The WORST Stock You Bought This Year

Raise your hand if you owned, bought or even thought about buying Carvana.

How about Virgin Galactic?

Maybe hydrogen truck maker Nikola Motors?

Don’t worry. You’re not alone.

Financial pundits work hand in hand with market manipulators to pull our emotional strings, sucking us into terrible companies at the WORST possible times.

Despite our resolve to “never again” be lured in by the scam artists, we trick ourselves into buying just a few shares on a pullback, hoping to catch lightning in a bottle.

Make no mistake. Whether it’s Carvana, Virgin Galactic or Nikola Motors, these companies are UNIVESTIBLE.

Tradable? Sure.

But if they still exist in 10 years, we’ll eat our shorts.

Many of you, like ourselves, got caught up in the latest fervor around these tickers. It’s hard not to when they climb 500% in weeks.

At the same time, no one wants to miss the huge upswings we’ve seen in stocks like Tesla, Meta or Netflix after they got obliterated.

And, as we said earlier, there are still LUCRATIVE trading opportunities in garbage stocks.

That’s why we want to help you understand why stocks like Carvana or Nikola will never prosper, what causes these huge moves and, most of all, how to CASH IN, no matter what.

Yep, That’s a Dumb Idea

Much like banana and lemon fashionwear, some things are terrible ideas.

Carvana has to be one of them.

Despite being a COVID favorite for investors, this “disruptor” stock is anything but.

Seriously, think about what they created… a car vending machine.

It’s more like something you think of after gargling bong water. Is anyone surprised their business model isn’t sustainable?

Even Virgin Galactic’s business model is somewhat silly. They’re going to get rich people to pay them to shoot them into orbit for a few minutes before dropping back down to Earth for champagne and hors d’oeuvres.

We can’t think of anything more bougie.

And then there’s Nikola Motors, once run by charlatan Trevor Milton.

He convinced investors to pour billions into his company, which had made ZERO advances to a technology that has been around as long as disco.

This might sound obvious, but if you want to avoid getting sucked into terrible investments, take the following three steps:

1. Simplify the business to explain it as you would to a child (ChatGPT can help here)
2. Say that explanation out loud
3. See if it sounds dumb to you on its face

Chances are, if it sounds like a bad idea, it probably is.

But if you want something more substantial, ask yourself what the company’s competitive advantage is based on the four Ps of marketing:

1. 1. Product: The product is totally unique and revolutionary
   2. Place: You can get the product more easily where and when you need it
   3. Promotion: The brand is well-recognized or has a cult following
   4. Price: The company holds a sustainable cost-advantage

Some folks might argue Carvana had a cost advantage or unique product. Neither is true. If they had the first, they wouldn’t be teetering on bankruptcy. And if the second was true, people would be clamoring for their vending machines, which they aren’t.

Virgin Galactic certainly has a unique product. And it could develop a cult following of billionaires. But are folks going to keep shelling out half a million to fly up to orbit for a few hours? We doubt it.

Now that you know what these garbage companies look like, let’s talk about what causes them to rise like Lazarus from the tomb.

Easy Squeezy

Every stock has a certain number of shares available to trade, known as the float. These shares are either owned or sold short.

When a stock is sold short, a trader borrows the shares from their broker and sells them on the open market. They hope the stock drops so they can buy it back at a lower price, give it back to the broker and net the difference.

In essence, they make money when a stock goes down.

When you buy a stock, the worst thing that can happen is the stock goes to zero and you lose your investment.

Short sellers carry additional risk because, in theory, a stock has no limit to how high it can go.

That’s why short sellers have to use margin accounts. And many use leverage.

When too many traders bet against a stock, it creates the conditions for a short squeeze. We saw this happen acutely with GameStop, AMC Theaters and other meme stocks.

Let’s use Carvana as an example.

The company has almost a 100 million share float. Decent sized.

Until recently, more than 50% of those shares were sold short.

Before GameStop blew up, over 100% of the shares were sold short (yes, it’s possible using leverage and other financial loopholes).

So, you had a lot of people betting against Carvana.

Then the stock rose some 500% over about a month and a half, slowly at first, and then gained speed.

Yet roughly 50% of the shares remained sold short.

In a sense, short sellers were getting their butts handed to them, having to buy back the stock to stem their losses, sending the stock higher.

As they did that, even more folks came in and bet against the stock.

It’s like the front line of an outmatched brigade being replaced with another brigade.

So, when the company’s managers pulled forward earnings and announced that they had shored up their debt, buyers started to scoop up shares.

In a matter of minutes, the stock was up 50%.

What happened?

All those short sellers were forced by their brokers to cut their positions to stop the bleeding. They had to buy back the stock to close out the trade, sending shares up even more, causing more short sellers to get squeezed out, which became a cascade of buying.

You see parabolic moves on garbage stocks that go up and down quickly.

The buying stops once enough short sellers have been obliterated.

And it’s these moves where the opportunity lies…

It’s an Option

The biggest mistake most investors make is leaving themselves exposed to unnecessary risk.

Betting against Carvana should eventually work. But if you lose money for every penny the stock climbs, how long can you hold on?

That’s why options are one of the BEST instruments to play this volatility.

When you buy an option, you know EXACTLY how much you can win or lose from the outset. So, if the trade doesn’t work, your risk is limited to what you put in.

And when it does work, the leverage provided by options contracts makes that win even juicier.

That’s why Bryan Perry believes his EIGHT-MONTH MILLIONAIRE program is PERFECTLY POSITIONED for this market.

Think about where Carvana was back in November, trading near $10. It recently broke $55…

…or Nikola Motors when it was only $0.55 in early June, and it just hit $3.00…

Imagine where you could be in eight months…Click Here to See…