A hallmark example of a magical thinking mindset is the piling into the stock market by younger, inexperienced, millennial punters. They are identified loosely as “Robinhooders” after one of the primary trading platforms designed for commission-free odd-lot activity.
The primary magical thinking of this herd is the Fed put, or notion that stocks — and especially tech bubble names — are always supported by Fed mucky muck Jerome Powell and stimulus. The actual condition of the economy is quite secondary for them.
In reality, the empty suits at the Fed have caused systemic malinvestment. They’ve incentivized excessive risk taking and sustained zombie firms, in addition to transferring immense artificial wealth to the plutocrat class, making the rest of society poorer.
“Our policies absolutely do not add to inequality,” said Jay Powell, chief tool of the Federal Reserve.
Just the facts:
- The wealth of 643 of US’ richest billionaires rose from $2.95 trillion to $3.8 trillion between March 18 and September 15, a report by the Institute for Policy Studies and Americans for Tax Fairness said.
Winter Watch holds that these Robinhood speculators are foils who will end up financially broken. They also allow plutocrat insiders to dump billions in holdings at more favorable prices. This is a truly disgusting sistema.
Powell: We don’t have the ability to target particular groups.
*only the top 1%
— Sven Henrich (@NorthmanTrader) September 16, 2020
An example of the flavor of this “come on back to me 22” market was ahead of the opening of the hyped action movie “Tenet.” Robinhood traders in August piled into movie theater stocks, including Cineworld and AMC, in anticipation that Americans would rush back to theaters even though theater capacity is limited to 50% in most of the country. By Labor Day, 68% of theater chains reopened.
But their analysis was wrong. Theater stocks dumped after “Tenent” was released. The film itself collected only $9.4 million in its first weekend in North America and just $29.5 million over its first two weeks.
This also suggests to us that large parts the population are psychologically damaged by fear of other humans in indoor settings.
Just the facts: There is no way that this translates into a healthy and strong economy.
Another “come on back to me 22” scam the Robinhooders were sucked into was the buying of September call options on the nifty bubble tech FANGMAN stocks. Speculative call buying is typically an all-or-nothing bet, with little room for error in timing or direction. As a rule, Winter Watchers, who have considerable personal experience with this kind of trading, recommends that you don’t try this at home with the last of your nest egg.
September Robinhood call options pic.twitter.com/ja6hnzkDYw
— Sven Henrich (@NorthmanTrader) September 18, 2020