Evening Note

Have to share this quote from an interview I’m listening to with Stephen Clapham, founder of investment research firm Behind the Balance Sheet:

“When I started doing my forensic accounting course, the first one in June 2018, I was asked to do it by Stuart Investors, they’re a well-known firm in the UK; they specialize in global and emerging markets. They’re very thoughtful and smart people. They asked me to do a forensic accounting course because they’re worried that some of their analysts had never seen a down market.”

We’ve offered a number of parallels herein to the late-90s/early 00s over the past few months, and listening to Stephen it occurred to me that that epoch tech bubble bear market put an end to what was at the time the longest bull market on record. I recall the then narrative about how all of the online trading craziness around dotcom stocks reflected the utter inexperience of the majority of individual investors at the time, exacerbating the risk (the bubble).

Well, the most recent bull market overcame the ’90s stretch as the longest ever, and, lo and behold, we’re seeing huge trading volume among the do-it-yourselfers. 


“Retail investors have doubled their trading activity during the pandemic, thanks partly to $0 commissions.

But there are more things occurring to encourage retail trading, including stay-at-home orders and market volatility. Add it all up and you get electronic brokers reporting trading volumes that are up 100% year over year.

In the first quarter alone, daily average revenue trades, a standard industry metric, have doubled for most of the e-brokers from a year earlier.”

I’d add that for sure some of the additional $600/week times millions of unemployed folks accounts for a fair chunk of what’s funding those budding billionaires. Keep in mind, that’s temporary stipend, we presume

Note that the UK firm was so concerned with how a professional analyst might act during his/her first-ever bear market that they brought a consultant in just to teach of, and I presume, simulate, the extreme risks inherent in managing such events. 

Know that millions of shares of stocks each day are presently being traded by first-timers who’ve received no such tutoring. The last time this occurred didn’t end so well…


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