What’s that Warren Buffett quote about when the tide goes out you’ll see who’s been swimming naked? Seems to me like we’re about to see a lot of willies.
Every day since the Iran War started, one opens Yahoo Finance, or whatever your app of choice is, and sees one of two headlines corresponding with one of two colors:
- “Stocks slide as Iran War peace shaky“
- “Stocks jump as Trump Truth signals Iran War peace“
Sometimes we go through two cycles of this in one day. The elevation change of the Dow or the S&P is net 1-2%.
After 50 days of this now, my conclusion is that the stock market is dumb.
I don’t mean it’s not worth playing, paying attention to, or trying to leverage in some way. I just mean that the schizophrenic behavior of some small group of people who have a profound impact on the world who wait anxiously all day long for President Trump to “signal” (i.e., proclaim made up or half-true information about how things are going with Iran) and then move the market up or down a half a percent based on his sentiment, look profoundly toddler-ish.
Look, I know we should pay our respects to the wisdom of Mr. Market. I know we should be in awe of its ability to see what is unseen in the real and material world. I know that, yes, even the heat death of the universe, is already priced in.
But, I also know they look dumb.
What seems obvious to me is that you can argue with math. You can’t argue with supply.
And we are running out of supply, my friend.
And here’s what’s interesting about the market… It is fully of smart people doing smart things who learned all of this a long time ago. They’re operating with more information than you and I have! So, trust them! The day will be won with more information.
You will thank The Market when, against all odds, the reality you think you see on the ground, the risk you (you?!) think you see from your perch, is overwhelmed by the exuberance of the chart turning green before your eyes and the number, once again, going up.
Perhaps the market is the ultimate Baudrillardian Simulation.
“… if it is practically impossible to isolate the process of simulation, through the force of inertia of the real that surrounds us, the opposite is also true…
… it is now impossible to isolate the process of the real, or to prove the real.
The market is rational, autonomous to a degree, and acts in perfect tension with the real and the hyperreal.
But The Market (the aggregate of Truth Social posts, circular private deals between NVIDIA and OpenAI, and the fact that ~70% of U.S. GDP is services vs. ~11% manufacturing), is irrational, hard to pin down, and “impossible to isolate the process of the real, or to prove the real.”
That’s what I see happening. That’s what the Iran War makes obvious to me, if anything is:
The Market isn’t going down because it won’t let itself go down because those who would make it go down are in the same life boat as those who want to make it go up. In fact, they are the red and green headlines every day, in superposition with one another.
And no matter what “inertia of the real” comes, (~500m barrels of oil lost so far in the Iran War, jet fuel doubling, food shortages coming) it will, until it no longer has an internet connection to convince itself otherwise, continue to go up.
I expect we will soon see The Market’s willy.
addendum, 3:28 PM, 4/22:
The Market is a magical and wishful place. Anything you want to be, can be:
addendum, 10:42 AM, 4/23:
“There will be NO SUPPLY CHAIN SHORTAGE or ENERGY CRISIS until an analyst at JP Morgan can’t get his latte on time or fill up his BMW.”