Walk and Talk: The Zero Productivity Economy

This is an almost-verbatim rant I had, dictated into the Apple notes app while chatting with a friend. I then used AI to transcribe it and make it legible. Didn’t change any wording or structure, just eliminated any “you knows” and things like that.

Going forward, I’ll post more of these “Walk and Talks”:

Zero Productivity Economy

The retail stock market, the stock market that everybody thinks they participate in, has become a casino and no longer represents the true investor.

The original concept of investing means you invest in something because you think it is going to generate a return over time. You invest your time in working out, it pays off with better performance and physique. You invest your time in learning a trade, it pays off with higher paying jobs and a larger client list. You invest in a relationship, it pays off over time with love, companionship, sex, and a family. You invest in a building because you are going to get rent. And originally, you invested in the stock market originally because you thought you were going to get a dividend. You made your investment, hopefully prudently, on the basis of an analysis you did, which was a calculation that gave you the net present value of a stream of future payments. That was the original basis of stock market investing.

Quite often, the company selling the stock would take the dollars that investors gave them and utilize them to hire people, to rent space, to buy raw materials, and do all the the things that it takes to run and grow a business.

All of that has changed.

Now the multi-trillion-dollar retail stock market is a casino. The companies never see your money. The only time the company will see your money is if it does issue more stock. When companies issue more stock, those shares are usually scooped up by institutions, who buy all of the newly issued stock and then try to sell it into the streets, into the 401(k)s and the money managers and the individual stock investors.

So the basis of the retail stock market these days is that the companies do not see your money.

What does that mean? It means that you are buying a fictional piece of paper that represents fictional ownership in a company that will never see your money, with your only hope being that you will be able to sell it one day to somebody else, a greater fool, at a higher price.

There is zero productivity in that dynamic. Point to the productivity because I can’t see any.

Now trillions of dollars are invested without being earmarked for any sort of productivity. Other than the original issuance, they don’t go toward buying widgets, hiring employees, renting office space, or acquiring raw materials. In the retail stock market, it is just people hoping that they can sell their ownership to somebody else at a much higher price later on.

Robinhood is a casino. Most people go to Robinhood as a casino. They are trading and looking to sell almost immediately. They are buying a stock and hoping that in three days they can sell it for a profit, or in three weeks, but they are not investing. They are basically day trading. Not only is this not productive, it winds up being a zero-sum game, because for every winner, there is a loser that same day. There is no productivity, there is no production, there is nothing that is building the economy there at all. It’s actually anti-productive, because the “investors” aren’t doing anything else with their time.

The same goes with DraftKings and FanDuel and Polymarket and Kalshi. Betting on games, typically on sports, with no actual productivity. Because betting on sports was not enough, let me bet on whether or not Donald Trump is going to golf this weekend. Somebody just thought it was a great idea to create a platform where you can make a bet and throw it out to the world and say, “Do you want to play in my betting game?” with zero contribution to society, zero advancement of humanity, zero fixing of the woes of the world, with trillions of dollars exchanging hands annually under the guise of investing.

The lottery is a classic example of zero productivity economics. The people who play the lottery are people who should not be playing the lottery. A friend of mine once famously said, “Jesus, I wish I had a dollar for every lottery ticket I bought.”

The lottery, and all these other forms of “investment,” gives people a little glimmer of hope that their life is going to change. When I buy my lottery ticket on Monday and the drawing is Thursday, for three days I have just as much chance of being a millionaire as everyone else who bought that lottery ticket. For three days I get a little glimmer of hope. Then when it is over, you go back to your 40-hour workweek and making ends meet and doing all the stuff that you do to live. The lottery is a shot of optimism that never pays off.

Gambling (and it’s all gambling) gives people that little hope that they are going to advance their own life’s plotline. It has become more democratic. You used to have to have really niche knowledge. You had to be good at playing cards, or you had to know sports. Now the fact that you can bet on almost anything opens up the world of gambling to so many more people. True democracy.

Outside the retail stock market, there is the broader stock market, the institutional stock market, where the same people are trading in and out of stocks on a daily basis, hoping to extract pence or pennies on each of tens of millions of shares in and out because they had a slightly better electronic edge, or their quant had some information on where the stock was going to go. Or they managed to get office space a few blocks closer to the stock exchange, so their trading algorithm has a fraction of a millisecond’s advantage over the other firm’s.

These people do not ever look at the value of the company. They look at who traded what, when, and how much they paid, and what the moving averages are, so that they can enter the market at the next inflection point or exit at the next inflection point, once again hoping to extract non-productive dollars from other people, who are the losers. So much of the world economy revolves around these non-productive transactions, non-productive pursuits, just casino-like betting, trying to extract a dollar from somebody else.

Let’s talk about Bitcoin. Bitcoin might be the biggest waste of productivity ever. It is not even non-productive, it is counterproductive, because it takes so much energy to mine these things. Bitcoin mining worldwide uses as much electricity as all of Sweden. Bitcoin has become this massive store of value that sucks energy from other, more productive uses and has no utility other than as a store of value. Real estate is a great store of value, much better than Bitcoin, and at least real estate exists. If you own real estate and the world goes to hell and currency goes to hell, you still own real estate and still have somewhere to live.

At the end of the day, because it is a store of value, it is also a zero-sum game. For every winner, there is a loser in Bitcoin. It looks like there are a lot more winners now because the value has gone up. But for everyone who sold at $90,000, somebody bought at $90,000. For everyone who sold at $63,000, somebody bought at $63,000. There was an equal exchange in the assumption of what the value of the transaction would be at the time.

It seems like all of this is just a symptom of hopelessness. People feel like they have no other recourse. They have to take the long shot, buy the lottery ticket, buy the shitcoin. The old fashioned way of starting a business or getting a good job feels out of reach, maybe impossible. Or if it is possible, it’s too slow and they’ll just get lapped by everyone else.

The real danger is that it’s a self-fulfilling prophecy. If this is indeed how the “economy” is going, and it’s how people are thinking about investing, then you almost have to go along with it to have a chance. Or so it seems.

What is the breaking point of all this? What happens to the economy? How long can this go on?

The good news is that real investing will never not work. Investing in a business you believe in by giving the actual founders money to get it going and keep it going. Investing in your own business by gaining skills, raising money, or putting in time and effort to see it blossom. Investing in your health, your relationships, your fitness, your children. Reality will always be there underpinning everything. Even if you invest in the casino (and it’s increasingly impossible to avoid doing it), keep both feet firmly in reality. Never stop investing in yourself and things you can hold in your hand (or control from the computer).