Industry trade

Market meme frenzy, 90s day trading


The market conditions and technology in AMC Entertainment’s current stock mania are very different from day trading during the dot-com bubble of the late 1990s, the online brokerage pioneer and former trader told CNBC on Friday. options Tom Sosnoff.

“There is no comparison between the day traders of 1999-2000 and that first transition to online trading, than what we see today,” said Sosnoff, who in 1999 co-founded Thinkorswim.

“It’s completely different” from the far superior trading technology offered by the online brokerage industry these days to commission-free trading, he said on “Squawk Box”. “Remember back then, you were basically cut off living with the bid-ask differential as well as the commissions and fees.”

Retail investors can now better compete with the pros on speed of trading while achieving extremely thin bid-ask spreads, Sosnoff said. Bid-ask spreads are the difference between what buyers are willing to pay and sellers want securities.

Sosnoff launched the TastyTrade Online Financial Network in 2011. Six years later, Tastyworks Online Brokerage was founded.

“It’s different from 1999. It’s different in 2008. The number of players today and the amount of capital today are huge compared to what we saw” when it was mostly professionals who indulged in large-scale speculation, Sosnoff said, referring to the recent surge in retail traders fueled by Reddit.

“What you see is an entire generation is getting involved. So instead of waiting until they’re 50 or 60 and trying to figure out what the markets are, they do it when they are. are 22 or 23 years old. is a generational movement, “he added.

This “generational move” plays out in a grand way in this week’s mad rush for AMC investors who saw the stock roughly double on Wednesday, lose nearly 18% on Thursday and fluctuate between gains and losses on Friday.

“It’s definitely the retail investor that dominates,” Sosnoff said, as other meme stocks such as Bed Bath & Beyond, BlackBerry and GameStop also saw high volatility this week. Sosnoff said he was not worried that a generation of investors would leave the market altogether if trading in stocks even ended badly, which happened when the dot-com bubble burst from 2000.

“People are looking for speculation. Speculation is what turns them on. I think the opportunity to participate in something speculative that you think you own, I think is a very good thing. “Commitment. It’s good for the markets. I think it’s good for the future of finance,” he said.

At the same time, Sosnoff said AMC’s decision to sell shares generating around $ 800 million in cash and an offer of investor support to sell an additional 25 million shares are smart decisions by CEO Adam Aron.

“If you’re running AMC and you’ve been given this essentially gift horse and you have the ability to float more stocks, you have to do that. That’s what’s in the best interest of your business and for the best interests of your long term, term shareholders and everything, ”he said.“ It’s just taking advantage of opportunities. That’s what good CEOs do. “

Sosnoff brought over 20 years to the Chicago Board Options Exchange to the online brokerage industry. He said he was a trader at heart.

“In fact, I’m short in the market right now,” Sosnoff said, meaning he’s betting against the entire stock market. “I like strategies where you’re basically short in the market and short a certain premium. I like to sell volatility. So for me personally, I prefer to be short in the market and lean into volatility a bit. . It’s just a strategy. “

Disclosure: Thinkorswim was sold to TD Ameritrade in 2009. TD Ameritrade, in turn, merged with Charles Schwab Last year.



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