John Roque of Wolfe Research shared an email excerpt, which I found so intriguing I am reproducing below:
“We also emailed a few times with a market contact who shared an exchange he had with his son. He gave permission for us to share it here.
My middle son, who just turned 25, is home during COVID. He is probably the smartest of my 3 boys … he has that fantasy football gift …wins a lot. He starts playing the stock market using Robinhood while he is home. He is KILLING me in the market (ed. comment – our friend is a good investor) … He says, “your problem is that you like companies with earnings. I buy cool companies. I buy value. I watch them trade; buy them and when they stop going up, I sell them. I buy low and sell high… Value.”
YESTERDAY (ed. comment – Wednesday), he says, “I sold my AMZN ‘cause it looks like it topped out. I bought BA & JPM ‘cause they look like value.” I thought… good, the little guy will finally get smoked…. In one day of ownership both BA and JPM are up sharply and AMZN barely green. He texts me that he “knew he’d make money in BA, but he did not think he would get rich.” He bought 5 shares. My son is your competition. He is REALLY good at fantasy football and computer games and does not care much about 2022 earnings power. His type now owns the Airline Industry apparently.”
I agree with John, that these sorts of anecdotes can be amber warning lights.
That said, remember that Greenspan’s Irrational Exuberance speech was in 1996, so whatever madness there was went on for 4 full years before it all came tumbling down.
Millenials trading 5 shares at a time whole under lockdown at a time does not make for the sort of national pastime that day-trading was in the 1990s.