Choosing Stocks Using Scrabble letters
“There’s nobody who can argue that Warren Buffett is better at the stock market than I am right now. I’m better than he is. That’s a fact.” — Dave Portnoy
If you live somewhere under a rock, you wouldn’t know that the Stock Market has become a completely unpredictable shitshow. Even the investing giants — like Warren Buffet, are losing as the market was following a downtrend after the COVID-19 pandemic.
But now — even after the new announcement that 12 states hit daily records in new cases, the market reaches new highs.
What is going on?
Well, for one thing, 16 year-olds like me and a ton of bored people with stimulus checks are now signing up to trade in the stock market.
In fact, platforms like Robinhood and TD Ameritrade have seen the number of new accounts more than double from previous years. Everybody with some money sitting around is looking to get rich in their free time.
So what’s been the result of all these new accounts. Well, since a bunch of uneducated traders are buying stocks that they see in random newsletters or on their twitter feed, the volume of traded stocks has spiked insanely and created lots of volatility.
In fact, a bankrupt company, hertz, who’s stock is literally worth nothing, saw a 500% increase in price from a bunch of retail investors looking to make quick money. Seriously, think about that. The stock is literally worthless.
Hertz chart, showing a 500% price increase and insanely high volume being traded
Sports bets to day trading: Davey Day Trading Global (DDTG)
Dave Portnoy, the founder of Barstool Sports, has recently started trading. He has a huge following of over 1.3 million people on Twitter and 2.3 million on Instagram.
Before the COVID-19 pandemic, Portnoy couldn’t recall trading stocks. He then decided to put 3 million dollars into a trading account, and during April, it was in the red. He lost a good amount, and at one point hit a low of 1.8 million in losses.
But now, it’s a different game. Portnoy has taken over the media and Twitter, with his loud enthusiastic attitude and his statements that “Stocks are easy”.
“Stocks only go up” — Dave Portnoy
He makes videos on twitter daily about the stocks he is trading on #DDTG. Here’s one of his videos.
After making some money on his own trades like Spirit airline ($SAVE), Portnoy’s Twitter followers soon became his “Day Trading Army”. These followers began buying Portnoy’s stock calls and drove up the prices on his picks, which is evident based on the fact that these stocks are trading with insanely high volumes.
Although very full of himself and confident that he only makes money, Dave Portnoy realizes he is not as smart as other investors and tells his audience this clearly. In his Twitter bio he wrote, “Don’t trust anything I say about stocks.”
Scrabble for picking stocks
The cocky Portnoy has now settled on a new strategy. On June 19, 2020, he posted this video.
Portnoy described that he would now be choosing stocks by picking random letters from a scrabble bag, and seeing if they become a ticker symbol. If they do, he purchases the stock and waits for his army of traders to rally up the price.
His first buy using this strategy has been $RTX, Ratheon technologies. So far, the stock has been following a downward trend, but I would not be surprised to see Portnoy’s other scrabble picks to rally up as his army follows suit and rallies up the price by buying shares.
I’m still in shock that this was possible. How can this be true? How is the stock market now controlled by a bunch of kids following blogger who claims he is undeniably better than Warren Buffet? How are people making money choosing stocks with scrabble letters? Honestly, the stock market is nothing like it used to be, but, in the future, it hopefully will return to truly representing the value of a corporation.
Portnoy has announced that he does not expect to do this long term, and will probably quit once the virus ends as he has his 9–5 job. This is also true for many of the new traders that have entered the market, who are probably also experiencing losses.