Mimetic Desire

Welcome to Market PSYOPs — the newsletter at the intersection of psychology, markets, and degenerate trading.

If you’re trading, investing, or just managing your own personal finances, you’re in the right place.

And away we go 📈

The (literal) small print: this newsletter is mostly stories, pop-psychology, and half-baked trading ideas. This is NOT financial advice. Best to think of this as a community of like-minded gamblers. If you are having a punt, make sure you restrict your trade size to whatever change you can find down the back of the couch.

This picture of a cartoon rock is no Mona Lisa. But it did sell for $1.3M back in August 2021. More on that in a minute.

But first, a quick story about Banksy.

In August 2013, an old man set up a stall in Central Park to sell paintings. Not just any paintings though - these were genuine, authentic Banksy originals. But here’s the catch: they were priced at $60 each. And there was no fanfare - no advertising, no crowds, no auction.

So what happened? Well… very little.

Without any hype, most people couldn’t recognise the value of the art. They just walked straight past. Only eight paintings were sold that day…

Okay, back to our cartoon rock.

By 2021, the art scene had changed. No need to have Banksy’s talent - instead you could just copy and paste clipart and stick it on the blockchain. This was the world of NFTs.

And in this world, EtherRock #27 - a cartoon image of a grey rock - was in high demand, eventually selling for $1.3 million.

How? Because everyone wanted it. Headlines were shouting about NFTs, Twitter threads were hyping the next big thing. Even TradFi got involved.

All signs pointed towards EtherRock #27 being extremely valuable. And so, it was.

Two different stories, same psychology. Banksy’s stall had no crowd, but lots of value. EtherRock #27 had no value, but crowd behaviour made it worth seven figures.

Sometimes we want things just because others want them (anyone else buy a Labubu last year?).

French philosopher René Girard called this Mimetic Desire. And it can destroy our decision-making.

The theory goes like this:

Most of our wants aren’t self-invented, instead we actually learn them by imitating others - friends, family, influencers, the markets, Jim Cramer, whoever. Because when we don’t know what to want, copying others seems like the best thing to do.

Not the worst strategy I’ve ever heard.

But if we aren’t careful, we start chasing the wrong things - the wrong career, the wrong life partner, or worse: the wrong trade.

The secret Banksy sale and EtherRock #27 are cautionary tales. Mimetic Desire can have us piling into crowded trades near the top, or overlooking value in forgotten sectors.

So what’s the solution?

Let’s not overcomplicate it - the advice is this: know why you want the things you want. Make sure you don’t just want something because everyone else wants it.

And definitely make sure you’re not the guy who pays $1.3M for a picture of a cartoon rock.

Bit depressing to learn that we copy most of our desires from others, huh? But hey, it’s not all bad - at least we can trade it.

The way I see it, there’s two easy ways to trade Mimetic Desire.

We could do what most traders don’t do these days: we could look for equities or commodities that are priced reasonably. Wild concept, I know. But hear me out.

Agricultural commodities. Here’s the trade:

Teucrium Corn Fund (NYSE Arca: CORN):

Nobody wants to talk about corn when they could be talking about AI, crypto, or quantum. Which is exactly why I’m interested in it. If the Iran war keeps fertilizer and fuel costs high, a supply squeeze could be incoming. Higher input costs, reduced planting, and ethanol demand could make this unloved crop look like a meme stock by summer.

I’m buying: CORN ETF, outright.

Generally speaking, I’m all for leaning into a strategy where I don’t have to use my own brain.

So let’s leverage the madness of crowds. See if we can find the equivalent of a $1.3M cartoon rock before the whole thing comes crashing down.

Here’s the trade:

Space Tech - Redwire Corp (NYSE: RDW)

This one fits the bill. Not many themes are more hyped right now than space. Who knows what the fundamentals are like, let alone the valuation, and more importantly, who cares - I sure don’t!

With the SpaceX summer IPO rumours in full swing, I’m hoping Mimetic Desire kicks in and retail traders do what they do best: FOMO buy anything remotely in the orbit of SpaceX. Redwire builds space infrastructure and hardware - close enough! Now we just sit back and let the SpaceX narrative do its thing.

I’m buying: RDW August 21, $12 calls.

As far as irresponsible trading goes, this is light-your-money-on-fire levels of risk.

There’s psychological traps everywhere in life. They shape how we think, how we make decisions, and spend money.

But that’s enough word salad for one day. Let’s gamify this:

🎲🎲 You arrive at the roulette table. The screen shows that the last 10 spins in a row have landed on RED.

Place your bets:

The answer - and the psychology behind it - will be revealed in the next edition.

Or you could just Google it now like a normal person 🤷‍♂️

Thanks for reading! See you next edition 👀

In the meantime:

Have a friend or loved one in your life who’s really bad at making financial decisions? Then tell them that (indirectly) by sending them this newsletter.

And finally, got a topic you want us to cover? Reach out and let us know.

More soon

Jack