The wrong question

Oceans of ink have been spilled on the topic of the markets having come unhinged from reality, bubbles in tech stocks, Tesla, and Bitcoin and the crazy behavior of retail investors under COVID, especially via Robinhood and options trading. None of it is entirely nonsense, but it also marks a change in market regime, much as the retail FX trading of legions of Ms. Watanabes changed foreign exchange markets in earlier days. Google it. There will be a lot of pain when mean reversion sets in, but when the dust settles on that the world will look different from how it was before, in traditional Hegelian fashion.

But overall so much of this, and so much of our behavior as financial actors, focuses on the wrong question. So much of what people are asking is "how can I allocate the next marginal dollar so that it grows in my account?" when they should be thinking "how can we allocate our next marginal dollars so that more people will be happy and healthy in the future?"

I am of course dramatically oversimplifying things. I have the impression that people are giving more. I gave more this year than I ever have before, about 10% of household income between charitable giving and political campaigns, with slightly more to the former. In aggregate US charitable giving has historically hovered around 2% of GDP, not counting hours volunteered, and the money-giving is logically clustered amongst those who have more (more hours may be given by those who have less money, I've never seen good reporting). People have also been really focused in many places on supporting local businesses, especially restaurants, to preserve them, so that's a kind of giving.

But the national, high-level conversation has not been focused there, not by a long shot, and that's a shame. If the President could have led a conversation around service and giving while leaving governors and public health officials to lead the dialog on the pandemic, COVID could have been a wonderful moment for civic engagement. In many ways, it still has been, but still an opportunity has been squandered.

Almost as an aside, and because this is my blog I can do this, it's worth noting that the breadth and scale of equity financing in the US -- the stock market -- has worked well for us under COVID. By contrast, the shallow equity markets and largely bank-based financing system of Europe have hindered its ability to shift capital to places where it can be useful. For example, as Zoom has taken over the world, it's been able to easily get money to expand operations, and the whole platform has gotten more stable. I could go on but I've been typing long enough for one day