That the mercurial Musk’s tweets can whipsaw investment prices became evident in just the last few days.
The cryptocurrency, whose creators had conceived it as a parodic gloss on bitcoin using the shiba inu breed of dog as its icon, had accumulated a mass of followers thanks in part to Musk’s own tweets about it.
We’ve written at length about bitcoin, an asset “mined” via a computer algorithm, which its promoters tout as an alternative to government-issued and -backed currencies.
That’s what a performance artist calling himself Burnt Banksy did when he bought a print by the artist Banksy for $95,000 and, as a camera rolled, set it on fire.
Earlier this year, GameStop shares exploded in value as it became the lodestar for an army of small investors whipped into action by comments on the internet bulletin board Reddit.
GameStop shares, which had been trading for a few dollars each before the mania was launched, reached as high as $483 before falling back.
The 1920s, for example, featured the original Ponzi scheme, through which Charles Ponzi lured clients by promising returns of 50% in 90 days, purportedly from trading in international postal reply coupons.
Perils are heightened during periods of technological and social change.
Seeking to raise several millions of dollars in capital to take over a company but unwilling to reveal his target for fear of driving its price beyond his reach, Villard issued a prospectus for a “blind pool,” stating that he would reveal “the exact nature” of his plans 90 days hence.
More recently, hundreds of so-called Special Purpose Acquisition Companies, or SPACs, have raised billions of dollars for blind pools, which promise only to merge with another company they hope to find sometime in the near future.
Partnoy cautions that “in the rearview mirror, it’s always easy to say something was a fraud.
One is a long period of easy money fostered by the Federal Reserve’s policy of keeping interest rates low.
“You always want to have a balanced set of information about an asset,” Partnoy said.
Finally, there’s the attraction of what appear to be big gains by investors who got in at the ground floor.
“It’s always a smart thing to be early into a momentum trade,” says Webber.
Who is smart enough, however? Someone bought GameStop at $300, $400, or $483; those buyers have sustained massive losses based on its current price.
For all that GameStop looks to be insanely overvalued at $150 a share, one can make a case that the company could remake itself into an avatar of the video-gaming market of the future and justify its current valuation.
His seventh book, “Iron Empires: Robber Barons, Railroads, and the Making of Modern America,” has just been published by Houghton Mifflin Harcourt.