GameStop, short stock trading mania will enter ‘death drop when the music stops,’ investment exec says
Kaltbaum Capital Management president Gary Kaltbaum warns short squeeze will be short-lived
It’s all fun and games until Wall Street’s short selling frenzy bottoms out, Kaltbaum Capital Management president Gary Kaltbaum told FOX Business Network's “The Evening Edit” Thursday.
Kaltbaum explained that once all the hype has ended and lawsuits against Robinhood for restricting trading of GameStop and AMC stock have been settled, share prices will undoubtedly “go back to where they came from.”
“Just realize, GameStop, that came from $20 and went to $500, it’ll be back to $20,” he said. “And some of these other names that don’t even have any sales, it’s going to be a death drop when the music stops.”
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Kaltbaum warned investors to be “very, very careful” when approaching these wild-swinging transactions and specifically advised buyers to “not be the last one in.”
Michael Lee Strategy founder Michael Lee also weighed in on the mania, suggesting that investment institutions like Robinhood and TD Ameritrade shut down the buying of high-selling shares to protect the “big guys” from losing money.
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“People who are not allowed to win are winning,” he said. “Historically, the business model for hedge funds has been to take money from retail investors, not the other way around.”
Lee agreed with Kaltbaum that buying into the hype of a short selling free-for-all is not investing -- it's speculating. Kaltbaum described the movement as a “gigantic short squeeze” that will “end up bad when all is said and done.”
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“The hope is that people don’t get caught near the highs,” he said. “I’m amazed that people are upset that they couldn’t buy today at $480 when it finished at $110."