Excess Returns · Sunday, September 6, 2026
The current investment landscape, characterized by 'yolo-ness' and rapid market recoveries, mirrors gambling due to underlying behavioral biases like overconfidence and the underestimation of luck. Experts suggest that the psychological experience of quick recoveries, unlike the prolonged downturns of the 2000s, is preventing a necessary sentiment reset. This speculative behavior persists even after significant drawdowns.
“I think that's fascinating. I I know that um, your friend Kyle Scanlan has written a lot about how gambling has has morphed into traditional investing as well. And Dave, you've written a lot about all the leverage ETFs, and you know, we've been seeing this aspect of yolo-ness that that really has been present arguably since April of 2020.”
“And that's such a huge contrast to the experience of the 2000s where of course, the big bear markets that happened there, they really did create a generation of investors who did not want to take risks.”
“And so it's the question of what would it take for this trend to move in the opposite direction. And it's something we should not be rooting for. A deeper protracted bear market is painful. But it almost feels as if the longer that this goes on, the more leverage is built into the system.”