Wall Street needs a new drug

The Wall Street Journal reported on Tuesday that a review of drug-test data compiled by Sterling Infosystems, shows that cocaine is losing favor among investment professionals with marijuana and amphetamines picking up the slack.

The story compared the data compiled by Sterling Infosystems from 2009 to 2007, which showed that cocaine was present in 7% of positive tests at Wall Street firms in 2009 compared to 16% in 2007 and the prevalence of marijuana in failed tests jumped to 80% in 2009 from 64% in 2007. The percentage of amphetamines in failed tests grew to 10% in 2009 from 3% in 2007.

 The story interviewed some addiction experts regarding the meaning of the results but they offered boiler plate analysis that talked about a general increase in drug use and the addictive personalities of traders but did not touch on the changes of investment professionals’ drug of choice.

Perhaps it is indicative of a tired market longing for a mellower groove. A desire to get back to the mellow yellow groovy markets of the 1970s — nearly completely flat — as opposed to the hyper active 1980s, which saw the Dow Jones Industrial Average triple and 1990s, when the Dow quadrupled; and the bust, boom, bust of the 2000s (see monthly Dow chart).

Metaphorically cocaine is the drug of the 1980s corporate raiders, 1990s IPO hucksters and 2000s leverage junkies. Those promoting a new paradigm, piling leverage upon leverage to create a new bubble so as not to come down from the high of the previous bubble. The drug of Gordon Gecko, a truly amoral character in the 1987 movie “Wall Street” that became a folk hero to many young aspiring traders.

If cocaine is the drug of greed and industry, marijuana may be the drug of sloth and contentment.

Perhaps even Wall Street is getting tired and is looking to “turn on, tune in and drop out.”

Not sure the data means anything though it may be time to take a sober look at our markets. The credit crisis that came to a head two years ago represented a culmination of a lot of poor policy decisions by business and government that took us to the brink of a depression (a brink still visible) and we only just recently passed a law to address it. Many market analysts have declared the crisis over and a new bull era beginning but the remedies put in place to hold off disaster — zero interest rate and quantitative easing to name just two—are still in place. There is a long rehab in front of us.

About the Author
Daniel P. Collins

Editor-in-Chief of Futures Magazine, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange. Dan joined Futures in 2001 and in 2005 he was promoted to Managing Editor, responsible for overseeing all the content that went into Futures and futuresmag.com. Dan’s incisive reporting and no-holds barred commentary places him among the most recognized national media figures covering futures, derivative trading and alternative investments.

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