The business of investing is a serious one, best left to serious people. Just ask anyone who works in investing!
You might not believe me, but I used to wear a suit. My first job in finance, it was so serious, I would wear a suit and tie every single day. We all did. Shoes were polished too.
Investment company names are serious. Serious names that convey prudence and suspenders. Serious people managing serious wealth. It’s nothing to be frivolous about.
Investing is serious business.
Things are a little different in 2024. There are no serious discussions of balance sheets or the inner workings of public companies.
This is investing in 2024: macro determined by Fed narratives, micro determined by fraud narratives, and passive flows act like gravity pressing down on any signs of risk.
Let me unpack that: The federal reserve bank sets the narrative as to their intentions on interest rates and other schemes designed to inflate the market, and then the market follows.
FOMC days are the best. Global market valuations blowing around like a balloon in a blizzard based on the wordsmith choices of one 70 year old lawyer. The most well paid and well educated among us running around like their hair is on fire trying to interpret the difference between “transitionary” and “transitory”.
The federal reserve bank, of course, is deeply serious. The people who work there are very serious, so serious that they believe they can end the natural pattern of economic cycles and save us from fates worse than death (a 10% equity draw-down), even if that means dumping $5 Trillion into a zero interest environment to kick off the most predictable of bubbles and a painful inflation cycle. Oops.
And then the micro - the securities that make up those markets - are dispersed not by the value of the businesses but by the stories being told about the companies and industries they comprise.
I might start to suspect that is all deeply unserious, but nothing prepared me for the unseriousness we saw tonight. This is whole other level.
What a blessing to be able to live through the most hilarious of market structure times.
Let’s start with bitcoin. This is key to understand: bitcoin is not digital gold, it’s not faster payments, its not peer-to-peer, its not limited supply, it’s not a tool for money laundering, it’s not banking the unbanked, it’s not protection from inflation. It is none of those things.
Bitcoin is a middle finger to the very serious financial system we have. The financial system that distorted our free markets, widened the wealth gap, and burdened us with debt.
At first they criminalized bitcoin, but that only they gave it an air of mystique and danger.
And then they forced savers to become investors. Suppressed yield to incentivize risk-taking. Rained money down through QE programs. Severed the relationship between price and value.
Told us all that we “can’t give investment advice” while claiming crypto promoters operate outside their jurisdiction.
It was the perfect storm.
And then came the asset managers, ready to bag it, tag it, sell it to the butcher in the store. They need something to sell after decades of falling over themselves to commoditize their own business, culminating in pricing index funds below cost. And the fee race this time goes to zero before a single fund even launched.
And then the SEC. They have their approval process, and they’re sticking to it. So everyone gets to front-run this ETF approval process and the ETF clients while waiting for the process to slowly play out.
So tonight, material (market moving), nonpublic news announcing the ETF approval is sent out from the SEC. But wait - surprise - it was not the SEC. They’ve been hacked!
You can imagine the panic at the ETF issuers. Meeting invitations sent, emails with all cap subject lines. You can imagine SEC lawyers racing down the halls screaming “Delete the tweet! Delete the tweet!”
Markets are swaying, fortunes are won and lost, and based on what? The serious announcement from serious regulators about a serious financial product on a serious asset class.
It’s almost enough to make you think the whole thing is unserious.
So many bad takes on X about this whole charade, this is the first and perhaps only honest dissection of the real issues facing the investment management industry today!
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