The ‘Best of’ 2021: Don’t Scour Reddit For Your Next Profitable Opportunity

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Nothing has shaken the financial markets as much as the first weeks of 2021.

Source: Marcus Krauss / Shutterstock.com

With scary headlines every week and the market moving up and down like a roller coaster track, it was a rough start to the year.

But with every market event comes significant opportunities, but not necessarily the ones that seem obvious.

Today we take one last look at your favorite 2021 Smart money articles examining the short-term GameStop-AMC-Reddit debacle – and what it means for your money, even today.

GameStop frenzy sparkles

Note: This article was originally published on January 13, 2021.

welcome to Reddit-Earth!

Thanks to this online stock discussion forum, many previously unloved stocks have skyrocketed in recent weeks.

Reddit has become a powerful, albeit narrowly focused, force in the stock market, and Reddit traders have bit their teeth into very short names like GameStop (NYSE:GME), AMC Entertainment (NYSE:AMC), and Blackberry (NYSE:BB) and created huge “short shots”.

In other words, Reddit traders bought those stocks … then tricked others into buying those stocks … then bragged about the thousands they made by buying those stocks … and then rejoiced in the millions that the Hedge funds and other professional short sellers have lost by betting against these stocks.

Before this started, GameStop shares were trading below $ 20. But on Friday January 8, 2021, they were trading around $ 350!

And since nothing succeeds like success, the Reddit crowd is on the hunt for fresh red meat.

Already some people are calling what we have seen over the past few weeks “the future of the market”.

I doubt…

Cats and dogs unite

Thursday morning, Robin Hood (NASDAQ:HOOD), TD Ameritrade, and other platforms have started restricting trading on GameStop and other Reddit favorites. (Is this even legal? I guess we’ll find out.)

This led to U.S. Rep. Alexandria Cortez (DN.Y.) and Senator Ted Cruz (R-Texas) finding the one thing they agree on: Robinhood shouldn’t be doing this.

And here’s a headline, from Fox Business, that none of us expected to see: “Treasury Secretary Yellen ‘Watching’ GameStop’s inventory situation.”

So maybe these Reddit frenzies are already the pass of the market.

But I doubt it too.

While the Securities and Exchange Commission may reject some regulations in its way, the Reddit Army’s stock price manipulation is likely now a part of the stock market.

Detainees will sometimes have the opportunity to manage the asylum. It’s just something we will all need to consider when making business decisions.

But for the most part, it will be a sideshow. The market will continue to turn… and Wall Street and smart investors will continue to make money.

Now, I’m not here for a lecture on “fundamentals” or “the purpose of the stock market”. After all, the stock market left reality a long time ago.

They are smart kids, there are many of them and they will continue to find loopholes in the market to exploit. Good for them!

If you want to join them – and you’re not risking more than you can afford to lose – go for it. However, treating the market like a casino is just not what we do here or in my other services.

After all, the Reddit army could evaporate as quickly as it appeared. So, there isn’t really a disciplined or academic way to trade off these frenzies.

If any of my trades get caught in chaos, I would be foolish not to suggest cashing out. But I won’t recommend buying stocks as a game on Reddit chat.

Instead, I’ll continue to use a holistic macro approach to finding and recommending stocks and other trades, as I’m playing long term on huge trends like the global rollout of 5G.

This story continues to gain ground …

This 5G game is ready for a comeback

5G is not just what comes after 4G. This is a particularly powerful investment opportunity that will generate outsized gains for many years to come.

Trillions of dollars of investment will flow to and through 5G infrastructure over the next several years, no matter how good or bad the global economy is.

Qualcomm believes that 5G networks will generate a huge $ 13.2 trillion in global sales activity by 2035. Typically, an industry measures its growth potential in billions of dollars, not Billions.

Perhaps this is the reason why telecom companies are placing incredibly huge bets on the future profitability of 5G. They do this through their bidding on federally managed 5G airwaves.

In January 2021, US mobile operators like Verizon Communications (NYSE:VZ) and pay TV providers like Comcast (NASDAQ:CMCSA) offered more than $ 80 billion to access 5G airwaves in auctions organized by the Federal Communications Commission (FCC). That’s way more than analysts’ estimates of $ 47 billion … and it beats the old record of $ 45 billion in 2015.

Telecom operators are spending all of these billions now because they believe in the trillions of revenue expected in the years to come.

Also in January, China stepped up its focus on 5G growth by unveiling ambitious new plans to nearly double its 5G wireless capacity in 2021.

Clearly, we are on the cusp of a 5G revolution… and this revolution will create enormous opportunities for some companies and their shareholders.

No business or country can afford to ignore 5G or fall behind in its construction and use. This new network will quickly become the essential oxygen of the future technological economy… and the dollars at stake will be astronomical.

An update from Eric

The 5G revolution is far from over; as I mentioned before, we are only in the first or second round. But some businesses are already thriving on this new megatrend. In fact, in the 12 months since the above article first appeared, many of my 5G-focused action recommendations have delivered “surprisingly strong” earnings growth.

Obviously, this growth has not come as a complete surprise to my subscribers and me. This is exactly what we expected … and exactly what fueled recommendations such as Ciena (NYSE:CIEN), Nokia (NYSE:NOK), and Aviat Networks (NASDAQ:AVNW) to earnings above the market.

I expect the 5G industry to continue to gain momentum in 2022.

At the date of publication, Eric Fry had (directly or indirectly) no position on the securities mentioned in this article.

Eric Fry is a award-winning stock picker with many “10-bagger” calls – in the good markets AND the bad. How? ‘Or’ What? By finding powerful global megatrends… before they take off. In fact, Eric has recommended 41 different scholarship winners over 1000% over the course of his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he reveals his next potential 1000% winner for free, right here.

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