Are Markets Just a Casino Now? | The Acquirer's Multiple®

During their recent episode, Taylor, Carlisle, and Michael Gayed discussed Are Markets Just a Casino Now?. Here’s an excerpt from the episode:

Michael: Well, which goes back to why I find the environment disturbing. It’s distorting market signals. It’s distorting– It actually distorts efficiency. It’s like where is capital best treated attributes to the companies where fundamentally they’re strong and solid. I’ve used that line many times before. I’ve been wrong, because the market– the S&P, not the market, has kept on doing what it’s doing. I keep saying, when a rising tide does not lift old boats, everybody drowns.

So, in the same way, we have two Americas. In the same way, we have the very rich and everybody else. The stock market has become the parallel of everything else around us, where you have basically the Pareto principle on steroids. It’s just– [crosstalk]

Tobias: Pareto squared.

Michael: Yeah. And then, it’s like, all right, well, what’s the implication of that? The implication of that is a very uneven environment. It’s beyond just haves and have nots. It is at the core through which people interact with each other. It creates this gambling mindset, which is why you ask anybody on the street, “Hey, do you have DraftKings on your phone?” I can almost guarantee you almost everybody has DraftKings on their phone. They’re doing parlays. They do this–

Everything post-COVID has resulted in something really fascinating culturally in that it’s become this environment where people just say, “You know what? The hell with everything. I’m going to just gamble.” Gambling is now available in any which way you want. Whether it’s at the actual physical casino or sitting on the toilet on your phone buying Fartcoin. [laughs]

Jake: Yeah, there is does feel a bit of a financial nihilism that probably set in and created some interesting societal impacts. [crosstalk] I’m actually quite disturbed by it, to be honest. I think it’s not a good thing for your civilization to be too anchored to gambling.

Michael: No. Well, it’s rather a circus, because it’s like everybody’s just getting the dopamine hit from gambling. You really think you can have democracy working with people are just not thinking, they just want the dopamine. And then, by the way, that’s the other thing. As you get these dopamine hits, at some point, your body acclimates to it, which means you need even bigger hits. And it creates people taking on more drugs, taking on more alcohol, taking on bigger bets. And it’s like, “Guys, you really want to encourage this?”

Tobias: I think that the nihilism is not– it’s understandable in the sense it’s so hard to get on real estate relative to incomes is as stretched as it’s ever been. Mortgage payments relative to incomes is as stretched as it’s ever been. So, people buy–

Jake: Still buying that?

Tobias: Yeah. So, people buy expensive cars and gamble as a way of feeling better, because the expensive cars within reach, whereas the house is not. You can gamble and maybe you hit it big enough that you can then go and afford the mansion.

Michael: Yeah. Look, [chuckles] it’s even culminated in our president having a meme coin, which I don’t know if he claims, he has or hasn’t, but the whole thing is just very weird to me. It does feel like a simulation.

Tobias: Truly bizarre.

Michael: Right.

Tobias: I don’t know, is he associated with it? It just seems insane to have done that before he went in.

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