Okay folks, so there is a pretty insane story that just happened: The story of HKD stock HKD which is the ticker for a very unknown Hong Kong based company called Amtd Digital enters the market on July 15th. well as that day were 12 dollars and five cents over the coming weeks leading up to about two days ago, while the stock went all the way up to Highs at 2 555 bucks which is a casual 21 103 increase and a little bit less than a month. And comparing that to the S P 500's year-to-date return of about negative 13 and you may be wondering why you didn't just invest in HKD And with those kinds of numbers, it's only a matter of time before the experts start pitching HKD as the newest Financial instrument Four soon to be retirees shares of HKD are a very very important part of your 401k. Sally Put it right next to the Terra Luna that I recommended you buy last year.

And don't forget to keep paying me that five percent management fee I Need that for my Mercedes-Benz payments. But anyways, folks, I Want to get into what the heck happened with the stock? How did it so quickly and without anybody really knowing what it is? become one of the most valuable companies in the world in the span of about a month with a market cap of 400 billion dollars. At some points it passed the likes of companies like Goldman Sachs, Bank of America and JP Morgan despite the fact that it only had about 25 million dollars in Revenue. What are the main lessons that we can take away from this and what does it mean for the market moving forward? We're going to get right into that.

but of course this video is sponsored by Zip Trader you and our recession 50 50 off coupon code join us today to get lifetime access to our step-by-step lessons, private chat, daily morning briefings as well as our full price Target list and other training resources. I'm heading up to Vancouver this weekend and I won't be posting until Tuesday but we will continue to do the briefings as scheduled 30 minutes prior to Market open each day that the market is open. So if you do want to follow up with those and my thoughts on the evolving Monkeypox trade which by the way, Apdn. Oof what a time! Today it doubled after dipping from its pre previous highs and made a new Peak But if you do want to keep up to date with our lifetime access to the program, make sure to check it out below.

So if you want to know what in the world can make a company that barely anybody has heard of it has only 25 million dollars in sales, go to a market cap that is 8 000 times plus the yearly Revenue Well, there is one word that starts with a C and explains it all. Wait, uh no, not that one uh calculation tactic. Firstly, to understand what happened here, you have to understand the formula that goes into calculating market cap. If you have a company with a 400 billion dollar market cap, you may assume that there are 400 billion dollars invested in it, but that is not true.

That is a very popular but untrue misconception. Market cap is actually simply share price times shares outstanding. If you have 10 shares selling at a share price of ten dollars, then your market cap is 100, right? 10 times 10 equals one hundred. This is a simple concept to understand, but where it gets a little bit more dicey is how share prices are calculated.

Share prices are determined by the most recent prices that shares are selling at, and that often makes a lot of sense. Apple Stock, for example, trades tens of millions of shares a day, and if that's resulting in prices around 165 bucks, then that's probably a fairly reasonable estimate on what you can get if you sell your Apple shares on the open market today, But it gets a lot more dicey when you start talking about illiquid stocks. For example, if you have a hundred shares outstanding of Charlie stock and 99 of them are being held by their owners and just one of them is sold and it's sold for fifty dollars. Well, that means that that one share that is sold sets the share price for all of them, because that's the most recently sold share.

That's the only transaction that the market has to go off of. So it sets the price for all of them. And thus the share price for all of the Charlie Shares are now registered at fifty dollars. Which means that in terms of market cap, the market cap of Charlie Charlie shares in totality is considered to be five thousand dollars, which is just almost enough to buy an avocado protest down in Santa Monica.

Now, if more of the outstanding Charlie shares get sold on the market and they sell lower, well, the share price will go down and thus the overall market cap will as well. Not as long as they aren't being traded, the ones that are being traded and the ones that are being sold are the ones that are setting the price of Charlie's stock and thus the market cap of Charlie stock. You can kind of see how this is a flawed metric for setting market cap right because it's just determined by what the shares that are available are selling for. but it doesn't take into consideration the many, many shares that aren't being sold, right? But at its core, I mean it's still dictated by the laws of supply and demand.

If one company has barely any shares in Supply and there's just a little bit of demand, it could cause the prices to Rock It versus another stock that has 50 times more demand. but the supply is a lot higher so it doesn't shoot up as much, right? It just depends on the distinction between the two. Now again, with most stocks like Apple, there's a lot of shares outstanding and a lot of shares that are being traded constantly. If you are in a very, very liquid Market Every single penny that you move, there's a new wave of buyers and sellers, which means that it's much more difficult to motivate insane price swings, right? Because somebody's making the decision to buy or sell at every single level along the journey, right? There's a lot of Supply Obviously, rapid shifts and supply and demand still happen, but it's not as extreme.

It takes a lot more money to move a big company like an Apple, right? But let's say that you go back to an illiquid Charlie stock where it's really hard to find shares to buy because everyone wants to hold their shares. But then let's say that Margot Robbie goes and watches the zip Trader YouTube channel and hey, Charlie really gets her engines going and she's like, give me some of that Charlie Well, in that situation, she's obviously going to decide that she just can't resist buying at least one Charlie share. But what happens when all of the people with Charlie Shares are holding and they refuse to sell even though the last share might have sold at fifty dollars? Margo finds that when she puts in the limit order to get executed at that price, it just doesn't execute. No one wants to sell those Charlie shares to her at that price.

But of course she just has to have a Charlie share. So she keeps increasing her bid again and again and again until she finds a seller that's willing to sell. Let's say that the level she reaches is 10 million dollars for one Charlie share. Well guess what happens is she buys a share of Charlie stock for 10 million dollars.

Now the new stock price of Charlie stock is 10 million dollars. Which means the market cap is 10 million dollars times the shares outstanding, which is 100 and that equals 1 billion dollars. Now does that mean if other holders of Charlie stock decide to sell that the stock won't plummet. Does that mean that there are other buyers in the market that are willing to buy Charlie shares at 10 million dollars? No, it doesn't mean that at all.

It just means that the last price that was sold at was 10 million dollars. The point is, if you have a very, very illiquid name, there are simply no Supply available and thus, demand spikes can cause huge, huge increases in share price and also corresponding the market cap. But where it gets a little bit freaky is, think about what happens when a share price goes up really rapidly and the market cap goes up really rapidly. While it attracts new buyers who are thinking, oof, this thing's up three four hundred percent I better buy in two All of a sudden they start rallying up the price and more and more people come in and they start rallying up the price.

And that's why you actually see some of the worst forms of stock market manipulation in very illiquid names because if it's very, very liquid, it doesn't take much Capital to get the stock really rallying and once it's really rallying, everybody else is going to see that and be like oh, it's time to buy in after you, it's not too uncommon, or you have very, very illiquid stocks seeing some big buying pressure, bidding prices up higher and higher with a small amount of capital going into the stock and then all of a sudden because the stock is up, you see huge swarms of massive Capital following and after causing those original buyers to be very profita very profitable Now I Do want to be completely clear: I'm not making any inferences that anybody has done something like this: I'm using a hypothetical example on a hypothetical stock called Charlie stock NOW Inference: It's about real companies or institutions or players in the market personally and I will take this to the Grave I Believe that the stock Market is 100 fair and everybody plays by the rules and it's really all about making each other money. It's kind of like a big Kumbaya The only people that I believe are causing problems in this market are really just those dirty, greedy retail traders that get together on forms like Reddit and share opinions. Those people are disgusting and they're trying to fleece some of the hard-working men and women who are serving this country on Wall Street in the Hamptons in their country clubs on Palm Beach people that are only trying to make some extra profit so they can park it in the Caymans Please stop blaming them and please continue focusing on the retail traders who are literally just in this market to fleece disgusting pathetic human beings who think they can play with the big boys but also are somehow dangerous to the big boys. But anyways, you go back to: HKD The media is saying that this is caused by a retail Army pouring in and pumping prices Bloomberg Reported earlier this week obscure us listed China Stock scores 520 as retail Army piles in company was the most bought stock on Fidelity's trading platform.

CNBC calls it a 300 billion dollar meme stock relates it to Gme Media article after media article points the finger that Retail for popping this up. However, there is a very, very big difference between this and the meme stocks that we saw of last year. The difference between something like a Gme and an AMC and something like an HKD is that people were buying those stocks to stick it to the short Sellers and squeeze them out with this one. There's virtually no shorting and it started rallying outside of something that isn't even retail.

Bloomberg admits quote at one point Tuesday its market value Rose above 400 billion dollars with the bulk of that coming from from its Class B shares which aren't publicly traded. So again, the idea that retail stemmed this run is disproved by the fact that the bulk of the move was actually induced by Class B shares which aren't publicly traded and Retail does not have access to class B Shares are usually held by promoters, institutional investors, managers at the highest ranks of the company, so on, and so forth. so more likely in my opinion in my opinion alone. What happened is that whatever buying activity went on in this incredibly low liquid stock at the class B level caused the share price to jump up rapidly, with probably relatively modest amounts of money invested here.

And then you had, of course, your retail momentum Traders Seeing this and saying oh, it's rotting time to buy in to try to ride the wave And that caused prices to go up even faster, which was kind of a bit of a bull trap, right? And then all of a sudden the ones that didn't get out got totally trapped. But the people who were buying those Class B shares and pushing and stemming that original rally ended up making a ton of money. and if they sold, really locked in a lot of game. But even if they didn't sell yet, it's still up a lot.

and it doesn't take much money at a liquid levels of volume to actually jump share prices right? If you have like a hundred thousand dollar buy order that could have pumped this price even a hundred million dollars, it could have a thousand x times the price appreciation effect based on how illiquid it is that increase over such a short time period. Then causes more people in the market to notice it and then they all of a sudden go and start buying in getting trapped in the overall wave that somebody else just started which causes the prices to shoot up even faster. and then the original buyers who started pumping it all of a sudden are sitting on very very big gains if they ended up selling it which we don't know yet what happened, but if they ended up selling it, then they locked in a lot. Now that is just my opinion on what happened.

Only somebody that has the forensic ability to go through and look at each of the trades and see when they bought and when they sold or if they sold would be able to tell you. conclusively. Unfortunately I Can't think of like a Securities enforcement agency that could help us with this problem. I Wish somebody would make that something that like is funded by taxpayer dollars and like represents the taxpayer.

Can't think of an agency like that. But anyways, HKD in totality ran so much because there was so little liquidity that even buying a few shares would cause the price to jump and when it started jumping, lots of people bought it afterwards also. PSA I Talked about this in the beginning, but I am leaving to go to Vancouver until Tuesday zip Trader You daily morning briefings will go on as planned and you'll still be able to get your 50 off if you use coupon code recession 50. But just to give you an idea on where our heads are at right now, a lot of our focus is on the Monkey Pox trade right now, like Apdn which just had another run today after it's lugged down.

In fact, it jumped from three to seven thirty five today, which is a new Peak. On Wednesday's video, we talked about how I thought Apdn would likely have one last pre-market hurray before selling off and then going on to rebound. It has since done that, albeit in a much shorter time Horizon than I had thought thanks to the National Emergency announcement today. but as the Monkey POG situation unfortunately develops which it seems like it's multiplying very, very rapidly, well I continue to see different opportunities in Monkeypox stocks.

I Don't know that Apdn will continue to hold much relevancy after a week or two more of this, because they have already started to try to dilute with that offering that they announced this morning. But we will keep you up to date as we see more and more new opportunities anyways. have a great rest of your day and enjoy your weekend.