Wednesday's Market Minute: Greed All The Way Down

Everybody is pretending to be in awe of GameStop Corp. GME, when in reality we all know it’s perfectly in line with everything that's been going on for months. You can do all the short interest math and gamma calculations you want, but the simple explanation that everyone knows and few want to admit is that we all have too much money and time, and nobody knows what to do with it.

The global economy went into the toilet and everyone got richer. Everyone. From the billionaires down to the average Joe and Jane, who even in their joblessness ended up with more income and savings in 2020 than they thought they would at the start of the year. It may not have been a fun year, but it was an enriching one, and it makes no damn sense.

It’s not “The Fed’s fault.” It’s the Fed, the politicians eager to promise the biggest check, and good old-fashioned greed all the way down. The Fed can’t be at fault because it’s not in control. It hasn’t been since Jay Powell caved to White House and Wall Street pressure in 2018 and slashed rates during the easiest financial conditions ever because the S&P actually went down for once.

It’s been pure froth ever since; market gains explained entirely by multiple expansion, because the rules have changed: stocks can only go up, so you might as well get in front. GameStop may be the most egregious example yet, but traders have been piling into lotto tickets all year, because nobody wants to miss out when everyone else is getting rich, and the people who aren’t are doing a good job pretending to on Instagram. And what assures us everything’s OK? That it’s “not as crazy as dot-com!” That’s how bad the cognitive dissonance is right now.

Our benchmark for what’s normal is the greatest speculative craze in stock market history, fueled by the most groundbreaking technological development (the Internet) possibly in the history of mankind. The risks are not like then, they’re not like the Housing Crisis, and not like the Depression. But the driving force is the exact same as always: tremendous greed that will come with a cost.

Photo by Alexander Schimmeck on Unsplash