Bulls, Bears, and the Retail Investor Effect

The puppet master speaks and the dolls dance upon a string. That’s what happened this week when the stock market’s master of manipulation, Elon Musk, announced his $43 billion takeover bid for Twitter (TWTR). Retail investors went wild over it, sparking a buying frenzy that saw the stock price jump 7.5% in a single session on Monday.

Remember when we had bulls and bears that made their bones with solid financial management and quality products? That’s not the world we live in anymore. Twitter isn’t “worth” any more than it was last week. The $46.08 it’s trading at today falls short of the $54.20 Musk is offering to pay, and the price has dropped $2 a share since the surge.

Elon Musk is a brilliant strategist and a ruthless adversary, so I’m not going to bet against him on this deal. That doesn’t mean I’m buying in. He’ll make money on this somehow. Those retail investors who are riding his coattails? Like his Tesla minions, they’ll get screwed in the long run. Twitter is not a bull. It’s a dog. This story makes for good theatre and nothing else.

Unpacking the Real Story Behind the Netflix Losses

I recommended dumping Netflix (NFLX) last year because I wasn’t happy with their content library and I honestly believe they can’t compete with Amazon Prime (AMZN). Neither stock has done particularly well this year, but it’s been a bear market for streaming since the pandemic reopening began. No real surprises there. That said, Netflix’s Q1 report was a shocker.

Losing 200,000 subscribers would put a lot of companies out of business. Netflix share prices took a 35% loss after the report was released. Retail investors moved off it like rats abandoning a sinking ship. I’m ready to jump back on board. Someone is going to bail this crew out. Maybe Jeff Bezos will finally close the deal he proposed in 1998.

Unlike Twitter, Netflix did lose some real value this week. Those 200,000 subscribers were worth $4 million in recurring monthly revenue. Of course, nearly half of them came from Russia, Ukraine, and Eastern Europe. They didn’t cancel. Netflix cut them off. Ruminate on that for a few moments. Self-inflicted wounds heal when they’re premeditated.

US News Claims Apple is a Reddit Meme Stock

Speaking of bulls and bears, Apple (AAPL) has been on a steady uptrend since 2005. They blipped briefly during the 2008 financial crisis, but their average annual return for the past five years is a whopping 131%. To me, that’s a bull. They’re a solid blue-chip stock that’s been part of my portfolio since Day One. Why would the Reddit Raiders take aim at that?

Don’t believe everything you read, particularly when it comes to financial “expertise.” Retail investors are a force in the market, and I’m happy for it, but Apple has real money backing it up. It can’t be inflated like GameStop (GME) or manipulated like AMC Entertainment (AMC). Buy Apple and hold it if you want long-term returns. Meme stocks won’t give you that.

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About the Author

Bulls, Bears, and the Retail Investor Effect

Kevin D. Flynn

Kevin D. Flynn is a former financial professional and founder of AdvisorScale Financial Writing. He lives in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.