A feeling of unreality still pervades financial markets. Investors who take fiduciary duties seriously still exist — but they're seemingly outnumbered by people who see investing as a fun get-rich-quick game.
Why it matters: The post-pandemic return to some kind of pre-pandemic "normal" has yet to arrive, and as a result there's a lot of worry about the disruption and volatility that could accompany such a transition. The markets, so far, have done an excellent job of climbing that wall of worry.
The big picture: The defining characteristic of the pandemic era has been feverishness. The initial weeks of uncertainty and isolation felt like a fever dream, with time dilating and reality warping. After that, the whole country entered a particularly febrile state, as the Black Lives Matter movement and the 2020 presidential election ratcheted up the nation's emotional temperature to unsustainable levels.
- Markets have not been immune. In some ways, they're the last bastion of delirium, in a country where vaccines and a boring president have allowed much of the country to feel some semblance of normality.
- Money has become something to play with for fun and profit. There are even now hundreds of play currencies, some of which are worth hundreds of billions of dollars, for people who find government-issued money too constrained.
- The decadence is increasingly offensive to anybody living paycheck to paycheck, or even just people brought up to respect the value of a dollar.
Be smart: The strength of the economic rebound from the March 2020 recession came as a surprise to almost everyone — and helped to create windfall gains in everything from NFTs to mega-cap stocks.
- Get-rich-quick fever has reached unprecedented levels over the past 18 months, encompassing everything from GameStop and Dogecoin to SPACs and even Spider-Man tickets. One company became a unicorn by persuading individual investors to buy securitized art.
Financial shenanigans are everywhere you look; Bloomberg's Matt Levine, for instance, has a masterful dissection of the $1 billion private investment in Donald Trump's barely-existent new social-media company — a classic greater-fool trade which doesn't need to be based on any underlying value at all.
What they're saying: Pollster Bruce Mehlman cites "extreme expectations" as the number one risk facing the U.S. in 2022 . "Lack of realism and perspective is itself a major risk," he tells Axios. "It undermines the rationality-based cooperation essential for the nation and its institutions to succeed as designed."
The bottom line: The occasional crypto crash doesn't mean the fever has broken. It just means the game is still exciting.