Every generation bears witness to the destruction of wealth – all booms end in a bust that is the natural cycle of the markets. These busts always follow on the heels of what has become known as irrational exuberance and this exuberance is fueled by hubris. But as each investing generation learns price goeth before a fall. An exemplar of this has been the collapse of HOOD – the trading app that sought gamify trading for a new generation. If I was to use the parlance of the 1960s marketed as a means to stick it to the man. Unfortunately, it was the investors in HOOD who had it stuck to them in an all too unpleasant but familiar fashion. At its stockmarket peak, HOOD had a market capitalisation of $45B – as of the close last night, this had shrunk to $8.8B. The chart below gives an idea of the savage collapse.
The chart below shows the analyst’s guesses as to what the share price of HOOD should be at various times – to say they are wide of the mark is to be somewhat charitable.
Seeing this graph caused me to look up what the analysts actual recommendations for HOOD were and I have overlayed them over the chart below –
In typical analysts’ fashion, the stock was continually recommended as it collapsed. This is akin to the behaviour of those who are driving ARKK at present which I wrote about yesterday.
The lessons from this are simple – history repeats, analysts remain idiots and people still fall prey to their more basic instincts when it comes to trading.
PS: I forgot to mention if you also listen to stock analysts then you are an idiot as well.
