Below are some of the most interesting things I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
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The Wall Street Journal reports from Robinhood’s Hood Summit: “They came from different walks of life—plumbers and small-business owners, mingling with corporate middle managers and stay-at-home parents. But many had something in common: investment portfolios that had grown so large in recent years they had quit their jobs to play the market full time.”
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And they love options. Also from The Journal: “Volumes in options tied to individual stocks have recently reached levels seen during the meme-stock mania of 2021, about $700 billion of notional volume a day… The prices of call options, which give the right to buy, have eclipsed levels seen during that time.”
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That’s not to say that more traditional forms of leverage have fallen out of favor, though. “Morgan Stanley, Bank of America and Goldman Sachs each reported this week that their margin books have seen double-digit growth in the 12 months through September. The tax-aware long-short strategy has been a key reason,” reports The Journal.
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Foreign investors, too, are getting in on it. Bloomberg reports, “Asian capital is the fuel that feeds the US AI boom. And all of that sits on top of precarious global imbalances in demand and capital flows. A stumble in AI investments would thus entail painful adjustments for the US, the greenback and for Asia and the world.”
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Paul Tudor Jones, the founder of the other Robin Hood (the charitable foundation), seems to have a different opinion, however, to that of fans of Robinhood (the trading platform): “2027 is going to be really, really challenging for the stock market. You’ve probably got the most negative flow picture for the U.S. stock market that we’ve had, say, since 2002.”
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