To The Moon

The last decade or so has been defined by loose capital propelled by low interest rates, followed by a relaxation of investing standards. The low interest rate environment allowed for many firms to receive capital from VC, equity funds, and retail investors regardless of their financial position.

This period seems to have ended. The tech bubble burst (with some big tech being down as much as 75%), rates have risen, and the consequences have started to ripple throughout markets. Many investors have increased their discipline, and the party seems to be over.

One party that may have one final hurrah is the meme stocks craze. And that’s a huge opportunity to make money.

Back in their prime, meme stocks like GME, AMC, and BB were up several hundred percent from their natural levels. Many people made money shorting these stocks after their initial rallies, because they had a long way to fall. And fall they did indeed.

This was an era of heightened evaluations that could’ve made short sellers a killing if executed at the right time. Imagine shorting the many altcoins that skyrocketed then subsequently lost everything. I think many have made the mistake of believing this period is over, and we are already in the the next market and economic regime.

While the regime may have changed, there are residual effects leftover.

Bed Bath and Beyond ($BBBY) shot up over 100% in the last week. This valuation has no fundamental basis or rationale. Rallies like this are a fantastic opportunity to short sell.

There is way less steam or cultural movement behind meme stocks in 2023 than there was in 2020. Some investors opened short positions when GME first rallied, then got burnt because of how long it stayed elevated. Many retail investors who propelled the original meme stocks were left with a bad taste in their mouths after their investments fell back down to earth. This created something of an exodus from the meme stocks and crypto frenzy.

Long-held short positions can be expensive because of borrowing costs; however, without a cultural movement artificially holding up prices, short opportunities are less likely to result in a burn.

BBBY has already lost steam. Though it was difficult to short in this instance, due to it being difficult to borrow at its peak, it is indicative of remnants of the bubble. These could be considered almost predictable “microbubbles” to trade in the next few months.

Regardless of where the market goes in 2023, this is a place to make money.