Can the internet be a hedge fund

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More and more young people are discovering stock speculation and cryptocurrencies for themselves. One reason for this: meme accounts like the one from “Hedgefonds Henning”, who brags on Instagram that he is the richest guy on the business campus. How serious is he? And do you have to understand it if you want to understand the financial market?

From: Gregor Schmalzried

Status: 04/29/2021

Fun currencies like Dogecoin are exploding, while stocks like GameStop are making billions. All hell is going on in the financial markets, also because young people stir up the established scene. The experts in the financial world can hardly explain why. But Henning's hedge fund knows what's going on. The meme account on Instagram has over 139 thousand followers. Does the future of the capital market belong to the memes?

Zündfunk: Hedge Fund Henning, is that you or a fictional character?

Henning hedge fund: No, that is actually a fictional character. Of course, I orientated myself very much towards the American market: there was Arbitrage Andy, Levered Loyd, Trustfund Terry. I thought to myself, Hedge Fund Henning fits German quite well.

You talk about your account a bit like a startup.

(laughs) Yeah, maybe it comes from my business background. But in the end, of course, it's not a company either. It's a meme page. I just post the things that I find funny there. If other people like it, that's cool. But if the site only had 5,000 followers, I'd do it anyway.

If you only had 5,000 followers, they might not go together that well. To post with 140,000 followers about how rich you are and what big balls you have ... That might be a little better than if there are only 5,000 followers.

Clear. On the other hand, one could argue again that it is more elitist. Then you could say: Yes, my 5,000 followers are of course the top 5,000 in Germany who want to remain anonymous. And who is there?

If you mean, Hedge Fund Henning is a fictional character, does that mean the guy in the Ralph Lauren shirt and big watch who likes to appear in your memes ... That's not exactly how I have to imagine you?

Sometimes it does. You are of course versatile. If you would see me at university, I would of course also be wearing the classic Ralph Lauren, polo shirt or shirt. Unfortunately I don't have a watch.

I just looked who follows you from my contacts. For example, a person who follows you is a friend of mine from Nuremberg. She's a DJ, guaranteed to be very critical of capitalism. But she still finds something in your memes.

The good thing about the side is: maybe 80 percent of the followers can identify with it themselves and make fun of themselves, so to speak. And the other 20 percent come and laugh ABOUT the people. The main thing is that people laugh.

Financial memes were pretty niche a while ago, but they're much more present now. In the GameStop campaign, for example, young people on Reddit got together to shoot up a share because they could squeeze out a very established hedge fund and get rich themselves with it. A culture of this kind has already developed, especially young people who are actually interested in somehow disturbing the classic financial players. Sometimes even with a political stance. How do you perceive that?

One notices, especially over the last year, that more and more young people who previously had nothing to do with the whole subject of finances are now coming to the stock market. People realize that they don't get anything on their savings account and that they have to invest their money somehow differently. In principle, that's good too. But I think that at Wall Street Bets the main topic was not to exert a lot of political influence, but it is, as the name suggests, very gambling. That means you go “all in” on some company, which you probably don't even know and hope to become a millionaire with it tomorrow - an exaggeration to say. The fact that you have such an influence at some point through such an action, when many people are involved, of course attracted many people who said, "Okay, I don't really give a shit about the stock market, I want to piss off some billionaires now to step".

Is there a reason why - I'm also in my mid-twenties - so many of our generation treat money that way?

Well, first of all we are digital natives too. You're somehow at home on the Internet, it's relatively easy to find things like Reddit or Twitter where you can exchange ideas. 40 years ago none of this was technically possible at all. Even if you were interested. And then of course: we are currently in the longest bull market in terms of history. In other words, the stock exchanges have never been as good as they are now. So, of course, when things go well for a long time, more people get wind of it and are driven into the markets because they think: If it's that easy, then I can, although I have no idea about it, invest now and be successful with it.

I live in Munich, I know people who bought an apartment 20 years ago that they could never afford today. Now when young people have a well-paid job for the first time, they might have done the classically sensible thing a few decades ago and said: "I'm now investing in a home". That is no longer possible today. So maybe it's just a bit of self-defense that you try to somehow get more out of the money?

Of course, if I see a market so exaggerated, why should I invest my money? Then of course you go to other asset classes. And then for young people like us, who know the Internet well, crypto currencies become interesting, or even shares in companies like Tesla or Apple, which you find interesting because you know the companies. Some also think that a cryptocurrency just sounds cooler than a boring property. You shouldn't blindly buy anything or invest in a crypto thing just because you've seen memes about it. With crypto currencies in particular, there is now something like "Dogecoin", "Cumrocket" or "Asscoin". So, you can see from the name that this is not a serious investment.

The only problem is: These things, which start out as a joke, are now often more profitable than the things that would be the classically serious investment. The crypto currency Dogecoin, for example, is worth 40 billion dollars in the meantime, although it was initially only meant as a joke. That means: maybe a meme account is a bit of a better investment advisor? The classic investment advisor couldn't explain to me why Dogecoin is taking off. A meme account can tell me: Well, we think it's funny.

Okay, you said that now. But I think that's good, the statement. But I think that's the way it is in the current market situation. If you look at the financial sector and the real economy, they are already very much decoupled from each other. For example, you have airline shares that are going through the roof or something like TUI, even though they don't sell anything. What's going on in the financial markets is basically a real life meme. If you then joke about it and the values ​​also rise, then of course that plays into my cards. Then it's funnier for the memes. But I doubt that this will continue to be the case for the next five or ten years.