The Casino Market

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Wall Street is really good at finding new ways to make money.

They’ve got the ETF machine cranked up to 11, as this chart from Todd Sohn shows.

The thing that stands out on the previous chart is the red line going vertical. This next one breaks it down into its sub-categories.

Look at the bar on the left. 245 leverage and inverse ETFs, with $110 billion in assets. One hundred billion. And ~eleven on top of it.

We are a nation of gamblers. For us, the action is the juice.

Eric Balchunas tweeted about MSTU, which is an ETF that gives you twice the daily exposure of Microstrategy, which itself is a levered bet on Bitcoin. Bitcoin is up 65% year-to-date. MSTR is 307%. But why stop there? Why not have two times the daily exposure of the two times exposure?

This ETF, which launched just six weeks ago, is already in the top 1% of volume, right there with GLD.

Eric said, “It’s so funny they’ve long had 3x MSTR ETFs in Europe but no one cares, no assets, volume.”

We spoke with Jason Zweig on TCAF last week about the gamblification of the markets that is apparently unique to Americans.

As much as I enjoy gambling, I don’t love it in the market. But as I told Jason, it’s not 100% bad.

If people can keep it to a small amount, that’s good. If people can learn that it’s a fruitless exercise, that’s good. If it teaches them that the market is a serious place and is, in fact, not a casino, that’s good. And if they can learn this lesson at an early stage before they accumulate real money, that’s great!

We’re going to continue that discussion on tonight’s What Are Your Thoughts? with our Chief Strategist, the brilliant Callie Cox. See you at 5 EST.