The bear market in the stock market this year has been devastating to the financial industry, which tends to go in boom and bust cycles. Brokerages and asset managers as a whole are making less money as their clients assets have shrunk in value. As for my story, I started a small email newsletter for stock trading back in 1999 and then started to charge for it in 2000 as a trading service. Such services evolved over the years, and so has what I have been doing, but at the end of 2020 I decided to shut down my pay trading service to new people and stopped accepting any customers. It’s in a stasis right now. Partly I did this because I was getting burned out from doing it nonstop for twenty years and had to take a break. I also had made enough money over the years that I no longer needed to do it. The weekly swings in my account could be as big as what I’d make in a single year in the past, so the selling of a trading service is a distraction to me, but in the end I didn’t want to deal with the stress that I saw coming with a new bear market, of which there were warnings signs of one on the horizon by the summer of 2021. All the hype of 2020 I knew would one day end in disaster.
I feared the trading service industry would go bust like never before.
The crypto industry is now bust and being revealed by recent events to be what it is all really about. All the crypto gurus who tied themselves to it and shouted at people on social media about coins have destroyed their credibility.
The earnings reports of Robinhood and similar brokerages suggest that the big boom in new traders in 2020 has led to almost all of them wiping out.
There have been big contractions in the business world of financial newsletters and trading services in the last two bear markets and all the signs I see suggest it is happening again. One company that is publicly traded, and is a publishing company for them, is MarketWise. It owns Stansberry, Casey Research, InvestorPlace, and Legacy Research Group, among others and reported a big drop in paying subscribers from a year ago in its latest earnings report. The day before Thanskgiving it announced the resignation of its Chairman and CEO.
In it’s latest earnings report it revealed an annualized 23.9% decline in billings revenue on 894,000 paying subscribers. It had lost 7.4% of its paying subscribers in the past 12 months. They stated that “We believe the decrease is due in large part to reduced engagement of prospective and existing subscribers, as external economic and geopolitical factors continued to impact investor uncertainty and delayed purchases in the quarter.”
Although we are now seeing a stock market rally, that could for the next few weeks, I personally do not believe this bear market is over and is likely to continue now into at least the second half of next year.
You can see from the MarketWise chart that this has been a tough year for its investors.
At some point the financial industry downturn will come to an end and there will be another growth cycle. I’ve seen this before, but during these bust periods many of the smaller players – and many more that come into the game late in the bull cycle with pure hype messages – close up and go away.
Each new growth cycle I have seen also has been different than the previous ones – with evolving changes in the internet and the nature of the way people interact with it. This last one was linked to the rise of social media.
Before 2015, there were no so many people addicted to Twitter and Facebook, which has had a negative impact on the industry, in my view and now there is a bit of social media fatigue out there.
Yes, many people are still trying to turn themselves into “influencers” and Twitter trolls for attention, but these people are becoming tiring and boring.
But, it’s no longer 2016.
It is not clear what will be the most successful types of financial publishing models in the next bull cycle for the industry.
There are also regulatory issues that make the type of marketing that had been the most successful in the past few years, up to perhaps this year, no longer viable.
For a good discussion on all of this I’d refer you to a video by the people that put on the Financial Marketing Summit.
Towards the end of every year I take a break to plan for the coming year and I am starting to do that early.
Part of my yearly planning is to look at the markets and think about what trends may change in the coming year and how I may have to adapt to them. It’s also a time to take stock of what the past year has brought.
But, part of my planning is to think about what I am doing with this website.
Since I shut down the trading service I had not gone in a definitive direction.
I have a working document that I have put together full of ideas in.
At the start of this year, I told myself I’d try to get this site to growth by implementing some of the ideas or I would make a decision to really pair it down and basically retire.
What has happened is that none of the ideas excited me enough to want to do them and a few weeks ago I examined what I get out of social media, and Twitter in particular, and it made me realize how ugly much of that world has become and how little I get out of it.
I’m bored with social media and when you load up Twitter all you see is trolls that yell all the time at people.
The good news is that 75% of people never Tweet.
Most people don’t worship Elon Musk and most people are normal.
However, a frustration I have had for the past few years is how social media has impacted the financial world.
The financial publishing industry really began as print newsletters after the Civil War. The Wall Street Journal was a simple print newsletter by Charles Dow at first then became a newspaper. The industry as I came into it was really made out of a giant growth explosion in the 1970’s, with people like Jim Dines, Howard Ruff, and Doug Casey.
People just took that on to the internet at first.
Then added online video.
But when social media came around starting around 2016 the hype marketing began to grow exponentially to the point where the audience of customers came to believe that trading was as easy as putting money into a slot machine.
The type of messaging used in the crypto market came into the stock trading world in 2020 and not simply overloaded it with hype – but programmed the potential customers to believe that the hype was real.
The social media advertisers and influencers told them that they did not have to know anything to make money, but simply buy and believe.
Now they are being wiped out.
Loading up a Robinhood app and just buying what others are buying on there or going to a Redditt message board is not enough.
I have more interests than the stock market and have made the website also deal with some general news topics and local news too about the area I live in.
I am making plans, though, to do something different in the trading world that is not a trading service.
I’m not 100% sure if it will work or not as it is not what people in today’s markets have been programmed to want to have.
But I’m going to try to return back to long ago when the internet was fun and before social media ruined most of it.
Hopefully, I will have something new for you here by New Years.
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-Mike
