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Pokémon Go and new records of U.S. stock indices

After a 14-month-long hiatus and doldrums (Greece+China+Brexit and similar hysterias), the broader S&P 500 index of U.S. stocks apparently returned to the routine of setting new historical highs yesterday. The Dow Jones Industrial Average index set a new historical intraday high today and has a chance to close at a record value, too.

The technological index Nasdaq is oscillating beneath 5,000. Note that in 2000 when the dotcom bubble imploded, the high was set at 5,060 or so. The closing high was marginally beaten in April 2015 but the intraday high of the best day in 2000 hasn't been beaten yet. Is there some mysterious upper bound of NASDAQ below 5,100?

Needless to say, the realization that Brexit is not a problem – something that people with intelligence knew all along but the average trader cooperating with the group think apparently needed several days to get this point – is the main reason why the indices are erasing the post-Brexit-referendum losses these days.

While the holders of U.S. stocks are setting new high, investors like your humble correspondent are still more than 10% below the maximum.

But there are other reasons for the buying. In Japan, rumors are spreading that a new stimulus could be launched by the Bank of Japan (but the yen has already erased all the post-Brexit gains so the motivation for interventions may have disappeared).

Moreover, July 2016 brought a small revolution in the real economy. Some sources attribute the rise of Asian and global stocks to the Pokémon mania.

Nintendo Ltd owns this supersuccessful game released for Android and iOS this month (users of Windows Phone like me have signed a petition demanding a version of the game for Windows Phone): if you click at the link, you will see that the stock has jumped by some 50% in recent weeks.

Adult people, teenagers, and children with their smartphones are walking all over the U.S. and Australia – the global launch should be imminent – and they're seeing Pokémons everywhere. Well, they see them on the display which shows the camera picture enhanced by something important, the Pokémons. Thousands of users have gotten so mad that they already see the Pokémons on the grass even if there are none and are killing real-world puppies although in Pokémon Go, you may catch the creatures non-lethally. Others are finding their Pikatchu at sensitive places of parks.

(If you want to trade stocks in Summer 2016, it is very important for you to learn that the yellow Pokémon is Pikachu but there are also some 720+ other species of the Pokémon whom you should memorize.)

Note that people are voluntarily – well, happily – downloading and playing the game and many of them are voluntarily paying for virtual in-game consumables and observables. (By the way, today, I bought my first food for $32 – a discount from $41 – over the Internet, via kosik.cz. It worked just great. We're told that only 10% of Czechs buy food over the Internet but 50% of Brits do so. I will surely recommend this method to everyone.)

You should compare the Pokémon Mania and its positive impact on the sentiment in the markets with the 2012 proposal by Paul Krugman, a winner of the memorial Nobel prize and a notorious crackpot economist. He said that corrupt scientists like the IPCC should not only spread the idea that the Earth is gonna fry; but also, they should announce that they have figured out that we're gonna be invaded by extraterrestrial aliens and the only protection against the extraterrestrial aliens is, surprisingly, new railways.

He was almost right. The Earth isn't invaded by extraterrestrial aliens but by Pokémons. They are similarly omnipresent and similarly virtual and the meme does similar wonders. The only difference is that it is fun to catch the Pokémons on the street – while it's not really fun for the workers to build the railways. So the useless Krugman railways could have been added as some "success" to some Krugmanist-Stalinist propaganda reports (a "check" in their five-year plans) but they wouldn't actually make the people happier, they wouldn't improve the life in ways that the actual consumers appreciate.

On the other hand, the Pokémon Go players are thrilled, indeed. And imagine how much better the game will be once you will be able to catch Pauls Krugmans and not just Pokémons. When the game is updated in this way, I will surely run around rivers with a gun and a smartphone and play the game for many hours every day, too. ;-)

You can see that the markets can do things that no Bolshevik-Keynesian apparatchik similar to Paul Krugman could ever invent. Even if an apparatchik like Krugman has an idea that is "similar" to some good idea, his is a counterproductive idea because something is missing. Similar ideas are only leading to miracles – e.g. the success of Pokémon Go – if its creators are clever, hard-working, and lucky and if their product simply "clicks" and is appreciated by the consumers or users.

If you had a predetermined "leader" such as Krugman whose task would be to "improve" the economy in seemingly similar ways, it just couldn't work well because there would be no reason to think that he would be better than the average creator of Android/iOS software (he is vastly worse than the average creator, but I don't need this insight to make the point that I am making). You simply need to give the freedom to the market to discover which programmers and inventors are the right ones and what ideas and apps are the winners. Any redistribution of time, energy, money, or efforts towards some pre-elected apparatchiks who are supposed to make "wise decisions" is statistically bound to reduce the progress that the invisible hand of the market brings and lower the happiness of the mankind in the future.

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