. The IPO may be overvalued, but Birkenstock has been around for well over a century. I have been wearing them for 35 years and currently have 3 pairs. They’re probably one of the few profitable IPOs to hit the market in recent years. We’ll see when they implode, but I doubt they’ll be next.
I bet the micro sec momentum traders and their “AI” (algo/memory boxes, all as close as possible to where the gambling occurs) have fun with these SPACS, too. Wikipedia (I think) said SPACS were poor man’s PE. Myself, I’d prefer playing the lotto (I don’t) than what is called “investing and trading”, considering what’s available to me. Small “total lifetime econ loser” savings stay in savings. PERIOD. What’s “dining out”. I remember it every couple moths as a kid, but always hated getting dressed up and “behaving weird”, so no loss.
Anyway, it’s a really sick system we have here, Kinda like “Capitalism theory” went through the teleporter in the movie The Fly, and is now pleading softly, “Kill me”……..but it IS consistently pushing money UP, as designed and paid for….lobbying, bribes, dark money, creating law and ever more ignorant citizens. This is the ONLY social media I do, and practically the only financial media.
I feel like I can watch the whole ECON show fine from here, and learn some things as I never took ANY econ in school. Too boring……..more palatable here.
Yes, I know they are a necessary evil, but I hate most ALL managers and busy-ness people, and it’s getting worse.
Just imagine controlling your own Baine Capital, just like that nice Mormon guy. Or being a bit like the hero in “Pretty Woman”!
Should have said controlling a BIT of it…but still technically in the big boys game……ego boost worth the lost money, I guess. Weird sick society we have here. Good for drug sales.
Just looked up Vraylar New generation of “smart drugs” (like smart phones, TVs ,houses, etc?
Anyway, it can tell if this society makes you overactive (manic…in current Doc talk) or depressed and cure ether!
How do it know?
The connection to the article? Simple. Same drug can handle your societal agony that makes you buy in, enjoy for a while, and then keep you from suicide when you lose the rent.
“AI Medicine”
“Obviously, this kind of idiocy should never happen in a healthy stock market. This is just nuts.”
^^^Exactly my thoughts almost every day I log in to check how my investments are doing. No matter how negative the news, the march continues into oblivion.
I’m curious how long before the entire A.I. hype machine will become VINFAST. I’m shocked how hard even the extremely intelligent investors are hyping A.I. at the moment, buyers beware…
Personally don’t fight the madness anymore and do well investing as long as I turn off most logical thought processes, yet I’m in constant disbelief as it all seems too good to be true.
Ever I question how humanity got this far???…HA
I get interrupted regularly by Bill Gates AI parrot. The real hard questions it is verboten to answer. But when you are looking for infantile, mechanical answers to questions you already know, then it is outstanding.
My favorite AI adventures are the sites that recruit tech workers for AI projects using AI on their sites. The sites are impossible to use. It seems the computers don’t want the humans to apply for jobs, hmm…
Some of the recent memes generated by Bing/Dall-E 3 were hilarious. They caged it though. But for a few days… wow! The AI /LLMs are going to change things a lot. We are just at the beginning. And the savings will not be passed on to consumers.
Reminds you of that song “Take the money and run…”
No, Billie Joe and Bobby Sue were two young lovers with nothing better to do, the engineers both electrical and financial are not nearly as trustworthy as kids getting high and watching the the tube.
NC is giving Vinfast 1.2B in incentives to build a manufacturing plant. I hope it works out better than NY’s solar panel plant incentives. Not holding my breath.
These welfare payments from taxpayers to corporate welfare queens are a massive scandal – and no one is able to stop them.
It’s never going to stop at least in part because it’s industrial policy and nations have strategic interests in building or sustaining capacity in sectors they believe have (or will have) national security adjacent significance.
Of course that also gives cover for grifts which can pass themselves off as significant in this way, so caveat emptor and all that …
NC voters are easily distracted.
EG,
Agree.
Industrial subsidies essentially present the same difficult/dangerous balancing act that “protective” tariffs do…
Do little/nothing and your key industrial base may migrate/rot/evaporate…do too much and pontificating scumbags will fleece consumers/taxpayers with excessively high prices, inferior domestic products, or vaporous bullsh*t.
Historically, the latter danger seemed to have more empirical evidence…plenty of American tariff/subsidy exploiting grifters/politicos (but I repeat myself) here in US.
But for 20 years China has well and thoroughly kicked America’s industrial ass…and American industrialists (our contemporary Tom Edisons…) responded with…utter impotence.
To such a total and complete extent that tariffs and industrial subsidies are made to look necessary again.
But it is smart to be deeply, deeply afraid of some Americans’ capacity for infinite grift (Infrastructure spending and CHIPS act we’re watching you).
…and then there’s that ‘exceptionalism’ (…’hubris’, in ancient Greece…). MUCH easier to cite than actually working hard to remain in the lead…
may we all find a better day.
Kinda like the “Carpetbaggers” who went south after the civil war, and kept the war, and as mentioned it’s hubris alive for all the despondent losers, and now pretty much run the ENTIRE place….with lots of different grifts, too, not the least of which is preachin’. Ted C is a perfect example of this type, sponsored by GS.
There is always opportunity in the miserably trashed wreckage of a society, lots of it.
My granpa worked in one of their shoe factories in Sparta, North “by God” Carolina. Took me on his long morning walk to it and showed me the place. (c1961)
Think most all commoner shoes are made in Bangladesh now, have been for a long time. Had to pay too much in wages in the South.
BTW; saw several states in the South are going on a HUGE PRISON BUILDING splurge….yet another profitable grift. Today my granpa would have to be a cop (dispatcher?) or a guard (one of those sit in a box with a rifle 8hrs types, most likely)
These folks do have a good work ethic, except for the grifters…..who will pay them in as much hubris as they can get away with…….ceremonies, media, etc. Para military stuff.
The rest of the hubris they get for themselves by beating the hell out of the “suspect” or “convict”……yeah, same types who get it from kicking the dog or beating the wife.
Exceptional power over others….self pride really flows.
Not smart enough to grift….can do simple things that don’t require planning/thinking though….like bribes. Just take it and leave….easy-peasy.
Well, the subsidy to sports teams is the least economically justifiable popular public support.
The public pays for what they want, no matter how much they bitch after they start paying for it.
Corporate welfare is de rigueur in America.
CNBC- IRS says Microsoft owes an additional $29 billion in back taxes
Even when someone like the IRS is able to stop the corporate welfare, NOBODY goes to jail if they are individually super wealthy or a large mega corporation.
You miss paying $29,000 and you go straight to jail. MSFT misses paying $29,000,000,000 and NOBODY goes to jail.
Such unfair rule structures do not create a stable and prosperous societies. And thus the loss of confidence in the institutions and the American Dream…
Yort – am still awaiting corporate ‘citizens’ to be required to register for, and be subject to, the draft (…like us non-corporate ones…).
may we all find a better day.
Nice thought Dustoff. I can just see them yelling, “US Drill Sargent!” as they get tossed their C-ration box as they double time out of Corp Headquarters…..for eating on the bus on their way to basic.
Corruption is a cancer. There is no stopping it. I suppose it’s many humans nature. Societal decline is well under way.
Oh, have a nice day….
Gotta wonder, who were the bag holders?
There are no bag holders. Everyone got what they wanted: a lot of fun. Like going to a casino for a night of drinking and gambling and coming out the next morning with a hangover. It was a huge amount of fun, and for the rest of your life you’ll be bragging about how you lost so much money so fast.
And a few of the people who got in early and got out before the collapse – and their efforts to get out CAUSED the collapse – are laughing all the way to the next casino.
EV SPAC VinFast Collapses 92% in 31 Trading Days, $213 Billion in Fake Market Cap Evaporated in Hilarious Manner…..
Those who created this debacle represent teh “Best and teh Brightest” minds in investments and finance… Graduates of highly selective Ivy League schools. Mere mortals, whose money they manage so wisely are not even allowed to breathe the rarefied air to which they are entitled by virtue of their superior education and investing skills.
Advanced degrees in sheep shearing. Passes as an ag dept at Harvard.
Shift recently declared bankruptcy…they went from $118 to $0.20.
They never made it to meme status.
The Shift hit the fan.
Exactly. Losses are for losers like American families.
Wolf,
Next to last paragraph, “… of $100 billion would allow it to rase a whole lot more cash from the meme-stock crowd …,”
Maybe you meant ‘raise’, but perhaps it was ‘raze’ or even ‘erase’.
As always, great stuff.
Or “Craze”
I thought raze was what Wolf had meant Your suggestion of “erase” is priceless and makes perfect sense.
If I had my druthers, I’d go for “erase” 🤣
I would be really surprised if this SPAC would not fail dramatically, lots of idiocy there for sure.
Wolf, perhaps would be a worthy topic about TLT, BND (and such). These were very popular bonds ETFs with the retail investors. Implosions-like there! Deep red since the start of the indexes, and after last 10y. But they were promised to be safe…. Boo.
Agreed anyone who invested in these spaces or really any IPO assumes a level of risk.
The collapse of TLT is well documented here and wolf is absolutely right about the way people buying bond ETFs versus just buying bonds and holding them to maturity is idiotic.
Still any financial advisor or independent financial advice via typical online resources or dang even Buffett and the 60/40 portfolio or Target date funds. Literally nearly everything has said buy bonds for safety and a 2-4% gain annually.
This advice should have been accurate but we had a decade plus of manipulated rates (naughty naughty crooked government) and then COVID and inflation.
I agree tho it’s a shame that people have had large amounts of money in these bond ETFs and they have been hit hard… Necessary but still rough
Holding to maturity won’t help much if the value is inflated away by high inflation.
I only started investing 2.5 years ago, with a lump sum, and couldn’t understand why people were telling me to invest 40% or more in bonds that paid almost nothing and had significant duration risk. I ignored them.
I still have money in a 0-3 month US Treasury ETF. (I’m in the UK, so can’t buy US Treasuries directly, as far as I know.)
AmD – shouldn’t they be called ‘SPAC Cadets’?
may we all find a better day.
Biker,
TLT has been featured here for over a year-and-a-half (since early 2022) giving lots of advance notice, so to speak, with beautiful charts. All you had to do is look at them.
The most recent one is here, Oct 3, bottom chart:
https://wolfstreet.com/2023/10/03/20-year-treasury-yield-spikes-to-5-13-yield-curve-gets-ready-to-uninvert-juicy-yields-tempt-but-bloodbath-may-not-be-over/
Here is an early one from May 2022, first chart:
https://wolfstreet.com/2022/05/07/so-the-fed-gets-ready-to-walk-away-from-the-bond-market-and-all-kinds-of-stuff-happens/
Everyone here who reads my bond-fund comments knows that I hate bond funds as investments, and that I think they’re only good as bets on the direction of interest rates. I have been saying this for many years, even during the bond bull market. I have been saying for many years that if you want to invest in bonds as a conservative investment, “buy bonds outright at auction and hold them to maturity” is the way to go, not bond funds. Bond funds are among the most mis-sold investments out there.
Yes, Mr Wolf, you have been reporting on TLT before. Just slipped my mind I guess. TLT is one thing. BND has been the most preferable bonds allocations with retail as far as I can tell and this must be a shocker for them.
And this is not only about disappointing returns, but also on the social dimension. The bankers/advisers they trusted… and collected their 1-2% cut.
I’m glad you made the exception for interest rate direction ETF bets, as I find them valuable for my “gamble” investments. For example, TBT ultra short Treasury ETF went from $15 to almost $40 from 9/2020 to this past week. And they say “Don’t fight the Fed”…HA
Plus what is investing these days if not entertaining, like this article states. Almost any investment is probably better than 1 in 292.2 million chance at Powerball, yet we buy tickets because it is exciting and entertaining to fantasize, even if we mathematically know better…
Will you please direct me to your more detailed writing on bond funds? I remember reading it but don’t remember which article. Thank you.
I just googled it. These articles are all over this site and go back years. some of them discuss the other big risk of bond funds, a “run on the fund” that has caused bond funds to collapse. Here are a few of them:
From November 2018:
https://wolfstreet.com/2018/11/29/potentially-treacherous-times-for-bond-funds-ahead/
From February 2019:
https://wolfstreet.com/2019/02/11/bond-funds-are-potential-source-of-financial-instability-after-years-of-global-qe-and-low-interest-rates-fitch/
Oct 2019:
https://wolfstreet.com/2019/10/28/first-mover-advantage-run-on-the-fund-liquidity-mismatch-big-risk-of-bond-loan-mutual-funds-what-smart-investors-do/
Dec 2015, LOL:
https://wolfstreet.com/2015/12/11/junk-bond-fund-implodes-investors-stuck-focused-credit-fund-by-third-avenue/
You can probably find others. I also endlessly held forth on the same top in the comments. But specific comments are harder to a Google. So I just picked out one:
Comment why “I hate bond funds” – Oct 2022:
https://wolfstreet.com/2022/10/18/return-of-the-bond-vigilantes-sent-shockwaves-around-the-globe/#comment-473892
Comment why “I hate bond funds” – Feb 2022; make sure to read my series of comments below it too:
https://wolfstreet.com/2022/02/05/rough-day-in-the-bond-market-treasury-yields-spike-30-year-fixed-mortgage-rate-nears-4-wheres-the-magic-number/#comment-407852
I knew you will write about this one Wolf the day Vinfast first listed. It’s good to see crap like this stock crash back down to earth…
Only sad part is the collapse happened so fast, doesn’t give Hollywood writers much materials to work with and turn it into a good TV show like the WeCrashed
wikipedia says Pham got his start in Ukraine producing dried fruit and instant noodles. Almost like 6 degrees of Kevin Bacon stuff.
Outside the SPAC arena (similar to professional wrestling), are the biggies like Apple, Microsoft, Google, Tesla, etc made of similar fabric?
All these would have to fall hmm like A LOT to “beat” the TLT/BND e.g. in the last 10 years. I do think this would be interesting story to tell.
And this is mind-blowing more than the fall of hight risk bets like memes. Like very risk intolerant investors failing often even more than hight risk growth investors that are OK with some gamble.
Apple is sitting on $50 billion in cash and short term investments, Microsoft has $100 billion, Google $150 billion, Tesla a measly $23 billion.
The problem is their unjustifiable valuations coming from zirp era.
All assets need to be resetted to higher rates environment and it may happen over time
Right now thr market is running on hopium about pivot..
Whp knows Fed may pivot.
Information is power.
I wonder how much of that cash would vaporize if/when the Spit Hits The Spam.
I think so. The bigger they are the harder they fall, it just takes a lot longer to take them down. I remember in the late 1980’s buying a computer when Apple was selling as the MacIntosh against very stiff competition from Atari, Timex-Sinclair, Commodore and others who got bumped out by Apple. The big internet search engines were AOL, Altavista, Lycos, Yahoo, Hotbot, Web Crawler and others who got knocked out by Google. I would bet there are tens of thousands of Tech Savvy genius’s working on their own version right now. It is just a matter of time before the next King is crowned.
No. They are overvalued but Apple Ms etc make products and profits NOW.
Moving on,,,all this blame the Fed bs…Charles Ponzi needed no help from the Fed. The South Sea Bubble did not need a Fed. The Tulip Bulb Bubble did not need a Fed. There wasn’t one. These spec manias are part of human nature. OK,,,the Fed hasn’t helped…lol, but the root cause? No.
Not sure I understand the logic of your statement, Nick. While I respect that you are familiar with Charles MacKay’s 1841 book (Popular Delusions…), are you suggesting we exonerate the Fed for it’s policies over the last 25 years because they did not exist prior to 1913, when the bubbles you mention took place?
My main bones with the Fed are three:
1. It’s goals are confused and mutually exclusive (low inflation and high employment)
2. By inflating credit and keeping rates low, it enables ever-growing government debt by temporarily blunting the political cost of deficit spending.
3. It distorts market pricing signals that would otherwise act as natural (and less political) limits to production, savings, lending, and consumption.
Incidentally, it’s not just the Fed. Most other CB’s play supporting roles in the fiat regime.
I’m curious why you did not mention the Great Depression, a debacle that DID occur during the Fed’s existence. For a revelatory dive into the role that the Fed played in the lead up to that dismal period, find a copy of Banking and the Business Cycle, by Phillips, McManus and Nelson (three respected professors) written in 1937. It describes how the Fed’s reaction to the new realities of world finance following WWI led to both the insane expansion of the last half of the 1920’s, and the inept dithering, reversing and manipulating of the ‘30’s.
(Incidentally, it’s not just the Fed. Most other CB’s play supporting roles in the fiat regime.)
Call me an whiner if you must, but please don’t do it without learning a little more about why so many largely blame the Fed for today’s financial stresses.
Respectfully…
Easy come. Easy go!
“Obviously, this kind of idiocy should never happen in a healthy stock market. But it has happened a lot.”
There’s too much liquidity, still. The FED should never have “paused,” it was completely unnecessary and a continued dereliction of their duties.
At least the bond market is no longer viciously fighting the Fed so it makes sense to me that helps tighten things… but let’s be real inflation is out of control and rates are just going to need to go higher it’s just a matter of time. More hikes could get back on the table if the inflation reports come in hotter like I believe wolf has suggested in the past.
I think oil and gas was highest in September so we should see that this month I believe.
The Keynesian economists have achieved their objective. That there’s no difference between money and liquid assets.
Interest is the price of credit. That means bank credit along with the activation of savings.
As savings are activated, while bank credit is constricted, real interest rates obviously rise. High real rates of interest aren’t restrictive when they are accompanied by an increase in the transaction’s velocity of funds.
Fed won’t as energy “fluctuations” are stripped out on feds preferred core pce.
Wall Street pushing the pause and pivot narrative again. Twisting everything the Fed says as being dovish now. A few Feds came out and said they may not need to raise rates since the market is doing it for them. Of course, wall street, in it’s usual denial and desperation, is calling it dovish. Also they have moved up the first-rate cut again. Sentiment changed this weekend with the war. And then you have the NAR, MBA, and NAHB penning a joint letter to the Fed demanding that the Fed not raise rates anymore and not sell any MBS’s. “Make Orwell Fiction Again” I can’t stand it anymore.
So if rates fall because of the narrative that the Fed doesn’t need to tighten as much with high yields… Then by that logic the Fed will have to tighten more because of falling yields lol like it matters, inflation is out of the box either way
Exactly, but that’s the narrative they are spinning now. I guess they are hoping the majority of people don’t engage in logic or maybe they haven’t thought it through. Probably the latter lol.
The FED is doing exactly what it needs to do. It is holding the means-of-payment money constant / no growth.
Waller, Williams, and Logan seem to agree. They “believe the Fed can keep unloading bonds even when officials cut interest rates at some future date.”
The insiders who were in by third week Aug 2022 are the culprits. Follow the money.
MW: US Treasuries are seeing longer bear market than stocks did in the 2008 financial crisis or the 2000 dot-com crash
….“ in front of the idiocy of the stock jockeys that were playing this game amid the detritus of EV SPACs, some of which have already filed for bankruptcy.”
All time epic statement. Using the word ‘detritus’ in a financial blog… well done. Well done, Wolf.
Isn’t the SEC supposed to protect against this obvious scam fraud?
Yes, “supposed to,” but in reality, if the SEC ever does anything, it starts only after everyone has gotten cleaned out, and then it tries to go after the perpetrators.
Correct Wolf. Harry Markopolos (man who blew the whistle on Bernie Madoff) stated in a 60 Minutes interview: “The SEC typically comes in after a crime has been committed, they toe tag the victims and count the bodies, and try to figure out who the crooks were after the fact which does none of us any good.”
Markopolos also said “In my experience with the SEC, their people are totally untrained in finance, they’re unschooled, most of them are merely lawyers without financial industry experience.”
Ouch. Don’t count on the SEC for protection from scams, frauds or other bad investments.
Hold on there cowboy, the SEC got Martha Stewart for insider trading 3,928 shares of ImClone for $58.43 per share in 2004.
The irony is by June of 2004, the shares had risen to $87…HA
To be fair to the SEC, if they go after this stuff before it blows up they get blamed for interfering in the free market.
TESLA did all sorts of shady stuff as it was growing. Clearly manipulating it’s stock price, etc. The SEC barely went after them and yet it still gets attacked. I have heard people whose opinions I generally respect say the SEC is stifling innovation.
Go talk to a somewhat financially knowledgeable Trump supporter. Ask him about Trump’s SPAC deal. You will hear the usual nuttiness about the federal government interfering because “they” are trying to get Trump.
So the SEC cannot win either way. If it preemptively acts people scream, if it reacts, people scream that it only acts after the fact.
Like any policing function, any attempt to pre-empt the commission of a crime leads to people complaining (rightfully so) about their rights and freedoms. So as a result, police function are mostly reactionary. Investigation of crimes after they are committed. Not during the actual commission of the crime.
It all feels like the coal train in the tunnel in the end of atlas shrugged. full throttle through the tunnel with dumb ipos and free money with a millions of people on the train slinging their HELOC money, higher incomes or whatever they have… putting more coal in the train furnace to push the train faster through a tunnel with no light at the end. The dining cars still have great food. Just smells like coal and I can’t breathe things are so weird.
Stick with sexual porn and you’ll breathe much better.
Yer welcome.
If you do a simple Google search today for “mortgage rates” there are multiple headlines about multiple housing groups (NAHB, MBA, NAR) beseeching the Fed to stop any further rate hikes.
Yes, they sent a joint letter to the Fed crying that they need the Fed to not raise rates again and not sell any MBS’s. Lance Lambert posted the actual letter on Twitter. Pathetic group.
Companies like D.R. Horton want to be able to sell their piece of shit new builds for $500k.
These companies are selling because people are buying.
People stop paying these prices, the prices would come down to the ground.
Bottomline, too much money sloshing around.
Yes, the 1966 Interest Rate Adjustment Act is the solution.
Wolf: An anecdotal information from Seeking Alpha (where you also publish) commentor:
A company called Immunovant (a brainchild of the 38 year old genius who wants to be our next president) releases a positive news on their Phase I-A results for a drug (this is like a baby step; we have phase Ib, II and III that would take years to complete) and the stock doubles (pumped as a takeover candidate at some MightyFool; the company is already valued at 5B). Next day or two, the company comes up with the idea to collect more fresh money. Wen I try to point out the tiny details, this commentor, obviously a stock holder, says, “Yes, they need money for the infrastructure, cost of drug manufacture etc.
Yeah, I tried to go against these geniuses by shorting and lost my shirt and more!
Moral of the story: Go with the crowd or stay at home or you will end up in a stampede :)
Doctor-
“ Moral of the story: Go with the crowd or stay at home or you will end up in a stampede :) “
That’s a good warning on the unlimited risk inherent in shorting stocks. When you short a stock, you are a borrower, and you will need to pay up at an unknown future cost at and unknown future date. Your buyback might be voluntary, or it might be forced on you by your broker’s margin department.
Second moral: shorting stocks, is best used by fully diversified and emotion-free professionals with suitably deep pockets.
Ditto. The first slaughter of investors who were confident enough to short stocks in a big way occurred from 1997 – 1999. Some of smartest investors who unequivocally knew that many of the dot coms were rubbish had their heads handed to them monthly because they were shorting stocks. Even the C-suiters who cook the books can keep a b.s. operation on ventilators much longer than one might imagine.
Unless you have excellent insider info. and ideal timing, you shouldn’t f’ around with shorting.
Indeed.
New EV’s that qualify for the federal tax credit purchased starting 1.1.24 can have the tax credit applied directly at the point of the sale and provided to the dealer. Some end of year EV sales may get pushed to early next year.
Hopefully Vinfast will leave a nice usable building in NC.
I didn’t know they had a plant in North Carolina. Turns out it is 13 miles from where my department is based.
I think this stock is still so much overvalued and will probably be a penny stock in the future. This is not an investment advice.
Well that was fast. The Randy Parton Theater (Dolly’s brother) actually got built before it blew up. They barely broke ground. Granted, at $4B ($4MMM?) , it is a little pricier than Randy’s theater.
On the (very) plus side, it sounds like public funding turned over so far is limited.
I actually saw a VinFast on the streets of Toronto the other day.
Looks nice. I’ve heard the build quality is poor though.
Thanks Wolf. Unfortunately, I am convinced that the level of fraud still existing in today’s “market” is still exceptionally high. There is a LOT more of this type of thing still left to unravel. Almost 15 years of free money has resulted in an unprecedented level of capital mis allocation and malinvestment. So much more left to unwind…
Hedge accordingly.
When Wolf wrote: “EV Maker VinFast’s Market Cap Spikes to $159 Billion on 9th Day of Trading. This Stuff Would Be Hilarious if it Weren’t so Serious. ” I Googled Ford market cap and it is under $50 Billion. I think stocks that spike like this one have more to do with big trading firms buying more as it keeps going up than 20 something guys gambling with the cash they saved up by not having to pay on their student loans for the past three years.
that was in references to the article I wrote on Aug 25.
In this article, I wrote in references to the peak stock price on Aug 28: “…and then to the all-time high of $90 on August 28, giving the company a beyond-ridiculous market cap of over $230 billion, about five times the market cap of GM,”
I haven’t seen one of these vehicles here in Ontario yet, but there is a dealership on the service road in the town next door where my Mom lives, so maybe I will soon.
Wolf, when I need a laugh, I read your articles on the latest addition to your pantheon of imploded stocks. Your mastery of sarcasm is greatly appreciated.
Hey, maybe they’ll start a new IPO called “FastVin”. Symbol: “FYOU”?
Key words in press releases, “green” “environmentally sound” “carbon neutral” “ground floor”, maybe even toss in the old “block chain” meme since its been a year and likely already been forgotten by today’s “smart money”.
What do you guys think?
Atlis Motors (NXU) is another huge scummy stock. They produce more useless YouTube livestreams and it took years and about $20 million dollars of investors’ monies to produce one single charging station.
Stock was priced at a US$26 peak, now it’s at 10 cents and scheduled to be delisted next week.
The Tesla wannabe hype was a huge tulip mania.
DM: House prices set to plummet for the first time in over a DECADE, claims analyst once dubbed the ‘Oracle of Wall Street’ – as she reveals four states expected to see values decline
House prices are set to plummet for the first time in a decade, claims a former Oppenheimer analyst who was dubbed the ‘Oracle of Wall Street.’ Meredith Whitney is famed for sending an accurate research report sounding the alarm about the risks Citigroup was taking on before the financial crisis. But as warning bells sound again over the health of the US economy, Whitney told Insider she did not fear another recession thanks to robust consumer spending which has been bolstered by low unemployment rates. Instead, her focus is on American house prices which she expects to decline for the first time in over a decade. It marks a stark reversal of a pandemic-inspired trend which has seen home values shoot up by 42 percent since March 2020, according to CoreLogic.
Not sure where any of the stock market craze ends. There is a lot of money out there even with the quantitative tightening and increases in wages and it has to go somewhere. Ideally we evolve past the current system that serves society as a whole but that is not practical in the US and it seems like for humanity in general. Obviously things will go up and down but down tends to just hurt those already hurting and a negative power imbalance.
I reversed my July 21st sell signal because the 6th seasonal inflection point came a few days early.
Atlanta GDPnow’s latest estimate: 5.1 percent — October 10, 2023
Wolf,
Since this post relates to vehicles, I wonder if you might consider commenting on this video, re RV industry general growth and the class A general decline. The economic data presented in the video is interesting compared to 30yr T, S&P, and med income v RV deliveries.
I don’t comment on videos. I delete links to videos.
MW: Tempest Therapeutics’ stock jumps nearly 4,000% on liver-cancer treatment study
Google “The housing market looks like a bubble, 2008 regulator says”
The idiot Lawrence Yun is going on about “low supply.”
LOL.
Anyone who says that housing prices are high because of low supply is either an idiot or a liar. Which is he?
The engineer gone economist, has written the playbook for the NAR.
Both.
Damn 10 year is going down again. I hope this is temporary.
Can someone please comment on (from the earlier article) on who bears the pain of the massive drop in long bond values and what the likely consequences will be?
Thanks
Bruce
“Obviously, this kind of idiocy should never happen in a healthy stock market. This is just nuts. ” sums up the current unstable disequilibrium that we Americans find ourselves in.
After 15 years of the “nuts” being in charge, the result is starting to reveal the degree of insanity that we just experienced, but is only beginning to reveal the extent.
The collapse is like watching paint dry.
The national sense is that money is available too spend and I deserve to have the products I want. Therefore, I shall buy the products J’m able too, to make sure that my kids don’t feel less than ……
or
It’s related to the most human of frailties, sex.
The best part of your site is that it presents the facts without interpretation. Usually, you leave the interpretation part to the commenters. Whatever.
The plot of the rise and fall in price of this swindle is breathtaking and begs the question of who won and who lost.
A question of the integrity at the top of a righteous society, America.
Dang – you are having a conversation with yourself, apparently. I’m not sure that things are as bad as you suggest but only time will tell.
…not ‘righteous’, friend Dang, ‘exceptional’. (…see also when ‘liberty’ is conflated with ‘license’ (nod to R.A. Heinlein)…).
may we all find a better day.
Nice, from the original ‘Starship Troopers’ book. That guy sure had a vision, and a way with words.
He thinks therefore he is, (“Cowboy?…..is that right?)
Quit stepping on his existence and pay attention to your own.
Was referring to “OutWest” handle choice.
BTW, never read book, but Starship Troopers is one of my “newer” cult film favorites, not as good as those big worms in Nevada, though….can’t recall name…..amyloid plaque buildup in brain, I suppose….part of aging like short or vanished telomeres….?
Conversation with self or just second thoughts? What would De Cartes say?
According to Wolf’s earlier post the whole 3% stock float was paid for with only $70 million… not $258 billion. Where that $70 million came from is anyone’s guess (probably my own state’s pension fund knowing our luck)… but I doubt much of it came from actual investors spending their own money on what they thought would be a sound investment.
The $258 billion figure is “mythical” as Wolf says because it includes the nine-fold runup in price along with multiplying the whole float at the peak price to include the VIN Group’s ownership share of 97%. But if the owner had actually sold shares into the market at its peak… then the peak would have collapsed on him.
So basically the “investors” in this Ponzi scheme all thought they were Charles Ponzi. They seem to have forgotten that in the end, Ponzi was just as broke as the investors he snookered. Very few of them were able to get in at $10 per share… and even fewer were able to profit when the price ran up to $90.
FYI Typo: the float is 0.3%, not 3%.
This perfectly illustrates why the trope of “low supply” of housing is so utterly wrong. Prices for all assets, whether houses, crypto or meme stonks, are set at the margin.
Right now, many potential sellers aren’t selling because they’re listening to the nonsense from the media about the Fed pivoting soon, returning rates to 3-4%, and happy days being here again (for asset holders).
This is what’s causing the so-called “low inventory.” The few that are selling are being sold to the few buyers willing or able to buy at these prices.
Of course, if ANY appreciable number of potential sellers listed their houses, prices would plummet. It’s the same principle as only 0.3% of the outstanding shares being on the market causing a high valuation. If suddenly even 5% were floated, the price would plummet.
The collapse of this was so fast that I bet most of the people who took a bath on this were insiders and proxies. I bet very few Joe Blow outsiders lost anything on this because it never had time to even become a meme.
That is the thing about Greater Fool Theory. You never know when the music ends and you will be the one holding the grenade.