Show Me the Money!

October 31, 2022
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It’s one of those iconic Hollywood scenes.

Jerry Maguire, the sports agent played by Tom Cruise, yells into the phone to Rod Tidwell, the star wide receiver played by Cuba Gooding Jr., four words: “SHOW ME THE MONEY!”

Ok. Iconic is a bit too strong. Dated might be a better one.

Hello 1990s! (Wait, isn’t the ‘90s “in” again?)

Let me get to the point.

You should say something similar every time you hear an investment aficionado on CNBC announce their opinion on the future of finance and where you should be investing.

Say they are being interviewed and they go on a tirade poo-poohing the stock market or preaching an innovative safe investment that will help you survive the financial apocalypse, look for the interviewer to ask them to reveal exactly where they are putting their money.

If they don’t, change the channel or click to the next thing.

If they do, don’t settle for an answer like: “I have my money in gold” or “Mine is in crypto.” Those answers may very well may be true. But it may also be true that they have a portion of their portfolio allocated to US stocks.

Those who are so certain that the entire financial system will undergo a Copernican shift, should put their money where their mouth is. If they were as certain as their sales pitch sounds, wouldn’t they actively be shorting stocks and profiting off the decline?

Tyler Cowen, the Holbert L. Harris Chair of Economics at George Mason University, put it this way: 

"As many of you know, when I confront mega-pessimists I like to ask them ‘But are you short the market?’ Not once in my life have I heard a satisfactory rejoinder to this query. (The last answer I heard was ‘I will be!)”1

Not once. For someone who deals in financial arenas as much as Cowen has, that’s saying something.

I will be. That’s like, “I’m going to quit smoking…. tomorrow.”

While talk is cheap, money talks.

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Sources:

1. https://marginalrevolution.com/marginalrevolution/2022/10/but-are-you-long-volatility.html