Jim Cramer Suggests Wall Street Professionals Using Poor Performing Stocks To Bait Robinhood Traders
Jim Cramer, the host of CNBC’s Mad Money has provided some much-needed insight into the recent trading fiascos surrounding amateur Robinhood investors. According to Cramer, Wall Street’s seasoned professionals are taking advantage of new investors by artificially inflating a collapsing company’s stock during premarket trading.
Many popular companies that were significantly impacted by the coronavirs pandemic are currently in shambles as the travel and hospitality industry has become essentially stagnant. American Airlines (NASDAQ: AAL) for example, is anticipating a decrease of at least 90% in its second quarter revenue, but in defiance of rational behaviour, the company’s stock was up over 16% on Friday’s session. A very strange observation indeed, given that the true believers in an air travel comeback would buy the stock once the market opens, instead of early trading.
As a result, Cramer points out that these professionals are fomenting action in the markets, as a means of bringing in inexperienced investors. As rational behaviour would dictate, if there is no other outside variable dictating a stock’s movement such as a merger or consolidation, then it is plausible to assume that someone on the inside is manipulating the stock’s price before regular trading commences.
Hertz Global (NYSE: HTZ) for example, saw an increase of more than 37% in its stock price on Friday, despite the fact that the company is clearly in the midst of a chapter 11 bankruptcy filing. According to Cramer, the sudden Robinhood trader’s irrationality is not what is ultimately driving up the equity prices, but rather a cascade of ill-informed investing stemming from fomenting activity instigated by Wall Street Professionals.
Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
