“Buy the rumour, sell the news” is an old market saying – and we got a classic of the genre yesterday.
It was a huge day in the evolution of bitcoin. From its origins on obscure chat boards, the open-source experiment of a few renegade computer programmers, to mainstream investment vehicle.
And then yesterday, for the first time, a nation – El Salvador – made bitcoin legal tender. The bitcoin price was steadily running up on the story – from $30,000 to $53,000. Then “Bitcoin Day” arrived and wallop: it sells off $7,000 to $46,000. The bitcoin price “should” have risen. It didn’t; it rose on the rumour and sold on the news.
How many times? It’s happened before and it will happen again.
How to bet on cryptocurrencies without having to own cryptocurrencies
Traditional investors have long been searching for a vehicle by which they can own bitcoin through their Sipp or Isa, via a regular broker account. The older generation in particular don’t want to get involved with wallets and keys and storing coins on hard drives in safes and all the rest of it. They just want to be able to buy and sell bitcoin through their regular broker, with which they are familiar.
In response to this demand there have been numerous attempts to establish bitcoin ETFs, but every attempt has run into some sort of regulatory issue. The most successful were probably the Greyscale Bitcoin Trust, listed in the US, or Coinshares Swedish listed XBT Bitcoin Tracker One. Neither is quite the same as owning bitcoin, but they do track the price.
But another vehicle has come to my attention and I thought I’d flag it up for you today, as I think it might be quite useful. That is the VanEck Vectors Digital Assets Equity UCITS ETF (LSE: DAGB).
It invests in companies that, to use its own lingo, “are driving the blockchain revolution”. That is to say in miners, exchanges, payment providers, service providers and companies that hold and trade crypto and crypto patents.
If I were to draw a parallel, I’d say that, rather than buying gold, it’s like holding a basket of gold mining companies or a gold mining ETF.
The ETF is listed in London, and it’s been going since the beginning of May. There’s a dollar denominated version whose ticker is DAPP – and a sterling version, which is probably most useful to us, with the ticker DAGB (there are also euro-denominated versions listed in Germany (DAVV) and Italy (DAPP), and a Swiss franc denominated version listed in Switzerland (also DAPP)).
It’s still small – very small – but as awareness grows it has the potential to grow too. It holds 25 companies in total, with 75%-plus weighting to the US and Canada and 12% to China, and it rebalances on a quarterly basis. I’ll post the holdings below, but in case you’re not familiar with them, I’ll outline what the major ones do.
It’s biggest holding is Marathon Digital Holdings (Nasdaq: MARA) a Nasdaq-listed bitcoin miner. Then there’s Jack Dorsey of Twitter fame’s payment company Square (NYSE: SQ) and Coinbase (Nasdaq:COIN), the recently-listed wallet-provider and exchange.
Other miners it owns include Riot (Nasdaq: RIOT), Hive (Vancouver: HIVE) and Argo (LSE: ARB), while other notable holdings include Silvergate (NYSE: SI), the bank for fintech and cryptocurrency businesses, and Michael Saylor’s Microstrategy (Nasdaq: MSTR).
Saylor has in the past year totally got the bitcoin bug and become one of the most vocal and articulate cheerleaders for the space. His company, Microstrategy, has gone from being a software company to a bitcoin holding vehicle, owning more than $5bn in bitcoin. He’s raised debt to do it so it is a highly leveraged bitcoin play.
Anyway, here are the main holdings:
Market value (US$)
% of net assets
Marathon Digital Holdings Inc
Coinbase Global Inc
Hut 8 Mining Corp
Silvergate Capital Corp
Hive Blockchain Technologies Ltd
Voyager Digital Ltd
Riot Blockchain Inc
Galaxy Digital Holdings Ltd
Taiwan Semiconductor Manufacturing
Northern Data Ag
Argo Blockchain Plc
Bit Digital Inc
Ebang International Holdings Inc
BC Technology Group Ltd
Hong Kong: 863
Coinshares International Ltd
DMG Blockchain Solutions Inc
Huobi Technology Holdings Ltd
Hong Kong: 1611
Bigg Digital Assets Inc
Future Fintech Group Inc
Bitcoin Group Se
Bitcoin is supposed to be outside of the traditional financial system so it sounds funny saying that I own DAGB in my Sipp, but I do. I’m not, however, recommending that you go out and buy it straight away. I see it more as a useful vehicle to be aware of.
My overriding theory that we are in a period of “frustrating consolidation” for bitcoin remains in play, so I would try to wait for the sell off to get really harsh before you buy: buy the dips, as they say. But this should be a good vehicle to play the bitcoin game, should you see fit.
Regulating the unregulatable
In other news, I see that a bit of a crypto storm is now brewing in Brussels, where the European Parliament is about to try and regulate cryptocurrencies. Good luck with that! What could possibly go wrong when regulators are trying to regulate something they don’t understand, one of the purposes of which is to obviate bureaucracy?
The polling company Redfield and Wilton has run a poll and found that the overwhelming majority of Europeans want cryptocurrencies regulated by their own countries and not at the EU level, with many seeing EU regulation as a power grab. Greece, The Netherlands and Latvia are the most anti-EU regulation, while Spain and Portugal are the most pro. Make of that what you will.
Financial strains among Chinese property developers are hurting the Asian high-yield debt market, where the companies account for a large chunk of bond sales.
That’s widening a gulf with the region’s investment-grade securities, which have been doing well amid continued stimulus support.
Yields for Asia’s speculative-grade dollar bonds rose 41 basis points in the second quarter, according to a Bloomberg Barclays index, versus a 5 basis-point decline for investment-grade debt. They’ve increased for six straight weeks, the longest stretch since 2018, driven by a roughly 150 basis-point increase for Chinese notes.
China’s government has been pursuing a campaign to cut leverage and toughen up its corporate sector. Uncertainty surrounding big Chinese borrowers including China Evergrande Group, the largest issuer of dollar junk bonds in Asia, and investment-grade firm China Huarong Asset Management Co. have also weighed on the broader Asian market for riskier credit.
“Diverging borrowing costs have been mainly driven by waning investor sentiment in the high-yield primary markets, particularly relating to the China real estate sector,” said Conan Tam, head of Asia Pacific debt capital markets at Bank of America. “This is expected to continue until we see a significant sentiment shift here.”
Such a shift would be unlikely to come without a turnaround in views toward the Chinese property industry, which has been leading a record pace in onshore bond defaults this year.
But there have been some more positive signs recently. Evergrande told Bloomberg News that as of June 30 it met one of the “three red lines” imposed to curb debt growth for many sector heavyweights. “By year-end, the reduction in leverage will help bring down borrowing costs” for the industry, said Francis Woo, head of fixed income syndicate Asia ex-Japan at Credit Agricole CIB.
Spreads have been widening for Asian dollar bonds this year while they’ve been narrowing in the U.S. for both high-yield and investment grade amid that country’s economic rebound, said Anne Zhang, co-head of asset class strategy, FICC in Asia at JPMorgan Private Bank. She expects Asia’s underperformance to persist this quarter, led by Chinese credits as investors remain cautious about policies there.
“However, as the relative yield differential between Asia and the U.S. becomes more pronounced there will be demand for yield that could help narrow the gap,” said Zhang.
Spreads on Asian investment-grade dollar bonds were little changed to 1 basis point wider, according to credit traders. Yield premiums on the notes widened by almost 2 basis points last week, in their first weekly increase in six, according to a Bloomberg Barclays index
Among speculative-grade issuers, dollar bonds of China Evergrande Group lagged a 0.25 cent gain in the broader China high-yield market on Monday. The developer’s 12% note due in October 2023 sank 1.8 cents on the dollar to 74.6 cents, set for its lowest price since April last year
The U.S. high-grade corporate bond market turned quiet at the end of last week before the holiday, but with spreads on the notes at their tightest in more than a decade companies have a growing incentive to issue debt over the rest of the summer rather than waiting until later this year.
The U.S. investment-grade loan market has surged back from pandemic disruptions, with volumes jumping 75% in the second quarter from a year earlier to $420.8 billion, according to preliminary Bloomberg league table data
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Sales of ethical bonds in Europe have surged past 250 billion euros ($296 billion) this year, smashing previous full-year records. The booming market for environmental, social and governance debt attracted issuers including the European Union, Repsol SA and Kellogg Co. in the first half of 2021.
The European Union has sent an RfP to raise further funding via a sale to be executed in the coming weeks, it said in an e-mailed statement
German property company Vivion Investments Sarl raised 340 million euros in a privately placed transaction in a bid to boost its real estate portfolio, according to people familiar with the matter
The Chinese property bubble was a real estate bubble in residential and/or commercial real estate in China. The phenomenon has seen average housing prices in the country triple from 2005 to 2009, possibly driven by both government policies and Chinese cultural attitudes.
Tianjin High price-to-income and price-to-rent ratios for property and the high number of unoccupied residential and commercial units have been held up as evidence of a bubble. Critics of the bubble theory point to China’s relatively conservative mortgage lending standards and trends of increasing urbanization and rising incomes as proof that property prices can remain supported.
The growth of the housing bubble ended in late 2011 when housing prices began to fall, following policies responding to complaints that members of the middle-class were unable to afford homes in large cities. The deflation of the property bubble is seen as one of the primary causes for China’s declining economic growth in 2012.
2011 estimates by property analysts state that there are some 64 million empty properties and apartments in China and that housing development in China is massively oversupplied and overvalued, and is a bubble waiting to burst with serious consequences in the future. The BBC cites Ordos in Inner Mongolia as the largest ghost town in China, full of empty shopping malls and apartment complexes. A large, and largely uninhabited, urban real estate development has been constructed 25 km from Dongsheng District in the Kangbashi New Area. Intended to house a million people, it remains largely uninhabited.
Intended to have 300,000 residents by 2010, government figures stated it had 28,000. In Beijing residential rent prices rose 32% between 2001 and 2003; the overall inflation rate in China was 16% over the same period (Huang, 2003). To avoid sinking into the economic downturn, in 2008, the Chinese government immediately altered China’s monetary policy from a conservative stance to a progressive attitude by means of suddenly increasing the money supply and largely relaxing credit conditions.
Under such circumstances, the main concern is whether this expansionary monetary policy has acted to simulate the property bubble (Chiang, 2016). Land supply has a significant impact on house price fluctuations while demand factors such as user costs, income and residential mortgage loan have greater influences.
Neil Gough (11 June 2015). “Idle Home Builders Hold China’s Economy Back”. The New York Times. By some economists’ estimates, real estate and related industries account for more than 20 percent of China’s gross domestic product
China’s economy had a great 12 months, leading the globe out of the Covid-19 era. Yet the last year has damaged something equally important: Beijing’s soft power.
Beijing’s handling of questions about what happened in Wuhan—and why officials were so slow to warn the world about a coming pandemic—boggles the mind. If China’s handling of the initial outbreak was indeed the “decisive victory” that it claims, why overreact to Australia’s call for a probe?
Harvard Kennedy School students might one day take classes recounting how China’s leaders squandered the Donald Trump era. As the U.S. president was undermining alliances, upending supply chains, losing allies, and playing down the pandemic, Beijing had a once-in-a-lifetime opportunity to increase the country’s influence at Washington’s expense.
And now, many in Beijing appear to understand the extent to which they blew it. Earlier this month, Xi Jinping urged the Communist Party to cultivate a “trustworthy, lovable and respectable” image globally. It’s the clearest indication yet that the “wolf warrior” ethos espoused in recent times by Chinese diplomats was too Trump-like for comfort—and backfiring.
The remedy here is obvious: being the reliable economic engine leaders from the East to West desire.
The Trump administration’s policies had a vaguely developing-nation thrust—favoring a weaker currency, banning companies, tariffs of the kind that might’ve worked in 1985, assaulting government institutions. They shook faith in America’s ability to anchor global finance. The last four years saw a bull market in chatter about replacing the dollar as reserve currency and the centrality of U.S. Treasury debt.
China is enjoying a burst of good press for its gross domestic product trends. Not just for the pace of GDP, but the way Xi’s team appears to be seeking a more balanced and sustainable mix of growth sources. Though some pundits were disappointed by news that industrial production rose just 6.6% in May on a two-year average basis, it essentially gets Asia’s biggest back to where it was pre-Covid-19.
Fixed-asset investment—in, say, property and land—expanded 4.2% on the same basis in the five months to May. Retail sales, meantime, is up a less impressive 4.5%, which is roughly half what we saw in 2019.
China is getting there, slowly but surely. Far from disappointing, though, data suggest Xi’s party learned valuable lessons from the myriad boom/bust cycles that put China in global headlines since 2008. That was the year the “Lehman shock” devastated world markets and threatened to interrupt China’s meteoric rise.
Instead, Beijing bent economic reality to its benefit. Yet the untold trillions of dollars of stimulus that then-President Hu Jintao’s team threw at the economy caused as many long-term headaches as short-term gains. It financed an unproductive infrastructure boom—one prioritizing the quantity of growth over quality—that fueled bubbles. It generated a moral-hazard dynamic that encouraged greater risk and leverage.
Unfortunately, Xi’s government doubled down on the approach in 2015, when Shanghai stocks went into freefall. The impulse then, as in the 2008-2009 period, was to throw even more cash at the problem—treating the symptoms, not the underlying ailments.
The ways in which Team Xi restored calm—bailouts, loosening leverage and reserve requirement protocols, halting initial public offerings and suspending trading in thousands of companies—did little to build a more nimble and transparent system. The message to punters was, no worries, the Communist Party and People’s Bank of China have your backs. Always.
Yet things appear to be changing. In 2020, while the U.S., Europe and Japan went wild with new stimulus schemes, Beijing took a targeted and minimalist approach. Japan alone threw $2.2 trillion, 40% of GDP, at its cratering economy. The Federal Reserve went on an asset-buying tear.
The PBOC, by sharp contrast, resisted the urge to go the quantitative easing route. That is helping Xi in his quest to deleverage the economy. It’s a very difficult balancing act, of course. The will-they-or-won’t-they-default drama unfolding at China Huarong Asset Management demonstrates the risks of hitting the stimulus brakes too hard.
The good news is that so far China seems to be pursuing a stable and lasting 2021 recovery, not the overwhelming force of previous efforts. And that’s just what the world needs. A 6% growth rate year after year will win China more soft-power points than the GDP extremes. So will China accelerating its transition from exports to an innovation-and-services-based power.
It’s grand that President Joe Biden rapidly raised America’s vaccination game. That means the two biggest economies are recovering simultaneously, reinforcing each other.
China’s revival could have an even bigger impact. Look at how China’s growth in recent months is lifting so many boats in Asia. In May alone, Japan enjoyed a 23.6% surge in shipments to China. Mainland demand for everything from motor vehicles to semiconductor machinery to paper products is helping Japan recover from its worst downturn in decades. South Korea, too.
The best thing Xi can do to boost China’s soft power is to lean into this recovery, and provide the stability that the rest of the globe needs. Xi should let China’s GDP power do the talking for him.
I am a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” My journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary.
State-owned enterprises accounted for over 60% of China’s market capitalization in 2019 and generated 40% of China’s GDP of US$15.66trillion in 2020, with domestic and foreign private businesses and investment accounting for the remaining 60%. As of the end of 2019, the total assets of all China’s SOEs, including those operating in the financial sector, reached US$78.08trillion. Ninety-one (91) of these SOEs belong to the 2020 Fortune Global 500 companies.
The crackdown on monopolies by tech giants and internet companies follows with recent calls by the Politburo against monopolistic practices by commercial retail giants like Alibaba. Comparisons have been made with similar probes into Amazon in the United States.
The Covid-19 pandemic has carried a significant impact on the rate in which businesses are embracing digital transformation. The health crisis has created an almost overnight need for traditional brick and mortar shopping experiences to regenerate into something altogether more adaptive and remote. While some businesses are finding this transition toward emerging technology a little tricky, it’s proving to be a significant opportunity for entrepreneurs in the age of the “new normal.”
Astoundingly, data suggests that digital transformation has been accelerated by as much as seven years due to the pandemic, with Asia/Pacific businesses driving forward up to a decade in the future when it comes to digital offerings.
With entrepreneurs and new startup founders finding themselves in a strong position to embrace modern digital practices ahead of more traditional companies, we’re likely to see a rise in innovation among post-pandemic businesses. With this in mind, let’s take a deeper look into the ways in which digital transformation are benefiting businesses in the age of the new normal:
Fast, data-driven decisions.
Any digital transformation strategy needs to be driven by data. The emergence of big data as a key analytical tool may make all the difference in ensuring that startups take the right steps at the right time to ensure that they thrive without losing valuable resources chasing the wrong target audience, or promoting an underperforming product.
Enterprises today have the ability to tap into far greater volumes of data than ever before, thanks largely to both big data and Internet of Things technology. With the right set of analytical tools, this data can be transformed into essential insights that can leverage faster, more efficient and accurate decisions. Essentially, the deeper analytical tools are embedded in business operations, the greater the levels of integration and effect that may have.
By incorporating more AI-based technology into business models, it’s possible to gain access to huge volumes of big data that can drive key decisions. The pandemic has helped innovations in terms of data and analytics become more visible in the world of business, and many entrepreneurs are turning to advanced AI capabilities in order to modernise their existing applications while sifting through data at a faster and more efficient rate.
Leveraging multi-channel experiences.
Digital transformation is empowering customers to get what they want, when they want, and however they want it. Today, more than half of all consumers expect to receive a customer service response within 60 minutes. They also want equally swift response times on weekends as they’ve come to expect on weekdays. This emphasis on perpetual engagement has meant that businesses that aren’t switched on 24/7/365 are putting themselves at a disadvantage to rivals that may have more efficient operations in place.
The pandemic has led to business happening in real-time – even more so than in brick and mortar stores. Although customers in high street stores know they’re getting a face to face experience, this doesn’t mean that business representatives can offer a similar personalised and immediately knowledgeable service than that of a chatbot or a live chat operative with a sea of information at their disposal.
Modern consumers are never tied to a single channel. They visit stores, websites, leave feedback through mobile apps and ask questions for support teams on social networking sites. By combining these interactions, it’s possible to create full digital profiles for customers whenever they interact with your business – helping entrepreneurs to provide significantly more immersive experiences.
Fundraising via blockchain technology.
Blockchain technology is one of the most exciting emerging technologies today. Its applications are far-reaching in terms of leveraging new payment methods and brokering agreements via smart contracts, and while the use cases for these blockchain applications will certainly grow over the coming years, today the technology is already being widely utilised by entrepreneurs as a form of raising capital through Initial Token Offerings (ITOs), also known as Initial Coin Offerings (ICOs).
As an alternative to the use of traditional banks, venture capital firms, angel investors or crowdfunders, ITO tokens can be made available for exchanges where they can trade freely. These tokens are comparable to equity in a company, or a share of revenue for token holders.
Interested investors can buy into the offering and receive tokens that are created on a blockchain from the company. The tokens could have some practical use within the company where they can be spent on goods or services, or they could purely represent an equity share in a startup or project.
There are currently numerous companies that use blockchain technology to simply and secure its operations. From large corporations like HSBC’s Digital Vault, which is blockchain-based custody platform that allows clients to access details of their private assets to small education startups like ODEM, which aim to democratize education.
Another company that’s pioneering blockchain technology within the world of business is OpenExO, which has developed its own community-driven utility token EXOS, to help build a new transformation economy that helps companies to accelerate, democratise and internationalise their innovation.
Salim Ismail, OpenExO founder, is the former Yahoo technology innovator who developed the industry of Exponential Organizations. He has become a household name in the entrepreneur and innovation landscape, and now he launches the blockchain ecosystem that includes Fortune 500 companies, cities and even countries.
Reaping widespread rewards.
Although digital transformation could begin with a focus on just one facet of a startup, its benefits can be far reaching for employees, consumers and stakeholders alike. It could limit the mundane tasks required of workers, offer greater levels of personalisation for consumers and free up new skills to be developed in other areas of a business.
This, in turn, helps to build more engaged and invested teams that know the value of fresh ideas and perspectives. Although the natural adaptability of entrepreneurs makes the adoption of digital transformation an easier one to make than for established business owners, the benefits can be significant for both new and old endeavours.
The pandemic has accelerated the potential of emerging technologies by over seven years in some cases, the adoption of these new approaches and tools can be an imperative step in ensuring that your business navigates the age of the new normal with the greatest of efficiency.
By: Dmytro Spilka / Entrepreneur Leadership Network VIP – CEO and Founder of Solvid and Pridicto
Digital Transformation (DT or DX) or Digitalization is the adoption of digital technology to transform services or businesses, through replacing non-digital or manual processes with digital processes or replacing older digital technology with newer digital technology. Digital solutions may enable – in addition to efficiency via automation – new types of innovation and creativity, rather than simply enhancing and supporting traditional methods.
One aspect of digital transformation is the concept of ‘going paperless‘ or reaching a ‘digital business maturity’affecting both individual businesses and whole segments of society, such as government,mass communications,art,health care, and science.
Digital transformation is not proceeding at the same pace everywhere. According to the McKinsey Global Institute‘s 2016 Industry Digitization Index,Europe is currently operating at 12% of its digital potential, while the United States is operating at 18%. Within Europe, Germany operates at 10% of its digital potential, while the United Kingdom is almost on par with the United States at 17%.
One example of digital transformation is the use of cloud computing. This reduces reliance on user-owned hardware and increases reliance on subscription-based cloud services. Some of these digital solutions enhance capabilities of traditional software products (e.g. Microsoft Office compared to Office 365) while others are entirely cloud based (e.g. Google Docs).
As the companies providing the services are guaranteed of regular (usually monthly) recurring revenue from subscriptions, they are able to finance ongoing development with reduced risk (historically most software companies derived the majority of their revenue from users upgrading, and had to invest upfront in developing sufficient new features and benefits to encourage users to upgrade), and delivering more frequent updates often using forms of agile software development internally.This subscription model also reduces software piracy, which is a major benefit to the vendor.
Bitcoin traders and investors are still reeling from a steep sell-off that’s wiped around $1 trillion from the combined cryptocurrency market.
The bitcoin price has crashed from almost $65,000 per bitcoin to under $40,000 despite a flood of positive bitcoin news in recent weeks—including Twitter TWTR+0.2% chief executive Jack Dorsey teasing a bitcoin payments plan.
Now, analysis of bitcoin trading data has suggested the bitcoin price could be hit by a so-called “short squeeze”—when the price of an asset increases rapidly due to an excess of bets against it.
“Given bitcoin’s past market performance, when traders use excessive leverage to short the market during a horizontal price adjustment, there will often be a short squeeze phenomenon,” Flex Yang, the chief executive of Hong Kong-based crypto lender and asset manager Babel Finance, wrote in analysis seen by this reporter and pointing to market data that shows recent capital inflows are “from short-sellers and that leverage has greatly increased.”
Since the bitcoin and crypto market crashed in mid-April, the volume of bitcoin perpetual holdings on the crypto exchange Binance have increased by 110%, with the ratio of long to short traders reaching a new low of 0.89—pushing funding rates into the negative.
According to Yang, the reasons behind such excessive shorts include “many people are anticipating a bear market; bitcoin “holders are building hedges,” or “those who bought at high prices are locked in.”
Historical bitcoin price data between February and April 2018 and then again from June to late July 2020, suggests an increase in short-selling is often followed by a bitcoin price surge.
“In November 2020, there was a temporary sharp increase in the number of short-selling positions at a high price,” wrote Yang. “Afterwards, the price of bitcoin continued to rise, continuing its bull market position. No matter if the market outlook is trending downwards after rebounding or if bitcoin maintains its bull market status, short traders have always suffered the consequence of being squeezed out and liquidated.”
The early 2021 bitcoin price bull run was brought to a sharp halt in April when fears over a crypto crackdown in China and mounting concerns over bitcoin’s soaring energy demands sparked panic among investors.
Tesla TSLA+1.1% billionaire Elon Musk sent shockwaves through the bitcoin market when he announced Tesla would suspend its use of bitcoin for payments until the bitcoin network increased its use of renewable energy.
The bitcoin price has failed to recover its lost ground despite continued reports that Wall Street banking giants are increasingly offering bitcoin investment and trading services and the Central America country El Salvador revealed plans to adopt bitcoin as legal tender alongside the U.S. dollar.
I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.
From January to February 2018, the price of Bitcoin fell 65 percent. By September 2018, the MVIS CryptoCompare Digital Assets 10 Index had lost 80 percent of its value, making the decline of the cryptocurrency market, in percentage terms, greater than the bursting of the Dot-com bubble in 2002.
In November 2018, the total market capitalization for Bitcoin fell below $100 billion for the first time since October 2017, and the price of Bitcoin fell below $4,000, representing an 80 percent decline from its peak the previous January. Bitcoin reached a low of around $3,100 in December 2018.From 8 March to 12 March 2020, the price of Bitcoin fell by 30 percent from $8,901 to $6,206.By October 2020, Bitcoin was worth approximately $13,200.
The investors Warren Buffett and George Soros have respectively characterized it as a “mirage”and a “bubble”; while the business executives Jack Ma and Jamie Dimon have called it a “bubble” and a “fraud”, respectively. J.P. Morgan Chase CEO Jamie Dimon said later he regrets calling Bitcoin a fraud.
Led by 8 former Morgan Stanley Executives, Phemex’s goal is to build the worlds most trustworthy cryptocurrency derivatives trading platform. Its leverage a “User-Oriented” approach to develop far more powerful features than any existing exchange.
Above all, they place customers first. All of the features and tools are designed with this philosophy in mind. This is why their development team is directly available and constantly gathering feedback, comments, and requests from our community on social media.
Back in 2017, as experienced professional Wall Street traders and investors, Jack Tao and other founding members of Phemex identified a lack of professionalism, trustworthiness, and customer support within the crypto industry. In the following two years, the number of users engaging in cryptocurrency trading increased significantly.
Nevertheless, existing exchanges showed little to no improvement. Realizing the seriousness of the problem, the team left Wall Street and founded Phemex in the summer of 2019. They then dedicated themselves to building a simple, efficient, but most importantly, a trusted cryptocurrency trading platform. Then, on November 25th, 2019, the Phemex platform officially went live.
Pheme (Fama) is the personification of fame and of the public’s voice in Greek mythology. While MEX stands for mercantile exchange. This name was chosen to highlight our vision and their dedication to stand as the most trustworthy trading platform.
From day one, their mission was and will always continue to be the empowerment of individuals. They want everyone in this world to have access to the right set of tools that will allow them to manage risk efficiently and trade simply. They sincerely believe this to be a fundamental right that all traders should enjoy.
For its crypto derivatives products, Phemex allows you to trade with leverage. This means that you can receive a higher exposure towards a certain crypto’s price increase or decrease, without actually holding the necessary amount of assets. You do this by “leveraging” your trade. In simple terms, this means that you borrow from the exchange to bet more. You can get as much as 100x leverage on this platform.
Leveraged trades are risky though. For instance, let’s say that you have 100 USD in your trading account and you bet this amount on BTC going long (i.e., going up in value). If BTC then increases in value with 10%, you would have earned 10 USD. If you had used 100x leverage, your initial 100 USD position becomes a 10,000 USD position so you instead earn an extra 1,000 USD (990 USD more than if you had not leveraged your deal).
As we mentioned above, in terms of Spot Trading, Phemex has adopted a zero trading fee model. Instead they just charge for monthly Premium Memberships (prices are $9.99 for 30 Days, $19.99 for 90 Days and $69.99 USDT for 365 Days). Becoming a premium member will also allow you to set conditional spot orders, you will enjoy hourly withdrawals with no limits, and will be able to gift trial premium memberships to friends.
With respect to contract trading, Phemex separates between “takers” and “makers”. Let’s describe these terms real quick. Every trade occurs between two parties: the maker, whose order exists on the order book prior to the trade, and the taker, who places the order that matches (or “takes”) the maker’s order. We call makers for “makers” as their orders make the liquidity in a market. Takers are the ones who “take” this liquidity by matching makers’ orders with their own..
Phemex previously didn’t accept any other deposit method than cryptos, so new investors were restricted from trading here. Starting 18 June 2020, however, they partnered with a company called Banxa which is a payment gateway that accepts credit and debit card purchases of crypto.
Since then, Phemex has also partnered with Koinal, Coinify, MoonPay, and Mercuryo. You have a variety of payment options (ranging from bank transfers to Apple Pay) and rates to fit your needs.
To our understanding, Phemex does not charge any fees of their own when you withdraw crypto from your account at the platform. Accordingly, the only fee you have to think about when withdrawing are the network fees. The network fees are fees paid to the miners of the relevant crypto/blockchain, and not fees paid to the exchange itself. Network fees vary from day to day depending on the network pressure.
Generally speaking, to only have to pay the network fees should be considered as below global industry average when it comes to fee levels for crypto withdrawals.
The sudden move to remote online instruction, coupled with social justice issues plaguing the United States, has forced college and university instructors to grapple with what it means to be a good teacher in socially distanced, unpredictable, and emotionally charged circumstances.
As instructional designers, we have noticed an undercurrent in our interactions with new and experienced university instructors that indicates they are doubting their teaching skills, confronting uncomfortable questions about their roles, making pedagogical decisions on the fly, and trying to use technologies that were once only written into science fiction novels.
While the move to remote teaching has been challenging, it has also provided an opportunity to reenvision pedagogy. As colleges and universities have collectively moved online, teaching and learning professionals can leverage mobile learning (m-learning) to inform and facilitate effective teaching in a virtual environment.
Mobile learning: Using portable computing devices (such as iPads, laptops, tablet PCs, personal digital assistants [PDAs], and smartphones) with wireless networks enables mobility and mobile learning, allowing teaching and learning to extend to spaces beyond the traditional classroom. Within the classroom, mobile learning gives instructors and learners increased flexibility and new opportunities for interaction.Footnote1
Contemporary m-learning definitions and discourse focus on using technologies that support the mobility of learners and teachers and that are based on constructivist and learner-centered pedagogies that promote individualization, flexibility, and communal engagement with content regardless of whether a course is online or face-to-face. To benefit from affordances like these, Yu (Aimee) Zhang, CEO of WEMOSOFT in Wollongong, Australia, recommends using m-learning in formal higher education to supplement face-to-face or online classes.Footnote2 Near-ubiquitous mobile-device ownership and a stable combination of agile technological infrastructure and widespread internet connectivity offer opportunities for the key affordances and strategies of m-learning to take center stage during the coronavirus pandemic.Footnote3 That is not to say that all students (or instructors) have fully equitable opportunities to access tertiary education through mobile devices—as the pandemic has revealed—but it does emphasize the current collective ability among colleges and universities to maintain a somewhat reasonable level of instructional continuity—something that would not have been possible just ten years ago.Footnote4
Amid the challenges of emergency remote teaching and learning, college and university instructors confront a complex set of pedagogical decisions as they try to balance the affordances and constraints of technologies with student access, learning outcomes, and the instructor’s teaching goals.
Our Mobile Learning Special Interest Research Group has been investigating this pedagogical balancing act for a few years, and although our participants were teaching face-to-face classes before the pandemic, our findings about the ability of instructors to achieve their teaching goals via m-learning remain applicable—and possibly more relevant—today.Footnote5
Teaching Goals: Prevalent Themes
As instructional designers, part of our work focuses on supporting instructors as they integrate technologies to improve their teaching. Understanding instructors’ experiences provides invaluable insight into the benefits of m-learning. This article presents findings from interviews with nineteen instructors (at four University of California [UC] campuses) who were using m-learning strategies in their teaching before the pandemic.
We examined the instructors’ perceptions of how m-learning supported or helped them to achieve their teaching goals. During the interviews, instructors told us that integrating m-learning in their courses supported their teaching goals by increasing student engagement, allowing students to learn specific skills, enabling the creation and use of analytics in class, and boosting instructor efficiency.
The Most Prevalent Themes Related to Teaching Goals
Student engagement (n=11): Using m-learning helped to increase student participation by stimulating their interest, creating a safe environment, building a class community, and/or providing multiple opportunities for and means of participation.Footnote6
Teaching specific skills and concepts (n=14): Using m-learning made it easier to teach complex concepts and skills related to future professional careers.
Analytics for and about learning (n=11): Using m-learning helped to inform the teaching that is going on, whether it is students collecting and analyzing data or teachers collecting data as a formative assessment.
Efficiency (n=6): Using m-learning helped students to get through content faster and/or allowed students time to think more deeply.
The instructors noted that the use of m-learning helped to increase student engagement by stimulating their interest, creating a safe environment, building a class community, and providing multiple opportunities for and means of participation.
First, the instructors we interviewed for our study said that they used mobile strategies in ways they felt would stimulate student interest and motivation. For example, Ozcan Gulacar, a member of the chemistry faculty at UC Davis, found that student engagement occurred by heightening students’ ownership of their learning.
Giving students a chance to share their answers via proper technology increases their ownership of the material, and they become more engaged in discussions. They pay more attention to the explanations. Basically, their interest in learning the right answer increases immensely.Footnote7
Similarly, our interviews showed the importance of student ownership when they were collecting and generating data as part of their learning experiences; students’ agency in that process kept them motivated and engaged (see “Analytics for and about Learning” below).
Second, instructors felt that using m-learning increased student engagement by creating a safe environment in the course. Interestingly, this safe environment was created in one of two opposing ways: Some students appreciated that mobile devices lowered communication barriers so they could get to know their peers better, while other students liked that using personal-response systems allowed them to participate anonymously in discussions, thus encouraging their engagement.
As Heather Macias, now an education faculty member at California State University, Long Beach, explained, “The anonymity and low stakes make [students] more willing to [share their ideas] because nobody knows what” any individual student responded.Footnote8
Third, m-learning allowed instructors to create a sense of community because the familiarity bred through the use of m-learning strategies helped to make large classrooms feel smaller. Emma Levine, now a member of the music faculty at California Polytechnic State University, reported that when her class uses Slack for instant messaging, “[students] don’t feel anonymous. They come to [class] because I know who they are, and other people know who they are. Having that sense of belonging, wanting to come, and [having] some type of accountability” encourages them to attend.Footnote9
Finally, students could engage more often during the course, as they had multiple opportunities and means to participate. As Macias said, “[Using mobile technology] gives me more . . . ways to get students hooked into a lesson or participate. I like it because it gives all the students the chance to participate, assuming they all have . . . access to a device, without the pressure of [having] to raise [their] hand.”Footnote10
When their teaching goals centered around increasing student engagement, instructors appeared to feel that mobile technologies helped to stimulate student interest and motivation, create a safe environment and a sense of community, and provide students with multiple opportunities and ways to participate. It is interesting to note that these four benefits of m-learning occurred in overlapping and intersecting ways, not in isolation.
Specific Skills and Concepts
Instructor comments indicated that m-learning facilitated improved student mastery of specific skills and concepts in two important ways. First, instructors felt that m-learning helped them to teach students specific digital skill sets that they needed for their future careers. Nic Barth, a member of the geology faculty at UC Riverside, said that m-learning skills help to provide students with a competitive advantage:
The motivation [for using iPads] was to not use [them] as a replacement for teaching students how to map with pencil and paper but to extend it to the next skill level, where okay now you know how to do that, now we can train you how to do this digitally. And that’s something that is a highly sought-after, marketable skill that they can then take and make themselves more competitive either in grad school or in the job pool.Footnote11
Second, instructors indicated that integrating mobile learning allowed them to more easily create rich learning environments in which to teach complex concepts. For example, Ashish Sood, a business faculty member at UC Riverside, uses a fully online, game-based approach to teach his students about empathy in a business setting. He describes how students learn about risk tolerance by completing a pricing strategy simulation:
In a standard case analysis, you [try to] put yourself in the shoes of a company or a manager and [consider why a manager chose a particular strategy]. But when you are actually playing a simulation game . . . it changes the perspective to, “How should I decide? What is the best way to think about this issue?” and that’s when the learning and the understanding of the concept really sinks in.Footnote12
Whether making use of simulations, visual representations, or demonstrations, instructors who used mobile technologies to illustrate or expand concepts in a more concrete way found that students could more easily understand and apply those concepts, skills, and methods. Often, the application of the technology was taught for future professional careers, and skills or concepts were made relevant by providing opportunities to apply twenty-first-century digital skills to authentic, real-world problems or contexts.
Analytics for and about Learning
Instructors noted that m-learning gave students the opportunity to practice collecting and analyzing data, contribute data to course content, and demonstrate understanding in formative assessments.
Randall Long, who is currently a postdoctoral research associate at the Holden Arboretum in Kirtland, Ohio, wanted to provide more robust opportunities for his students to fully develop sampling methods and data-analysis skills. His teaching goal was to have students create a large dataset from their fieldwork to complete their final group paper.
Long asked students to play Pokémon Go and systematically collect Pokémon data in a Google Sheet over a few weeks. After students used Pokémon Go to practice sampling concepts and methods, Long was impressed by the obvious improvement in the substance and overall quality of the group papers compared to those from previous years.Footnote13
Student-generated data can also help to facilitate meaningful class discussions. Bob Blake, a professor in the Department of Spanish and Portuguese at UC Davis, noted that using mobile technologies in his linguistics class helped to fuel discussions about course content because students themselves were represented in the data. He said that he uses mobile technology to get students to talk and share with each other.
Nobody wants to talk or share very much about their language. It’s a very personal thing. . . . So, we try to use technology to kind of give us a screen to look through. . . . They’ll type in [a word or phrase from their language in response to a scenario], and then suddenly I have all of that data right there. . . . So, we just analyze it, and it provides me the raw data for the types of points I’m trying to make [about language use].Footnote14
These student-generated examples became the data that was used to teach course content. Drawing from real-life examples prompted meaningful discussions.
Finally, data collected from students in formative assessments provided an invaluable opportunity for some instructors to gauge student understanding. Shane Jimerson, a professor in the Gevirtz Graduate School of Education at UC Santa Barbara, described how he uses data collection to gauge student comprehension in real time:
During the class, I tend to use [Kahoot] as a way of seeing what folks are knowledgeable of, and then that informs me in the moment that “we already know about this,” based on the readings and discussions and other resources. But then there seems to be a few [questions] where there is more variation in the responses. So then I can provide further discussion and exploration to try to make that clear.Footnote15
In Jimerson’s case, using Kahoot to formatively assess students’ learning provided an opportunity in which he could immediately address any confusion students were having or move on to more difficult concepts.
These examples highlight how instructors leveraged m-learning strategies—in which students collected or generated data—for teaching and learning. These techniques invited students to be active participants and make important contributions to the exchange of ideas. Additionally, real-time learning analytics for formative assessment immediately informed instructors about students’ knowledge gaps.
Instructors also noted that m-learning allowed them to get through content more quickly or deeply and improve the speed of the feedback cycle.
Barth distributed “geo pads,” iPads equipped with GIS software, to teach skills and concepts needed for field mapping. He said that this integration of mobile technology resulted in “surprise” time-saving affordances, allowing students time to dig into the more meaningful aspects of the content.
[The use of iPads] simplifies and makes a lot of things more efficient, such [as] the more mundane task [of] locating yourself on a map, for example. It could take a minute, but if you have a tablet that has built-in GPS, it’s a second. Or, if you’re taking a measurement with the tablet, that’s like two or three seconds versus like a minute of playing around with the compass to take that same measurement. And so it’s making things a lot more efficient. [Students] can then focus more of that time on actually understanding what’s going on around them using more critical-thinking skills.Footnote16
Jim Burnette, an academic coordinator at UC Riverside, noted that using e-notebooks made the feedback cycle more efficient:
The paper notebooks took a little while to grade, and so the feedback cycle was a little too slow. So [students] didn’t improve very much in their notebook skills. I think having gone to the e-notebook made the feedback cycle much faster; [students] are actually keeping better notebooks.Footnote17
In these cases, mobile technologies made teaching more efficient and provided students the opportunity to spend more time digging into the more meaningful aspects of the course content. In addition, mobile technologies also provided the instructor the opportunity to give students feedback more quickly, resulting in improvements in students’ work.
While the use cases in this study are all unique, span disciplines, and largely represent m-learning within face-to-face courses, m-learning strategies could also help to guide instructors’ pedagogical balancing act during emergency remote teaching and beyond. This study demonstrates the variety of ways that m-learning technologies can help instructors in their ongoing efforts to become better teachers:
Build and maintain classroom community by creating safe spaces that allow for peer interaction as well as anonymity.
Increase student interest and motivation by providing multiple means and opportunities for participation.
Illustrate concepts or topics more clearly.
Develop students’ emotional, cognitive, and technology-based skills for their future careers.
Increase engagement by having students use their mobile devices to generate, collect, and analyze data.
Identify and adapt to gaps in student learning.
Facilitate a more efficient feedback cycle for student learning.
Get through basic concepts more quickly, allowing students more time to engage deeply with complex concepts.
Although our study focused on faculty members’ experiences, research on student perspectives demonstrates that m-learning benefits students in similar ways (by creating safe spaces for peer interaction, increasing student interest by offering multiple opportunities to participate, and supporting students who increasingly rely on mobile technology).Footnote18
As instructors and instructional designers, it is essential that we understand the innovative ways in which using m-learning helps us to achieve our teaching goals during this time of instructional upheaval. As a majority of students use mobile devices to complete online coursework, and almost all students have more than one mobile device, designing with m-learning in mind is essential to support student learning, provide more equitable access, and improve instructors’ confidence in their ability to grapple with pedagogical issues in new ways.Footnote19
On Thursday evening Thomas Peterffy, the billionaire founder of Interactive Brokers, took stock of a day unlike any in his over fifty-year trading career. An army of novice traders had united on social media site Reddit and relentlessly bought stock and options in ailing video game retailer GameStop on trading applications such as Robinhood, driving its stock from $20 at the start of the year to nearly $500 that afternoon.
The surge cost Wall Street investors almost $20 billion in mark-to-market losses, and Peterffy’s brokerage spent the day issuing thousands of margin calls on its customers’ bearish GameStop bets, forcing them to realize losses. During the trading day, Interactive Brokers, Robinhood and other online brokerages also restricted some trading in GameStop, movie theater chain AMC Entertainment, BlackBerry and other stocks that were part of the pump. The move, they later said, was to conserve cash as their clearinghouses demanded money to cover potential customer losses amid the fervent speculation.
At Interactive Brokers, Peterffy estimated that had the firm not closed out trades, its customers were sitting on $500 million in losses. Cash got tight at Robinhood, the Silicon Valley unicorn that had raised billions in venture capital and unleashed the speculative frenzy, introducing millions of young traders to frictionless stock and options trading. It drew down hundreds of millions in its credit lines and raised $1 billion in new emergency cash as its clearinghouse reserves rose tenfold.
Peterffy went to bed that night worried of a market collapse. “If the broker has to pay more money to the clearinghouse for customer losses than he has, then the broker is bankrupt. And when one broker goes bankrupt, usually a few others do too,” he told Forbes late on Thursday evening. “So, I’m worried about a systemic failure.”
The episode of millennial and zoomer-aged Reddit traders taking on Wall Street’s wealthiest and winning has turned into the David versus Goliath tale of the age of inequality. There are some big winners from GameStop, young investors who’ve already taken massive profits that can be used to pay off student debt, or build savings. For many onlookers, the humiliation of Wall Street is icing on the cake.
Despite the wry cheers, GameStop’s surge is surfacing a market fraught with leverage, unprecedented speculation and superficial analysis at almost every corner, exposing enormous risks. The pain started with the hedge funds that lost big, but as risk bubbles over, it will have reverberations in the broader market (see story).
“What’s been happening really is a reflection of the quality of analysis, the quality of work, the quality of input that is coming to Wall Street,” says billionaire investing legend Michael Steinhardt. “And it’s a sorry tale, that something like this can happen and it’s obviously something that will have a bad ending for people who are in a position to afford it least.”
Long-short equity hedge funds generated big gains in 2020 as they bet on the digital companies that thrived during the Coronavirus pandemic, and hedged their rising portfolios by crowding into bets against troubled retailers like GameStop. But they entered the new year complacent.
“When I looked at these shorts, I thought who the heck would be short movie theaters, bricks and mortar retailers and airlines when we’re just beginning to clear bottlenecks in vaccine distribution,” says Barry Knapp, managing partner of Ironsides Macroeconomics. GameStop entered 2021 as one of the most shorted stocks in the world, though positive changes were afoot inside the company as online sales surged and customers lined up outside its stores to buy new PlayStation consoles. Moreover, the Federal Reserve has been flooding the market with liquidity and a second round of stimulus checks hit bank accounts at the end of the year, a risk hedge funds should have sidestepped. The complacency was exploited by the Reddit army, to devastating effect.
A hedge fund named Melvin Capital, backed by Billionaire Steven A. Cohen of Point72, was the biggest victim, dropping 53% in January according to the Wall Street Journal, in part due to its GameStop short. One of Melvin’s mistakes was disclosing a put position against GameStop (a bet shares would fall) on its public filings, which gave the Redditors a target to rally around. It could have done the trades over-the-counter, remaining discreet, or closed them. Last week, Melvin required a $2.75 billion infusion from Cohen’s Point72 Asset Management and Citadel, owned by billionaire Ken Griffin, due to its losses.
Other big funds were hit hard. “People are telling me that the pain is anywhere from down 10% on the low end, which is Steve Cohen, to down 30% on the high-end,” says hedge fund insider Anthony Scaramucci of Skybridge. Large funds swept up in the losses include Cohen’s Point72 and highly-regarded funds like D1 Capital, Holocene Capital, Viking Global and Ken Griffin’s Citadel.
These funds may have mistakenly taken a piping hot stock market as a sign of genius, pressing their trade too far. “Tech stocks today are historically overvalued. On many metrics, they’re higher than they were at the peak of the dot-com bubble,” says Kevin Smith, chief investment officer of $200 million in assets Crescat Capital.
Fueling soaring valuations is perhaps the biggest speculative frenzy witnessed in a century, thanks to frictionless and zero-cost stock and options trading by Robinhood. Single stock call option trading has hit new records. Junky GameStop, not Apple or Microsoft, was by far the most traded company in America at times last week. Daily option premiums traded in the video game retailer surged to nearly $10 billion, more than the entire S&P 500 Index.
It’s all thanks to online brokerage Robinhood, which introduced millions of young traders to these dangerous derivative financial products and adeptly built a platform that encourages video game-like speculation. While Robinhood purports to democratize investing, behind the scenes it makes money feeding customers order to Wall Street’s savviest traders (see story). Giant market making firms like Citadel Securities and Virtu Financial have been more than happy to pay for the flow of orders coming from Robinhood, earning record revenues executing the trades in 2020. Time and again, however, the construct has proven unable to handle the rampant speculation it encourages.
For the past year, Robinhood has crashed at the apex of market activity and a new problem emerged Thursday. Because Robinhood onboards clients with margin accounts so they can begin trading instantaneously, it’s required to post collateral for its traders’ activity. On Thursday, the activity was so large, concentrated and speculative, Robinhood’s clearinghouses demanded extra collateral, creating a cash crunch that led to the trading freeze. Robinhood then went running to its venture capital backers for a $1 billion cash infusion.
Lawmakers and celebrities came to the Redditors defense. When trading was restricted in GameStop, just as they could smell hedge fund blood in the water, both New York Congressman Alexandria Ocasio-Cortez and Texas Senator Ted Cruz demanded investigations. Comedian Jon Stewart lamented, “this is bull**it. The Redditors aren’t cheating, they’re joining a party Wall Street insiders have been enjoying for years…maybe sue them for copyright infringement instead!!”
GameStop’s rise began with reasonable analysis, but morphed into an arbitrage that exploits free options trading. Ultimately, it has revealed a new force in financial markets that’s crashing Wall Street’s clubby party, with hard to predict consequences. “Frictionless and highly gamified environments ignite the basest instincts of human nature,” says Paul Rowady of Alphacution Research. “Lubricating people to forego whatever discipline and self-control that they might otherwise have is the intended goal of these environments. And, with sustained exposure comes indelible impacts.”
GameStop’s ascent started in the summer of 2019 when Michael Burry, the hedge fund manager lionized for spotting the housing bubble in “The Big Short,” uncovered his next great trade in GameStop. Burry bought two million shares and recommended an obvious arbitrage. “GameStop could pull off perhaps the most consequential and shareholder-friendly buyback in stock market history with elegance and stealth,” Burry told the company after disclosing his position. “Mr. Market is putting this one right in your hands,” said Burry. Within months GameStop spent $200 million to retire 38% of its heavily shorted stock.
It seeped into social media. In September 2019, Keith Gill, a 34-year financial advisor in Massachusetts, got into the GameStop trade, paying $53,566.04 to buy 1,000 call options on the company and posting his position to Reddit on Sept. 8, 2019 under the pseudonym u/DeepF__ingValue, which eventually became a sensation with millions of followers. By July 2020, he was publishing videos to YouTube under the pseudonym Roaring Kitty, presenting in kitten-themed tee shirts his detailed analysis on why GameStop could gain big if the market grew more optimistic on its sales as a new PlayStation console was released. Others jumped in. Ryan Cohen, the billionaire founder of online pet food seller Chewy, bought 10% of GameStop, and joined its board in the fall, hoping to bolster its digital platform.
With positive change afoot, Reddit posters uncovered the potential for a squeeze due to GameStop’s heavy short interest and the interplay of options trades on platforms like Robinhood and their execution by market makers like Citadel Securities. Because call options are the right to buy 100 shares of stock at a specified price for a specified period of time, the market maker executing the trade (Citadel Securities, for example) hedges itself by buying actual shares.
If enough buying activity could be organized, the Redditors realized, demand for GameStop shares would far exceed available supply, pushing prices far higher. Eventually, hedge funds short GameStop would be forced to close or cover their positions and buy GameStop shares at higher prices, adding even more upward pressure to the stock. It would be similar to the organized run on shares of United Copper, which caused the Panic of 1907, only in a digital world.
The dynamics pushed GameStop up almost 2,000% in 2020, to a $22 billion market value. Had GameStop trading not been halted, it might have ripped far higher, and it may yet.
“It’s not like everyone is an idiot just playing with their money,” says Taylor Hamilton, 23, an IT worker who has made well over $100,000 in profits and paid his off student loans since starting to trade options on online brokerages like Robinhood in March 2020. “We understood what was going on and we understood how to take advantage of the moment.”
The key for the Reddit army is to get out before the music inevitably stops. “We’re in a naturally occuring Ponzi,” says Ben Inker, head of asset allocation at GMO, “The market needs to draw in more and more money to keep this afloat. Eventually you don’t have enough and it collapses.”
For some, the squeeze is the outcome of a decade of encouragement of risk taking. Signs of excess are everywhere, from record Spac issuance to red hot initial public offerings that double or triple in a matter of days. “Policymakers are essentially telling us as investors that the prudent and responsible thing to do in this cycle is to be irresponsible and imprudent. These guys on Reddit figured it out,” says Marko Papic, chief strategist at Clocktower Group.
Things may yet get crazier, and the possibility of a debacle that hits the portfolios of index fund investors seems inevitable. As GameStop and other “meme” stocks squeezed higher, hedge funds liquidated their portfolios en masse, causing a sharp weekly drop in the S&P 500 Index. With hedge funds squeezed to the hilt, brokerages low on cash, and millions of investors maintaining enormously speculative positions, risks of bad surprises abound.
“Where there’s leverage, there’s susceptibility to squeezes and tails,” says Mark Spitznagel, the head of Universa Investments. “The entire marketplace is leveraged in an unprecedented way right now.”
The biggest immediate issue is that the squeeze is far from over. “I keep hearing that most of the GameStop shorts have been covered. Totally untrue,” says Ihor Dusaniwsky, of market data firm S3 Partners. “Brokers have been telling me as soon as some shorts are covering there is a line of new short sellers looking to short GameStop at these high stock price levels in anticipation of a pullback.”
Short interest in GameStop is now $11.20 billion with 57.83 million shares shorted, or 113% of its tradable shares, near record highs, according to Dusaniwsky. Shares shorted have declined by just 8%, despite the billions already lost.
“These stocks could be pushed further,” worries Peterffy of Interactive Brokers, “It is a very dangerous, but very attractive game for both sides and the positions may increase accordingly… SCARY.”
—With reporting from Eliza Haverstock, Halah Touryalai, Christopher Helman, Sergei Klebnikov, Matt Schifrin and Jon Ponciano
I’m a staff writer and associate editor at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, mergers, and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to email@example.com. Follow me on Twitter at @antoinegara
GameStop has captivated Wall Street’s attention. The stock’s rise has been otherworldly. But the obsession isn’t just with the rally, it’s with who’s making money off of it. Legions of individual investors — regular, everyday people — gathered on social platforms like Reddit and decided to send GameStop stock, as they would say, to the moon. This week, GameStop shares soared 400%, a hedge fund had to get bailed out, and online trading platforms had to restricting trading on GameStop and other hot stocks. Here’s how the GameStop saga played out, and what’s next as lawmakers turn their sights on the story that took over Wall Street this week. »
Instagram Live is one of the latest additions to one of the most popular social media networks today. Instagram already boasts hundreds of millions of users. The live format is one that several social media networks (including Instagram’s parent company, Facebook) have been exploring.
The Live space opens up the network to a different type of content—a combination of videos (which we already know have high engagement numbers) and the allure of getting a glimpse into someone’s personal life. While this feature tends to be more popular with individuals, brands can capitalize on it, too, with a bit of research and strategizing.
To help, these 12 members of Forbes Business Council discuss some of the creative ways they see businesses using Instagram Live to grow their brand presence and reach out to customers.
1. Schedule Q&As
People love reality TV and the use of live videos in business can provide instantaneous connection with customers. Integrating this tool in your business can maximize exposure and profits. Schedule Q&As to bring viewers online, update on new offerings and showcase team members’ personality and quirks. The more regular you do lives, the more connections you’ll be making and the more raving fans you’ll create. – Coraline Dufroux, Innova Services Group
One way businesses can increase their brand awareness using Instagram Live is through the collaboration feature. Companies can use it to partner up and cross-promote with other brands and influencers by going live on campaigns together. This way, both brands can engage with their respective viewers on Instagram Live and potentially gain new quality followers. – Amy Bourne, Brad’s Deals
4. Leverage Guest Appearances
With the shift to a remote work lifestyle, a lot of brands have started using Instagram Live for collaborations and guest appearances. This gives guests an opportunity to share their knowledge and speak about how the work they are doing relates to the brand’s audience. This kind of content helps brands grow because it attracts a new audience and is different from the content they usually produce. – Emma Rose Cohen, Final
5. Host Employee Interviews
One idea is to host an interview with one of your employees on Instagram Live. This is an opportunity to share your organization’s culture and add a human touch to your business, both of which can improve customers’ engagement with your brand. Let customers watching the Live ask questions as this will pique interest and add transparency. – Adam Harvey, Proofed
6. Create Interactive Live Demos
One creative way businesses can use Instagram Live to grow their online brand and presence is by providing live demonstrations that are interactive rather than only educational and content-based. During this time particularly, individuals want information that they can immediately benefit from, e.g., meditation, yoga, cooking and other wellness-related activities. – Dr. Jaquel Patterson, Fairfield Family Health
7. Engage In Bilateral Conversations
Studies indicate that millennials and Gen Zers want brands to engage them online. Consumers want experiential, not simply promotional videos. Instagram Live empowers brands to engage in bilateral conversations versus the standard one-way megaphone. Consumers also want to be heard, not told. Use Instagram Live not to broadcast, but to engage in a meaningful way to build customer loyalty and retention. – Scott Amyx, Astor Perkins
8. Use It As A Storytelling Platform
It’s a great storytelling platform as it has no time limitations and allows you to receive real-time feedback. Viewers can comment during the broadcast, so it’s a fantastic way to get a read on your audience. It’s also casual, so no need for fancy production. Just point and shoot! Consider using this option to expand your brand story, promote upcoming events and test new kinds of content. – Jessica First, Kilter
9. Enhance The Connection With Clients
Now is an excellent time to utilize Instagram Live more than ever before. Most companies are working remotely during this time, and creating human connection has become an essential daily need in all of our lives. Instagram Live is a great way to enhance the connection with clients and customers. Connecting with your customers through avenues like this organically grows your presence and brand. – Brittany Harrer Dolin, The Pocketbook Agency
10. Increase Engagement With Followers
When customers tune into a live video on Instagram, they are choosing to interact with the streamer. It’s important for companies to recognize this opportunity to engage by sparking discussions with the viewers. One way to do that is through rewarding valuable feedback communicated by fans with exclusive offers and coupon codes. Building communities and creating enthusiastic and loyal customers. – Ibrahim Ibrahim, iBoostReach
11. Share Your Journey
Being vulnerable and sharing your journey as a business owner makes your audience turn into loyal customers through the empathy they feel and the connection they have with your real business journey. For example, you could talk about manufacturing challenges or design decisions on social media marketing or about landing a huge contract and all the “feels” you’re going through. It’s priceless! – Silvia Mah, Ad Astra Ventures
12. Showcase Your Personal Life
Part of the brand is personality. We had a lot of success promoting an off-Broadway play with actors using Instagram Live to show fans their morning commute and work outside of the theater. You don’t need to be an actor with this approach. CEOs and other leaders can showcase their personal life with similar IG Live situations. Let your customers connect with your leaders via personal stories. – Mark Macias, MACIAS PR Check out my website.
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The COVID-19 crisis has exacerbated the existing challenges facing businesses and exposed new risks that must be addressed. To better understand these challenges, Deloitte Global conducted a survey of 351 respondents from around the world in April and May 2020, at the height of the initial global COVID-19 lockdown.
Through this survey, we sought to better understand the value that c-suite, finance and audit committee executives, investors, shareholders, and board members place on audit as a result of COVID-19.
The results unveil some of the most pressing COVID-19 concerns, many of which are still relevant today, as well as executives’ changing perceptions about the role of auditors in approaching these challenges.
The importance of assessing risk
Deloitte’s survey reveals respondents were seeking insights that could help them assess the risk presented by COVID-19 or similar “black swan events.” In fact, 90% of executives in our survey felt that management could benefit by taking a page from the auditor’s playbook in assessing risks from such events. For example, adhering to sound internal controls principles and practices, employing robust systems of quality control, and entrenching a culture of ethics and integrity can go a long way to helping an organization remain resilient in times of crisis.
Businesses that seek to understand the long-term impacts of the crisis on their operating models are more likely to find new ways to quickly adapt to the post-COVID-19 world. To navigate this emerging environment, all participants in the financial reporting ecosystem from companies and boards to regulators, auditors, and investors, will need to continue to participate in regular and transparent engagement.
Successful businesses will find opportunities to learn from the COVID-19 crisis and use their experiences to prepare for future disruptive events. For example, some companies—Deloitte included—are leveraging their cloud infrastructure and investments in innovative collaboration tools as well as virtual learning.
Addressing resiliency concerns
While the pandemic has exposed weaknesses in the ways some businesses operate, it’s also ushered in a new reality of virtual working. Driving a reliance on digital technology and collaboration tools has left many executives concerned about the long-term efficacy of their pre-COVID-19 business strategies. When asked about the resilience of their companies during COVID-19, the two largest concerns for respondents were viability of their business models (e.g., impacts on infrastructure, logistics, technologies, ongoing operations, and go-to market strategies) (57%) and accounting and financial reporting issues (54%).
When viewed by geography, respondent concerns shifted somewhat. Brazil, France, India, and the US rated business model concerns the highest. European respondents in general showed greater concern for the health and well-being of their employees (49%), and Asia Pacific respondents’ had the greatest concern for customer relationships and future demand (49%).
The pandemic has impacted industries in different ways, and the results reflected these differences in executives’ concern by sector.
For example, consumer products companies cited financial resilience (capital stability and liquidity) and liquidity as their top concern (64%), while companies in the financial services industry were most concerned with the brand and reputation of their businesses (55%).
Evolving the financial reporting ecosystem
The economic and health crisis resulting from the pandemic has also caused the process of financial reporting to be far more challenging than before. Professionals must now deal with travel restrictions which prevent routine in- person meetings and activities, market volatility that impacts estimates and valuations, challenges of cross-border data sharing, and complex tax implications of work-from-home mandates.
It is therefore unsurprising that 54% of executives shared that navigating accounting and financial reporting issues was a top concern—this was an especially common concern among investors. They are seeking objective insight about systems of control and quality that informs guidance in difficult decisions relating to forecasts, estimates, and other judgments related to valuations and complex accounting treatments.
When asked what actions their businesses were planning to take to respond to COVID-19 challenges, 63% of executives said they were focusing on communications with investors and stakeholders on business challenges and impacts. This response amplifies the positive potential impact that constructive engagement throughout the financial reporting ecosystem could have on markets.
Many regulators have acknowledged the uncertainties created by COVID-19 and emphasized the need for high-quality reporting that includes the transparent disclosure of new risks and assumptions made. These comments have provided some assurance for reporters and users of financial statements alike, and more regulator input will go a long way in reinforcing trust and reliability.
Access to timely, transparent, meaningful data and insights to inform financial reporting and associated disclosures remains critical. It enables stakeholders— investors, employees, suppliers, governments, and regulators—to identify which companies have so-far mitigated the disruptive effects of the pandemic.
As businesses continue to adjust to the new normal, understanding the long-term effects of the pandemic and what actions we all need to take is critical. COVID-19 has revealed just how disruptive events can be on “business as usual” and emphasized the need for future planning. With threats like climate change ramping up there is a lot to be considered and planned for. Further, the pandemic has brought into sharper focus the need for transparent and reliable information beyond historical financial statements.
Doing business has been forever changed, including how auditors operate. It is clear that the auditing profession has an important role to play in advancing economic recovery. This is why the conversation around the future of audit is so critical at this moment in time.
Jean-Marc Mickeler is the Deloitte Global Audit & Assurance Business Leader. He started his career at Deloitte in 1994, overseeing the audit of several major international banks. Jean-Marc holds an MSc in Management from Amiens Business School. He is a registered Statutory Auditor and an ACPR registered auditor. Jean-Marc has also served as the Chairman of the Professional Club Control Commission of the DNCG (Professional Football League) since 2017.