What caught my eye this week.
I read hundreds of investing-related articles to compile these Weekend Reading links each week. Far more than when I was just doing my own active investing [1] research.
I enjoy it. But I also wonder how much it skews my perception of the markets and investor behaviour.
Hot takes and weird observations are what spreads and commands attention, after all. Nobody is very motivated to write “same old, same old” – except of course my staunchly passive [2] co-blogger.
And reading all this kerfuffle every week has led me to wonder whether the stock market really has become as ‘degenerate’ as the Millennials commentators say?
Or is that just how it appears from inside this snow globe of opinion?
Funding the fanaticism
Some things have clearly changed a lot over the past decade. Mostly driven I’d suggest by free share trading and vast social media platforms, but also by the influence of crypto – especially the mega-bagging returns from Bitcoin and Ethereum that have underwritten this shift towards investo-gambling.
How many twenty-somethings would be YOLO-ing their life savings if Bitcoin had fallen back to $10 and stayed there?
Exactly.
It didn’t though – it minted millionaires – and the lingo of the resultant crypto movement has leaked into how punters wielding free share dealing apps talk about stocks, and how at least some trade them.
There’s lots of reports with data showing [3] that retail traders are an ever-bigger driver of stock volatility. But are these just the same people who were punting on tinpot resource stocks 25 years ago, and hyping their trades on ADVFN and The Motley Fool?
Or is it all a sign of some deeper structural malaise?
Asymmetric investing warfare
Over the past few years a narrative has developed that explains this apparent embrace of reckless speculation not through the technological drivers I see – zero-commission apps, mass-broadcast platforms, and blockchain – but through an almost Marxist lens.
In a compelling piece this week, a crypto-focused blogger called Jez [4] presented what he dubs ‘hypergambling’ as a logical response to asset inequality:
the core issue here is the cost of owning a house, and the expected timeline on an average salary.
with this core social contract broken, people look for shortcuts. crypto, memestocks, and the rise of option and leverage trading are examples of the public’s increasing desire for volatility and asymmetric upside when linear can’t buy a house.
It’s interesting that my fellow curator-in-arms Tadas Viskanta [5] also believes these forces are real:
For a long time it seemed the arc of financial markets was bending towards the interests of the individual investor. One could easy argue that arc has shot off in another more degenerate direction.
But then Tadas reads even more from the opinion hosepipe than I do. Pehaps he’s suffering from the same narrative overload?
Either way, there’s also the bigger, bigger picture.
If you’re someone like me who believes the current US administration is wildly overstepping multiple lines of legality, cultural norms, and decency, then it becomes even easier to fear the wider world “turning and turning on the widening gyre”, as Yeats once put it [6]:
“Things fall apart, the centre cannot hold. Mere anarchy is loosed upon the world.”
Why play by the old rules when even the ostensible leader of the free world is trying to bend the data [7] to his will?
As the longstanding economics blogger at Bonddad put it [8] this week:
Now we have the additional wrench in the works in the form of a mafia-style blowout being the operative behavior from the US Administration.
If sowing chaos were a winning economic move, banana republics everywhere would be wealthy.
There’s a good reason why they’re not, and that’s because chaos and corruption make it impossible for producers to foresee the results of their economic actions.
With the first family having their hands all over crypto [9] even as legislation is rewritten by their guys at the top, the stage is arguably set for what Bloomberg’s Joe Weisenthal has dubbed ‘The Golden Age of Grift’ [paywalled link [10]].
Investment manager Cullen Roche [11] quotes official statistics to show a trend that isn’t all in our heads:
[12]
Will this chart now go ‘to the moon’ like a heavily-pumped memecoin? Or will the US government stop collecting the data before it gets the chance?
Unfazed while Rome burns
This dispiriting landscape is a long way from the core Monevator message of sensible passive investing [13].
Heck, even my active investing antics [14] are snoozy and long-term by comparison.
And in contrast to the flashmob stock punters who gather at Reddit’s Wall Street Bets, I’ve stressed you should take what I and anyone else writes with a large dose of salt [15].
Moreover there’s plenty of evidence that ever more people are investing in index funds.
Fund giant Vanguard has produced data too that shows very few of its customers are trading in and out of their funds based on the latest news headlines, or other tumult in the markets.
So which way are we really going?
Perhaps like everything else these days we’re polarising into two camps. Shut-out [16] degenerate gamblers looking for a quick leg-up into money-baller society on the one hand, and steady Eddie millionaires next door – eventually [17] – plodding towards financial freedom on the traditional path on the other?
Or perhaps it’s all just light and mirrors and it’s the same as it ever was?
Tell us what you think in the comments, and have a great weekend!
From Monevator
How to construct your own asset allocation – Monevator [18]
Stoozing: why borrow money on a credit card just to save it? – Monevator [19]
From the archive-ator: When to buy insurance – Monevator [20]
News
Government considers replacing stamp duty with a new property tax – Guardian [21]
The lowdown on London’s new ‘Pisces’ market for private companies – Yahoo Finance [22]
Borrowing dip offers some respite for Reeves, but tax rises still loom – This Is Money [23]
The average retiree spends £22,140 a year [And other retirement data] – Quilter [24]
DeepFake of Anthony Bolton [25] drives latest ‘pump and dump’ shares scam – This Is Money [26]
The ONS is overhauling how it calculates house price statistics – ONS [27]
UK housing has slightly outpaced population growth over the past decade – Property Industry Eye [28]
Post-Brexit industrial resurgence latest: UK’s third-largest steelworks collapses – BBC [29]
Denmark to end letter deliveries in sign of the digital times – BBC [30]
[31]
Built to letdown: housing supply up, rents…up? – FT [32]
Products and services
Where can you earn inflation-busting interest rates on cash? – Which [33]
The pros and cons of fixing your mortgage for ten years – This Is Money [34]
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link [35]. Terms apply – Charles Stanley [35]
Lloyds Bank launches new way to deposit cash in shops – Which [36]
Freetrade’s shares ISA will be free from 1 September – T.I.M. [37] [Sign-up for a free share worth up to £100 via our affiliate link [38]]
Most affordable commuter hotspots revealed – Yahoo Finance [39]
Get up to £100 as a welcome bonus when you open a new account with InvestEngine via our link [40]. (Minimum deposit of £100, T&Cs apply, affiliate link. Capital at risk) – InvestEngine [40]
Where are the cheapest places to buy a cottage…? – Which [41]
…and more characterful cottages for sale, in pictures – Guardian [42]
Yet another long-term government bonds mini-special
[43]
Why it’s worth watching long-term gilt yields [Paywall] – Bloomberg [44]
Long-term rates are rising with no compelling explanation… [Video] – Sky News [45]
…though inflation came in at a hotter-than-expected 3.8% in July – CNBC [46]
…and the US curve is steepening, too – Apollo Academy [47]
Are long gilts at 5.5% a no-brainer? – Interactive Investor [48]
Fiscal dominance and the unexpected rise of emerging markets [Paywall] – FT [49]
Comment and opinion
“I’m still working at 70. I love my job so much, I commute three hours a day” – The Times [50]
Tax policy prevarication comes for the property market – Propegator [51]
The extremely frugal might be on the right side of history – Guardian [52]
Stop wasting time worrying about safe withdrawal rates – Purpose Code [53]
Gold is shiny enough for a strategic portfolio allocation – Carson Group [54]
Playing the ultra-long game – Novel Investor [55]
Crypto and your portfolio – The Uncertainty of it All [56]
How to eliminate that intense financial FOMO – Financial Samurai [57]
Why these 75-year-olds love working – Next Avenue [58]
Larry Swedroe returns explanations mini-special
Price predicts future equity returns, not future earnings growth – Morningstar [59]
The key drivers of corporate bond returns – Larry’s Substack [60]
Naughty corner: Active antics
The calculus of value – Howard Marks [61]
Where to invest when nothing looks cheap – Morningstar [62]
GLP-1s are booming. Shares in their producers, not so much – Sherwood [63]
Things are hotting up in the UK REIT sector – CNBC [64]
Harvourvest CEO on private equity’s great jumble sale – Semafor [65]
Kindle book bargains
What They Don’t Teach You About Money by Claer Barrett – £0.99 on Kindle [66]
Too Big to Fail by Andrew Ross Sorkin – £0.99 on Kindle [67]
50 Economics Ideas by Edmund Conway – £0.99 on Kindle [68]
Mastering the Business Cycle by Howard Marks – £0.99 on Kindle [69]
Or read one of the best investing books of all time – Monevator shop [70]
Environmental factors
Are we on our way to Earth’s sixth major mass extinction? – Guardian [71]
The climate crisis will blow up via the insurance sector [From July] – How Things Work [72]
Salmon breed in Yorkshire’s River Don for first time in 200 years – BBC [73]
Alphabet [Google] is the latest tech giant to fund a nuclear reactor – Semafor [74]
For heat stressed trees, autumn is coming early – BBC [75]
Wildlife is thriving in Korea’s demilitarised zone – Guardian [76]
The Thames has dried up just a few miles from its Cotswolds source – BBC [77]
Robot overlord roundup
MIT reckons 95% of generative AI pilots are failing – Fortune [78]
AI is a mass delusion event… – The Atlantic [79] [via Abnormal Returns [80]]
…with even Microsoft boss troubled by reports of ‘AI psychosis’… – BBC [81]
…but should we really embrace a world of many AI personalities? – Noema [82]
Evidence investors use ChatGPT in their trading – Marginal Revolution [83]
What if AI doesn’t get much better than this? – Cal Newport [84]
The puzzle of AI facial recognition – Harpers [85]
Not at the dinner table
What’s with the thousands of Union Jacks and St George’s flags? – BBC [86]
Charity workers being targeted by far-right anti-asylum activists – Guardian [87]
The hidden costs of trade protection – Larry’s Substack [88]
ICEing the US economy – Paul Krugman [89]
Off our beat
The violinist problem – Seth Godin [90]
Mapping the battle for online grocery delivery – Platform Aeronaut [91]
A veteran’s guide to self-publishing [Exhaustive!] – Kevin Kelly [92]
The hypersonic missile race is hotting up, and the West is far behind – BBC [93]
Materialists: a true reflection of today’s dating market – Guardian [94]
Over-tourism is hitting Europe’s hotspots, and some locals are fed up – CNN [95]
Rotten Tomatoes is rotten – Stat Significant [96]
And finally…
“…0.01% of your net worth is actually a great proxy for what constitutes a trivial amount of spending for you. For example if you have a net worth of $10,000, then paying $1 more (or 0.01% more) for something shouldn’t have any long-term impact on your finances. Similarly, if you have a net worth of $100,000, you should be able to pay $10 more for an item without skipping a beat. I call this the 0.01% rule.”
– Nick Maggiulli, The Wealth Ladder [97]
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