Robinhood Trader's Battle Cry: 'It's All Just a Game to Me'; Recast as 'Stimmies,' Federal Relief Checks Drive a Stock Buying Spree; Remote Work Is Here to Stay. Manhattan May Never Be the Same; A wild coincidence in Jackson Hole
1) The 25 stocks in my "Short Squeeze Bubble Basket" took a bath yesterday and are now down an average of 43% (all but three are down at least 25%) since I called the top in my January 27 e-mail.
But the carnage among many stocks popular with retail investors hasn't deterred these folks – at least not yet. In fact, many are boasting of their ignorance as they speculate madly, as this Wall Street Journal article notes: Robinhood Trader's Battle Cry: 'It's All Just a Game to Me.' Excerpt:
This isn't a bull market or a bear market. It's a know-nothing market.
Bragging rights used to go to those investors who worked the hardest at learning the most. Now the glory often goes to those who know the least and don't even care. That has turned the traditional investing hierarchy upside down, although it probably won't last.
"I don't know what the f– I'm doing," a young man said in a TikTok video in January. "I just know I'm making money." He added that he'd been trading stocks for only three days, but "just like that, made $300 for the day." In the next few weeks that young man, Danny Tran, racked up roughly 500,000 followers on TikTok.
At the WallStreetBets forum on Reddit, the online chat community, comments like "I can't read" and "I have no idea what I'm doing" are common. Users insult each other's – and their own – intelligence as terms of endearment and badges of honor. In February, commenters on WallStreetBets called themselves "stupid," "idiot," or related terms 3,550 times, according to TopStonks.com, which tracks stocks mentioned on Reddit and other sites.
I've said it before and I'll say it again: This will end badly.
If you're reading this, I suspect odds are very high that you're not engaging in such foolishness... but if you are, STOP!
Investing isn't a game. Saving money and investing it prudently so that it compounds over time is one of the most important things you can do to ensure a life of choices, happiness, and generosity. Don't squander your hard-earned money by getting sucked into the casino that's increasingly (and sadly) at everyone's fingertips!
2) The latest stimulus checks are one of the things fueling the market – and the speculation – as this New York Times article details: Recast as 'Stimmies,' Federal Relief Checks Drive a Stock Buying Spree. Excerpt:
The speculative appetite of small investors like Mr. Sanchez may seem at odds with an economy still reeling from a pandemic that has killed more than half a million Americans, decimated jobs, and snuffed out businesses and livelihoods. But one of the biggest tools deployed by the U.S. government to cushion the economic blow – stimulus payments – is also driving a huge surge in investing by small traders.
Analysts at Deutsche Bank recently estimated that as much as $170 billion from the latest round of stimulus payments could flow into the stock market. They conducted a survey of retail traders in which respondents said they planned to put roughly 40% of any payment they received – or $2 of every $5 – into the stock market. Traders between the ages of 25 and 34 said they expected to put half of their stimulus check into stocks.
"That could lead to a bit more mania, speculation in the market," said Patrick Fruzzetti, managing director and partner at Hightower Advisors, an investment firm. The "stimmies," he said – using a popular online term for stimulus checks – will go into people's trading accounts, and "they will trade."
For a decade before the pandemic, small investors accounted for roughly a tenth of trading activity in the stock market. But in the last year, they have become responsible for close to a quarter, according to Goldman Sachs analysts.
3) After finishing Harvard Business School in May 1994, I moved to New York City, following my wife Susan, who'd graduated from Harvard Law School a year earlier and taken a job in the city.
Having lived in New England since sixth grade and rooting for the Red Sox (and hating the Yankees), I wasn't very happy to be moving to big, dirty, dangerous New York. As soon as we had kids (our first of three daughters was born two years later), we planned to move to the suburbs.
But then New York grew on us... and we came to love it. (I don't even hate the Yankees anymore – though I remain loyal to my beloved Red Sox!) We've never once considered leaving, even now that my wife isn't working and I can work from anywhere.
But the pandemic has walloped our city, which is in rough shape right now. The tax base is highly dependent on two things: real estate and the uber-wealthy – and it's not clear when and to what extent either is coming back.
I remain cautiously optimistic, but a full recovery may take many, many years...
Here's an insightful article on this topic from yesterday's New York Times: Remote Work Is Here to Stay. Manhattan May Never Be the Same. Excerpt:
A year after the coronavirus sparked an extraordinary exodus of workers from office buildings, what had seemed like a short-term inconvenience is now clearly becoming a permanent and tectonic shift in how and where people work. Employers and employees have both embraced the advantages of remote work, including lower office costs and greater flexibility for employees, especially those with families...
But no city in the United States, and perhaps the world, must reckon with this transformation more than New York, and in particular Manhattan, an island whose economy has been sustained, from the corner hot dog vendor to Broadway theaters, by more than 1.6 million commuters every day.
Commercial landlords in Manhattan entered 2020 with optimism, riding a steady demand for office space, record asking prices in some neighborhoods and the largest construction boom since the 1980s. But that collapsed overnight. Property owners suddenly found themselves chasing after unpaid rent, negotiating repayment plans with tenants and offering deep discounts to fill empty space...
Still, about 90% of Manhattan office workers are working remotely, a rate that has remained unchanged for months, according to a recent survey of major employers by the Partnership for New York City, an influential business group, which estimated that less than half of office workers would return by September.
Across Midtown and Lower Manhattan, the country's two largest central business districts, there has never been more office space – 16.4% – for lease, much higher than in past crises, including after the Sept. 11 terror attacks in 2001 and the Great Recession in 2008.
As more companies push back dates for returning to offices and make at least some remote work a permanent policy, the consequences for New York could be far-reaching, not just for the city's restaurants, coffee shops and other small businesses, but for municipal finances, which depend heavily on commercial real estate.
4) By total chance, our dear friend Karen, who lives in Chicago, is here in Jackson Hole this week with her three children.
She was the maid of honor at our wedding 27 and a half years ago – she's circled in this picture (10 points if you recognize the guy next to my wife – before his hair turned gray!):
We had a great time skiing together – as you can see, it's warm and sunny spring skiing!
Best regards,
Whitney