Important to note that it's not just tech stocks. Yes, tech stocks are down more than, say, Archer Daniels Midland but things are terrible everywhere. "There's no safe harbor" as the traders like to say, and even going to cash means you're losing 8% a year, right?

So the first thing to keep in mind is nobody knows, but they all believe very strongly. The second thing to keep in mind is that from about 1759 to about 1946, it was popular to believe one thing, but from about 1950 on it's been sacrilege to believe that thing. The third thing to keep in mind is it's Cleverbots all the way down, and they're not waiting for you.

FT last night with the apocalypse

Obviously, all hedge fund managers love pseudo-philosophical metaphors and references, especially if they are a little recondite. But as somewhere that hosted Jamie Powell for four years, we can’t complain too much about people over-interpreting old films no one has heard of or cares about.

And the truth is that there are signs everywhere that a pretty profound market regime change is upon us, and that people are only starting to grapple with the implications. The Nasdaq has now given up all of its 2021 gains, and many — like Loeb — believe that this is just the beginning of an epic shakeout, rather than the end.

The most vulnerable are still-profitless companies that need the grace of equity or debt investors to stay alive. Loeb hints that many of the more speculative companies that relied on stock options to attract talent might already entering a death loop as the value of their equity withers — something that Jamie wrote about before leaving (sob).

So look. Backintheday? Back when economics was about running the world rather than maximizing yield? Talkin' like 90 years ago? It was generally accepted that there were two approaches to making money:

- "firm foundation theory" wherein an investment is worth (what you expect your investment to be worth in X amount of time) x (the risk that it'll do something else in that amount of time) - (what your investment would do risk-free). There's math here. There's a lot of assumptions, but you can come up with numbers that you can throw in a mimeograph, write on a chalkboard, send across the Telex to convince people to buy things.

- "castle in the air theory" wherein it's worth what people will pay you for it.

As math gets tougher, "castle in the air theory" gets more attractive because the more precisely you can model bad data, the more likely your prediction is to be wrong. Why is Tesla worth more than all other car companies combined? Because (1) it didn't go to zero despite the fact that "firm foundation theory" said it should (2) so there's no reason not to believe it's worth more than all other companies combined.

"they were this close"

As "the next guy" gets tougher to convince, "firm foundation theory" gets more attractive because if the horses are spooked they are not going to run the derby for you. "Exit capital" is a particularly smarmy euphemism for "the people who are going to buy the stuff you're selling" while "bags" have become the unit by which your success is made. If you double your money, you have a "two-bagger." If you make ten times your money, you have a "ten-bagger." If you don't, you're the "bag-holder". It happened slowly, then all at once: the slang of trading became the slang of grifting. I find that illustrative. It's a tacit admission that none of it was based on reality, but entirely on perception. A pickup truck is totally worth three and a half stealth bombers until suddenly it isn't.

AND HERE'S THE BIG THING

90% of trades are algorithmic. 70% of it is derivative. You start with actual "market sentiment" the way hurricanes start with the flap of a butterfly's wings. Of course "castle in the air theory" was going to dominate; neither the bots nor the ETFs care a whit about whether the underlying assets make any money. But now? Now you're profiting entirely on perception.

The old crusty dudes have been talking about the 'everything bubble' since 2017 or so. Basic problem is we threw a lot of money at the stock market in 2008 to keep the economy from unraveling (rather than throwing a bunch of money at the people living in houses they can't afford because we can't talk about economies, we talk about profits, remember?). Every time the Fed tries to ask for its money back the market loses its shit. Things were on the ragged edge of coming apart when the Pandemic hit, at which point... well...

So mk is right in that it's tougher to make money when you have to pay interests on loans (there's a Canadian economist whose name I always forget who said "interest rates are the price of monopoly" which should tell you something about, say, Amazon) but at the same time, we're going on fourteen years of grayhairs saying "this can't go on." EVENTUALLY they will be right.

Money is a religion. One of the psalms of the fundamentalists is "bear markets return capital to its rightful owners." The Hatorade is flowing. History doesn't repeat itself, but it rhymes.

Unfortunately? Stocks and bonds have been a popularity contest pretty much since we ditched fractional pricing. It was the end of history, China was in the WTO and AOL was worth more than Time Warner. Things should have corrected in 2008 but instead capitalism doubled down on itself. And eventually, that which goes up must come down.

It's a long way to say "people think cash will lose less money than Netflix" but also "nobody ever cared if Netflix made money before". The Nifty Fifty made money and still ate shit. What's happening, basically, is everyone is trying to figure out how to make money in a world where Lockheed and Raytheon are making missiles to light up Russians again and in which you are no longer rewarded for pricing pickups ahead of stealth bombers.

Higher interest rates means companies need to make money instead of borrowing it. This reflects that new reality.