How the day-trading TikTok 'witch' really makes money
🔸 Plus: 40% of companies post fake jobs vacancies 🔸 A rare King Charles bank note sold at auction for £17,000 🔸 Coinbase switches off its news feed 🔸
Your 2-minute guide to demystifying money and making you richer
The markets, year-to-date
S&P 500: 5,460.48 ⬆️ 15.13%
FTSE 100: 8,164.12 ⬆️ 5.92%
Bitcoin: $62,793.10 ⬆️ 42.05%
GBP to USD: $1.2668 ⬇️ 0.47%
GBP to EUR: €1.1776 ⬆️ 2.13%
That stock-trading TikTok ‘witch’ might not actually be an investing genius
In the last Moneyin2 email, we told you about a “witch” on TikTok who uses astrology and tarot cards to trade stocks.
Do not do this, we said.
That remains good advice.
On one level this is simply a funny story that went viral. But the more interesting question is, why was she able to make money by pulling the Ace of Cups from her tarot deck?
I’m going to take @Blonderichwitch at her word, partly because her TikToks include screenshots of a trading account which does appear to have made $1,200 in one day trading Oracle stock.
So how is she able to do this?
According to her TikTok, she uses “astrology”, “intuition”, and “trusting my higher self” to “confirm” her decisions.
Hmm. Maybe.
There’s more going on here than meets the eye
Stefaniya Nova (her real name) also, importantly, actually does research before placing her bets, according to her videos. And she knows how to set up a “put” and a “call” — two types of trading derivatives that are beyond the skills of most retail investors. So this “blonde” “witch” is clearly also someone who also has a relatively sophisticated knowledge of trading.
And she only uses tarot after she has decided which stocks to trade — which suggests that she’s not literally using cards to pick stocks; rather she’s picking stocks and then using the cards as dutch courage before she pulls the trigger.
So she’s not using magic to make money. It just looks that way.
Oh yes, there’s one more hugely important factor — she’s trading in one of the greatest intra-year bull markets history has ever seen. The S&P 500 index of large corporate stocks has gone up nearly 16% in 2024.
You could have blindfolded yourself and thrown a dart at the S&P and probably hit a stock on its way up.
The stock-picking witch is likely benefiting from the momentum of the market not the dark forces of the netherworld.
This caught investment manager Ben Carlson’s eye too:
“Young people quitting their jobs to day trade. Using astrology to make stock picks. Pffft.”
“This is the point where the grizzled market vet is supposed to say I’ve seen this movie before and I know how it ends.”
“Yeah, this is bull market behavior to be sure.”
Shoe-shine boys with stock tips
He’s right. There’s actually a series of legends about this. The earliest one dates to the 1920s, right before the crash of 1929 and the Great Depression. Stocks were running up to dizzying highs. President John F. Kennedy’s father, Joe Kennedy, was having his shoes shined one day when the shoe-shine boy began giving him stock tips. Kennedy decided that was the time to sell everything: When the rubes think they can trade stocks the market has probably peaked.
Fast-forward to the 2000s. There’s a famous line in The Big Short, by Michael Lewis, where two investors, Steve Eisman and Danny Moses, realise before anyone else that the property market of the mid 2000s has become a giant bubble because people are being given loans to buy houses they cannot afford. The pair take a trip to Las Vegas to visit a property investment conference:
“A friend of Danny's returned from a night on the town to report he'd met a stripper with five separate home equity loans.”
Eisman and Moses bet against the US mortgage market and allegedly made $1 billion when the entire economy collapsed in 2008.
Poledancers flipping houses are the equivalent of shoe-shine boys with stock tips and witches who recommend day-trading, in other words.
How to invest when the markets hit new highs
So, if @Blonderichwitch is a shoe-shine boy or a stripper, should you make like Joe Kennedy and pull your money out of the market?
No. One of the most difficult aspects of investing is staying in the market despite the fact that it has reached an all-time high. Stocks don’t go up forever. You need to mentally prepare to see your investments decline in the short-term.
Your gut may be saying, “I have made some money. Time to get out before the market goes down.” But if you want to build real wealth you need to be in this for the long haul — regularly putting some money from each monthly paycheck to work regardless of where the market is.
There’s an important reason for this:
If the market goes down, you want to buy it on the way down because your money will pick up stocks while they’re cheap. Over time, most of your buys will occur below the peak price of the market. This is “pound cost averaging”. When you buy stocks regularly, come what may, you get more of them on average than if you try to time the dips and highs. You get them at an average price that is lower than the market rate when stocks go up. It’s the cheap way to invest, basically.
That’s one of the key ways people get rich by investing: Not by trying to pick the highs and lows like a day-trading TikTok witch but by investing regularly and holding your assets for the long run.
And for dessert …
An unusual new King Charles £10 bank note has sold at auction for £17,000 because it has an incredibly low serial number: HB01 000002. The first one, HB01 000001, “is in the hands of King Charles III and This is Money understands that this second note, with serial number HB01 000002, would have belonged to Queen Camilla,” according to the Mail.
Since 2010, UK household income has gone up by just £140 a year, according to data from the Resolution Foundation.
TikTok influencer @IDontTip is trying to make refusing to tip a “lifestyle”. He says he saves $150 a week by not tipping. Hmm.
40% of companies post fake jobs vacancies, often to signal to employees that they can be replaced at any time, a US survey says.
China’s subsidies of its own industries create unemployment abroad. “On average, in the four years after China starts supporting a specific industry with a five-year plan, employment in the same industry in the US drops by 10-15%, investments drop by c. 10%, and bankruptcies in the industry rise by about 2%,” according to Joachim Klement.
Coinbase, the crypto trading platform, switched off its news feed a couple of months ago and traffic to crypto news sites tanked.
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