Wednesday February 24, 2021
Buffet vice warns of excesses
Gamestop share is running hot again
Gamestop stocks are going through the roof – again. What attracts the gamblers is unclear, possibly it is the announced withdrawal of CFO Jim Bell. Warren Buffett's deputy Charlie Munger sees an "irritating bubble" in the financial market.
The excitement surrounding the ailing video game retailer Gamestop never ends on the US financial market. After heavy losses in the previous weeks, the share price of the US company, which has become the pawn of speculators, more than doubled on Wednesday without a clear reason being immediately apparent. The shares were temporarily suspended from trading and ultimately closed with a plus of 104 percent at almost $ 92. After the trading hours it continued with violent fluctuations, at times the price shot up by another 100 percent.
The day before, Gamestop had announced the departure of CFO Jim Bell without giving a reason. US media later reported that the manager had to resign under pressure from influential shareholders because there had been disagreements about the strategy. Bell has his retirement silvered with a generous settlement of $ 2.8 million, in addition, he receives a block of shares of $ 13 million. In terms of personnel, investor Ryan Cohen is said to have played a key role, who took over a position on the board of directors in January. Many speculators consider him to be the bearer of hope for a comeback, because he had already successfully turned the pet supply retailer Chewy inside out.
Reddit users don't know about anything
In view of the conditions on the US stock exchanges, the long-time partner of the legendary star investor Warren Buffett, Charlie Munger, warned of excesses. The vice chairman of Buffett's investment company Berkshire Hathaway is apparently very concerned about the recent turmoil in the US financial market. Capricorn prices like the shares of Gamestop are signs of an "irritating bubble" that has to end badly at some point, said the 97-year-old at the annual general meeting of the US media group Daily Journal Corporation.
According to his criticism, the frenzy of speculation reveals a dangerous new culture in which people are encouraged by cheap brokers such as Robinhood to gamble with stocks, as in horse betting. In fact, Gamestop has been in crisis for a long time, but driven by hobby investors organized on the Internet, the company's shares had rallied breathtakingly last month. That in turn broke billions in losses for some hedge funds that had bet on a price decline. At the end of January, the stock had hit a record high of over $ 483, but the soaring was quickly over. The users of the Reddit forum, from which the concerted purchases recently started, were surprised at the recent price rush.
Munger disapproves of Robinhood's business model
The price turbulence around Gamestop and some other companies on the US stock exchanges has already had an aftermath that continues. US authorities are investigating the incidents and investigating possible market manipulation. The discount broker Robinhood, which is particularly popular with younger investors, came under the crossfire of criticism with its easy-to-use app. In particular, the fact that Robinhood restricted trading in hot stocks like those of Gamestop during the price explosion last month so that they could only be sold caused a lot of trouble. Robinhood firmly denied any suspicions of collusion with hedge funds.
Charlie Munger now also strongly criticized Robinhood, but not because of the trading restrictions, but because he considers the app to be more of a kind of gambling provider than a reputable broker. Robinhood runs a "dirty" business, in which users are lured with no fee, while the company receives money from Wall Street actors for the mediation of their transactions and therefore encourages as much and risky trading as possible.
The Buffett vice-president can also see nothing from the heights of the electric car manufacturer Tesla and the digital currency Bitcoin. He doesn't know which price rally he thinks is worse, said Munger. Bitcoin is unsuitable as a means of payment because of its strong price fluctuations. Tesla boss Elon Musk is a big fan of crypto currencies, the company had last bought bitcoins for 1.5 billion dollars and thus fueled the rate of the most famous digital currency.
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