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Matt Levine expressed this perfectly back in April The weird thing about the coronavirus crisis is that it simultaneously (1) caused a stock market crash and (

Matt Levine expressed this perfectly back in April The weird thing about the coronavirus crisis is that it simultaneously (1) caused a stock market crash and (2) eliminated most forms of fun. If you like eating at restaurants or bowling or going to movies or going out dancing, now you can’t. If you like watching sports, there are no sports. If you like casinos, they are closed. You’re pretty much stuck inside with your phone. You can trade stocks for free on your phone. That might be fun? It isn’t that fun, compared to either (1) what you’d normally do for fun or (2) trading stocks not in the middle of a recessionary crisis, but those are not the available competition. The available competition is “Animal Crossing” and “Tiger King.” Is trading stocks on your phone more fun than playing “Animal Crossing” or watching “Tiger King”? [..] I gather that for some people the answer is yes. If you believe the boredom thesis of the current retail rally, that is good news, because that thesis is basically countercyclical: The worse the economy is, the more bored investors will be. If stocks sell off because the coronavirus crisis is longer and worse than expected, there will be even fewer entertainment options and more people will turn, in desperation, to buying stocks on their phones. If someone finds a magic cure for the virus tomorrow, stocks will rally and all the new retail investors will happily sell into the rally at the top and go back to their other, more entertaining, entertainments.

JakeTheAndroid 6y ago
IDK if that is a perfect take at all. Sports plowed on, new shows, movies, and games were released. The only thing I see that went down was the available investments that could be made. If you are an investor you are going to have a hard time investing into companies because there aren't going to be a lot of physical companies being founded and you'll see a decrease in internet companies being founded. Also, starting a business would be seen as risky with the unclear future of the pandemic and its impact on the economy. This is why we seen stock and real estate investments rise. You add that to the fed rate cuts, and these are basically the only two mainstream investments that can be made. Most investors into stocks aren't individuals like you and me who would otherwise go out dancing or go to bars. While there was a surge of individual investments, the bigger firms are attributed for creating the huge waves in the markets. Do you think that Warren Buffet/Berkshire decide to invest in retail stocks because he was bored due to not being able to go out clubbing? And when he buys stocks in something it outpaces what the entirety of WSBs does in puts/calls. And thats just one firm. So, I find it hard to believe that the lack of entertainment (which was only really an issue at the very beginning of the pandemic, as baseball/basketball/football all carried on and plenty of games/shows/movies have come out) is the cause here.
- majormajor 6y ago
  > Sports plowed on, new shows, movies, and games were released. No - sports and movie releases were suspended for multiple months, and games and shows that released into that window of lowered competition did crazy good business.
  - JakeTheAndroid 6y ago
    Here is a list of stuff that was released in May, 2020. 2 months removed from the response to the pandemic: https://www.lofficielusa.com/film-tv/the-best-movies-and-tv-shows-to-stream-in-may-2020 https://www.lofficielusa.com/film-tv/the-best-movies-and-tv-... Not 100% of that was completely new IP, but it was new. And there were even new things released in April. I admit it was far lower than what would likely have been released without covid, but there was content being put out still. I admit that I was annoyed with the lack of content, and still am. But to suggest that I filled that time with stock trading seems like a stretch. Also, none of this addresses my other point. Individual investors do not make up a majority of stock purchases. So to assume that the average Joe being bored at home lead to rallies in retail stocks just doesn't jive. What does jive is the decline in other investment opportunities and having large firms shift their investments into the only options they really had; Stocks and real estate. However, real estate even became too prohibitive for a lot of investors due to the fed rate cut leading to tons of home buying. This is a sector that is largely composed of individual investors. Therefore, they were forced into stocks exclusively. I would simply need a lot more data to support that individuals being bored lead to massive movements in stocks. in 2016 14% of stocks were owned by individual investors. Let's assume a 100% increase due to the media drought and thats 28%. That is not enough to truly influence large parts of the market into the hikes we've seen. Especially considering that during this time there was a lot of financial uncertainty for these individual investors. Many didn't know if they'd have paychecks coming in (take a look at the mortgage forbearance to see how many people assumed they wouldn't have money). So how many new investors joined in on their piece of the pie when they were also strapped for cash? I'd be surprised if it was 100% increase. The only people that could take advantage of the dips were people that had were likely already in the market and had consistent money coming in.
- 6y ago

JakeTheAndroid 6y ago

IDK if that is a perfect take at all. Sports plowed on, new shows, movies, and games were released. The only thing I see that went down was the available investments that could be made. If you are an investor you are going to have a hard time investing into companies because there aren't going to be a lot of physical companies being founded and you'll see a decrease in internet companies being founded. Also, starting a business would be seen as risky with the unclear future of the pandemic and its impact on the economy. This is why we seen stock and real estate investments rise. You add that to the fed rate cuts, and these are basically the only two mainstream investments that can be made. Most investors into stocks aren't individuals like you and me who would otherwise go out dancing or go to bars. While there was a surge of individual investments, the bigger firms are attributed for creating the huge waves in the markets. Do you think that Warren Buffet/Berkshire decide to invest in retail stocks because he was bored due to not being able to go out clubbing? And when he buys stocks in something it outpaces what the entirety of WSBs does in puts/calls. And thats just one firm. So, I find it hard to believe that the lack of entertainment (which was only really an issue at the very beginning of the pandemic, as baseball/basketball/football all carried on and plenty of games/shows/movies have come out) is the cause here.

majormajor 6y ago
> Sports plowed on, new shows, movies, and games were released. No - sports and movie releases were suspended for multiple months, and games and shows that released into that window of lowered competition did crazy good business.
- JakeTheAndroid 6y ago
  Here is a list of stuff that was released in May, 2020. 2 months removed from the response to the pandemic: https://www.lofficielusa.com/film-tv/the-best-movies-and-tv-shows-to-stream-in-may-2020 https://www.lofficielusa.com/film-tv/the-best-movies-and-tv-... Not 100% of that was completely new IP, but it was new. And there were even new things released in April. I admit it was far lower than what would likely have been released without covid, but there was content being put out still. I admit that I was annoyed with the lack of content, and still am. But to suggest that I filled that time with stock trading seems like a stretch. Also, none of this addresses my other point. Individual investors do not make up a majority of stock purchases. So to assume that the average Joe being bored at home lead to rallies in retail stocks just doesn't jive. What does jive is the decline in other investment opportunities and having large firms shift their investments into the only options they really had; Stocks and real estate. However, real estate even became too prohibitive for a lot of investors due to the fed rate cut leading to tons of home buying. This is a sector that is largely composed of individual investors. Therefore, they were forced into stocks exclusively. I would simply need a lot more data to support that individuals being bored lead to massive movements in stocks. in 2016 14% of stocks were owned by individual investors. Let's assume a 100% increase due to the media drought and thats 28%. That is not enough to truly influence large parts of the market into the hikes we've seen. Especially considering that during this time there was a lot of financial uncertainty for these individual investors. Many didn't know if they'd have paychecks coming in (take a look at the mortgage forbearance to see how many people assumed they wouldn't have money). So how many new investors joined in on their piece of the pie when they were also strapped for cash? I'd be surprised if it was 100% increase. The only people that could take advantage of the dips were people that had were likely already in the market and had consistent money coming in.
6y ago