Posts Tagged ‘addiction’
“Wall Street sells stocks and bonds, but what it really peddles is hope”*…
Over the last several decades retail investors had been eclipsed in the stock market by institutions (e.g., pension funds). But COVID and the economic environment that surrounded started a trend that is reversing that polarity. Retail investors now account for roughly 30% of daily US equity volume, according to Goldman Sachs. Their stock trading in May of this year ran 10% above the previous record, set during the January 2021 meme-stock frenzy, and June set another all time high.
Much of that growth has come from the individuals known as day traders.” And while for the last 18 months or so, institutional investors have been cautious, often underweight, under-levered and short of conviction, these active amateurs in the retail crowd did the opposite, buying the dips, riding momentum strategies, and adding leverage. Retail investors tend to follow the herd, as can be seen in the surge in popularity – and valuations – of meme stocks and artificial intelligence stocks in recent years.
While historical performance is no guarantee of future results, history is not encouraging. The most “generous” reputable study your correspondent could find suggested that roughly 20% of day traders were at least marginally profitable; the balance lost money. Other studies suggest that 95-97% of all day traders lose money.
But as Simone Foxman reports, money is not all that they lose…
Surging retail trading isn’t just transforming markets; it’s also highly correlated with demoralization in young men, according to a new study.
One-quarter of men aged 18-29 said they trade stocks daily, and almost two-thirds of them (64%) report feeling like failures, according to a study of 2,000 men published Wednesday by the Institute for Family Studies, a pro-marriage think tank. The findings were strikingly similar to outcomes among men who gamble: Of the 23% of young men who said they gambled daily, including on sports and events, 66% reported similar angst, according to survey, which asked the young men a variety of questions about their personal behaviors and outlooks. Daily fantasy sports and pornography use were similarly correlated to feelings of failure, the survey found.
The struggles of young men are generating growing alarm among academics, pundits and billionaires. They warn that men are lagging in education and employment, gambling with their financial health on sports or event betting platforms and facing mental health crises.
At the same time, the line between gambling and investing has been blurred. Stock volumes from retail investors have doubled over the past 15 years, and day traders have driven record options volume. Now platforms like Robinhood Markets Inc. and Interactive Brokers Group are trying to capitalize on interest from Gen Z by also offering event-betting alongside stock-trading.
Some research suggests young people have embraced risky financial behaviors to try to generate returns in a world where homeownership and other markers of financial success are out of reach. Eighty percent of Gen Z investors said they’d invested or considered investing in stocks, options, crypto or prediction markets because they feel financially behind and see these investments as better tools to meet their financial goals, according to a Northwestern Mutual study.
The IFS researchers hypothesized that day trading, gambling, playing fantasy sports and porn use — among other activities — may be both coping mechanisms for dejection, stress and loneliness and also exacerbate them. Young men who engaged in these activities less than daily were about half as likely to report feelings of demoralization.
Overall, 42% of survey respondents said the statement “all in all, I am inclined to think that I am a failure,” described them very or somewhat well. This feeling was particularly strong among men without college degrees and those who were neither employed nor in school.
A quarter of participants said they felt lonely all of the time, while 30% expressed feeling that way some of the time.
The study also found disillusionment with the American dream, even as young men fostered high hopes for the future. Seven in ten respondents said that success is more a matter of who you know than ability or hard work, but 84% still said they had ambitious plans for their futures.
Further to the passing reference to “event-betting” above, we should note that prediction markets, while smaller than retail investing (at least for now), are growing explosively. Like day-trading, prediction markets are pitched in the language of empowerment and democratization. The former involves stocks and bonds, while the latter sells “event contracts“; but they share the same user base, the same psychological architecture, and the same uncomfortable gap between how they are marketed and what they actually deliver… so seem likely to contribute to the issues unpacked above.
Risky business: “Some 64% of Young Men Day Trading Stocks Feel Like Failures” (or here) from @simonefoxman.bsky.social in @bloomberg.com.
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As we parse symptoms and diseases, we might recall that it was on this date in 1966 that the U.S. Treasury Department, citing a lack of demand, ceased production of the $2 bill, which had been around in various forms since 1862. The (redesigned) denomination, featuring a portrait of Thomas Jefferson, was reintroduced in 1976… though readers will be forgiven if they mistakenly thought that “the deuce” was still retired: so few are in circulation that they are rarely encountered.
“Once, during Prohibition, I was forced to live for days on nothing but food and water”*…
Americans tend to have a pretty jaundiced view of Prohibition…
… driven by extremists, the country was pushed into an extreme experiment — to ban the sale, production, and transportation of alcohol in the US in 1919 through a constitutional amendment, the 18th. The policy was a political failure, leading to its repeal in 1933 through the 21st Amendment.
There’s also a widespread belief that Prohibition failed at even reducing drinking and led to an increase in violence as criminal groups took advantage of a large black market for booze.
“‘Everyone knows’ that Prohibition failed because Americans did not stop drinking,” historian Jack Blocker wrote in the American Journal of Public Health. He summarized what’s now the conventional wisdom: “Liquor’s illegal status furnished the soil in which organized crime flourished.”
But there’s a lot wrong with these present-day assumptions about Prohibition.
People like [Carry] Nation, as extreme as they were, were driven by real problems caused by excessive drinking, including alcohol-induced domestic violence and crime as well as liver cirrhosis and other health issues. This was perceived as a widespread problem, at least in popular media: George Cruikshank’s 1847 series of drawings, The Bottle, portrayed a father spending all his family’s money drinking and, eventually, killing his wife by attacking her with a bottle. And as historian David Courtwright documented in The Age of Addiction, per capita alcohol consumption increased by nearly a third from 1900 to 1913, largely due to advancements in brewing that helped make beer much cheaper.
Contrary to the conventional wisdom, the evidence also suggests Prohibition really did reduce drinking. Despite all the other problems associated with Prohibition, newer research even indicates banning the sale of alcohol may not have, on balance, led to an increase in violence and crime.
It’s time to reconsider whether America’s “noble experiment” was really such a failure after all…
America’s anti-alcohol experiment cut down on drinking and drinking-related deaths– and it may have reduced crime and violence overall. Vox takes a sober look at the an episode in American history clouded in received ideas that may not be altogether accurate, making the case that: “Prohibition worked better than you think.”
* W.C. Fields
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As we muse on moderation, we might recall that it was on this date in 1894 (after 30 states had already enshrined the occasion) that Labor Day became a federal holiday in the United States.
The country’s first Labor Day parade in New York City on Sept. 5, 1882. This sketch appeared in Frank Leslie’s Illustrated Newspaper.
source (and source of more on the history of Labor Day)
“I’ll give you my one-handed flail when you pry it from my cold, dead hands”*…
From the one-handed flail…
to the flamethrower…
… “10 Crazy Weapons That Are Still Legal In The U.S.”
* variation on the NRA’s slogan, popularized by Charlton Heston: “I’ll give you my gun when you pry it from my cold, dead hands”
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As we re-read the Second Amendment, we might recall that it was on this date in 1998 that a tobacco company executive– Steven Goldstone, RJR Nabisco chairman and CEO– acknowledged the health risk of tobacco products under oath to Congress for the first time.
Concern about the safety of tobacco dated back to the 19th Century, and links to lung cancer emerged in the early 20th. But it was in 1950, with the publication of Richard Doll‘s research in the British Medical Journal, that a close link between smoking and lung cancer was scientifically established. Many studies quickly followed, confirming Doll’s findings and establishing the addictive quality of nicotine. Still, as recently to Goldstone’s testimony as 1994, seven tobacco company executives had sworn under oath that nicotine was not addictive.
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