The most important roundup of news for AMC March 26 2021

“Big Banks” force hedge fund Archegos to liquidate $20 billion in assets (most notably, shares/swaps of Discovery Channel and ViacomCBS, which caused the PPS of each stock to plummet)

PUBLIC SERVICE ANNOUNCEMENT:

Remember, it’s just as important to protect your existing assets as it is to make new money.

Over the last several months, I’ve been strategically liquidating every stock in my portfolio that doesn’t start with “A” and end with “C.”  As soon as I’m able to take a modest profit of at least 5%, I’ve sold.  Why?  I believe that the fall is coming.  When AMC squeezes, there will be a domino effect of hedge funds getting margin-called one after the other.  They won’t have a choice as to which of their holdings get liquidated by the “big banks.”  So, no stock will be safe from the slaughter.

For example, if a particular, margin-called hedge fund holds 1,000,000 shares of Apple, guess what: those 1,000,000 shares of Apple may be randomly force-liquidated to cover that hedge fund’s short debt in AMC.  Why should you care?  Well, that sale of 1,000,000 shares of Apple will cause Apple’s share price to fall, likely dramatically.  If you hold shares of Apple, your investment will lose value.  That is exactly what we saw happen to Discovery Channel (DISCA) and ViacomCBS (VIAC) when Archegos got margin-called on March 26.  Credit Suisse, Nomura, UBS, Deutsche Bank, Goldman Sachs, and Morgan Stanley liquidated Archegos’ holdings in DISCA and VIAC.  In just a couple of days, DISCA dropped 46% ($77.27 to $41.23) and VIAC dropped 55% ($100.34 to $45.01).  That, in turn, caused a general market sell-off across virtually all stocks.  Keep in mind that when the hedge funds that are shorting AMC get liquidated, the impact on the market will dwarf that which we saw in the aftermath of Archegos’ liquidation.  In preparation, I choose to lock-in my gains and minimize my exposure to the broader market.  When AMC squeezes, not only will I make a killing in AMC, but I’ll also back up the truck to purchase a ton of Apple and other depressed blue chips with all of the cash that I’ve protected and set aside.