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The General Theory of Recession, FinTwitter & Memes

Over the past few months – clearly with nothing better to do – Mr Jack Dorsey and his contemporaries have decided to lock me in my weirdest echo chamber yet, something I’m just going to refer to as: ‘the world’s financial markets meet the internet 2: electric boogaloo’ (if you didn’t catch the previous instalment, see the deregulation of the stock exchange). I’m talking, of course, of this nexus of finance, “bros” and twitter; a phenomena none of us asked for and yet one that is ostensibly derailing our economy.

cc: Wikimedia Commons

To provide some context, we are in the single largest economic downturn since WWII. From March to April, the UK’s economy shrunk by 20.4% – a figure that has never been lower since records began [1]. But at this point, it’s incredibly important to look beyond GDP and quantify the real effect of this, because apparently, that’s a step too far for the (crypto)fascist, populist saviours of the “what I call ‘proper’ people™”. So, again in the UK, since the start of COVID-19: 40% believe their household income has decreased, 38% believe their savings have taken a hit, 52% have seen a reduction in spending and 89% believe the UK economy will remain depressed for the next 12 months [2]. By every single conceivable measure of economic wellbeing, everyone is emphatically worse off… except for the measure that “““matters”””. 

The world’s financial markets, in this time of unprecedented absurdity, are doing just fine; business as usual, if anything. Since March 1st, the Dow is up 6.13%, FTSE down 5.68%, the Nikkei up 7.61% and ludicrously, the NASDAQ is up 24.7%*[3]. So I’m left wondering, amongst other things, how is there this seismic dissonance between reality and the ticker boards? 

And then it hit me: Mr Jack Dorsey and his contemporaries had been feeding me all the clues right from the start – I just hadn’t been paying attention!

At this point I must stress: I have no idea what’s going on – and, as made abundantly clear in the bios of the entities I’m about to reference, this isn’t investment advice. Please, for the love of God, this isn’t investment advice.

Introducing FinTwitter (aka Finance Twitter), a smorgasbord of polarising identities. On one hand, you’ve got your run-of-the-mill investors, accompanied by extensive due diligence threads and somewhat reasonable discussion on the validity of logic driving strategy on various positions – nothing to see here. But then you’ve got the flipside, and boy what a flipside it is. 

I don’t particularly know what came first: r/WallStreetBets (the community meta-reflexively referring to themselves in the plural as ‘degenerates’) or the cesspit of ‘Retail Bros’ on FinTwitter™. Nevertheless, this multimillion-strong army of day traders shouldn’t be perceived as the straw-people I’ve (wrongly) set them up to be; they make serious money – percentage gains hedge funds would be celebrating. A user by the name of ‘u/WSBgod’ – because what else would they be called – has gone down in r/WallStreetBets history, racking up a gain of $10.2 million at a ROR of 247.3%! Their most upvoted ‘bet’, simply titled “DON’T DOUBT YOUR VIBE”, documents u/WSBgod making a day-gain of over $3m on a single call position – all off an original $125k investment. 

Then there’s Dave Portnoy – a guy who probably needs his own article. The CEO turned day-trader leads his 1.6 million strong Twitter following (DDTG Global) into battle against the suits of Wall Street; realising value where no value investor could, his motto is “Stocks only go up”. Davey’s virality perhaps peaked when he called out Warren Buffett for being ‘washed up’, proudly proclaiming “I’m the captain now” following a run of successful days. And you know what, despite all the entertainment and bravado, he’s got one thing spot on: “The market has no connection to reality.”

Despite FinTwitter’s problematic overtones, there’s something I can definitely begin to comprehend. In times of absurdity, what better a response than absurdism? If the Zeitgeist is truth doesn’t matter, then I call your bluff on pricing Tesla at $295 – I’m buying at $1500. 

But, and this is a huge but, let’s take a step back and think about the context that I’m happy to take that view in. A reality-TV star has transcended his medium to become the president of the world’s largest superpower, he’s made wearing a mask – amidst a global pandemic – a statement about liberty and freedom, all whilst thousands die at the hands of his policies. 

So thank you, Mr Dorsey – very cool. I’m still depressed.

*At time of writing 22/07/2020

References

  1. ONS, 2020. Coronavirus and the impact on output in the UK economy: April 2020. https://www.ons.gov.uk/economy/grossdomesticproductgdp/articles/coronavirusandtheimpactonoutputintheukeconomy/april2020
  2. McKinsey, 2020. A global view of financial life during COVID-19. https://www.mckinsey.com/industries/financial-services/our-insights/a-global-view-of-financial-life-during-covid-19
  3. u/WSBgod, 2020. NEW HIGH SCORE!!! https://ns.reddit.com/r/wallstreetbets/comments/fgg4fg/new_high_score/
  4. u/WSBgod, 2020. DON’T DOUBT YOUR VIBE. https://ns.reddit.com/r/wallstreetbets/comments/eytmj5/dont_doubt_ur_vibe/
  5. Dave Portnoy, 2020. New DDTG Tenet: Stocks Only Go Up. https://www.barstoolbets.com/blogs/2499221/new-ddtg-tenet-stocks-only-go-up
  6.  Dave Portnoy, 2020. I’m sure Warren Buffett is a great guy but when it comes to stocks he’s washed up. I’m the captain now. #DDTG, Twitter. https://twitter.com/stoolpresidente/status/1270350291653791747?s=20
  7.  El Presidente, 2020. A Couple Things To Remember: Nobody Has Ever Traded Through A Global Pandemic. I Have As Much Experience As The Suits Here. The Market Has No Connection To Reality. And Stocks Always Go Up, Barstool Bets. https://www.barstoolbets.com/blogs/2624714/a-couple-things-to-remember-nobody-has-ever-traded-through-a-global-pandemic-i-have-as-much-experience-as-the-suits-here-the-market-has-no-connection-to-reality-and-stocks-always-go-up
  8.  Business Insider, 2020. JPMorgan boosts its Tesla price target on the strength of delivery data — but still expects the stock to fall 79% over the next year (TSLA). https://markets.businessinsider.com/news/stocks/tesla-stock-price-jpmorgan-raises-target-strong-car-delivery-fall-2020-7-1029373458#

Matt Kemp

Matt is a final year Politics and Economics student and Deputy Editor (Online) for 2020/1.

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