An occasional review of technology, markets, and ideas.

Why No One Takes "Tech Journalism" Seriously

YOLO trades, Robinhood, and a microcosm into how tech is covered in 2021.

In a recent VICE article titled "I Lost $400,000, Almost Everything I Had, on a Single Robinhood Bet" an anonymous individual tells Maxwell Strachan about some trade gone wrong. Similar to other sanctimonious mainstream media outlets, VICE writes that it is "the definitive guide to enlightening information" and Motherboard is effectively VICE's tech arm which makes this Robinhood hit piece masquerading as a confessional worthy of comment. More broadly, this piece indicates how the mainstream media tends to cover tech and understanding this dynamic is crucial for techies unaccustomed to interacting with the "Fourth Estate".

We start with our heroic protagonist (Hiro Protagonist?) who we learn is a bit of a grinder and put himself through college.

I was 26 and stupid. I had arrived in the U.S. when I was 18. I didn't have money and worked shitty jobs to get through college. I didn't go to a nice school, and I've worked in sales ever since I graduated. My first job paid me $40,000. Next one $50,000. So I basically only started getting money like three and a half years ago, when I got a good job. And I was like, Oh my God, this is really great.

So far, so good. This guy is pretty conservative and has roughly $2,500/month in burn. But things go quickly off the rails.

First, apparently a lot of his colleagues are worth a lot and the GameStop incident led him to get FOMO. He writes:

I put chump change, like three grand, into crypto, when I only had five grand to begin with in 2017, and I lost all of it. But I was seeing everybody making money hand over fist, and I wasn't. I work in tech, and a lot of my colleagues were worth, like, $10 million. But the big tipping point was GameStop. It was just ridiculous, and I got greedy and had FOMO.

Next, he decides to go all-in buying options on Alibaba (BABA). You don't have to be a portfolio manager to know that going all-in like this is a Very Bad Idea:

Then I just went all in on this one single stock option: The $200 strike price call option on Alibaba. ​​I would describe a call option as a leveraged bet on an underlying stock, which helps you increase the upside (or downside) of the bet you're trying to make. I initially invested $300,000 in February, basically every single liquid asset in my account. Not retirement, but everything cash. I didn't have anything left. My thesis was I might not make a lot of money, but I won’t lose much. The downside seemed limited, and that if worse comes to worse, it would go down to like $280,000.

After YOLO'ing all his savings into this BABA call option, he decided to go even harder in the paint and ADDED to the position:

And as my salary came in, I saved another $100,000. So in July, I put in another almost $100,000. I basically transferred all the liquid cash that I had and maxed out my account. If my company had not paid me at the end of July, I wouldn't have made my rent payment on August 1. My mom told me not to do it. And I still did it. When I invested the other $100,000, she told me sell tomorrow, sell tomorrow, sell tomorrow. I didn't listen. It was stupid, an extreme level of greed and risk taking.

You can guess how this story ends. BABA's share price tanked and he lost everything:

But the truth was, I was still somewhat optimistic. I still had $75,000, and I was hoping that Alibaba would make a recovery, which of course it did not. My next thing was Okay, how do I earn all this money back? But it fell from $75,000 to $50,000 and … I was pretty depressed for like two months...I should have listened to [my mom]. She told me to diversify a little. Don't go all in on one. But I felt like, because she told me not to do it so many times, I actually had to.

This guy admits that he was stupid:

The day I sold it, I was like, You know what? I fucked up. It was a mistake.

He admits that he was overconfident and didn't know how to manage risk:

I feel like the younger folks are really, really stupid, especially folks who have money now. There’s a lot of other folks like me who think they know the stock market and the right way to manage risk exposures and diversify, but a lot of them do not. They're just overconfident idiots...I was fucking stupid. I had no idea what the hell I was doing. I just felt so confident in my bet.

And, finally, h admits that he doesn't believe in diversification (like it's believing in God):

I don't believe in passive index investing. You know how Warren Buffett made a multimillion dollar bet that the index will outperform a bunch of hedge funds over a decade long period? My truthful belief is I don't necessarily believe passive investing to be the answer.

In short this guy doesn't believe in fundamental premises of portfolio theory and YOLO'd all of his money into a dumb trade where he lost money.

Despite acknowledging his multitude of mistakes, he then tries to paint Robinhood as the villain:

It's my fault. At the end of the day. I was stupid enough to not diversify. But I don’t think Robinhood is a net positive for society. The way it's designed, you get dopamine hits. When you place a trade, when you see it go up or down, the green or the red, it's addictive. If their model is payment for order flow, there's no question they just want you to trade, no matter if you win or lose money.

The vilification of Robinhood is the whole point of the article. Instead of talking about how paying for order flow has enabled Robinhood to have superior execution quality (they save customers an average of $1.72/100 shares traded and 96.79% of their orders are at the National Best Bid/Offer or better) Vice just repeats the canard that Payment for Order Flow equates to the company is ripping you off.

Lest you think that this is uncharitable, consider that Vice has a callout in the middle of their website soliciting stories related to Robinhood:

Do you work for Robinhood or are you a trader with a story to tell? From a non-work device, contact the reporter at or via Signal at 310-614-3752 for extra security.

All of this is part of the media's new – and increasingly aggressive – posture with respect to the major technology companies. Tech companies deserve to be scrutinized. But the problem is that with this regime is that it's not bi-directional: it's uni-directional. Journalists get to try to decapitate tech companies and howl when the same tactics are reciprocated.

Zooming out, all of this points us to a new equilibrium in the relationship between tech and the media which is likely to become more fraught as the mainstream media continues to lose their legacy monopoly distribution. The NYT will basically be playing to their subscriber base which tends to be white, rich, college-educated coastals who tend to view big business as fundamentally problematic. The answer? Go direct, young man. Oh, and be careful granting interviews.

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Jamie Larson