≈ I know where some stimmy checks went.≈

Traders,

It’s becoming increasingly easy to find evidence of rampant speculation these days on Wall Street. Particularly in what Coach Mark calls the “underbelly” of the markets. I stumbled across the Chart of the Day in a recent New York Times article – Penny Stocks Are Booming, Which Is Good News for Swindlers. Here’s the money quote:  

“…last month, there were 1.9 trillion transactions on O.T.C. markets, an increase of more than 2,000 percent from a year earlier, according to data from the Financial Industry Regulatory Authority, a self-regulatory group that oversees brokerage firms.

The lack of oversight makes penny stocks easy targets for scammers, which has long accounted for their unsavory reputation. But risk can also be a draw for thrill seekers or those who fear they’ve missed a market boom that is creating wealth all around them.”

Your first response might be that this is definitive proof that stocks are in a bubble. But you’re casting too wide a net. There are micro bubbles popping up here (penny stocks) and there (SPACs), but I’d stop short of saying everything is a bubble. Furthermore, there isn’t much utility to the label because even bubbles can last far longer than you think.

If it wasn’t obvious based on the quote, penny stocks are garbage and should be avoided at all costs. And if the increased activity is people using their stimulus checks, there are far better options. Buying a broad basket of stocks seems far more intelligent, not to mention safer.

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Chart of the Day

My Penny Stocks Bring all the Buyers to the Yard

Degenerate gamblers have taken to penny stocks for scratching their itch. Unfortunately, many will depart the Over the Counter Markets (O.T.C.) poorer and more depressed than when they arrived.

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Video of the Day

Onboarding with Coach Frank

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Today’s line up

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The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

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