- A short squeeze can make you a fortune
or destroy your life.
They used to only be carried out
by fat cats on Wall Street.
But the tables have turned.
Anyone can attempt to squeeze these days,
and there's a few potential squeezes building as we speak.
And don't get me wrong,
it's risky, but it's insanely exciting.
I mean, I wouldn't mind my net worth
just getting shot into the stratosphere.
People have predicted giant short squeezes on everything
from big stocks to cryptocurrencies and commodities.
And some work out really well, like almost too well.
Others not so much.
But recently I've been getting a ton of questions
about whether a particular asset will squeeze,
and I felt the need to dive in.
But before we get carried away and decide whether you
could mastermind a short squeeze, we need to see what
a short squeeze actually is like internally.
Right, so there's an asset.
Let's use M&Ms for this example.
Imagine each M&M.
This thing costs $100.
I know with inflation, that's actually
not that hard to picture.
That's neither here nor there.
Some people think that these chocolates
are going to crash in value.
Maybe they think management is doing a poor job.
Or maybe they're sick of Miss Green
getting s**t-shamed and stripped of her individuality.
Either way, they're shorted these candies.
they did this by borrowing someone else's
M&Ms at the current price of $100 each.
Let's say they borrowed ten for $1,000 total.
The shorts would immediately sell 10 M&Ms for $1000
And they do this because they think the price will
drop and they can buy them back cheaper in the future,
netting a profit on the difference in price.
So let's say the price drops to $50
and the shorts buy back in.
This is an excellent deal for them because the price cut in half,
they only have to pay $500 to get the
same 10 M&M's back, meaning they can give back
what they originally borrowed and get $500 in profit.
Not bad for some delicious chocolate.
But what if the price doesn't go down?
Instead, it unexpectedly climbs to $150 per M&M.
Now, it's going to cost $1500 to buy
back those ten that they borrowed for $1,000.
A $500 loss instead of a profit. Devastating.
Thanks to these guys, you just
learned how short selling works.
Shorting can be done with stocks,
commodities, and kind of anything.
You could short an entire country if you wanted to.
All you have to do is borrow shares of that country's ETF
sell them, and hope for a total economic collapse
for your own personal gain.
- The world pays us a hefty ransom.
Now, what is a short squeeze?
If we were a textbook, we'd say something like a
short squeeze is a large spike in an asset price.
That happens when a huge number of short sellers
are forced to buy back in at a loss,
making the price shoot higher and higher.
Let's go back to the M&Ms.
So I have 40 M&Ms here, which is the whole market.
What if only two of them were shorted?
No big deal.
Five? Eh.
Twenty? Well, now we're starting to see an unusually
high percentage of the M&M market being shorted.
It's ripe for a short squeeze.
See, if the price goes up too high.
The people left holding those 20
short positions are in serious trouble.
Short sellers will try to minimize their losses, so they'll
rush out and buy M&Ms on the market.
So they can then give them back to
their lender without losing too much money,
to lower risk.
The thing is, all that buying to close
positions pushes up the price more and more.
And that's where things get interesting.
The people who hold short positions are
panicking, losing money by the second.
However, those who made a regular investment in the
M&Ms are seeing their net worth climb and climb.
They're on top of the world.
Different sides of the same chocolate.
Winners and losers.
Short squeezes entered mainstream investment lingo
just a couple years ago.
GameStop, Tesla, AMC.
However, they've been around a lot longer than that.
They've just never been as
accessible as they are today.
And I'm going to give you a
couple of new examples in a minute.
But I want to highlight something.
The power is now with the people.
It's just a question of understanding
how to use that power.
Ordinary investors can now carry
out complex financial strategies.
Like this fellow named Mike.
He was just a guy who dabbled in stocks,
winning on some and probably losing on more.
But he saw his chance to
finally make a fortune on GameStop.
In M&M terms, that's like almost all the M&Ms.
It made no sense.
It looked like far too many people
were banking on GameStop just going bust.
Sure, the chain was in trouble, the retail market had
changed and their model was looking a bit outdated.
But our buddy Mike here, he
didn't think it was terminal.
In fact, he thought all of these
shorts were just flat out wrong.
But despite that, more and more
shorts just piled on over time.
Soon, 110% of the stock was shorted, then 140%.
It turns out yes.
Short sellers were borrowing GameStop stock and selling it
to other people who are also short sellers.
So they did the same thing and sort of
the people they sold it to an endless senseless
cycle of shorting, shorts on top of shorts.
And the whole thing was a tower ready to collapse.
It was the chance of a lifetime.
To get in on a true short squeeze,
Mike bought 1000 call option contracts every single
week in anticipation of this event.
But despite all the data, the
price just didn't rise yet.
He had to let the contracts expire without using them.
He was losing money, but the
math just didn't make sense.
This thing has to collapse at some point.
He even tried to convince everyone he knew to
buy the stock, and it still didn't budge until
suddenly news of a possible short squeeze exploded online.
Regular folks started catching on, largely thanks to
this guy who goes by Roaring Kitty online.
The squeeze couldn't have been marketed better.
Not only was it a way to make some dough, it
was a way to effectively punch Wall Street in the nose.
At the same time.
Once demand finally popped, we saw
the mother of all short squeezes.
The price went nuts.
Beautiful chaos for the winners,
endless pain for the losers.
So how do you get in on the next thing like that?
Luckily, there's a few major
ideas floating around right now.
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you an additional 10% for life. Now picture this.
Times have been tough lately.
Inflation is sky high and wages
that just aren't keeping up.
There's a pandemic, collapsing market.
Everything is just terrible.
I know it hardly takes having
Hyperphantasia to picture that.
And yes, I just learned that word, Hyperphantasia.
It's someone who can produce insanely
vivid images in their head.
But back to the pandemic. Everything sucks.
You stumble across the story
of the GameStop short squeeze.
These ordinary people stuck it to the man
and made money doing it.
Now it's your turn.
You look and look for the next big
opportunity, and then it jumps out at you. Silver.
Your mind drifts back to what you learned at school,
this precious metal with the chemical symbol Ag and-
Actually, that's about all you remember.
But it doesn't matter because you're going
to short squeeze that sucker, not carry
out science experiments in the lab. And guess what?
There's a reddit plan already underway
and the idea is compelling.
Here's the theory.
Huge banks like JP Morgan have
enormous short positions on silver.
Billions of ounces shorted,
and it's massively undervalued.
And at first, that sounds a lot like how
someone from the 1600s would describe Tinfoil.
But what it really means is there are
a lot of futures and options contracts where
no physical silver is actually delivered.
People are starting to get excited about this idea.
It smells like GameStop 2.0, a wildly over
shorted market that doesn't make sense to you.
It's retail rebellion with the goal of raising
the price from under $30 to over $100.
$1,000 or who knows where.
If we all buy just a little bit of
silver, the price will shoot up, or at least
that's what they say will happen.
If it happens, banks with short positions would panic.
The squeezers would make massive profits and stick it to
the man yet again, making money while they're at it.
It seems perfect. It can't fail.
It won't fail.
But it did.
All this happened in 2021.
The GameStop short squeeze was massive, but the silver
squeeze failed for reasons that not everyone agreed on.
There's an important lesson to be learned here.
Even when it goes well, it takes a massive
amount of patience and it doesn't always go well.
Now, some people think the whole silver thing
was just a cynical pump and dump scheme.
Others believe that there's no way
of actually short squeezing silver, period.
And there's still a group convinced that the price
of silver is going to skyrocket and squeeze eventually.
Others mock them.
So who is right this time?
In some ways, silver seems ripe
for some kind of short squeeze.
It's tempting, but we just can't be sure. We don't know.
And maybe it's not as tempting as a certain
cryptocurrency that I'm sure you've heard of, Bitcoin.
I keep getting asked if this thing's going to squeeze.
You've probably had to remind yourself lately why
you got into Bitcoin in the first place,
because prices haven't been helping us out.
It was a way of breaking the
chains of the mainstream financial world.
Sure, it's been a neat investment, but you're worried
that those revolutionary ideas have kind of disappeared.
The people buying Bitcoin were no longer
people you identify with - stock market traders,
fund managers, wild speculators, and looking to
move on to the next hot thing.
And those people who are looking to make
a quick buck have generally left the market
at this point, sinking prices further and further.
It sounds like maybe, just maybe,
this could be a short squeeze.
So you do some research and it's looking pretty good.
Now, there's a lot of disagreement as to whether you
can truly call a crypto short squeeze a short squeeze.
But for the sake of simplicity, that's just what
we're going to call it in this video.
And some people think that Bitcoin is
actually well placed for a potential squeeze.
Prices are massively depressed, but there's still a lot
of belief in the long term price rising.
And crucially, there's a ton of short positions
you just need to run a bearish activity
and the short squeeze could kick in.
There have been predictions on this
for at least a few months.
However, here's the important thing
but if it does, Bitcoin prices
will move sharply and without hesitation.
So you need to be paying attention to this.
There was actually a brief short squeeze very
recently, maybe even saw it and felt a
tingle of excitement in your wallet.
But it didn't turn into a full squeeze. Not this time.
So what should you keep an eye on for
a potential Bitcoin short squeeze of the future?
First and second are increased short
positions and open interest on Bitcoin.
These are strong indicators.
CoinGlass is a great site to
use to monitor those data points.
Third is positive sentiment, people thinking
the price will go up.
And fourth is a sudden uptick in price because
remember, if there's a sudden increase, shorts may cover,
which can lead to more shorts getting scared and
covering as well, creating that vicious cycle of price
increases that can lead to a short squeeze.
It's possible for this kind of thing to happen, but it
isn't the type of bet to place your house on.
From here, I highly recommend checking out this video
where the entire concept of crypto gets challenged.
It's a must watch.