Dave Karpf writes about how two books with the title Dumb Money, published 20 years apart, echo pretty strongly.

His thesis is this, kind of:

E*Trade and Robin Hood weren’t disrupting the financial system. They were adding liquidity into the stock-gambling market. The whole point of “democratizing finance” is to bring more money into the game.

That’s important because, as stock valuations have become unmoored from companies’ actual revenues, the stock market becomes effectively zero-sum.* To a first approximation, if one trader earns $50,000 by betting on the stock market, some other trader(s) must have lost that $50,000.

It’s an interesting read, and I’ll definitely chase down the original Dumb Money.

Strong close:

The lesson to take from GameStop isn’t “haha now the financial system has been democratized and the fat cats have lost their advantage over the little guy.” That’s a catastrophically bad takeaway. The democratization of finance does not redistribute financial power. It does not disrupt the status quo. Neither Yahoo Finance in 1998 nor the Robin Hood app in 2021 were tools for tearing down the walls of the financial system. What they mostly accomplished was to dig a deeper moat.

Check out the whole piece here.