Remember the good old days when you got a summer job so you could still afford to buy Sour Diesel, MDMA and some of Sam Zell's "pussy on the block" in the interim period between semi-annual student loan disbursements?
Yeah, well those days are gone.
It wasn't so long ago that college students were smart. They were expert arbitrageurs who, despite being almost universally illiterate, intuitively understood that if you could make do with the 14th edition of the Biology 101 hardcover instead of the 15th edition the syllabus calls for, you could pocket the difference between the $250 your student loan check allots and the $6.99 you would pay for last year's version of the same text, always available at the shady used bookstore on the strip.
Those arb profits could then be diverted to Pabst Blue Ribbon, a sweet ass hand-blown glass pipe from the head shop that's literally attached to the used bookstore (and probably owned by the same people) or, for the enterprising, a half ounce of Hindu Kush which could be flipped for a 50% profit in an hour back at the dorm.
Well, I don't know what's happened to America's youth, but these days, kids are eschewing the tried and true textbook arb for other, far riskier opportunities when it comes to playing with Uncle Sam's student loan money.
Opportunities like Bitcoin which, as detailed late last year in "Bitcoin Investors Beginning To Resemble Tweakers Playing XBox", seemed like it might very well have benefited from student loan inflows, a category that as far as I know isn't counted in the EPFR data.
Back in January, as Bitcoin was in free fall and equities were surging to fresh records, reports suggested aspiring young investors were funneling money into weed stocks, a decidedly stupid thing to do considering the risk of losing your entire investment in those names probably outweighs the risk of going to jail for just buying a bunch of actual weed and reselling it. Assuming traditional profit margins, a decent connect and the miracle of compounding on every flip, the bar is pretty high (get it?) when it comes to whether those weed stocks could actually generate comparable returns to those garnered by simply running an actual weed business.
Again, America's youth seems to be getting stupider over time.
Fast forward to June and college kids are staring down the summer break and the concurrent liquidity vacuum between student loan disbursements (That assumes you're not taking summer classes and who does that? You're better off pulling a Thad and getting an internship with Dealbreaker, the myriad reputational risks notwithstanding).
Traditionally, that vacuum was filled by some bullshit summer day job that pays just enough to ensure you can stay lit at night.
But again, no one has any respect for tradition anymore.
Which means that in 2018, college students are going to be doing the same thing with their extra money during the summer that they did with their student loan money: forgoing safe haven assets like drugs for risky assets like Bitcoin and of course, FANG stocks.
Or at least that's what USA Today thinks America's youth should do and their expert investment advice is detailed in a brand new article that proves, beyond a shadow of a doubt, that they do indeed ring bells at the top. Here is a title that, one certainly imagines, will live in infamy:
Investing in Facebook, Amazon, Google stocks could turn summer job pay into a fortune
Read the following excerpts from this article and do file them away for posterity:
That $10-per-hour summer job slinging eggs or saving lives at the beach could add up to more than pocket change. In fact, it could translate into a nest egg of tens of thousands of dollars if you sock some of the cash away in the stock market.
While the pay isn’t great for teens and college-age workers looking to make a few extra bucks — 87% of employers hiring this summer plan to pay $10 or more an hour, CareerBuilder says — it’s enough seed money to build a small fortune in a short period of time, an analysis by educational investment app Rubicoin found.
Rubicoin calculated how much money a worker earning $10 an hour in a 25-hour workweek for 13 weeks each summer the past four years would have if they invested half of their before-tax pay equally on Aug. 31 each year in four FANG stocks — Facebook, Amazon, Netflix and Alphabet, Google's parent company. Half of the annual summer pay adds up to $1,625 per summer.
That $6,500 investment since 2014 would be worth $15,899 today, according to Rubicoin, citing closing prices on May 28.
Now first of all, it is abundantly clear that whoever wrote this egregious "covfefe" was desperate to figure out a way to incorporate the term "nest egg" into the first paragraph because who the fuck "slings eggs" as a summer job? Is that a thing? Egg salesman? Is that like "local milk people"?
Beyond that, this is absolutely terrible advice for reasons that should be painfully obvious. Someone making $10/hour has no business buying stocks assuming they have any other financial obligations whatsoever and if they have credit card debt, then buying stocks should be a complete non-starter until it's paid off.
But let's just give USA Today the benefit of the doubt here and assume that these hypothetical egg salesmen have no credit card debt and no bills and can thus realistically think about whether it might be a good idea to invest in the assumed future prosperity of corporate America.
In that scenario, no responsible financial advisor on planet Earth would recommend allocating your first $6,500 entirely to FANG stocks. That's insane. If you've got $6,500 to invest and you're hell-bent on putting it all in stocks, you either put it in SPY for 9bps in fees or you hand it to Jack Bogle. Period.
Ok, but let's give USA Today a second reprieve and assume that these "egg slinging" lifeguards are going to plow their summer job money into FANG stocks come hell or high tide.
Is now a good time to buy them? Why, fuck no.
This is the most crowded trade in the world according to BofAML's most recent Global Fund Manager survey, which represents something like $600 billion in AUM:
And while there are a number of very solid arguments as to why tech stocks aren't a bubble, exactly none of them are relevant for lifeguards. I mean how would that even work? Something like this maybe:
Hey girl, if the rip current drags you under out there, I'll throw you a life preserver and did you know that when it comes to topline growth, big-cap tech is where it's at?
Also, do you want some of these eggs? I've got like 45 dozen of them in a cooler under this lifeguard chair.
I could go on and on and on. But since we're already sitting on 1,100 words of pure comedy gold here, I'll try and wrap this up. Let me just underscore the point with the following screengrab from a recent CNBC article:
Anyone see the problem with that? I mean, there are all manner of problems with it, but just to point out the most obvious issue, how exactly are tech stocks "immune to Trump tweets"? Did everyone forget that when it comes to stocks, the only thing Trump would rather tweet about than record highs on the Dow is how he's going to grab Amazon by the pussy ("on the block")?
In any event, congrats to USA Today because sometime in the future, people are going to be using the title of their summer jobs/FANG stocks article to annotate a chart of the FANG+ index.
And I do not mean that in a good way.