The stock market's ADHD

By the numbers: Shares of cannabis company Canopy Growth closed on Election Day at $20.46 apiece, valuing the company at $7.6 billion.

• That evening, referendum results came in showing that recreational cannabis had been legalized in Arizona, Montana, New Jersey and South Dakota — a broad range of states, helping lay the groundwork for decriminalization at the federal level.
• The following day, Wednesday, Canopy's shares dropped as low as $18.32 — down 10.5%.
• By Friday, however, with no new news, the shares were as high as $24.98 — up 36% in 48 hours.
• The cannabis rally continued into Monday, because something something coronavirus vaccine, even as Peloton was seeing its valuation slashed by a quarter in a single day.

The market euphoria on Monday was so extreme that hedge fund manager Bill Ackman was able to replicate exactly the same credit default swap bet, at exactly the same prices, that he made in February — the one where he turned $27 million into $2.6 billion in the space of less than a month.

• The pandemic is much more out of control now than it was in February, and everybody knows how far prices can fall, because we saw them do just that in the spring. Yet Ackman's counterparties don't seem to have learned anything from their February mistake.

Between the lines: A lot of momentum trades got severely unwound on Monday, with moves as large as 15 standard deviations, according to Nomura strategist Charlie McElligott.

• It was almost certainly a day where fortunes were made and lost at long-short hedge funds. As the Wall Street Journal reports, "value stocks beat expensive growth stocks by the widest margin of any single day since the 1930s."
• Individual long-term buy-and-hold investors, however, were, as ever, perfectly fine ignoring the market entirely.