Pajama Traders’ Bankruptcy Bull Market

Since the shortest Bear market ever transitioned into a record Bull market in March, there has been an insolvency impulse by small investors. Esurient equity buying behavior of pajama traders is being spurred by up to $5,000 a month of Unemployment and Care package money in the pockets of novice investors. Free trading platform Robin Hood and online discount brokers are all experiencing record trading volume. Half of the top 10 stock picks among Robin Hood traders have been companies that will remain 100% or partially shut down for months to come. According to Citadel Securities, stocks under $1 per share had an average gain of 79% over the past week. Beyond the risky bargain hunting of stocks with long term financial impairment, many have been amazed by the Bull Market in Bankruptcy stocks. The poster child for betting on bankruptcies is Hertz rent a car. They have been talking about wiping out shareholders since mid-April and officially announced a Chapter 11 Bankruptcy filing in late May. Undeterred by such negative news, novice stock investors kicked off a 3-day rally sending Hertz up 1,462%. Legendary Billionaire investor Carl Icahn took a $1.8 Billion loss near the lows, knowing it was going to zero. Apparently the unemployed mass of first-time buyers are the real geniuses here with new math to value such worthless companies. Moving back towards our reality over the past 2 days since Hertz rose like the Phoenix, the stock has since given back most of its gains and will likely be trading for just pennies again this summer.


Speaking of pennies, another iconic brand, JCPenney (JCP) has been heading toward bankruptcy for many years in the eyes of many. Yet in mid-May, after they declared their stock would soon go to zero, pajama traders refused to accept reality and created their own universe. Since warning their stock will soon be worthless, JCP rallied 510% before losing most of that in the 2-day aftermath this week.


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Disclaimer: This report may contain information on investments that are high risk and have substantial risk of principal loss. It is for informational purposes only. Statements in this communication ...

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