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Bullheaded Dave Portnoy Gets Pounded with His Own Hammer

Dave Portnoy shakes fist as market gives him a pounding

Dave Portnoy is shaking his fist at the stock market, daring it to give him a bigger pounding than it already has — telling his gambling fans how the $700 million he lost on Thursday, and the four-million he’s lost “in a f—ing blink” over the week is just a flesh wound, a mere scratch.

If it’s “just a scratch,” he’s soon going to look like he took a naked marathon run through the blackberry patch. So, it’s a good thing he doesn’t appear to be too sober. He’s going to need a lot more anesthesia before his downhill run is over.

Potnoy is the big-mouth braggart who has led the Robinhood investing pack to gain billions in the insanity run that the stock market made against the backdrop of a shattered economy. Out of the ashes of the economic Covidcrash, Portnoy managed to establish the baloney mantra that “stocks only go up,” and he was fool enough to believe his barstool wisdom.

Yeah, stocks only go up in a meltup, and Portnoy got into the day trading gig just in time to ride the most insane melt-up in history … and help create it with his braggadocios cheerleading. The broader truth is that “stocks only go up … until they don’t.” He could have learned that just by drinking a little less during the market’s March madness. (As opposed to April’s fool run.)

Here, after just taking a major headbanger during the market’s Thursday opening, is Dave Portnoy boasting about how indomitable he is even as the market proved … again … the adage he’s tried to create is a fraud. He sounds like he just spent previous night downing Irish car bombs to steady his hands after the thromping he got in the earlier part of the week. This is the sound of money circling the drain as someone is too dumb and too arrogant to get out of harms way:

Portnoy is pretending he loves the thrashing like a boxer loves a good fight, but he’s clearly been hit enough that he’s punch-drunk and can’t figure out which ways is up in the market or, at least, why the market keeps falling when it never does that.

That’s what the brassy balls of golden bulls do when they run their heads into a boulder. They brag about how they didn’t even feel the pain, even as they stagger and their eyes role back in their sockets.

Portnoy right now looks like this kind of bloodied bull, determined to climb back up the edifice from which he fell and take the fall all over again:

Yeah, it’s a great trip, Portnoy, if you like to become living hamburger. The entertaining thing about braggarts of Portnoy’s type is you get to watch them get beat up again and again as they refuse to admit they could have been wrong.

Why the long horse face, Day-trader Dave?

David Portnoy’s boasts were made easy and predictably accurate due to Fed and federal support that was far more massive than any time in history. The market’s rise on that flood of support made Portnoy feel he was an unconquerable genius, far smarter than than seasoned investors because he could outdo “the suits” any day of the week.

Little did this bubble-headed genius know he was simply riding his Irish car bomb up one of the market’s famous melt-ups. He made a quick new fortune that will be just as quickly lost because he bet on the blowout of the largest most obvious bubble in US history, and he was too dumb to recognize it was a bubble, even when he was surrounded by the economic blowout of the sports world he made his first fortune in due to the Covidcrisis. I mean how could you expect anyone to know that the market would eventually catch down … again … to the smoldering ruins of the economy? You can’t see this stuff coming from behind a glass of Irish Death beer and Bailey’s.

And here he is after the day was over, stupidly telling his fans, again, that stocks only go up. Repeat the lie often enough to hammer it into truth in the minds of the masses. (The drunken video, like Portnoy, runs like it has heartburn, but try to skip past the long disclaimer intro to the action at 2:00 minutes in. And — forewarning for the faint of heart — he’s a crude talker if you want to avoid that. You don’t need to listen to all of it … but it’s entertaining to listen to a bull bawl as he tries to figure out why things aren’t going in the direction they are always supposed to go. You can feel the scalding pain bubbling up inside his chest, even as he tries to choke down what’s happening to him.)

Hmm? How can the stock market be all down, including even Tesla and Apple? They were the sure bet that would continue all the way to the end of the ever-expanding universe. Now they are food for heartburn. Hard for Portnoy to swallow. About all he can say on the positive is …

It could have been worse. We had a couple of bad days!… I believe in Elon Musk…. Whatever happens to Elon Musk, he’s eight steps ahead…. I don’t know what to sell though…. Don’t be an idiot; Tesla’s going to come back, but I have to sell something!… Like, the stock market is down, but it’s all down on Amazon, Apple and Tesla….

From the linked video

Believe away. Your Musk god is not going to deliver. You have faith in the finite. And who could have seen a crashing Tesla coming???

Maybe an idiot since it was priced to 777 times perfection? Don’t driverless Teslas always crash?

I have heartburn. Really, the heartburn is killing me. I don’t know what to unload. I’m over leveraged right now…. I don’t want to get rid of any, but I don’t have enough money!…

No kidding! That’s what happens when you buy stocks on leverage that are priced higher than 700 times forward earnings! (I do take a certain ill-gotten pleasure in watching boastful idiots fall — not in watching everyone fall, but just those whose unmerited pride has been puking out their flapping mouths all day, every day for months on end.)

I just got caught with my hand in the cookie jar with Tesla…. I’ve got twenty minutes to figure this out so I don’t have to write a check…. Free ad for Tums, but I’m dying over here…. What happens when Tesla’s down 20%? A couple antacids…. I’m WAY over leveraged…. Tesla, you piece of ____!… It’s not as fun when it’s going the wrong way, I’ll tell you that! I need the green hammer.

Your mighty hammer isn’t going to deliver either, Davie Boy. Thor is dead, and all that’s green is not golden.

Next, Portnoy turned to his his Smith & Wesson stock to defend himself; but even Smith & Wesson was killing him. Who gets shot down by something like Smith & Wesson?

An alcohol-sopping idiot who pulls the trigger with the pistol still in its holster and shoots his own foot.

Dave Portnoy didn’t sound so brave in that video shot as he pops antacids like a Tums addict.

When the market was rising, it was all real money, and he was getting rich hand over clenched fist. But now that he’s losing…. It’s money when you’re making it, just paper when you’re losing it! And, so, he dumps more cash in to try to hold his position.

It’s all on paper…. Right?… That’s what they say? It’s only paper…. I believe in Elon Musk…. Buy the f___ing dip, Boys! Stocks will be back. One of these days Smith & Wesson’s going to explode on people’s faces…. Where’s my equity?

Smith & Wesson just backfired and exploded into Portnoy’s face. That’s what a melt-up meltdown looks like in person.

You can only imagine how his videos will sound wilder with more heartburn as the market pounds relentlessly down (an experience Portnoy, green in all of this as he is, apparently has never had the opporunity to fully savor). It should be a fun train wreck to watch, and I’ll set up a few seats for everyone to watch with me in the weeks ahead because it is also educational.

Portnoy doesn’t understand the stock market on a longer timeframe any more than he understood crypto, where he also lost a wad of cash.

Such a long face for a guy who has spent months bragging about how brilliant he is and about how trading stocks is easy. Yeah, it’s easy when the Fed and feds are dumping trillions of new money into the market! But what happens when they stop?

And that’s the lesson to be learned. The props cannot continue forever, and they are increasingly ineffective to where it is taking larger amounts than we’ve ever witnessed to get the market to rise. So, what happens when they fail.

This happens:

Stock Market exhibiting signs of panic-like selling Thursday as Dow sees roughly 400-point skid

The U.S. stock market Thursday afternoon was seeing technology stocks routed again, and panic-like selling emerging on Wall Street. A volume-weighted breadth measure that tracks the ratio of advancing stocks to decliners over the ratio of advancing volume over declining volume, was showing a reading of 2.136 for New York Stock Exchange-listed shares. Many technicians say a rise to at least 2.000 suggests panic-like selling behavior.

MarketWatch

The NASDAQ, which predominantly features Dave’s favorite stocks, ended Thursday sitting on its line of hard support. Imagine how much longer Davie Boy’s horse face gets if the NASDAQ monkey hammers its way through that support.

I have a tip for you, Davie: invest in liquor stocks. Stock up. You’re going to need it because the bumpy ride down, which you haven’t been around long enough to feel, is going to feel a get a lot harsher than the smooth sailing up! So, get ready to be butt-hammered by the seat of the roller coaster on the bumps down … because some of them are really big. Your rocket ride uphill looks like this:

stock market roller coaster sets up 2019 recession

Dave Portnoy trips down the up escalator

Funny thing is, I warned Dave and his not-so-merry band of traders all of this was coming in an article titled “Robinhood & Its Band of Traders Not So Merry as Stock Market Turns Volatile.” At the time, even Goldman Sachs was openly wondering if it should just do what Robinhood was doing and follow his gang up the steep hill of success.

I questioned that strategy:

Is following Robinhood and the gang a winning strategy? I say Robinhood is about to bear the slings and arrows of misfortunate time as the stock market now becomes more volatile…. These fabulous traders are about to get trounced….

Robinhood’s three-million new traders in the first quarter arrived just in time to learn the main pathways through the forest right before the U.S. economy reopened.

The V-shaped recovery narrative became so widely popular that it was easy for anyone betting on that narrative to be swept along in a rising trend.

They were primed to make a killing on the reopening narrative. And they did. Now it’s going to kill them.

Fed Chair Jerome Powell sent a shudder through the stock market when he spoke candidly in June about how long recovery was really going to take. That was a mere foreshock of a far greater quake that was building. Thus, I warned,

Nouveau riche traders like Dave Portnoy, who made their sudden claim to fame on Robinhood, are about to meet the sheriff of Nottingham Forest. Let’s see if it goes as well for them as it did for the Robinhood of legend.

In other articles, I pinned the timeframe for that downturn to somewhere between late August and October. Alas, those who are in the ascendancy are not likely to listen to voices of cold reason about the cliffs ahead, even when they get a brief jolt from someone like Sheriff Powell to warn them.

The little guys who followed Dave Portnoy like a train of roller-coaster cars up the long incline are now all about to get pounded down by Portnoy’s hammer, too. The bullheaded think only with testosterone-addled brains, but the market’s hangover is now going to jackhammer their rattling heads for weeks to come with a few ups and many hard downs.

Here is a typical bullheaded investor’s response to the current stock-market plunge, which I just read Thursday morning as Dave was taking the Portnoy Plunge:

Agree this is NOT an elevator going to the basement, more like to the 90th floor from the 100th until they add on to 110 post election NO Matter who wins (relief rally incoming). We had a sky rocket summer, and the market usually pulls back September and October. Not likely we go to march or even april lows. Think about an infrastructure deal, and positive early preliminary vaccination info. Virus numbers are in gradual decline in rate. There is no real reason other then a breather from the massive run up.

True, it may not look like an elevator down this time. I think it will look more like a bunch of truly cocky people falling down the up escalator: (Sliding down those up smooth rails ain’t as much fun — or as smooth — as they thought it was going to be.)

Falling down the up escalator can be an endless ride to the bottom. Those who were benign and just wanted and needed a ride up, you feel sorry for; but the ones who are just plain dumb and cocky like Pottymouth Portnoy … they get what is coming to them. As Portnoy chooses to continue to dump money into this grossly overpriced market during a crashing economy because he believes he cannot possibly be wrong, I can only say, “Have a nice trip; see you next fall.”

Contrary to the commenter above, the market is actually highly likely to fall below its March lows, though probably not in a single plunge as it did in March’s cliff dive. It will be more like bouncing down a lot of stairs that just keep coming and won’t let up.

This one will look more like the dot-com crash, which was an protracted cascade to a new bottom that took almost two years to play out. We can barely fathom where that bottom is because this event is not just the dot-com crash all over again. It is all of that and a WHOLE lot more! 

It’s the implosion of the Everything Bubble, and it will be worse than the dot-com bust many, many months from now because the Fed has lost its ability too single-handedly turn the market around. For the past decade easy-peasy market Dave Portnoy bought into had risen and fallen and risen again based on Fed actions. Portnoy merely bought in for the final ride — the no-brains-required-or-even-wanted melt-up.

Federation of support is failing badly now

With Fed support always able to come to the rescue, Portnoy could easily claim, “stocks only go up.” Before the days of Fed support, he was too young to know the difference between stocks and bondage. Now he’s lost three-million in three days, four million in a week!

This year became different. The stock market ignored Fed actions completely. The Fed couldn’t turn the market around to save its reputation in March. (See “The Fed is Dead.”) It took the federal government adding an additional $3 trillion in muscle to create this last melt-up rally.

The difference is the Federal government pumped Fed-funded money straight into the pockets of retail investors. These are the folk the Fed never directly serves — the people the Fed overlooked throughout its Great Recovery effort that widened the gap between the rich and the rest. So, the federal government opened a new door for Fed funding to an untapped market with a trillion dollars flowing in every month!

Already, the government is starting to sound exhausted from this sprint. It’s deadlocked over how much further to take this, while the Fed is looking reluctant to crank its balance sheet higher still just to try to create a bigger, more insane stock bubble. So, where is the additional money going to come from?

If Democrats gain total control of government in November, we may get another attempted rocket ride because most of the party wants to create and hand out money to the new mass market with total abandon — in the form of free basic income for everyone, a return to $600-per-week unemployment bonuses, reparation money to Blacks, Modern Monetary Theory giving the government glorious amounts of our grandkids money to play with, etc.

That may forestall our pain — perhaps — and it could move the cliff a little further away at the cost of making it even larger; but I wouldn’t bet on it! Sinkholes are already appearing everywhere due to the caverns of debt we have carved out beneath every corporation and beneath the government, itself. There is nothing solid to build on; the whole economy is caving into a pit we have spent more than three decades creating.

Yet, the level of denial about this calamity is beyond extreme. It’s beyond anything the stock market has ever exhibited, and Portnoy is its perfect figurehead. That means it is likely going to take some long hard repetitive pounding to jackhammer the market down to where it needs to go to match the economy that ultimately the stock market does ride upon, whether investors are smart enough to realize that or not.

Consider that Fed and federal intervention is beyond anything we have ever seen, straining already to do everything they can jointly do to pump the market up and the economy up. Yet, the economy has clearly recovered as far as it’s going to in the short term. As I’ve been writing since May, the economic recovery (due to reopening and the largest stimulus effort truly in the history of the world) would peak around mid-July.

That didn’t take long to prove out. Total unemployment has started rising consistently again. Many other economic metrics that were improving started to plateau around mid-July.

After that, I said, the fake government supports would start to fail, so we would start to actually feel the pain. That is just beginning to happen. Now come the innumerable knock-on effects I’ve talked about, due to all the things that failed and will never reopen.

For example: two restaurants go out of business that brought a lot of people to a few boutique shops nearby, so next the shops go out of business. Then the shopping center they were in closes. Then the gas station next to the shopping center closes because no one is driving into the area. It takes months for those dominoes to fall one into the other until they are finally all down. But that DOES and MOST CERTAINLY WILL happen, and you can see that it is coming, so there is no reason to be surprised by it.

That second phase is just starting to happen due to the damage already cemented in place. That means it will play out, even if the Coronavirus is conquered today; but, if the virus does more damage, then there will be a third and fourth wave of economic damage.

I’m talking about the knock-on effects from all the businesses that have already permanently closed. Anyone who thinks those effects are not coming is living must be drinking whatever Dave Portnoy is drinking.

As we enter this secondary phase, we are also getting into what is likely to be the most hostile, contested and chaotic election season of all time. Our social reality is likely to get even worse than it already is, leading up to and especially after the election, regardless of who wins. The decision makers on both sides have clearly laid the ground for contesting the results, and their backers at street level are all ready for a brawl.

Thus, I don’t think the Democrat’s plan to spend a universe of new money is really going to spare us from our troubles, given the turmoil to come.

I think the social turmoil will be worse, however, if the Democrats lose because they are the ones most fired up already, lighting cities all over the US on fire and getting away with it; so, maybe winning would calm them down. Losing will certainly blow oxygen into their flames, especially if it is a narrow and contested loss.

Kamala Harris is already fanning the flames by encouraging everyone to keep the protests — violent as they are everywhere — going until the November election. Imagine how the Dem’s will fire up their masses if only a few hanging chads determine the election in Trump’s favor. Our best hope for social calm is a landslide victory either way that is beyond contesting; but that doesn’t appear likely.

This stock market clearly has a tremendous amount of travail coming, and bullheaded believers like the one quoted above, and particularly like Portnoy, parade the insanity that prevails right now. The market may try to rally at times in the months ahead on nothing but bull testosterone, but the bulls are going to get their heads bashed over and over as many times as it takes because REALITY will win.

The market WILL price down to reality. It always does during these economic downturns, and economic reality right now has returned, as I said it would by mid-July, to sinking in some areas and plateauing at a lower level than where it was in other areas.

When Dave Portnoy finally finishes using his hammer to pound his own head into hamburger made from bully beef, maybe he’ll be humbled by total, undeniable disgrace. For now, he is clinging to nothing but his own boisterous bravado, trying to convince the not-so-merry band to keep on pricing his stocks up.

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