The catalyst for Dave Portnoy’s foray into the high-risk world of day-trading was the waiting time that the COVIDE-19 pandemic imposed on professional sport.
Without football, basketball, soccer or hockey — the mainstays of the Barstool Sports blog he founded, Portnoy was at a loss. The stock market, volatile but still operating at full throttle, offered it a new challenge.
“E am trading my own money and a lot of it,” said Portnoy FOX Business. “I’m having fun. As long as we’re still a little bit with nothing else to do, I’ll keep trading daytime.
Portnoy has become the child-watcher of the day-trading craze, livestreaming his daily trading sessions on Twitter, giving followers a glimpse of both his successes and failures as he slings positions worth hundreds of thousands of dollars.
Portnoy isn’t the only one plunging headlong into the stock market to help fill its sporting game void. The sports betting industry was a $150 billion business in 2019 and players have since March been limited to betting on South Korean baseball and other obscure sports, causing many of them to focus on financial markets.
“Sports gaming is a huge business in this country and a lot of sports players and many of these millennial players now play the stock market, day trading,” Jim Bianco, president and macro strategist at Bianco Research, told FOX Business. The change is demonstrated in signing up for Robinhood and other trading platforms on the web.
“Robinhood numbers are just showing you parabolic increases in the amount of open accounts, added positions and all the other brokers telling us the same thing,” he said.
Nearly 800,000 people opened new accounts at the three largest online brokers in March and April amid the COVIDE-19 blockades, according to the Financial Times. This wave of new accounts breathed life into an industry that had been left for dead.
Two years ago, everyone was reaching out and saying, “How can we get retail investors interested in the market again?” J.J. Kinahan, chief strategist at TD Ameritrade, told FOX Business. “well, you know, all of a sudden, retail investors are interested in the market again.”
The industry’s renaissance was fueled not only by brokers’ decisions last fall to reduce commissions to zero, but also a news cycle that inflated market volatility. Investors aren’t just blindly plunging into the market either, according to Kinahan. He said TD Ameritrade saw a “3x elevator” in the number of customers taking advantage of educational tools.
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This and the fact that the Ameritrade Investor Movement Index showed that customers last month increased their market exposure for the first time since January suggest they may not have been buying shares hand on fist during a 36 percent surge on March 23 low.
New customers, who are skewing younger, see opportunities that “water many professional traders miss,” Kinahan said. He pointed to TD Ameritrade’s data, which shows that customers were buying airlines and heavily beaten cruise operators from March on. American Airlines is up 85 percent from bottom in May and Norwegian Cruise Line Holdings has jumped 125 percent since March 18.
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Portnoy, which can rattle off just about every trade it has made and the levels where it bought and sold, was among those that picked up cruise operators and airlines on the cheap.
Some of his best trades have been buy-and-holds in Spirit Airlines and Boeing, which have earnings of 169 percent and 58 percent, respectively. He also made 130 percent on a one-day trade in the recently bankrupt car rental company Hertz.
|Save||SPIRIT AIRLINES INC.||18.82||$2.74||17.04%|
|HTZ||HERTZ GLOBAL HLDGS||2.83||$0.77||37.38%|
“Smart money is Robinhood accounts, and silent money are billionaire hedge funds,” Bianco said with a hint of sarcasm. He alluded to legendary investor Stanley Druckenmiller, who told CNBC on Monday that he had returned only 3 percent from the stock market to the bottom on March 23 while the benchmark S’P 500 index was up 43 percent.
Druckenmiller said he has been “humiliated several times” during his career, which spanned more than four decades, and that the past few weeks “certainly fit that category.”
Portnoy, which is worth about $100 million after selling a 36 percent stake in its company to casino operator Penn National in January, told FOX Business it is up $250,000 after earning so much Friday.
“If these people were so smart and as good as they say they wouldn’t spend all day tweeting to me. They’d be on a yacht somewhere.
Portnoy’s had some bad jobs too. It took a big success going “all-in” on Lululemon ahead of the company’s fourth quarter earnings report on March 26. While Portnoy was right to be bullish – the stock has climbed 53 per cent since the report – it was rattled that shares fell as much as 9.7 per cent over the next five trading days.
Portnoy said he was “murdered” when he tried to short-circuit Boeing in March —essentially, making a bet that the aircraft maker’s stock would fall— and didn’t think he’d short-circuit stocks again “anytime soon.”
His business decisions and comments have made him a target of the so-called Fin-Twit community, made up mainly of financial professionals and journalists who say he doesn’t know what he’s doing and that his bank account will eventually pay the price.
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“If these people were as smart and as good as they say they are, they wouldn’t spend all day tweeting me,” Portnoy said. “They’d be on a yacht somewhere.”