What does the stock market have in common with the Discourse Online?
Both can be reasonably characterized as a million idiots screaming at one another at the top of their lungs, out of which a coherent image or consensus can sometimes emerge. Both are examples of human beings attempting to process and account for uncertainty. The world is chaos, and we all need some way of breaking it down into accessible, relatable terms — whether it’s a stock quote or a meme.
- “What happened today?” “Well, we were all talking about cat penises for a second there, probably because of the terrifying new Cats trailer.”
- “What happened today?” “Something about the yield curve, I guess. IDK, but stocks still went up, so I guess people aren’t too scared.”
Recently, these two worlds converged in what’s arguably the greatest financial meme the internet’s ever bestowed upon us: stonks.
Stonks is a deliberate misspelling of “stocks.” It’s used to mock bad financial decision-making, bullshit credentials and/or our incapacity to understand the powerful but incomprehensible economic forces that hang so heavily on our daily lives. The joke, essentially, is that all we know about anything money-related is the word “stocks,” which we can’t even spell correctly.
While the meme began in 2017, it surged again in June when an image went viral that depicted some poor sap begging an ex to take them back and accidentally sending the stonks meme in the process. Shortly after, Elon Musk shared a version of his own.
Like Dril‘s famous “candles” tweet and the ol’ stalwart “shut up and take my money,” the stonks meme speaks to our universal feeling of financial incompetence, explains Know Your Meme editor Adam Downer. “[Stonks] became an ironic way to pair images with captions where you are actually bad with money but you think you are good with money. You feel like you’ve gamed the system, but you’re actually kind of an idiot.”
It’s true: People often think they’re Good With Money when they’re Actually Quite Bad With Money. That’s one of the cornerstones of behavioral finance and behavioral economics, fields that study the intersection of human psychology and money. The research from these fields often tells us that, as far as investing goes, no one really knows what’s going to happen tomorrow. So instead of managing a portfolio, we should try to manage our behavior. The truth is, even professionals rarely outperform the average investor when it comes to picking stocks.
This idea was first pioneered and popularized by the great John “Jack” Bogle, who died in January at age 89. His company Vanguard has consistently been the fastest-growing asset manager in recent years. Investors poured about half a trillion dollars into Vanguard index funds in 2018, according to the Wall Street Journal. The company’s gotten so successful with its hands-off, passive approach to investing, it’s even getting a little sassy about it on Twitter.
In the finance world, Bogle’s fandom is unparalleled — except for maybe Warren Buffett, who’s a big Bogle fan himself. The r/Bogleheads subreddit, devoted to “Bogle fanatics,” has nearly 13,000 subscribers. Bogleheads, a web forum that began in a comments thread on the financial news and analysis site Morningstar, is now a sprawling community of its own, with 80 local chapters and thousands of forum posts each day. “Bogle was just a truth-sayer from day one,” says Douglas Boneparth, a certified financial planner and popular pundit. “He was able to cut through the BS and demonstrate a couple of very important things. The first was that most people’s worst enemy was their own behavior. [With investing especially], he knew that people’s biggest enemies were themselves.”
“To me, stonks is a representation of retail traders who think they’re smarter than the market,” says Ramp Capital, an engineer whose finance-focused Twitter account has more than 100,000 followers. “Stonks can represent someone making trivial gains or an investment that could be chalked up to luck.”
To truly unpack the connection, I reached out to the source. A (very patient) Vanguard spokesperson graciously agreed to take a look at some stonks memes and let me know what they thought. Essentially I wanted them to tell me why “stonks,” a fundamental and literal misunderstanding of stocks, loom so large in the public imagination as far as how this finance stuff works? And why do people continue to stonk, despite all the evidence that it’s more productive and lucrative to literally do nothing?
“There remains a notion of picking the winner and getting rich overnight,” Vanguard tells me. “[But as] Jack Bogle said, ‘Don’t look for the needle in the haystack. Just buy the haystack.’ Translation: Don’t try to identify the next Google or Amazon; invest in the entire market.”
In that sense, while stonks offers us a way to think about investing’s core problem — we think we know better than we actually do — it also offers the solution.
Don’t try to pick stonks. Buy all the stonks — through a cheaply priced index fund.