What just happened?
One of the enduring quirks of the 2020-21 coronavirus period may be in how it unleashed our collective inner Kardashian.
Even as lockdowns forced the acceleration of trends like working from home and holding video meetings, they also seem to have remade American life as one giant Truman Show.
Our living rooms and offices became television sets, and were critiqued , sometimes mercilessly. Our kids and dogs and private parts were overshared. Our kitchens mimicked reality shows and our driveways became marathon courses.
Now our penchant for performance art is remaking finance. Dave Portnoy spent much of 2020 marshalling a band of bored Americans to trade stocks as a social pastime, in public.
Robinhood gets a lot of attention, but it’s just the plumbing. What’s more important is that financial markets have now become not just the high school football game, but the cafeteria as well. The sportos, the motorheads, geeks, sluts, bloods, waistoids, dweebies and dickheads all adore Portnoy.
That’s why it’s important to watch his latest steps.
By working with VanEck to launch an ETF with the ticker BUZZ , Portnoy is making a business case for the power of social groups and media — and social media — to influence markets. We all know that’s a thing, but now it will be tested and tracked.
And by creating BUZZ, Portnoy is also making a business case for the ETF model — for diversification, mostly. If meme finance as played out through GameStop /zigman2/quotes/203755179/composite GME -1.12% was an awkward first draft — think of Pets.com from the dot-com bust — meme finance as played out through ETFs may be more enduring. Chewy, for example.
All this means it’s time to think seriously about what the social-ization and meme-ification of finance will mean for the ETF industry in the future. A financial instrument that once seemed like a risky upstart is now one step closer to being the main attraction: the “suit,” as it were.
Thanks for reading, as always.
One door closes, another one reopens…
As Americans hunkered down at home last spring, the financial-services community sprang into action, producing lists of the stocks likely to benefit and launching funds based on those ideas. More recently, publications, including MarketWatch, have published suggestions on how to invest in the “reopening” economy .
But a funny thing happened on the road to recovery. Even as funds like the ETFMG Travel Tech ETF /zigman2/quotes/216415466/composite AWAY +0.16% and U.S. Global Jets ETF /zigman2/quotes/207744796/composite JETS -0.53% fly to the sky, investors continue to reward many of the work-from-home plays.
The WisdomTree Cloud Computing Fund /zigman2/quotes/214057201/composite WCLD -1.27% has picked up $54 million in the year to date, for example, though the Direxion Work from Home ETF /zigman2/quotes/219230438/composite WFH -0.11% has lost $32 million, according to FactSet data. Many online retail ETFs are going gangbusters: the Amplify Online Retail ETF /zigman2/quotes/206522380/composite IBUY -0.49% has seen $192 million in inflows, while the ProShares Online Retail ETF /zigman2/quotes/208410191/composite ONLN -0.28% has hoovered up $253 million.
“Many of the trends that started in 2020 are likely to persist through the rest of the year even as people are vaccinated and begin to venture out,” said Todd Rosenbluth, head of mutual fund and ETF research at CFRA. “I don’t think of this as either/or. This is a situation where both trends can succeed.”
Rosenbluth thinks the diversification that ETFs offer compared to picking individual stocks will serve investors well during the transition. For example, companies will continue to rely more on tools like Zoom in the future than before the pandemic, even if it doesn’t account for as many of our meeting venues as it did during lockdown, he said in an interview. That diversification may also help calm some of the concerns around the ability of high-flying tech concerns to keep growing at the same rate, Rosenbluth argues.
It’s striking, however, that for all the many ways investors can play the stay-at-home boom, there are fewer options designed to capitalize on the reopening. Many stocks like cruise lines and restaurant chains make up small chunks of the portfolios of non-thematic ETFs, and few REIT ETFs have concentrations of mall stocks, arguably the property type most likely to benefit.