Oil, Bubbles, And Gamestop

Oil, Bubbles, And Gamestop

For oil traders, the brouhaha surrounding the Gamestop stock price spike is familiar, but also to fans of Charles Dickens, who, in Nicholas Nickleby, described a similar sensation involving the United Metropolitan Improved Hot Muffin and Crumpet Hot Baking and Punctual Delivery Company. The firm was promoted by numerous highly-regarded fellows as promising to elevate the situation of the working class by providing them with hot, nutritious breakfasts. This was a classic case of what is now known as 'pump and dump,' wherein speculators talk up a stock's price and then sell out.

Of course, Gamestop



GME

is a real company with a real business as opposed to hypothetical crumpets but that is not to say that the recent stock price is warranted by what are known as fundamentals. Ay, there's the rub, as my broker Hamlet would say. Fundamentals are not always fundamental, as they arguably include a dose of perception and expectations: today's P/E ratio matters, but is not the only factor entering into the valuation of an equity.

This can include expectations about the length of the pandemic, economic growth and consumer income in coming months, the extent to which consumers return to