14. The $1200 Divide—and the DOW

1. Those of us who used our $1200 checks to buy groceries or pay rent;

2.  Those who didn’t really “need” the $1200, got it and added it to an IRA, or used it to help others—in our town pooled $1200s to create a community help fund;

3.  Those who didn't get it and are OK with that;

4.  Those who didn’t get it and wouldn’t notice $1200 if they got it.

Protests are sweeping across America and the world. Police departments are staggering. State and federal lawmakers are scrambling, passing legislation they wouldn’t have looked at six months ago. Coronavirus deaths are down in the US, but cases and deaths are spiking in some states and other countries. The world is fighting COVID-19 hard, and measles and polio are being neglected—and might erupt again. We are officially in a recession with 21 million out of work…

And… the DOW bounces along up and down, mostly up after the first big shutdown hit, down last week as shareholders sold off and took profits, then a few up days, etc, etc.  It’s up about 7 % today from May 20, when I wrote about a guy who put $3 million in a trading account to “play” with. He made $210,000 if he indexed $3 million on that day and sold today. If he’d lost $210,000, he’d still have $790,000 to play with.

Most Americans agree that capitalism is a good way to organize the economy and provide opportunity. But we understand capitalism in terms of the investments and hoped for returns we and our friends make in homes, businesses, and bank accounts. We have no notion of the gyrations that allow a few to cash in on stock options; we don’t have millions—or thousands!—in E-trade accounts to play with, and we tend to our own and our neighbors’ needs gratefully with our $1200 checks.

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2. The Stock Market

I bought into the market once, in 1987—right before the “Black Monday” crash of October 19. The $3,000 I took out of a slow-growing insurance policy suddenly became less than $2,000.

I’ve never had the excess cash or felt the need to play the game again—but since then it has seemed to me more like a casino than a legitimate business. My brother the economist assures me that the market has a legitimate purpose—in raising capital for business development…. But he also admits that he tells students that it’s a horse race, that you bet on good safe horses, or take fliers on long-shots; that sometimes the good horses break a leg, and sometimes the long-shots win. Some know more about horses than others.

Now that I have an I-phone, I can see what’s happening to the Dow Jones anytime. And it’s been quite a ride with COVID-19. The big dip in the beginning has given way to zig-zag ups and downs, not reaching previous highs, not going deeper in the tank.

My simple-minded understanding: there’s money that has to go someplace. Confirmed by John Cassidy in the New Yorker, who found that E-Trade and TD Ameritrade more than tripled transactions this April over April, 2019.

A Cassidy friend suggested that casinos are closed and there are no sports to bet on. Dave Portnoy, the founder of Barstool Sports, confirmed that. He said that “Sports ended, and this was something that… I could do during the day.” Portnoy put three million dollars in an E-Trade account “to play around with.”

Some are out of work; many are grateful for the $1200 government checks. And some are playing the *&^%) stock market—at least until the tracks open and some kind of football season happens.

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