The return of 'Roaring Kitty'; Scott Galloway on 'Big Energy'; Loneliness and the brain

May 14, 2024

1) I'm not ready to declare a top – I continue to be constructive on the overall market – but foolishness like yesterday sure gets my "Spidey sense" tingling...

It started at 8 p.m. Eastern time on Sunday. That's when Keith Gill, the main driver of the mania in GameStop (GME) and a couple dozen other meme stocks in 2021 under the moniker "Roaring Kitty," posted on X for the first time since June 2021.

Was it a hot stock tip? An analysis of his favorite stock?

Nope, just a meme of a guy leaning forward:

Then yesterday he posted this equally meaningless video at 11 a.m.:

And another one at 11:30 a.m.:

The tweets quickly attracted millions of views... and GameStop soared as much as 119% yesterday before closing up 74%.

And it wasn't just GameStop. Other former meme stocks took off as well, including:

AMC Entertainment (AMC), up 78%
Koss (KOSS), up 37%
iRobot (IRBT), up 19%
Beyond (BYON) – the new name for Overstock – up 17%
Plug Power (PLUG), up 13%
BlackBerry (BB), up 7%

This is so ridiculous.

Every one of these stocks are the worst of the worst – part of my 25-stock "Short Squeeze Bubble Basket," in which I nailed the top of the meme-stock bubble on January 27, 2021. Since then, the 25 stocks are down an average of 67% versus a 39% rise in the S&P 500 Index.

And GameStop and the other six stocks noted above, even after yesterday's moves, are down an average of 86%!

Don't get sucked into silliness like this – you will get burned...

2) A quick follow-up to Friday's e-mail about my friend and NYU professor Scott Galloway...

I enjoy his No Mercy/No Malice essays and thought his latest one, Big Energy, captures one of the reasons my colleagues and I at Stansberry Research are so bullish on energy: the soaring demand from the tech sector, driven by artificial intelligence ("AI").

Here's an excerpt:

Big Tech isn't just similar to the energy business, it is the new energy business. AI's growing power requirements make this concrete...

Training the trillion-plus-parameter models being stewed in a medium-size city (San Francisco) requires the energy consumption of a small country. One ChatGPT request requires 10 times the energy of a Google search. In five years, the incremental energy demand of AI will be equivalent to 40 million homes – more than California, Texas, Florida, and New York combined. Data centers make up 3% of total U.S. power demand, but that's projected to triple by 2030.

And as Galloway notes, tech companies are investing billions of dollars in energy production and storage in order to feed their data centers:

The [Wall Street Journal] reports Big Tech execs descended on this year's annual oil and gas conference, hunting for energy. Bill Gates was the featured speaker. Amazon, the largest corporate buyer of renewable energy, has over 500 projects operating or in development. Announcements of new data centers are accompanied by commitments to develop new wind and solar farms to provide the power.

The convergence of tech and energy reflects tech's transition from selling computing tools to selling compute itself. We don't buy DVD players and discs, we stream. We don't buy maps, we get directions. We don't purchase film, we capture images. Apple, the most profitable product company in history, depends on services for growth. Amazon, the Apple of retail, is a data center business that offers retail.

In fact, in our Stansberry's Investment Advisory newsletter, my team has identified a number of ways to play the enormous long-term boom in the energy sector.

We also released our latest issue earlier this month... and our new recommendation in that issue – while not in the energy sector – is still trading below our recommended buy-up-to price.

If you aren't already an Investment Advisory subscriber, you can become one for just $49 for the first year – you'll also gain instant access to the full portfolio of open recommendations. Get the details by clicking here.

3) The front page of Friday's New York Times had this article about the devastating effects of the epidemic of loneliness, which is occurring not just here, but around the world: Loneliness Can Change the Brain. Excerpt:

Everyone feels lonely from time to time – after, say, a move to a new school or city, when a child leaves for college, or following the loss of a spouse.

Some people, though, experience loneliness not just transiently but chronically. It becomes "a personality trait, something that's pretty sticky," said Dr. Ellen Lee, an associate professor of psychiatry at the University of California, San Diego. These individuals seem to have "this persistent emotion that then shapes their behavior."

Research is mounting that this type of entrenched loneliness is bad for our health and can even change our brains, raising the risk for neurodegenerative diseases.

"Loneliness and/or suffering a permanently impaired relationship with a loved one" is one of the five calamities that can ruin your life that I wrote about in my book, The Art of Playing Defense. (You can access a PDF of that chapter right here.)

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.