Our Best Stuff From the Week We Learned About Short Stocks
GameStop, stimulus, teachers unions, and a frank conversation with a retiring GOP senator.
Happy Saturday, everyone! How’s your GameStop stock doing?
This week, Joe Biden issued some more executive orders, and the Senate confirmed Antony Blinken to be secretary of state. Our vaccination distribution continued to improve, albeit modestly, with an average of 1.3 million jabs a day. Some states began easing pandemic restrictions, seeming to acknowledge the reality that, if the virus is spreading in homes, maybe it’s not the best idea to incentivize people to socialize “underground” in private gatherings. And yet, with all of that going on, the nation watched riveted as a bunch of Reddit users took on hedge funds by pumping up the stock of a video-game chain that operates like Blockbuster Video in a Netflix world. It’s safe to say that 2021 is really enjoying this game of “Hold my beer.”
Don’t worry. I’m not here to give you stock advice or launch into a deep dive on the inner workings of hedge funds (or even Reddit). But there’s one thing I noticed about coverage of the GameStop story that encouraged me. As the story unfolded, plenty of people asked questions like, “What the heck is a short sale?”
The internet has put an immeasurable amount of information at our fingertips. But it’s still tricky to sort for quality. A common refrain among vaccine skeptics, for example, is that, “I have done my research.” And a common retort is, “Congratulations on your degree from Google University.”
This false sense of confidence reached a peak in 2020. The pandemic made everyone an epidemiologist, and the protests over the summer made everyone an expert on criminal justice reform. And the election? Well, let me point you in the direction of the Dispatch Fact Check home page. The problems became clear immediately: We bickered over masks, over defunding the police, and over mail-in ballots. Since so many people had convinced themselves they were right, that they knew the REAL truth, we could never find any common ground.
It’s good to admit when you don’t know something, especially for journalists. Our jobs are to research, to investigate, to report. And the world of finance is very complicated. My husband is a financial adviser, and I like to think that I’ve picked some basic knowledge of the world over the years. And yet I’ve probably had him explain to me how shorting stocks works—and then forgotten the details—half a dozen times over the course of our marriage.
I admit, I’m often on the lookout for something about which to be optimistic. It’s a bit of a survival mechanism in a pandemic that has dragged on and can leave you with a sense of being overwhelmed. We don’t know how this particular story will end. It’s OK to say so. And maybe, if we’re lucky, we’ll remember that next time we’re faced with something that we don’t understand.
If you want to catch up on the GameStop story, we did some great work this week in The Morning Dispatch, on both Thursday and Friday. We also spent some considerable time looking at the state of the conservative movement, reported on Democrats’ plans to move on COVID relief, and more. Thanks as always for reading.
For all the talk about being the “party of science,” the Democrats are having a bit of a science denial problem right now. Joe Biden has been outspoken about his goal of reopening schools, but in spite of considerable evidence that is safe to have kids learning in-person, an important part of the Democratic coalition remains fervently opposed: teachers unions. Meanwhile, out in San Francisco, schools are closed but the school board found time to rename 44 schools in the district. Did the liberal bastion somehow forget it had schools named after Confederate generals or ravaging explorers? Nope. Schools named after George Washington, Abraham Lincoln, and even Sen. Dianne Feinstein were on the list. If only there were a reasonable opposition party grounded in facts. About that, David has some thoughts.
When news broke that Saudi Arabia had intercepted two incoming missiles over Riyadh in recent days, it seemed like a potential tragedy averted, but not much was known about who did it. Charlotte waded into the confusing geopolitics of it all, explaining how, whether it was Houthi rebels angry about Saudi support for Yemen in the civil war or a newly formed insurgent group in Iraq, both of those groups are backed by Iran. And that has implications for the new administration. “Just days into the Biden presidency, the Islamic Republic is testing the boundaries of a new American regime,” she writes.
We’ve spent $3.1 trillion on COVID economic relief so far. That money has helped keep businesses open and provided unemployed workers with expanded benefits. Now, the Democrats would like to pass another $1.9 trillion COVID economic relief package. Scott Winship asks whether we need it, particularly the relief checks for $1,400 per person. “Congress may need to extend at least some of the unemployment insurance provisions further, as they are set to expire in March and April, but the food stamp provisions are in place into June. Anti-poverty policy, by and large, has been up to the task.” The checks won’t guarantee economic stimulus, as Americans are saving at a high rate and will spend once opportunities to travel and shop return to normal. “Even if you aren’t worried about the debt, there is an opportunity cost to spending $500 billion on badly targeted checks that aren’t needed to keep poverty down,” he writes.
Ohio Sen. Rob Portman has announced his retirement. Steve hopped on the phone with him, and they had a fascinating conversation about our current political climate. Portman had a refreshing answer about his reasons for retirement: “I had to make a decision about the next eight years of my life. I do love being home, and eight years from now, I would be in my mid-70s and less able to be engaged in the things I'd like to do.” He also made an important statement about how we’ve gotten to a point where politicians are incentivized to prioritize communications over legislation—there is a lot less attention paid to actual governance anymore. “There’s one stringer left, there’s literally one Ohio reporter left in Washington; she’s with the Cleveland Plain Dealer, and she’s terrific. And, you know, she actually writes about our policy successes sometimes. But other than that, there’s nobody, and there were, I don’t know, maybe six when I got elected. When I was in the House there were 12, literally 12. The Cleveland Plain Dealer had two or three. Cincinnati Enquirer had one, Cincinnati Post had one.”
And now for the best of the rest:
There have been calls for the U.S. to speed up approval of the Oxford/AstraZeneca vaccine since it is being administered in the U.K. James Capretta and Scott Ganz say “not so fast,” and explain why approval might take a little time.
In the G-File, Jonah wades into the “space laser” story to highlight the problems the GOP has with the “right-wing entertainers,” and how the party has an opportunity to to counter some of the silliness we’re seeing from the left, if only it could be serious for a moment.
In Capitolism, Scott Lincicome is here to bust the “deindustrialization” myth that has helped give rise to protectionism for the manufacturing industry.
In Uphill, Haley Byrd Wilt has everything you need to know about the Democrats’ push to move forward on COVID economic relief, with or without GOP support.
Now that Trump is out of office, Andy Smarick looks at how our institutions held up in the face of his time in office, especially the months after the election.
On the pods: I admit I’m partial to Jonah’s interview with Will Saletan of Slate on The Remnant, as Will is a former colleague and a friend. But it’s a great conversation. And also to Steve and Sarah’s interview with Ohio Rep. Anthony Gonzalez—not just because he’s from my home state (and his district is near my hometown), but also because he’s a former Buckeye football player. Lastly, don’t miss David and Sarah’s Advisory Opinions podcast if you’re curious about the legal doctrine of “munsingwear.”