Speculative bubbles are always around. Usually, they end up poorly – think the tech and housing bubbles earlier this century.

Now, one of the craziest speculative bubbles going is bankrupt stocks.

Bankruptcy-bound Chesapeake Energy’s stock went up 182 percent. Hertz went up 115 percent. JCPenney went up 96 percent. Every one of these stocks isn’t just likely to decline, they’re zeroes.

So, what is driving the market higher?

My crazy hypothesis, which I discussed on a recent radio show, is these rallies are driven by sports gamblers who can’t gamble due to COVID-19. Without sports, these folks satisfy their urges in the stock market.

Further drivers of the rally are millennials who have nothing better to do with their stimulus checks. They don’t need the money for bills (or maybe they do, and they don’t care). Thus, sheer boredom has driven them to investing in their favorite brands.

Is it possible this confluence of events led people to say, “I’m bored. Let’s check out the stock market!”?

The 2019 pivot to zero-commission trades certainly helped make trading a welcoming environment. Unsurprisingly, in 2020, three large, no-commission brokers – Charles Schwab, E*Trade, and Interactive Brokers – added an incredible 780,000 new accounts in March and April using “free trades” as incentive.

Robinhood, the free trading app targeted at millennials, reported its March 2020 trading activity was three times higher than in March 2019. Also, 72 percent of all trades were buys.

There is a mantra developing – stocks only go up – and it’s driving the recent market surge. What will happen when the punch bowl is pulled away?

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