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Is Elon Musk the new stock market oracle?



Is Elon Musk the new stock market oracle?

Has the “Oracle of Omaha” Warren Buffett been replaced by Elon Musk, the “Oracle of Memes”?

The futurist billionaire, chief executive of Tesla and SpaceX, and world’s richest person is now also able to move markets, from cryptocurrencies to actual stocks, using a single tweet.

It’s a power not seen since Warren Buffett, the financial world’s reigning cult of personality, who has long been able to lure tens of thousands of ordinary people from around the world to Omaha, Neb., each year just to hear him speak.

While Musk’s cultish fan base live on social media, they too have proven they are willing put their money where his mouth is — sometimes causing chaos on Wall Street.

Musk made headlines this week when his electric car company Tesla announced that it had bought $1.5 billion worth of Bitcoin, sending the cryptocurrency to a record high. But he’s sent cryptos and individual stocks skyrocketing with far more frivolous signs of support.

The most prominent example may be Signal Advance, a small medical device firm whose shares exploded more than 400 percent in a single day after Musk urged his legions of followers to “Use Signal.” He was referring to the Signal messaging app, which is owned by a nonprofit and Signal Advance’s shares retreated back to normal levels after the confusion was cleared up.

Etsy’s stock price also jumped last month after Musk said he “kinda” loved the online marketplace and its quirky homemade goods. He indicated that he’d used the site to buy his dog a “hand knit wool Marvin the Martian helm,” referring to the Looney Tunes character.

In perhaps the most bizarre case, shares of gold investment firm Sandstorm Gold briefly spiked in the early morning of Feb. 4 minutes after Musk tweeted that “Sandstorm is a masterpiece” — even though he appeared to be talking about “Sandstorm,” the 1999 hit electronic song by Finnish DJ Darude.

Buffett’s fans also followed in his footsteps, but usually by buying shares of his conglomerate Berkshire Hathaway and adhering to his folksy advice on life and investing, including his mantra to “be fearful when others are greedy and to be greedy only when others are fearful.”

Musk’s fans, by contrast, appear more interested in the chase.

“Buffett is so organized and long-term, and so difficult to copy,” mused George Pearkes, macro strategist at Bespoke Investment Group. “Musk is just out there tweeting. Even he doesn’t know what he’s going to do next.

But Quincy Krosby, chief market strategist for Prudential Financial, notes that Musk’s power may seem chaotic because his ability to influence the masses has trading algorithms trolling his Twitter feed so they can act fast whenever he mentions a stock or cryptocurrency. 

“Knowing the power of an Elon Musk comment or tweet is included in the brains of the algorithm,” she said. “The thinking of an algorithm is, ‘He moves markets and therefore we wanna be there.’”

And his “appeal,” said Jim Paulsen, chief investment strategist at the Leuthold Group, is also due to his real-life accomplishments with Tesla and SpaceX.

“This is a guy who said we’re gonna be having private rocket-ship flights to the moon… and everyone’s gonna be driving driverless cars and on and on and on,” said Paulsen. Musk as “said a lot of things in the past that were pretty out there or would never come to pass, and they did.”

Critics say Musk is also dangerously acting as the face of what many on Wall Street have dubbed the “Stonk Bubble,” in which stocks soar despite weak fundamentals — and against Wall Street sentiment — like the recent manic short squeeze of GameStop.

“Every bubble has a face,” said Carson Block of Muddy Waters Research. “Tech, housing, all of them had a guy that went on TV and got people to move money around. Elon is the face of this bubble, which makes sense because there’s no bigger stonk than Tesla.”

Tesla only recently went from being a money-losing company — stymied by production delays and controversial moves like its 2016 acquisition of Musk’s troubled power company, SolarCity — to reporting its first full year of profits.

When Tesla was still losing money, the company’s woes attracted a number of short-sellers who openly criticized Musk’s leadership and tried to cast doubt on the company’s future. Musk took to social media and staged public pranks to fight back against his critics.

It worked. Investors last year sent Tesla shares stock up 700 percent in a move that made Musk the richest man in the world and Tesla the biggest US automaker by market value.

“Elon has thin skin,” siad Block. “The implied criticism of people being short his stock always got to him and he managed to find a way to rally people around him and make himself a Jesus figure, and it’s still working.”

It may be why Musk was able to claim solidarity with the short squeezers on social media during the “Reddit rally,” sending GameStop’s shares even higher during the most manic portion of the squeeze.

“I think amongst futurists and technologists Elon Musk has achieved something almost akin to godlike status,” said Brock Pierce, a cryptocurrency entrepreneur and chairman of the Bitcoin Foundation. “In general I think the things that Elon Musk does are for the benefit of the many. And I’m glad to see such an iconic, kind of heroic individual joining this movement, which is really what it is.”

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Goldman Sachs reportedly plans to move more than 100 bankers to Florida



Goldman Sachs reportedly plans to move more than 100 bankers to Florida

Working from home is no longer an option at Goldman Sachs — but working from Florida might be another story.

More than 100 key Goldman Sachs employees are reportedly poised to migrate from the firm’s New York headquarters to a new office in Palm Beach, Florida.

The snub to the Big Apple — which comes as Goldman bankers reported back to the office on Monday after more than a year of working remotely — would mark a shift in Goldman’s more than 150-year-old, New York-centric strategy at the hands of Chief Executive David Solomon.

The Florida expansion is in the early stages and a few employees have made firm commitments, according to a report from Business Insider (paywall). Among those who have expressed interest in moving are partners in the firm, whose salaries start at $950,000 not including bonuses and other perks.

“High-performing managing directors or vice presidents are also being encouraged to relocate, to signal that the office won’t be considered a backwater that kneecaps their Wall Street career,” the report said, citing an unnamed source.

Staffers who move to Florida will not be expected to take a pay cut, according to the report.

Goldman executives at the global markets division, which includes the the core sales and trading operations, will select which members of the team to send, with the idea that “each cluster would be an offshoot of a larger team based in New York and made up of as many as eight or 10 people,” the report said.

Marc Nachmann, co-head of the trading division, commutes regularly from Boca Raton, which could be part of the reason behind the migration. The other head of trading, Ashok Varadhan, is based in New York.

Florida’s sunshine and low taxes made it a haven as coronavirus has shut down New York City. But it’s unclear whether CEO Solomon — who called working from home during the pandemic an “aberration” that was not a “new normal” — will be pleased with large swaths of employees moving to Florida permanently.

As reported by The Post, Goldman’s Asset Management division had been planning to expand its presence in Florida but a lack of interest has stalled those plans. When employees were polled on the cost-saving idea — with managers informally sounding out the rank-and-file, and the company even sending out an email survey — the bank was met with a notable scarcity of snowbirds, sources told The Post.

Goldman has previously dismissed the idea that the firm is planning major relocations.

“As announced at our investor day in January 2020, we are executing on the strategy of locating more jobs in high value locations throughout the US, but we have no specific plans to announce at this time,” Goldman said in a statement.

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El Salvador volcanoes to power bitcoin mining



El Salvador volcanoes to power bitcoin mining

Bitcoin is red-hot in El Salvador — and the country says it plans to use power from its volcanoes to mine it.

El Salvador President Nayib Bukele — just hours after the country’s legislature approved the “Bitcoin Law,” making it the first to accept Bitcoin as legal tender — revealed Wednesday that the nation’s state-owned geothermal electric company will harness volcanic energy to mine the cryptocurrency.

Bukele said the country is already designing a mining hub that will use “very cheap, 100% clean, 100% renewable” energy from volcanoes to power the operation, which effectively would be a bank of super-powered computers that solve the complex mathematical equations required to mine Bitcoin.

“Our engineers just informed me that they dug a new well,” Bukele tweeted, saying it would generate 95 megawatts of energy — enough to power more than 500 homes for a year. “What you see coming out of the well is pure water vapor.”

Bukele — who is looking to lower transaction fees on the $6 billion in yearly remittances sent to its citizens from abroad — has yet, however, to reveal when the new operation will be live or how many Bitcoins he expects to be able to mine.

It’s been a bullish week for Bitcoin in El Salvador. The digital coin can now be used as payment for goods, services, and taxes in the public and private sector. Bitcoin rose 6 percent on the news, according to data from Coindesk.

According to a study by Cambridge University, Bitcoin mining consumes more energy per year than the Philippines. Elon Musk has met with Bitcoin miners about environmental concerns, recently citing them as he announced Tesla would no longer accept Bitcoin as payment.

Details about the mining efforts and how El Salvador will widely adopt Bitcoin remain vague. The law states it will provide “the necessary training and mechanisms” to allow the 70 percent of its citizens that don’t have access to traditional banking services to understand how they can use Bitcoin but didn’t elaborate.

Still, Bukele remains an enthusiastic advocate for the currency and his mining project. Late Thursday he tweeted drone footage of the new mine with a rainbow in the background.

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China arrests 1,100 crypto users on money laundering charges



China arrests 1,100 crypto users on money laundering charges

China’s crackdown on cryptocurrencies is heating up with a series of arrests that suggest digital currency users can be traced.

More than 1,100 people who allegedly used cryptocurrencies to launder profits from frauds were arrested Wednesday, the country’s Ministry of Public Security said in a statement. 

The busts involved 170 criminal groups who authorities say hired “coin farmers” to open crypto accounts after bank accounts they used for their alleged scams had been seized.

“The high illegal income attracts a large number of people to participate, causing serious social harm,” the ministry said of the alleged plots.

The arrests may cast further doubt on the supposed un-traceability of cryptocurrencies. On Tuesday, the price of bitcoin fell almost 12 percent after it was revealed that US authorities were able to reclaim most of a bitcoin ransom that Colonial Pipeline paid to hacker group DarkSide in May. 

“Criminals have been using bitcoin because of the supposed inability of governments to get at it,” Anthony Denier, CEO of trading platform Webull, told the Post on Tuesday. “If governments can claw it back, that hurts its appeal.” 

Wednesday’s arrests are part of a broader Chinese crackdown on crypto. They come less than a month after the government called for greater regulation of digital currencies.

A committee presided over by a member of China’s Politburo wrote in May that it is necessary to “crack down on bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.” 

Worries about bitcoin’s traceability and the looming threat of government regulations have sent the cryptocurrency plummeting from its peak of more than $63,000 in April. Bitcoin was trading at about $37,600 Thursday morning. 

Additional reporting by Will Feuer

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