What hell happened with Bed Bath and Beyond?

Email agenda:

Estimated read time: 6 minutes 18 seconds

1. What the hell happened with Bed Bath and Beyond?!

2. Chamath and Ryan Cohen = market con artists

3. Crypto down 26% + what I am buying

Good morning and happy Monday - let's get smarter

Blood Bath and Beyond ($BBBY)

If you have been following financials markets the past 2 weeks, you have this stock rocket up 400% from around $6 to $23 and then come soaring back down to $9

So WHAT THE HELL happened?

As most of you know reading this, when you buy a stock (long) you want to buy low and sell high - you make $ when you sell at higher price and lose $ when you sell at a lower price than you buy

Simple

Now let’s discussing “shorting a stock”

When you short a stock - you are looking to make money when the stock goes down, rather then up - you are selling high and buying back low

When you short a stock, your broker (Vanguard, Etrade) loans you shares of Apple, you SELL those shares at $100, then, hopefully the stock goes down to $90, you as the short seller then BUY back the stock, and return those shares to your broker, and keep the $10 of profit

With Blood Bath and Beyond we have a short squeeze

So what's a short squeeze?

Imagine in the Apple scenario or the diagram that you sell the Apple stock at $100 a share, hoping for it go down (you're shorting it)

All of a sudden news breaks that Apple won a $15bn contract with the US Gov’t and everyone starts buying the stock shooting the price up

Uh-Oh… you loaned shares from the broker, SOLD them at $100 hoping it would go down, now its at $135....

In a panic, you and every other short-seller try to cut your losses and stop the bleeding so to close out your position, you have to BUY back the shares you SOLD at $100 at $135

So now, you have everyone buying the stock on good news (long positions) and all of the short sellers ALSO BUYING BACK their shares to stop the bleeding

Everyone’s buying, the stock goes vertical

That my friends is a short squeeze 

Pump and Dumpers (Ryan Cohen and Chamath)

If you know me on a personal level, you know that I have very few enemies or people I truly dislike

If I had to name people I genuinely hate right now off the top of my head, the old Giants GM Dave Gettleman would probably be the only one that comes to mind and I do genuinely hate him with all of my being

That’s neither here nor there

As Spiderman once said, with great power comes great responsibility

One of the main reasons for both the Gamestop $GME frenzy/short squeeze last year and Blood Bath and Beyond $BBBY frenzy this year, is Ryan Cohen

Ryan Cohen founded Chewy which has been a great success, known for their high quality products and amazing customer service

However, when someone has success with 1 company, retailer traders (you and me) and the public have this genuine belief that everything he touches turns to gold

Very similar to Warren Buffett - when he buys a new stock, everyone scrambles to own it? Why? He’s been extremely successful in investing, so if he likes it, it must be good

Now - people like Ryan Cohen (I will get to Chamath) have no control over you buying a stock after them

BUT they do have control over putting out PR or talking up an absolute GARBAGE business

When Cohen bought the shares of $BBBY in March of 2022, he wrote a letter blasting the current management and discussing his plan to completely overhaul the business (similar to $GME)

Here is the PR campaign letting everyone know he's buying and has this grandiose plan to overhaul the company 

The only difference is, after doing all of this and the stock soaring, Ryan Cohen…..

DIDN'T SUCCEED IMPLEMENTING THIS AMAZING PLAN AND....

SOLD ALL OF HIS SHARES OF THIS SHIT BUSINESS TO WHO????

Innocent, unaware, probably Robinhood traders like you and I

So he buys the stock, it soars, he sells for millions, and who is left holding the bag?

The little guy

The only difference between Ryan Cohen and Chamath, is I believe Ryan Cohen has good intentions and actually does believe in most cases he can turn around the business

Chamath, who famously laughed on his podcast about selling all of his Solana crypto to retailer investors after pumping up its use and how incredible the crypto would be, is a scum

Not only the Solana incident, Chamath has touted many of his businesses that have went public via SPAC that are all dogshit businesses

After peaking during the post-COVID boom of 2021, Chamath tweeted a picture of his SPAC returns to tout himself

Oh those SPACs in that picture… those “great businesses” like Virgin Galactic ($SPCE is the ticker)… are down 88%

But don’t worry… that 88% didn’t impact Chamath!!!!

Gee I wonder why???

Because after touting space travel, Virgin Galactic ($SPCE), and blah blah blah

HE SOLD HIS SHARES TO THE COMMON MAN

But.... the show goes on!

You thought he was finished??? Why stop now?!

and the stock goes vertical!!

When I saw this, all I could think is how the median Chamath SPAC is down 79%, he's proven to retail traders he'll prop up his investments, let them all drive the price up, and then he'll sell out and laugh in your face

Again and again and again

This is how I feel

I am not a businessman, I am am a pump and dumper man

Let this be a warning to you to be careful with your $. Who you trust, who you listen to, who you follow

Don’t believe what they say, follow their actions

I am sure a few months from now, Chamath will be completely out of this investment making million in profits, and the little guys will AGAIN be stuck holding stock in some shit company

Make sure that when you see the light at the end of the tunnel, it’s not the train

When you see someone on TV or a podcast pumping a stock up, think to yourself…

Hmm why would they do this? Do they own it? What do they have to gain by doing this?

If something smells like dog shit, and looks like dog shit, odds are, it's probably dog shit

What I am doing / not doing in my portfolio

My biggest position still remains the US Dollar $UUP

I am a buyer of bonds: $LQD, $BAB

Stocks and equities I bought more of this past week: Utilities Sector $XLU, Healthcare ETF $PINK and New Zealand ETF $ENZL, General Mills $GIS, and McDonald's $MCD

Stocks that are categorized as consumer staples (you can look at the consumer staples ETF $XLP), which are products that are essential as opposed to discretionary, tend to perform well during recessionary macro dynamics

Another new buy is Activision, $ATVI

Thesis: The FTC (Federal Trade Commission) is reviewing Microsoft's all cash offer to buy Activision for $95.00 per share, the stock is currently trading at $78.63

If the acquisition is approved, the stock most likely will quickly trade up to $95 per share

Based on the current legal outlook, it doesn't seem like the FTC has grounds around anti-trust to block this acquisition

Crypto

A couple of weeks ago, I mentioned keeping an eye on Ethereum but then said it was a no go

Crypto more than other places, people have insane FOMO and chase when things start doing higher to avoid missing out

To reiterate, the macro conditions for crypto do not look good for he foreseeable 6-9 months

If you bought Ethereum 2 weeks ago at it's weekly high when there was another head fake or counter-trend move, you'd be down 26% as of today and need to make 30% from here just to break even

Not good - not buying Ethereum or any crypto still

When the macro conditions are favorable, we will be sounding the horn

We won't worry about picking bottoms as we're not proctologists, we will make sure we don't get lured into a price head fake, and make data based math decisions

The time for crypto is STILL not now

- Dev

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.