News
Robinhood and the gamification of the stock market: The online trading giant whose popularity has surged during the pandemic was this week prompted to make urgent changes after a 20 year old student trader committed suicide over a $730k negative balance racked up whilst trading options. The story highlights the dangers of a millennial focussed platform offering significant leverage and esoteric products to young people with limited financial knowledge. It also leads naturally onto the moral repercussions of “gamifying” the stock market - the $8bn valuation on which they are now raising funding speaks much more to a gambling or gaming platform than an online brokerage. Meanwhile, rambunctious Barstool Sports founder Dave Portnoy, who took up day trading as a lockdown hobby for Youtube, has been using random Scrabble letters to pick stocks and trash talking Warren Buffett in the process.
It all reminded me a little too much of the (likely apocryphal) story of JFK’s father who, after being given stock tips one morning from the shoe shine boy, decided to liquidate all of his bank’s positions and start shorting the market because we must be at the top.
Zuck pulls Trump ads: on Thursday Facebook followed Twitter’s lead from last week, removing adverts posted on its platform by the Trump campaign that prominently featured a symbol used by the Nazis to classify WW2 political prisoners. This comes as the President’s first campaign rally of the 2020 election was hijacked by teenagers who signed up for the rally under pseudonyms and then didn’t show, leaving the Oklahoma arena half empty. This in a state which has voted Republican in every election since the 1960s: most certainly not a good start.
Short Watch
Attenborough on the Economist: This week the magazine asked national treasure Sir David Attenborough how he would invest $1bn to protect the world’s oceans. Link
Long Read
Dust in the Light: Everything Stratchery’s Ben Thompson writes is good, hence the popularity of his well known newsletter, but I particularly liked this. On the Internet’s ending of gatekeepers and its increasing of transparency, which have world altering effects, both good and bad. Paying particular respect to the recent death of George Floyd and the subsequent BLM protests. Link
Interesting Things
Robin Williams on the stock market: Predictably hilarious, RIP. Link
Cardboard Box Syndrome: Or, how to lose a fortune. This week I found myself reading about boat building companies, mostly the vainglorious and unprofitable hobbies of bored boat owners. And the description of those wishing to get into the industry as suffering from “Cardboard Box Syndrome.” Or, those who have been successful in something boring like selling cardboard boxes, so they feel the need to start some type of exciting or romanticised business. Lesson: stick to what you’re good at, and double down. Building boats is just manufacturing anyway. Link
Software spend should hurt your wallet just enough so that you actually use it: So how much is that? Source: van Westendorp Price Sensitivity Model
Latest from Munger: Quick video from the GOAT. “I don't consider this a time when an idiot could get rich by doing practically anything. There is a lot of idiocy going on at the moment & mis-behaviour and it always creates danger for the unwary.” Link
Are there too many entrepreneurs? The accelerating geopolitics of the tech supply chain, from Entrepreneur First founder Matthew Clifford. Link
What do you think IKEA’s best selling item is? Not in fact any form of furniture, it’s actually their humble meatball. With over 1bn units sold, IKEA shifts them at almost 22x the rate of the iconic Billy bookcase. Their policy is actually really interesting - to try and be the cheapest meal within a certain radius of the store, even if that means selling at a loss. Link