Wall Street’s Version of Pros Vs. Joes

From 2006 to 2010 there was a reality show on the Spike network called Pros Vs. Joes. The show featured professional athletes in competition against amateur athletes in various sporting competitions. Most of the professionals were retired, but it was still entertaining to watch the average person compete against a world-class athlete. At least as an old jock, I found it entertaining.

Apparently, there are many people that feel like Wall Street is having its own version of Pros Vs. Joes currently. In the last few days, I’ve seen a number of articles about how the crazy jumps in stocks in the last few months have been fueled by non-professional investors.

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In an interview on CNBC’s Halftime Report on Monday, Leon Cooperman, the billionaire hedge fund manager, issued a warning about the current market environment. Cooperman stated, “They are just doing stupid things, and in my opinion, this will end in tears.”

Cooperman went on to add, “The notion that American Airlines has an enterprise value today higher than pre-COVID because of the debt they’ve issued …  doesn’t make any sense.”

I have personally mentioned the airlines stocks and how the huge rallies since mid-May made no sense and that investors were flirting with disaster there. Leon Cooperman’s statement doesn’t mean that my sentiment will play out, but it’s nice to know that a billionaire thinks the same way I do.

That was only one article that I read. Yet another article came from MarketWatch and it plays right into the original sports theme of Pros Vs. Joes. The article featured comments from Dave Portnoy, the founder of Barstool Sports, a sports and lifestyle blog-oriented website.

The article pointed out comments by Portnoy that seem to point toward an extreme confidence in how easy it is to make money trading stocks. One such comment was, “Flipping stocks is easy” he shouts from his desk. “I’m just printing money… I should be up billions!”

The article also pointed out a tweet from Portnoy. He commented in the tweet, “I should be up a billion dollars with how right I was about cruises and airlines.”

Portnoy is known for a circus-barker style and that’s part of what has made Barstool Sports a popular site for sports enthusiasts. Wall Street isn’t known for boisterous claims about successful trades and there is a reason for that. Anyone that has been trading for a long period of time knows that hot streaks come and go and that cold streaks will hit eventually.

Portnoy’s comments caught the attention of several people within the investment industry. One comment came from Peter Cecchini, the former top strategist at Cantor Fitzgerald. In a post on LinkedIn, Cecchini commented that, “we could be looking at a “Portnoy Top” in this market.”

Cecchini went on to state, “[Portnoy’s] attention-getting, wild style is emblematic of just how emotional and extreme equity markets are now. It’s both impulsive and compulsive. His behavior really just explains everything. It doesn’t even matter if he’s serious or not.”

A third article I read was from a fellow Seeking Alpha contributor. Michael Gayed is a Chartered Financial Analyst and he posted comments about the Robinhood platform becoming the next odd-lot indicator. Included in Mr. Gayed’s article was a tweet from another gentleman.

I found this tweet to be especially interesting because my young friend that I introduced you to last week, Average Joe the Second, has asked for my thoughts on six of the eight stocks in the picture. I am trying to teach this young man about the market and how to come up with his own analysis style and trade ideas. It appears as though he has found some stock touts that he likes and is following their playbook.

I fear this isn’t going to end well for my friend, but hopefully he wakes up and listens to me about investing. I know I’m not right all the time and nobody is, but the stocks I recommend to subscribers are solid companies that have been around for years and have solid fundamentals to back their stock movement. Last week, when we saw the big drops on Wednesday and Thursday, yes the stocks in my portfolio fell, but they fell less than 10%. The eight stocks in the image above all fell at least 13% on Wednesday and Thursday and six of the eight fell over 20%. Hertz fell over 50%.

The euphoric attitude of Dave Portnoy along with the excitement my young friend has for the market—these are starting to remind me of some of the things I heard back in the late ’90s and early 2000. When people that are new to the business think they can just “print money” by investing in stocks, that is a sure-fire warning sign to me.

About Rick Pendergraft

Rick has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick’s analysis process includes fundamental, sentiment and technical analysis. Rick started college as an education major, wanting to teach economics, but eventually changed to majoring in Economics and received a Bachelor of Science in Economics from Wright State University. His desire to inform and educate people is at the heart of his writing.

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