WallStreetBets Rebellion Rally Is A Bubble That Will Burst, Peter Boockvar Warns

  • Bleakley Advisory Group chief investment officer Peter Boockvar calls the Reddit-fueled rebellion rally a “parabolic bubble” in the CNBC interview.
  • In a research note, Boockvar warns that mania trades into GameStop Corp. GME and American Airlines Group Inc AAL will ultimately go bust.
  • “Let’s break down the investment strategy: Find the most shorted stocks, buy calls, write about it, buy the stocks and jam it higher,” said Boockvar.
  • The prices of these securities far exceed the underlying value of companies.
  • Boockvar said that markets’ history shows that bubbles start the same way and then pop right “back to where the stock started from.” 
  • He also blamed Fed’s loose monetary policies for the rise in speculation, though he admits that the policy was not intended to help “investors get drunk on dangerous trades.”
  • “We have to understand that the purpose of essentially free money via zero rates and QE is to encourage risk-taking. It is meant to scare money out of a savings account, a CD, or T-bill and into riskier assets. It thus encourages riskier behavior on purpose,” he added.
  • According to Boockvar, the euphoria is touching dot-com-bubble euphoria levels.
  • Price Action: In the pre-market session on the last check Friday, GME is 97.3% at $382, and AAL is up 14.1% at $20.65.
  • Related News: How WallStreetBets Is Fueling A Rally In Silver Stocks
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Posted In: Analyst ColorNewsTop StoriesAnalyst RatingsMediaTrading IdeasBleakley Advisory GroupCNBCPeter Boockvarwallstreetbets
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