YOLO Blues

The stock market broke today

Well, actually, it’s been broken for quite some time. For anybody that still remembers the GameStop fiasco earlier this year, what’s been happening the last two days will come as no surprise. Yesterday Donald Trump’s SPAC (special purpose acquisition company) Digital World (DWAC) shot up hundreds of percent, peaking this Friday morning at around 1,657% on the announcement that Trump plans to start his own social media empire called Truth Media (or something). But really, who cares, because the reason that anybody is YOLOing into stocks like Trump’s, is the vision of staggering returns on their initial investment. Since 2020 the stock market had been turned into a casino, something the market and the ‘smart money’ that is floating around in it, pretended it wasn’t. But the new retail generation begs to differ. It started slow, first with Volkswagen a few years ago, then with Hertz last year. The stocks pumped and dumped on bad news of bankruptcy. But it was the pump that was interesting to retail and the smart money shook their heads. Then GameStop started and what was supposed to not happen again, did, retail started to make money, and quick. GME popped hundreds of percent making instant millionaires out of unwitting kids who dumped their stimmy checks into the stock and let her ride. The smart money had to act and the stock was halted several times. It has since become a big problem for the SEC, the regulatory body that’s supposed to keep a watchful eye over market manipulation, but that is mostly acting to the best interest of smart money. Congressional hearings followed, nobody got punished, but one thing is for sure, the idea was to make it more difficult for retail to repeat the squeeze.

Since then short squeezes have been on the weekly menu of the market makers and thus far, they’ve not come up with a process that’ll stop it from happening. What was once a problem endemic to crypto, is now a standard occurrence throughout the financial sector. With increasing frequency stocks pump and dump 25%, 50%, 100%, 400% - it goes on and on and on. On the news that the Federal Reserve will continue to print money out of thin air and pumping it into the market through its purchases of mortgage-backed securities and bonds (don’t worry, none of this money is going to the ‘poors’), the market continued making all-time-highs throughout the year. This enabled the creation of pockets of money that could then flow throughout the market. Increased liquidity resulted in increased speculation and an increase in the YOLO mania, out of which rose the SPAC and the NFT craze. Everything is now an asset to be bought and sold for profit, at least before the inevitable dump that creates countless bagholders. This year saw the rise and fall of an incredible amount of stocks and cryptos – Titan (backed by Mark Cuban), Sonim Technology, Farmmi, Rocket Lab, Tilray, Sundial, Doge, Bitcoin, Teligent, and GME’s cousin AMC – and a slew of others I won’t name, there’s just not enough time. Then crypto came back and many made all-time-highs – Cardano, Shiba Inu, Bitcoin. Today marks yet another ‘milestone’ in the FOMO circus.

This morning alone, CRTD was up close to 200% on the news that the company signed a Tik Tok ‘celebrity,’ the 22 year old Tiny Mom, PHUNWARE (another SPAC) was up over 2,200% at one point, and DWAC continued to rise and fall with breakneck speed and frequency, up 100% then down 75%, then back up 50%, and on and on and on, as the market makers continued to halt the stock for 15 minutes at a time, supposedly so that ‘smart money’ could catch up, front run and dump when they needed to avert what seemed like an inevitability, a moonshot unlike anything previously seen. Forget Trump and forget his politics, this is purely about speculation. This run was always about squeezing as much money out of the system as possible. The casino is open for business and it makes total sense that the figure that’s tied to one of the biggest casino failures in history would be the subject of an epic squeeze.

To understand what is behind the ‘logic’ of the current market, one has to try to understand the climate out of which it was borne. With the news that the Boston Fed president Eric Rosengren and Dallas Fed president Robert Kaplan were trading on insider information, dumping stocks at all-time-highs, thus manipulating them to the downside, and that the Fed chairmen Jerome Powell has been doing the same (nobody will be punished, Rosengren and Kaplan stepped down and Powell might get replaced by a different lackey), there is an atmosphere permeating the market that whatever fundamentals there once were, they have long been obliterated, divorced from reality, just as the knowledge that the market exists solely to transfer money from the bottom, from retail, to the top, to the so-called ‘smart money, is now a given and not surprising. There is no ‘value’ to anything, because money itself isn’t backed by anything. With cryptos people can pretty much create money by typing code and making it available on platforms like Coinbase. Price will rise, money will be made. But on the opposite spectrum there is the ‘insta-millionaire’ effect that draws in new blood, spurred on by the success of trading apps like Webull and Robinhood. For millions of users, many from the Zoomer generation that have grown up online, the transition from gaming to stocks and NFTs is natural and the vision of becoming accidental millionaires too strong to pass up. The idea of working and saving money for retirement at 70 is untenable. There is a generalized sense that the older generations have been stealing the future from the younger, now underscored by rising inflation, an out of whack housing market, and soaring student and credit card debt, while the media world is presenting a reality completely unlike what young people are experiencing directly. If the top two billionaires in the world can now hold wealth equal to that of the bottom 40% of the population, then nothing really matters, the only thing that does is personal gain, the ultimate logic of hyper-individualism.

The March 2020 market crash was a much greater event than everyone thought. Sure, the market recovered and within two weeks the ‘recession’ was over. It was the shortest recession on record, a blip. Since then numerous attempts have been made to assess what happened, pandemic-aside, as the market and the FAANG stocks, backed by smart money, continued making all-time-highs. Today it is being called the ‘Great Resignation’ but that seems wrong, because it is yet another attempt to blame the poor people for the bad management of the economy by the likes of Powell and the Fed. In China the ‘Lie Flat’ movement is a reaction to the insanity of the current economic system, while in the US labor seems to finally be waking up with strikes at Deere, Kellogg and across Hollywood. YOLOing stocks and giving money to Trump’s SPAC is both a form of protest and a get-rich-quick scheme that has the same underlying premise. We live in interesting times.

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