When Did The 'Degenerate Economy' Begin? Take Me To The $FAZ Mobile!  A Stocktwits Memecoin?

When Did The 'Degenerate Economy' Begin? Take Me To The $FAZ Mobile! A Stocktwits Memecoin?

Good morning…

I spend a lot of time reading and thinking about, now investing in the ‘degenerate economy’.

To be clear for people new to this newsletter, I use the term ‘degenerate’ a little differently than the ‘degens’ themselves do.

Speculation as Entertainment’ and ‘Investing as a Sport ‘ is how I think about the ‘degenerate economy’. I am a degenerate, so is my son Max and my daughter Rachel. Degeneracy is now an 8 to 80 ( eight year old to eighty year old) theme and way of life.

When I started Wallstrip in 2006 (acquired by CBS), all I was thinking about was making a show that captured the power of trend following. The show was all about irreverence, silliness, education and fun…no degeneracy.

When I started Stocktwits in 2007, I was thinking about was ‘Twitter for Stocks’. I believed that an open web version of stock market chatter filled with ideas would be a thing. We invented the ‘cashtag’, built our own platform and are still growing today. I had no inkling of the degeneracy that was to come.

If I were pinpoint the beginning of the ‘Degenerate Economy’, I would go way back to 2008 during the GFC (Great Financial Crisis), and $FAZ. The ticker $FAZ represents a 3x leveraged bearish financial ETF…specifically:

ETF Summary

The fund invests at least 80% of the fund’s net assets in financial instruments, that, in combination, provide 3X daily inverse (opposite) or short exposure to the index or to ETFs that track the index, consistent with the fund’s investment objective. The index includes securities of companies from the following industries: Banks; Thrifts & Mortgage Finance; Diversified Financial Services; Consumer Finance; capital markets; Insurance; and Mortgage REITs. It is non-diversified.

The chart below tells the story as the ETF was introduced in 2008 and peaked in 2009 as the markets found a bottom. It trended all day every day on Stocktwits. If the financials rallied during the depths of 2008, the community would jump into the ‘$FAZ mobile’ (betting $FAZ would rise and financials would fall). Nobody was funnier and on point with the ticker then UpsideTrader. Joe is a grizzled veteran who would try and time the next phase down for financials with $FAZ.

Thank goodness the GFC ended ($FAZ lives on dying a slow death).

The unintended consequences of ZIRP, the cloud, the web 2.0 boom and easy VC money was upon us.

What followed was Bitcoin, Venmo, Etoro (portfolio company), Coinbase, Robinhood (portfolio company), DraftKings, Fan Duel, Solana, Stablecoins, NFT’s, Memecoins and even Alpaca (portfolio company). None created by degenerates or for degenerates (ok maybe DraftKings and Fan Duel) but here we are.

Today, Robinhood is likely to offer crypto futures in Europe.

0 dated options are a thing.

Anything can be parlayed.

In 2008, the markets were open 9:30 to 4 pm, Monday to Friday. Saturday morning was for old farts to read Barron’s and wait until Sunday futures.

Today, the markets are basically open 24/7/365. Crypto trends all weekend on Stocktwits.

Alpaca (we are investors) powers hundreds of ‘Robinhood’s’ across the globe.

Finchat (we are investors), Koyfin (we are investors) are modern day research terminals for everyone.

Do not shoot the messenger…but the ‘degeneracy’ cannot and will not be turned off.

Check out India if you think degeneracy is not a global phenomenon. Stocktwits India covers the ups and downs and introduces you to the people that trade these markets. The Indian stock markets have been rocketing higher with over 200 IPO’s just this year. The Sensex just a record high of 80,000. Modi has been good for the markets (you can sign up for the Stocktwits India Newsletter here). We talked a lot about the India boom on this weeks Trends With Friends (starts minute 30):

What we can do as citizens and participants of this global ‘degenerate economy’ is manage it. The best way to start is to invest. The next best thing is to learn the language and figure out your risk profile. Next up, find mentors and learn what to avoid (almost all of the leverage and most of the bells and whistles).

In my personal opinion, we have enough of the tools and toys, but I do see lots of cool products and pitches.

Education and utility (idea generation, curation, content) are what interests me when it comes to the future of ‘degeneracy’.

As for Stocktwits, I am excited about the next era. Stocktwits is an idea generation, meme and sentiment machine. AI will help us make it better. More curation, better search, more content etc…

I am fascinated by utility even as ‘grift’ seems to be accelerating. I believe we are reaching a state of ‘grift exhuastion’ where everyone rightfully assumes/understands that markets are rigged and the grifters are in charge. Much like ‘degeneracy’ is not going away, grift must just be assumed in order for one to participate.

From this understanding, a culture of utility is emerging. The tools exist for this to take hold and grow.

I have been thinking through a memecoin/utility token for Stocktwits that captures the best of membership, idea generation, fun, rewards, curation and content.

Stay tuned…

Happy Saturday.

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