The Q-Anon Effect: Is The Stock Market A Conspiracy?
Q-Anon supporters are banking on a Trump-led New World Order. Is the stock market doing the same?
August 22, 2020. Back in the early days of lockdown, a friend told me about Q-Anon, a fringe conspiracy group that believes in a ‘deep state’ of evil criminals who control the world. I'm not one for conspiracy theories, but I soon found myself immersed in You Tube videos about Q-Anon and its anonymous leader, ‘Q’, who is secretly working with President Trump to expose a worldwide ring of influential gangsters that traffic and eat young children for their magical powers.
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Such fantastical stuff doesn’t normally find its way into the mainstream conscience, but 2020 has been anything but normal when it comes to how we interact with news. Americans have ramped up their screen time hours by 20-60% during the pandemic, according to industry estimates. I’m not even sure how to define the ‘mainstream’ in the era of COVID-19 where the Internet has supplanted the roles once played by our communities, friends, and families for sharing ideas.
It’s difficult to gauge the impact all this is having on how we filter information and make choices. I spent hours watching conspiracy videos I’d have never otherwise given a second glance if I hadn’t been stuck inside my house for months. Baby eating aside, Q-Anon’s idea that we’re living in a world that isn’t what we believe doesn’t sound so crazy these days.
2020 is proving a bumper year for all sorts of fringe behaviors. Consider the stock market: All the major market indexes have rebounded beyond their pre-COVID-19 highs, yet the economy is teetering on the brink of a severe recession and infection rates are still rising across much of America. Students aren’t studying, workers aren’t working, cities aren’t functioning. A quick glance at the NASDAQ, however, and you’d think the index was surfing ripcurls out in Montauk, closing out this past week at a record high of 11,312.
Like all fringe theories, there’s more to the stock market’s rally than meets the eye. Dig a little deeper and it’s clear tech stocks are bolstering the gains of the S&P500 and the Dow, with the largest tech companies masking weaker results in other sectors. The S&P’s advance/decline line – a measure of the number of stocks finishing higher versus those finishing lower that’s often used by analysts to gauge the market’s overall health - has been falling even while the index itself continues to climb.
A big chunk of this disparity comes down to the jaw-dropping performance of Apple (AAPL), the largest stock in the S&P500 index. The maker of iPhones and iPads, whose market capitalization now tops $2 trillion, has seen its stock jump 29% in the past month alone. AAPL's price defies all traditional measures of valuation, but that hasn't stopped bullish investors pouring into the share ahead of the upcoming rollout of the 5G network, which tech analyst Ted Ives believes will lead to a ‘supercycle’ spike in sales. Even still, AAPL's valuation suggests investors are already pricing in a huge uptick in demand; whether Apple can deliver on these expectations is yet to be seen.
At least everyone is cradling an iPhone. But Tesla cars?
Tesla and its CEO, Elon Musk, are still raising eyebrows on Wall Street
And then there’s Tesla (TSLA). Not the company itself, but its stock price. The alt-energy giant and its alien-esque leader, Elon Musk, have become the illuminati of Wall Street. Not a day passes when TSLA shares - rather than Tesla, the company - isn’t gracing the financial headlines. Whether it's how TSLA’s market capitalization has rocketed near the $400 billion mark, or the pros and cons of TSLA’s upcoming three-way share split, never before has a ticker symbol acquired such celebrity cult-like status.
Tesla is now valued higher than Ford, GM and Chrysler combined, yet its cars account for less than 2% of the automobiles on American roads. Indeed, the shares have become something of a fringe event of their own, enjoying the same sort of eyebrow raising as the anti-establishment ideals of conspiracy theories. Maybe, just maybe, this really is the moment of reckoning when Tesla overtakes the automotive world and frees us from the shackles of carbon fuels.
Yet TSLA is riding an informational phenomenon that is piquing the public’s curiosity rather than converting our behavior. At the end of the day I’m not ready to embrace Q-Anon’s pro-Trump, deep-state rhetoric any more than I accept TSLA’s price realistically reflects its current value to the American and global economies. Who knows, I might be wrong. But there are far more real issues on the table that need addressing right now, and lots of companies working to deliver on those needs.
In the mean time, I’ll still enjoy the entertainment of thinking on the fringe.