Here's one for what's left of fans of the Efficient Market Hypothesis: having stampeded into Hertz stock as it was plunging over the past three months, one would expect this bizarre BTFDing to end after the auto rental giant filed for bankruptcy. After all, with the company set to equitize billions in debt, there will be zero left for existing equityholders.
One would be wrong: not only has the retail stampede of Robin Hood traders into bankrupt HTZ not moderated, but in the week since the company sought bankruptcy protection, the number of Robinhood holders of the worthless stock has increased by a 50%, hitting a record high 60K according to Robin Track.
And while one can, in theory, explain this ludicrous and relentless euphoria to the perpetual BTFD "strategy" spawned by central banks, which now step in every single time there is a modest market pullback, at this point one just has to sit back and laugh at the idiocy that Powell's "market" has become.
Or maybe retail investors will have the last laugh after all, as Powell will one day shock the algos and the veteran Robinhood millennial traders, and announce it will buy Hertz stock. After all, as we first reported last weekend, it already owns defaulted HTZ bonds via the various junk ETFs it has been buying in recent weeks. At this point, Powell may as well go all in.