The Market

'The main purpose of the stock market is to make fools of as many men as possible."

-Bernard Baruch

Over a year ago now, I pretty much pulled out of the stock market. I held a firm conviction that the new administration would be incompetent in its fiscal policy, profligate in its tax cuts, reckless overseas, and derisive of the rule of law at home.

Check. Check. Check. Check.

And yet, our household has left a lot of money on the table by pushing away from the roulette wheel just as an epic stock market rally began. Stocks are up 75% since the inauguration, which would've allowed P and me to retire. Instead, we're still toiling in the vineyards, and will be for years to come.

What did I miss?

For starters, I approached the stock market as I've mistakenly approached juries over the years, assuming we're dealing with rational actors who would weigh risks and rewards and act accordingly.

Did that happen? Maybe I just don't have the same data set they all do, and in fact the market is acting in a perfectly reasonable way.

But all those negative variables I rattled off above have always spooked markets, in part because we're a consumer based economy and horrible policy at the top inevitably impacts those down the ladder, who then skip a trip or a restaurant meal or try to keep the old Toyota running another year before trading it in. Trading markets were tethered to this economic reality.

That may be the real issue here. In fact, at least anecdotally this fiasco of an administration has damaged Americans' economic well-being. Consumer confidence is at an all time low. Yields on long-term bonds have started rising pretty dramatically, telling us that bond investors see the risk in all this stupid fiscal policy and expect to be paid a premium for their participation. It sounds like Las Vegas and other popular destinations are seeing their lowest numbers since anyone started keeping track.

But it doesn't matter anymore, because those at the top hold most of the country's wealth, and are insulated from all this unpleasantness. The futures market is an accumulation of puts and calls and hedges, all betting on very small movements in the market. These folks are playing both sides of the table, the gambler and the house, and it's in none of their best interests to see either side lose everything. So they play these small movements in a handful of tech stocks blown up in value by AI bets, and really make bank when the Investor In Chief makes some Truth Social post that creates a little swell they can all bet on. If you were on the wrong side of the swell, it's because you didn't know in advance what was going to happen, vel non. They did.

So the stock market will continue to reflect a non-reality about the current state of the economy, which seems by most measures every bit as bad as I thought it would be when he took power. I just wish I'd seen the oligarchy coming, and placed our bets accordingly. I'd be writing you from Greece or Ireland right now.

And so it goes.