How Robinhood gets users addicted, plus Cathie Wood talks Tesla and GameStop

Summary List PlacementHello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through what’s been happening in markets, as well as what to expect in the coming weeks. Here’s what’s on the docket:

We spoke to 10 users and industry experts to find out how Robinhood has let the gamification of trading. We specifically focused on the platform’s digital interface, and the tricks it uses to get young users hooked.
Cathie Wood and her team break down the implications of Tesla’s $1.5 billion bitcoin investment, and also share the investment case for the Chinese stock behind the audio chat app Clubhouse.
A hedge fund manager who literally wrote the book on short-selling discusses how he evaded the short squeeze on meme stocks, and shares what stocks he’s buying.

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Have thoughts on the newsletter? Just want to talk markets? Feel free to drop me a line at jciolli@insider.com or on Twitter @JoeCiolli.

Your weekly outlook
The past week saw the market zeitgeist shift somewhat away from the pesky day-trading rascals on Reddit and towards bitcoin, which repeatedly set new records. The red-hot cryptocurrency got a coveted co-sign from Tesla, which said that it bought $1.5 billion worth and would start accepting it as payment.
It then surged even more to all-time highs after further adoption from the likes of Mastercard and BNY Mellon. With bitcoin now back at record highs, some age-old questions will persist over the coming weeks: Can increasingly widespread adoption continue to offset concerns the coin’s price is overextended? And who else will follow the lead of these high-profile companies?
But the return of crypto didn’t mean all was quiet on the Reddit front. There was significant day-trader interest around cannabis stocks throughout the week, pegged to expectations that federal legalization will gather steam under the Biden administration. Volume for options — the preferred investing vehicle for risk-hungry Wall Street Bets users — surged to records.
The initial pop in cannabis names did quickly subside, raising questions of whether the Reddit crowd will again be able to achieve the level of consensus and interest that made its GameStop wager so effective. The sudden interest in the cannabis space also showed the unpredictability of the Reddit cohort, which seems to shift its focus at a moment’s notice.
Lastly, stimulus will remain at top of mind for investors this coming week, even if progress has been slow and frustrating at times. The market still responds immediately to any sort of incremental development, so keep an eye out for guidance from politicans or further package details.

The design features that make Robinhood so addictive

By all indications, Robinhood has become the investing app for beginner retail traders. Its sleek design, flashy features, and simple interface have attracted 13 million users since 2013. Insider spoke with 10 users and industry experts to find out how Robinhood has transformed trading.
Read the full story here:
GENERATION ROBINHOOD: How the trading app conditioned its inexperienced users to obsessively play the market

Cathie Wood & Co. discuss Tesla, GameStop, and the Chinese stock behind Clubhouse

Last week Ark CEO Cathie Wood said stocks are not in a bubble, but bonds are. She and her team break down the implications of Tesla’s $1.5 billion bitcoin investment, and also share the investment case for the Chinese stock behind the audio chat app Clubhouse.
Read the full story here:
Cathie Wood and her analysts discuss why Tesla’s $1.5 billion bitcoin purchase could trigger a wave of corporate investments, the fallout of the GameStop-AMC phenomenon, and their bullish views on the Chinese stock behind Clubhouse

Short-selling strategies from the man who wrote the book on it

Nitin Sacheti is the founder and portfolio manager of Papyrus Capital, a long/short hedge fund. In a book called “Downside Protection,” Sacheti detailed his unique short-selling strategy. He breaks down how he evaded the short squeeze on meme stocks, and shares what stocks he’s buying.
Read the full story here:
A hedge fund manager who wrote a definitive book on short-selling breaks down how his strategy helped him evade the squeeze on GameStop — and shares what types of stocks he’s buying and shorting now

Stock pick central
Seeking experts who are willing to name names? Look no further:

RBC says to buy these 15 stocks as small companies keep dominating the market — and details why each is a top pick for 2021
GOLDMAN SACHS: Buy these 26 ‘best of both worlds’ stocks set to soar with economic recovery even if interest rates stay low
Bank of America says buy these 17 under-owned stocks that are set to benefit from a faster economic recovery and improved COVID response
Credit Suisse says to buy these 16 ‘highest-conviction’ stock picks that are set to outperform despite the market’s contrarian view
Barclays says buy these 33 beaten-down stocks that are perfectly poised to capitalize on the reopening of the economy in the years ahead
These 3 cannabis stocks are ‘poised to be market leaders’ and have the infrastructure to grab up industry share when federal legalization happens in the US, according to an analyst for the top-performing ETF in the world this year
JPMorgan says 2021 is a stock-picker’s paradise offering big money-making opportunities. Here are the firm’s 22 highest-conviction small-cap investment ideas.
GOLDMAN SACHS: Buy these 13 stocks poised to benefit from surging commodity costs — including 2 set to soar by more than 40%
BANK OF AMERICA: Buy these 7 online-retail stocks that are ‘structural winners’ set to build on strong 2020 gains — including one with 41% upside
A wealth management research chief shares 6 stock-market sectors to buy as the country reopens and the economy experiences its ‘best single year of GDP growth since 2000’
Bank of America shares 9 stocks to buy as the pandemic prompts consumers to shift their spending habits towards ‘solitary leisure’ activities like golf and biking
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