The Casino-fication of the Market: Comparing Past and Present

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Carroll discussed The Casino-fication of the Market: Comparing Past and Present. Here’s an excerpt from the episode:

Jake: I was kind of surprised to see Buffett say that he thought that today’s markets were more of a casino than when he was first started out.

Jim: Well, I think that’s interesting. I would say that it’s a little bit like sports betting, right? You can now bet on sports betting sites like UFABET เข้าสู่ระบบ สำหรับการพนันออนไลน์ที่ดีที่สุด in the middle of a game on the next play, how far is the punt going to go? It’s nuts, and it’s very high twitch. And some of that high twitch has entered the markets, whether it’s the meme stock trading, the Robin Hood platforms, certainly AI and machine learning is being applied to markets to try to figure out how to buzz in faster than your competitor, how to take that position in front of somebody else. And so, I think that there certainly are aspects of markets that are much more casino like than they were back in Warren’s earlier days, when he could take his time to find some inefficiency and slowly build a position before anybody knew he was doing it.

Jake: You have Einhorn, on the other hand saying that he can’t get a repricing on any of the things that he used to buy at a ten PE and get back to a 15, and now he has to buy a five PE and hope that they do buybacks. So, on the other hand, it’s like kind of inefficient in the other direction compared to what, you know all the gambling?

Jim: Yeah. I leave the fundamentals to smart people like you guys and David Einhorn. I think that for what I’m trying to do price is the arbiter, and it’s not to say that price is always right, but how many times have we seen price stay wrong for an enormously long period of time. So, I think–

Jake: No comments.

Jim: [laughs] yeah. it’s hard to argue with Uncle Warren on an observation like that. As our buddy Rudy Havenstein, I think just about every day he’s got a post referring to the casino.

Tobias: Casino closed. Jim, I just read Hussman’s interim comment and he’s bearish, but he’s been bearish for a while, but he seems to think the reason it’s an interim comment is because there’s some very near-term volatility, I think is the way that he would characterize it. If you read that and you want to rush out to sort of hedge yourself or what’s the sort of smart way of doing that given where the VIX is relative to the VIX futures and the options and all that sort is it an expensive–

Jake: Not investment advice also Toby.

Jim: It’s not, but I’m going to be writing down the answer.

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