๐Ÿ’ก Musings of the Angry Optimist: Dumb money

๐Ÿ’ก Musings of the Angry Optimist: Dumb money

How 'dumb money' became 'smart money', what you should do to knock down a wall, and what to do if you're inside that wall.

Mathias Sundin
Mathias Sundin

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My thoughts, tips, and other tidbits that I believe are suited for a fact-based optimist. This newsletter is for you who are a Premium Supporter at Warp News. Feel free to share it with friends and acquaintances.

๐Ÿ’ธ Not so dumb money

'Dumb money' refers to the funds invested by individual investors in the stock market. It's the professional investors who call it thatโ€” the Wall Street millionaires and billionaires.

But in 2021, these pros got a rude awakening.

Heavy hitters on Wall Street had shorted the gaming retail company GameStop. This meant they would make money if the stock went down. If the stock went up, they'd lose money. If it skyrocketed, they'd lose a lot. But why would it go up? They had, after all, decided to break the company.

However, out there on the internet, a cat-loving father sat in his basement. He had invested everything he owned (and then some) in GameStop, based on an analysis that the company was undervalued.

Roaring Kitty, or Keith Gill, as his real name is.

He shared his analyses on YouTube and Reddit, wearing t-shirts with cute cats and a red bandana, under the name Roaring Kitty. Up to this point, one could somewhat understand why Wall Street didn't take him seriously.

What happened in the fall of 2020 and early 2021 has become a part of stock market history. GameStop's stock began to rise as private investors like Roaring Kitty bought more and more of it. This attracted even more investors, and the price kept rising, meaning the Wall Street short-sellers lost a lot of money.

The entire fascinating story is told in the movie "Dumb Money", which is currently playing in theaters.

Another bastion has been stormed

I loved the movie because I love when things like this happen. (Go watch it; I'm not spoiling anything.)

Someone builds a fortress, with a moat around it and a massive gate that only opens for certain individuals. But then someone outside invents a new weapon, the wall crumbles, and the fortress is stormed.

In this case, the new weapon was the internet and what's built on it: Reddit communities like WallStreetBets and YouTube channels, where dads in cat shirts can lead millions of people. Serious analyses are mixed with vulgar memes, creating a force that breaks down walls.

When the wall falls, new opportunities arise

One who made it behind Wall Street's walls was Jim O'Shaughnessy. He not only got in but became one of the leaders. So much so that Forbes named him, alongside Warren Buffett, a Wall Street legend. Before he sold his company, O'Shaughnessy managed over $7.5 billion.

Why did he sell? Because he realized that walls are crumbling worldwide. Not just around Wall Street. He calls it "The Great Reshuffle":

โ€œWe have reached a place with the confluence of things happening in technology, but also in a very, very large number of different disciplines. At the center of the great reshuffle sits the internet. And it's coming of age, so to speak, in that it is the largest variance amplification system in human history. The tools that it gives to normal human beings are quite breathtaking in their scope, and their numbers.โ€

In The Great Reshuffle, numerous new opportunities emerge. Jim is now investing his money in these through the newly formed O'Shaughnessy Ventures.

Additionally, Jim has a YouTube channel, but sadly neither a bandana nor a cat shirt.

๐Ÿš€ Jim Oโ€™Shaughnessy launches new venture for creators
Wall Street legend, Jim Oโ€™Shaughnessy, is looking for creators around the globe.

That's precisely how one should approach walls.

If you're on the inside, jump out and help storm the fortress.
If you're outside staring at the massive wall, build a battering ram.

Mathias Sundin
The Angry Optimist

Jim O'Shaughnessy is also a Warp Premium Supporter, which further shows how smart he is. ๐Ÿ™‚

โ— Interesting stuff?

๐Ÿ•บ Quantum physics

Via Massimo on X.

๐Ÿ˜ A sixth taste?

Scientists have discovered something that we Scandinavians have suspected for a long time: Salty licorice is delicious!

Here's how one non-Scandinavian described the first time he tasted salty licorice (salmiak) candy:

"The first time I sampled salmiakโ€ฆ I spit it out on a Copenhagen street corner. It wasnโ€™t that this powerful little pastille was bad. Itโ€™s just that my taste buds had never quite been lit up that way: smacked with a layer of sharp and sour salt dust, then soothed by something bitter and caramel-sweet. It felt simultaneously fascinating andโ€ฆ abusive? Or at least odd, like a knocked funny bone.โ€

But... it now appears this might be a sixth primary taste, following sweet, salty, sour, bitter, and umami. The taste is called Ammonium chloride (NH4Cl), but can't we just simply call it yummy?

Mathias Sundin
The Angry Optimist