The Nasdaq Whale and Robin Hood Traders Get High! The Psychic Drama of Living in Bubble Times.
Do shares only go up? Are tragic minded therapists jealous? All around the world there is a speculative craze where traders are getting high, chasing the next shiny object, pouring their hot cheap money into anything that moves. Everyone is chasing the next high...
Mr Son is a Whale, when he gets his swimming trunks on, he creates tidal waves. When he sneezes the world catches a cold. When he walks cities rumble. He lives at no. 1 Mt Olympus. Ok, not really, but in his day job he runs the Japanese Softbank. But there is nothing Soft about him. He is a raging bull. He lost 70 billion in the dotcom bust. He wants it back. Recently, after selling some IT firms from his Vision fund, he had hole burning in his pocket and told his traders to put some huge bets on US equities during the sleepy summer months. Boom. 50 Billion call options, giving his traders the rights to buy 100s of billions dollar value in Tesla and Apple shares and profit if the prices went up. The FT uncovered him as the Nasdaq Whale. He had been working in the shadows, using shock and awe tactics to move markets. Whales are big enough to move the markets on their own. Psychotherapists (envious of their lack of call options, steeped in "put options" with their tragic-realist view of life) might call him omnipotent, god-like, in his ability to shape the world around him, prone to hubris, or inflation, heading for a fall. Indeed, when he bought call options, the price of shares did go up (a lot)! It's likely this happened because the size of his traders meant that the counterparties to the trade took out some insurance buy automatically buying the stock in question. That way they could deliver the stocks if Soft bank chose to exercise its call options.
This set in train an upward trajectory, as the higher prices led to Soft bank buying more call options. This manic activity, has led to a spectacularly rally, as sellers are absent from the markets. Its like a magic trick, where traders are able to generate something from nothing! Pessimists and realists have gone home, tails between their legs, drinking tea with tragic-realist psychotherapists, as the optimists have entered into a full blown mania. Day traders, confined at home by the virus, have joined in the feeding frenzy, listening to crazy mutterings of celebrity trader, Mr Portnoy, who says, "Don't let the Suits get you", "Stocks only Go Up!" as he bangs his gavel on his desk.
We are living in a bizarre split and disconnected world, where as unemployment goes up, asset prices are in parabolic ascent. Sadly, as a psychotherapist will tell you, the party can't go on forever, because what goes up, must come down, and in the end, yes we all die. It's not pretty. Plus when things are going unbelievably well, something just seems to go wrong!
Generally, however, when we are in a socially manic phase, such considerations are obliterated from the mind, and the one-sided fable of things only going up seems believable. Mr Son, the Whale, will be ok. However, the Robin Hood traders, might do well to start buying "puts", both literally and psychologically, which would allow them to survive and even prosper when life and the markets inevitably turn South.
Well Mr Portnoy has been right so far. His dedicated followers, the young people on Robin Hood, that allows stock trading with no commission or fees, and lots of leverage, have been responsible for a retail splurge on call options for small amounts and short time frames, but adding up to 30 billion. Mr Son, and the Sons and Daughters of speculative America, have combined, the Whales and the shoals of fish (on Reddit, and investment boards), pouring their hot cheap money (thanks to Mr Trump cheerleader of the mania, and Mr Powell, financier of the asset bubble) into US equities.
This speculative mania is something to behold. 2 trillion, is the value of Apple, which has risen 30% since June, based on a paper share split, which is like cutting up the same cake in a different number of slices. The same with 400 billion dollar Tesla. Weirdly, it rose after a non value creating share split, on the basis Robin hood traders could buy and sell it more easily (as the split made the shares seem "cheaper" - even though the split of course meant that they were actually worth less). I can't quite believe that 800 billion was added to these two companies simply on the back of this purely cosmetic split. The group delusion has spread across every level of society.
In the world of psychotherapy, there is generally understanding that there is no such thing as a free lunch, and that most things are hard earned, both in psychic and physical terms. It is so easy to get carried away in the mania and lose one's footing. The psychological impact of the bubble is going to impact us over years to come. Recently a Robin hood trader committed suicide when he misunderstood his balance, thinking he was £100,000s in debt, when in fact he was solvent. However, this tragic misinterpretation will soon be a harbinger is a sign of things to come, as soon, we will all be facing a bubble deflating, and our profit and loss sheet covered in red ink, as the we come back to earth with bang. Sadly, even the grandest Whales find themselves beached, or ruthlessly hunted down and harpooned. Hedge funds will start to circle Mr Son. Overtime, the dormant sellers, the bears, who have lost their growl, smashed by the aggression of the bulls, will re-emerge. The current mania feels almost permanent, a paradigm shift where the normal laws of gravity have been upended. "Stocks only go UP!" We seemed to think we are exceptions, and that this time it's different. The economist, John Maynard Keynes, an astute observer of the markets and the human psyche noted that the markets can remain irrational longer than an investor can remain insolvent. The legion of busted Short sellers of Tesla could fill a stadium. Psychotherapists would agree. People can remain irrational, deluded, or inflated for a few days, or a lifetime. However, reality will surface, with its painful impact, either through a conscious change in attitude, or fate. In the case of the current speculative bubble this means a shift in our attitudes to disentangle ourselves from the speculative bubble, or the external blow of financial losses. Inwardly our outwardly, reality will crowd in on us as our lives unfold.