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Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

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Illustration: Megan Robinson/Axios

Buying and selling individual stocks is a hobby for rich people that, over the course of the pandemic, also became a hobby for millions of new investors using free trading apps. But given the number of conflicts involved, it's a hobby that many people should probably give up.

Why it matters: In recent days we've seen shock headlines about the stock-trading activities of judges and corporate insiders. Two Federal Reserve presidents resigned after they were revealed to be actively trading the markets they were also influencing via monetary policy.

  • Thanks to the passive-investing revolution, no individual investor needs to pick and choose which stocks they invest in. (Even many institutions don't.) Trillions of dollars are invested happily in low-cost index funds that tend to outperform active investment strategies over the long term.

Context: While recent decades have seen a long-term trend away from active and toward passive investing, the past year has seen a countertrend toward rampant stock-market speculation.

  • The notional value of options traded this year, for instance, has surpassed total stock market volumes for the first time ever. Billions of dollars' worth of those options are short-dated zero-sum bets that expire worthless within days or weeks unless the stock moves dramatically.

The big picture: Back when individuals had no choice but to invest in individual stocks, there was much more tolerance for the conflicts such activities raised. Today, it's more common for those trades to be considered scandalous, evidence that the market is rigged.

The bottom line: The recent headlines mostly concern boomers whose formative investment years predate the height of the passive revolution. As apps try to make stock-picking "easier and more delightful," in the words of Robinhood CEO Vlad Tenev, it's becoming increasingly likely that we'll see similar headlines about the boomers' kids.

Go deeper: Bloomberg's Matt Levine notes that when it comes to corporate insiders, it's not so easy: Companies can't issue index funds in lieu of stock options. He asks for rules that might solve that problem; if you have any ideas, do copy me as well as him.

Go deeper

Oct 22, 2021 - Axios Denver

The National Western Stock Show is here to stay — with or without 2E

Denver Mayor Michael Hancock, center, speaks at a 2014 press conference at the National Western Complex. Photo: RJ Sangosti/The Denver Post via Getty Images

What you see isn't always what you get when it comes to the 2021 political mailers touting Ballot Measure 2E.

Be smart: 2E is Mayor Michael Hancock's pitch to put $190 million in bonds toward a new "state-of-the-art" arena on the National Western Center campus and convert its 112-year-old former arena into a public market.

Inside Biden's Taiwan flubs

Illustration: Aïda Amer/Axios

Twice this year, President Biden has blurted out commitments that the U.S. is prepared to defend Taiwan against a Chinese invasion — forcing the White House to walk back his statements and leading to confusion over a high-stakes national security policy.

Why it matters: U.S. defense officials have publicly aired their concerns that China will take Taiwan by force in the next four to six years, perhaps sooner. The president's position on this question may soon have real-world, life and death consequences.

"Atmospheric river" to whiplash Northern California from drought to flood

A map depicting 24-hour preciptation forecast (inches) ending Monday at 5a.m. local time. Photo: NOAA

A series of powerful "atmospheric river" storms are set dump historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.

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