CSotD: One-Percenters’ Fantasy League
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Kirk Walters comments on the 30th anniversary of the 1987 stock market crash, which, he contends, harshes the buzz created by the Dow going over 23,000.
I covered the 1987 crash, but it was only a blip and hardly a warning. A few adjustments to automated trading software and off we went again.
The Dow Jones Average has meaning, but mostly to the people who play the stock market, and then mostly to those at the apex of the pyramid.
The oil companies put out some ads a few years ago touting the fact that you, the average person, own the oil companies because you are one of millions of people whose pensions are invested in stocks that include oil companies.
Which I guess means I could pick up the phone and call Exxon and tell them to stop drilling in the Arctic and they'd have to do it.
Or possibly it means that they are jerking me around.
It's like saying that, because I bought a ball cap with the logo of my favorite football team and a small part of those profits went to the team itself, I own the team.
Or it could just mean I got suckered into paying $24 for a damn ball cap. I got a free ball cap at Tractor Supply Company a while ago, and Dickies just sent me one for buying some T-shirts on-line.
Perhaps the best way for me to process it all is to figure I have three ball caps that I paid an average of $8 for, none of which gave me a stake in the Texans, Tractor Supply or Dickies.
If it sounds ridiculous to even ponder the notion, you should spend more time watching the stock market and listening to how their acolytes explain things.
Some of the analysis is intended to deceive outsiders but most is simply empty speculation about a system that runs on emotional responses to random events.
The best way to understand the stock market is to compare it to sports fantasy leagues, in which people speculate on the statistics of individual players, the important factor being that it has nothing to do with a team winning or losing games.
Put these guys in three-piece suits and see if they still seem like gullible nitwits.
They do? Good. You get it. A few at the top win, the rest are just fodder.
And there is no "loyalty" in fantasy leagues, in which participants choose players from different teams to make up a fantasy roster of their own.
Naturally, a player is apt to pile up more points if his team is doing well, but he might also spend the game on the bench or he might have a magnificent performance in a game in which the rest of his team plays badly and the team gets shellacked.
In the stock market, the perceived value of a stock may go up because the company is actually doing well, or simply because it shut down some factories, increasing short-term profits while employees were being turned out on the street.
When I was doing educational programs for newspapers, I was required to run the Stock Market Game, either the official trademarked one or a variant.
The game calls for classes to form teams, choose stocks and make mock investments throughout a six or eight or ten week period. The team with the largest portfolio at the end wins.
I hated the game, and used to distribute copies of MacKay's Tulipomania chapter in the rules package, in hopes teachers would talk to their kids about bubbles and perceived value and short-term plunging, but I'm sure they didn't.
Teachers loved it because they could use it to teach percentages and other math facts, which had nothing to do with investing, so that the exercise sent the same message state lotteries send: Pick right and you'll become wealthy.
So here's an interesting factoid: I kept having winners in the juvie facilities, and I asked other newspaper educators around the country if they had the same experience. Several did.
The kids in jail had, admittedly, screwed up somewhere along the line, but, basically, they knew how to game a system, and the stock market was just one more system in which chumps lose and players win.
There have also been numerous examples of a dartboard making out well in short-term profit taking, and a few in which an animal picks the stocks and triumphs over human experts.
From a sense of civic duty, the most important connection to sports fantasy leagues is this:
If you are loyal to a particular sports team, you will almost certainly fail to win in a fantasy league because you'll favor your team's players over more pragmatic choices.
And you will often find yourself rooting against your own team because you want opposing players to be racking up good statistics in the game.
Similarly, if you are loyal to your employer or to the mill that provides jobs for your town, you will not do well in the stock market.
Make of that what you will, but the bottom line is that investing in the stock market is a venture in which a sense of loyalty is a hindrance.
And in which only the major players at the very top of the pyramid have any real impact or influence.
Speaking of sports, and loyalty …
Drew Litton notes that the NFL, while stating the importance of respect for the national anthem, has officially placed a higher value on the First Amendment and on the value of seeking social justice.
The President, of course, is tweeting that this is disloyal, and there are some commentators dutifully following Dear Leader's take.
Meanwhile, various news organizations are either leading with the league's opinion that standing for the anthem is preferred, or its assurance that they respect the players' drive for social justice.
Depending, I guess, on where they feel most invested.
Anyway, we don't all fall for the hype
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