What caught my eye this week.
The sky above the port was the color of television, tuned to a dead channel.
So runs the first sentence of William Gibson’s Neuromancer, a book I first read as an 11-year-old and have judged technology against ever since.
As one of the first few thousand people in the UK to encounter the ‘World Wide Web’ in the very early 1990s, I half-saw Neuromancer becoming half-true.
Admittedly I wasn’t sliding through coloured shards of anti-viral software in a 3D manifestation of hyperspace.
But I was chatting to equally astonished kids in faraway Hyderabad. And I had an alternate life as a Dwarven catburgler in a multiplayer text-based MUD.
It was the shape of things to come.
All together now
To be honest, I’ve not re-read Neuromancer for 20 years. Which is probably why reality seems to be catching up, regardless of what Gibson actually wrote.
For example, I remember a scene in which a flash mob is summoned as some kind of tactical distraction, and the attendant street punks and ne’er-do-wells cause mass chaos both on the ground (or in ‘meatspace’, as the cyberpunks called it) and across various digital venues.
I’m not sure this scene takes place. Thinking about it now, I suspect it might have been in one of the sequels.
But it certainly should have been in an early Gibson novel, because the man was a visionary about the unintended consequences of hooking humanity up to – and together with – technology, and those consequences are running amok in the stock market today.
How else to explain the loony activity we now routinely see in the stock market each week?
Shares in the hitherto struggling operator doubled in a day. At one point it was up around 30-fold for the year. A giant push by retail traders from Reddit (and piling-in professionals) took the market cap to $30 billion.
Showing a commendable nimbleness at getting with the program, AMC management first wooed its new small owners with free popcorn. It then (rightly) dumped a load of new shares on the market to raise hundreds of millions of dollars the next day.
So AMC’s future (though not its sky-high valuation) looks assured for now. All without a corporate restructuring or a tense boardroom meeting with bankers on Wall Street in sight.
In some corners of the market, this is how the game is played these days.
It’s fake it until you make it on a corporate scale.
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It makes me feel old, if I’m honest. As Ben Carlson writes on his blog:
The strange thing about this meme stock saga is we have and have not seen this movie before.
Yes, speculation is as old as the hills and that part of the markets will never go away.
But this is also very different from past excess.
This isn’t some hot new innovation people are bidding up in hopes it becomes the next big thing. This is a company people know is not worth its current value. No one is even pretending that’s true.
This is the internet bleeding into the markets in a big way. It’s a coordinated viral meme working its way through the stock market.
Ben nails it here. Like him, I believe the frictionless physics of the Internet has found its real-world proxy in the shadow theater of the financial markets, and the Internet-raised youngsters are having a field day.
And so, increasingly, are the professionals. Hedge funds struggling to gain alpha in the mostly-efficient market must see excess irrationality to be gorged upon in these recurring bouts of zania.
As Michael Batnick puts it:
Small money might have lit the match, but big money is pouring gasoline on the fire.
Indeed while it’s still tempting to dismiss the meme stock pops and flops as an short-term consequence of bored lockdown trading, we can also see the outlines of how history will remember this era in wider market trends.
For another incarnation of the zeitgeist, see the SPAC boom in the US. That’s seen hundreds of companies raise many, many billions for what are euphemistically called ‘blank cheque companies’.
You might argue there’s a legitimate case to take companies public this way, especially if you’re one of the key promoters who got unfathomably wealthy from mad fad.
But that doesn’t explain SPAC’s sudden explosion in popularity. Cheap money and this Fake It ‘Til The Market Makes It mindset does.
Then of course there’s crypto, and Elon Musk sending Bitcoin hither and thither with a Tweet. Once an outlandish outsider, Musk’s antics over the past few years are starting to seem like they were the shape of things to come, like a Shane Warne or John McEnroe of the markets.
Retire to a quiet room
Some old hands see a return to normality with crypto recently crashing, SPAC enthusiasm dying down, and the price of the frothier tech shares also falling.
Short of the punchbowl suddenly getting yanked by either the markets or by Central Banks, I suspect Josh Brown may be more on the money in a brilliant essay for Fortune:
Jerry’s not on Twitter. He’s tired of hearing about all the rhetorical twists and turns on the app that are constantly pushing his stocks around.
Sports commentators and actors turned venture capitalists are causing gyrations in the value of his retirement portfolio with their online antics.
Remember when stocks traded on fundamentals? Or at least they traded based on people’s perceptions of the fundamentals. What do they trade on today? It was always a popularity contest. Now it’s a three-ring circus.
It makes no sense. Jerry is tired.
Upstairs there’s a burst of excitement, the sound of a young man cheering. It’s Jerry’s kid, Aiden.
Aiden’s been out of school for years. He’s making as much as Jerry did 30 years ago.
Josh says your father’s stock market is never coming back.
I wonder if it’s all another sign that William Gibson’s surreal sci-fi future is rushing forward.
Have a great weekend everyone. Fingers crossed for 21 June, eh?
Managing an investment portfolio: how to keep it on track – Monevator
Learning Cantonese and learning investing – Monevator
From the archive-ator: Understanding the low interest rate era – Monevator
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First-time buyers in England offered homes at up to 50%-off – Guardian
UK house prices jump by 10.9%, the fastest in seven years – Reuters
Brexit-supporting Wetherspoons’ boss wants more EU migration – Sky News
G7 nations confident of reaching a global tech tax deal – BBC
US adds 559,000 jobs in May as fears of hiring slowdown fade – Guardian
Crypto mining booms on subsidised energy in Argentina – MSN
A bet on emerging market outperformance is a bet against the US dollar – Factor Research
Products and services
Employer perks you could be missing out on – ThisIsMoney
Clone investment scams: what are they and how to spot them – Hargreaves Lansdown
It’s time to lock into a cheap fixed-rate mortgage – ThisIsMoney
Could you get a better savings rate from a bank you’ve never heard of? – Which
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade
By 2024 just 7% of shop payments will be in cash, predicts report – Guardian
Why advisers are moving towards retainer-based fees – Think Advisor
Homes for sale for flexible workers, in pictures – Guardian
Comment and opinion
In defence of buy-to-let landlords [Search result] – FT
Three types of enough – Calibrating Capital
Couples need £26,000 a year to be content in retirement – Which
Is $1 million still worth $1 million? – Of Dollars and Data
Too frugal for me – Humble Dollar
A bear case for future stock market returns – Banker on Fire
How inverted thinking can improve your investing – Acorns
Natural selection favours index funds – A Teachable Moment
It’s a weird time to be an investor – Abnormal Returns
Now that’s what I call financial independence: 26 – The Escape Artist
Naughty corner: Active antics
Tobacco and defense sectors offer shelter from inflation – Fortune Financial
Stocks, bonds, bills, and inflation [PDF; a feast of US data] – CFA Institute
John Lee: a dark year has been kind to my portfolio [Search result] – FT
Permanent capital: the Holy Grail of private markets – Enterprising Investor
Covid infections rise by two-thirds in a week in the UK – BBC
US now says the Pfizer vaccine can be stored in a standard fridge for a month – Yahoo
“I’m not too scared to reenter society. I’m just not sure I want to.” – The Atlantic
Covid long-haulers continue to baffle doctors – Bloomberg via MSN
Vaccine lotteries are sad, but also perfect – The Atlantic
Evidence of Covid lab leak would have been destroyed, says ex-MI5 boss – Sky News
We have bigger problems than Covid-19’s origins – The Verge
Kindle book bargains
(Don’t have a Kindle? Buy one – they’re great and save a ton of space!)
Liars Poker by Michael Lewis – £0.99 on Kindle
Business Adventures: Twelve Classic Tales from the World of Wall Street by John Brooks – £0.99 on Kindle
Legacy by James Kerr – £0.99 on Kindle
Think and Grow Rich by Napoleon Hill – £0.99 on Kindle
President Biden to suspend Trump’s Arctic drilling leases – BBC
Socially responsible funds do not deliver excess returns – Advisor Perspectives
World at risk of hitting temperature limit within next five years – BBC
Off our beat
Answering the call – Humble Dollar
Why quirky people are attractive – BBC
Number of smokers hits an all-time high of 1.1 billion – Guardian
America has a drinking problem [Interesting history of booze] – The Atlantic
From Hartlepool to the hangman: the flag-wavers now running the Tory Party could take Britain back to the gallows – Prospect
The massacre of Tulsa’s ‘Black Wall Street’ – Vox
Cultivating the art of noticing in the age of scrolling – Literary Hub
A long lead time – Seth Godin
“Never buy anything from someone who is out of breath.”
– Burton Malkiel, A Random Walk Down Wall Street
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