The market fever has not broken

A sense of unreality always permeates financial markets. Investors who take fiduciary obligations seriously still exist, but apparently more than those who see investing as a fun get-rich-quick game.

Why is this important: The post-pandemic return to some sort of pre-pandemic “normal” has not yet arrived, and therefore, there are many concerns about the disruption and volatility that could accompany such a transition. The markets, so far, have done a great job of climbing this wall of worry.

The big picture: The defining feature of the pandemic era has been fever. The first weeks of uncertainty and isolation felt like a feverish dream, with time dilation and reality distortion. After that, the whole country entered a particularly feverish state, as the Black Lives Matter movement and the 2020 presidential election raised the nation’s emotional temperature to unbearable levels.

  • The markets were not spared. In some ways, they’re the last bastion of delirium, in a country where vaccines and a boring president have allowed much of the country to feel a semblance of normalcy.
  • Money has become something to play with for fun and profit. There are still hundreds of play currencies, some of which are worth hundreds of billions of dollars, for people who find government-issued money too limited.
  • Decadence is more and more offensive to anyone who lives paycheck to paycheck, or even to people raised to respect the value of a dollar.

Be smart: The strength of the economic rebound after the March 2020 recession surprised almost everyone – and helped create windfall gains in everything from NFTs to mega-cap stocks.

  • The get-rich-quick fever has reached unprecedented levels over the past 18 months, spanning everything from GameStop and Dogecoin to PSPCs and even Spider-Man Tickets. A company has become a unicorn by persuading individual investors to buy securitized art.

Financial shenanigans are everywhere you look; Bloomberg’s Matt Levine, for example, has a masterful dissection billion dollar private investment in Donald Trump’s barely existing new social media company – a more dumb classic business that doesn’t need to be based on an underlying value at all.

What they say : Depthsounder Bruce Mehlman cited “Extreme expectations” as the number one risk facing the United States in 2022. “Lack of realism and perspective is in itself a major risk,” he told Axios. “It undermines the cooperation based on rationality essential for the nation and its institutions to succeed as intended.”

The bottom line: The occasional crypto crash does not mean that the fever has subsided. It just means that the game is always exciting.

About Bernice D. Brewer

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