twinkie-snack-cake

Today’s announcement that Hostess is going out of business has sent tremors through investing circles.*

“People are hoarding,” comments a checkout clerk at Gristedes on Manhattan’s 54th Street. “The shelves are bare.”

Within minutes of the announcement, single packs of the tasty yellow treats were seen popping up on eBay with “Buy it Now” prices set as high as $75. Quick to spot a trend, speculators in Tokyo, New York, London and Toronto started acquiring them by the caseload, and advisors have been telling clients to jump on the bandwagon.

Read: When bubbles burst, clients suffer

“I’ve instructed my clients to buy, buy, buy and hold, hold, hold,” says Nathanial Withermarque III, an investment advisor in Halifax. “One of my clients now has a garage full after a midnight run to Costco. She’s going to cash in big.”

Others aren’t so sure.

“C’mon. Are you kidding me? Twinkies?” says Ramon Ridallo, a penny stocks trader still bailing water out of his lower Manhattan office. “I mean tech stocks and tulip bulbs, sure. Those were buys worth making. But Twinkies? I smell a bubble.”

Read: Income products: the next bubble?

Such concerns haven’t stopped conversations in London about renaming the FTSE 100 index the Twinkie 100. “We only have to change a few letters,” notes a City floor runner who spoke on condition of anonymity. “Plus, it gives us an index replication basis for dozens of new ETFs.”

And, notes Withermarque, Twinkies have more staying power than past bubble drivers.

“Times change. Tulips only bloom so many times. Computers become outmoded. Mortgage strips on houses built so poorly they won’t last for 30 years aren’t worth the paper they’re printed on,” he notes. “But Twinkies, those bad boys can withstand nuclear war.”

*Yes, this is a Friday Funnies satire.

Originally published on Advisor.ca

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