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No. of Recommendations: 11
I'm reminded of the VW short squeeze in 2008. Lots of shorts. Share price spiked from ~E200 to ~E1000 in a couple days..... and then plummeted. Some winners, lots of losers.

The lesson, which most value investors miss, is that value is only part of the game and its effects are longer term. Shorter term supply and demand trumps value but the effect is short term. Huge price spikes tend to be short lived but it can be difficult to tell if the spike is driven by value or supply and demand.

Multiple price charts all accelerating in unison during 2019-20 is a clear indication that money printing (election year and cobvid-19) is sustaining demand. A lot of money is going to people who don't really need it and the dearth of spending opportunities driven by covid-19 funnels that extra cash into the lure of a fast growing market, a positive feedback loop, the dangerous kind. "Governors" that keep systems in balance are negative feedback loops.

Looking at individual cases...

Zoom's (ZM) 2020 spike was totally value driven but some of it is discounting future earnings which will tame the stock price growth for a time, until the discount is digested.

Tesla (TSLA) is a mix, value being EVs crossing the chasm and supply and demand being short sellers getting squeezed and entry into the S&P index.

My portfolio has grown in sync with the money printing and I have been adding to my cash reserves about once a quarter. Next week I'll be adding some more, about 4.7% of the portfolio. Gains you can lose but losses are harder to make up. Be safe!


Participation isn't investing, it's more akin to gambling.... not quite Russian roulette but it will be painful for many.

Forgive me for saying so but terms like "gambling" and "Russian roulette" are not helpful in understanding our favorite game. We have to learn the rules and how to game them! :)

There are laws of nature like the Power Law Distribution and the Law of Supply and Demand, which are apparently not appreciated enough in MBA schools. To this day most people don't understand why 75% of investors underperform the market. It's a law of nature that mandates it, the Power Law Distribution. One pertinent law of nature that I have seen in the news lately is the "S" Growth Curve. Cathie Wood relies heavily on another law of nature, Wright's Law. These are not physical laws like Conservation of Momentum but laws of Complex Systems, not yet widely understood.

Denny Schlesinger
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