06-16-2020, 02:24 PM
For what it's worth, in Paul Krugman's latest email newsletter, he attributes recent market increases to amateur, former sport-betting "retail bros".
He gave about as clear of a"sell" signal as I see him make -- the last time he wrote a column like this was around March 2008.
For my part, I wouldn't call the market a "sell" but I do find it unattractive. If it is true that retail bros are driving up the market, they may unload and exit just as irrationally if things go south.
It’s possible, of course, that more conventional investors were too pessimistic, and that the “retail bros” will end up being vindicated. But history is not on their side.
Still, we shouldn’t be surprised that they haven’t given up despite steadily worsening news on the coronavirus. At this point it’s not just money that’s on the line; it’s egos too. That’s why we’ll probably see a series of temporary recoveries before the awful truth finally sinks in. But sink in it eventually will.
He gave about as clear of a"sell" signal as I see him make -- the last time he wrote a column like this was around March 2008.
For my part, I wouldn't call the market a "sell" but I do find it unattractive. If it is true that retail bros are driving up the market, they may unload and exit just as irrationally if things go south.
Quote:What are these investors thinking? I don’t think they are thinking — not really. The conventions of financial reporting more or less require that articles about market action ascribe rationality to investors, so stock movements are attributed to optimism about economic recovery, or something. But the reality is that we’re largely talking about young men, many with a background in sports betting, who have started buying stocks and are bullish because they’ve made money so far.
It’s possible, of course, that more conventional investors were too pessimistic, and that the “retail bros” will end up being vindicated. But history is not on their side.
Still, we shouldn’t be surprised that they haven’t given up despite steadily worsening news on the coronavirus. At this point it’s not just money that’s on the line; it’s egos too. That’s why we’ll probably see a series of temporary recoveries before the awful truth finally sinks in. But sink in it eventually will.