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In a 60 Minutes interview in 2011, gambler Billy Walters said he was swindled by Wall Street, losing big on Enron, Worldcom, and Tyco shares. Walters made his fortune betting on football and basketball games. Professional gamblers have little to bet on these days with most sports shut down due to the COVID-19 outbreak.
They’ve had to start betting on stocks according to the Financial Times. The FT reports that in March and April, with Wall Street and 401(k)s being rocked by negative economic news, Charles Schwab, ETrade, and Interactive Brokers opened a record number of accounts, “adding a collective 780,000 new customers. March, the high point, amounted to three times the monthly average of the past two years.”
If one were looking for clues as to why the stock market has rebounded while daily economic news grows worse, besides the Federal Reserve’s Jerome Powell’s “flooding of the market“ with liquidity, another reason could be the flood of new punters betting on stocks, from high-flying tech shares to dead-in-the-water leisure stocks.
The FT’s Richard Henderson writes,
But brokerages that connect everyday investors to the stock market have seen a surge in account openings, as punters seek thrills in unfamiliar places. This has brought new investors to the market, helping to propel a one-third rise in US stocks from the depths of the pandemic sell-off in March.
Henderson provides Adrian Mallett as an example. Mallett is a business student and works as a greenskeeper at a golf course on Prince Edward Island. The enterprising Mr. Mallett used the CAD 3,000 stimulus he received from the Canadian government to open an account and begin trading.
The twenty-year-old piled into Lyft and Tesla shares. “I’m a little bit up,” he told the FT. “I cut grass at a golf course. I’m on a lawnmower refreshing the app every few seconds—it’s great.”
Only five stocks now make up 20 percent of the S&P 500 index: Facebook, Google (Alphabet), Amazon, Microsoft, and Apple. This narrowing breadth is a negative sign according to David Kosten at Goldman Sachs.
“For example, in addition to the Tech Bubble, breadth narrowed ahead of the recessions in 1990 and 2008 and the economic slowdowns of 2011 and 2016,” the Kosten’s Goldman team told Business Insider. “Historically, sharply narrowing breadth has signaled below-average one month, 3 month, 6 month S&P 500 returns as well as larger than average prospective drawdowns.”
For bettors who can’t bring themselves to play the stock market, there is Russian table tennis. Betting on table tennis matches from halfway around the world is keeping bookmakers’ lights on. Jim Barnes writes for the Las Vegas Review-Journal, “William Hill sportsbook director Nick Bogdanovich has said table tennis has consistently been the No. 1 sport for his book during the pandemic, taking close to $1 million in daily wagers.”
There are over a hundred matches a day, with three matches taking place at the same time. A match only lasts ten to fifteen minutes. It goes on for up to twenty hours a day, according to Shawn Harnish, who told the R-J, “It’s like the first Thursday of March Madness over and over again every day on repeat. I call it the keno of sports betting.”
Some have questioned the integrity of the matches. Forget about finding table tennis on TV; you must go to live-stream365.com to watch matches online.
Tesla or table tennis, both provide the opportunity to be swindled.
