Yesterday’s Price Is Not Today’s Price

"The influences which determine the movements of the Stock Exchange are innumerable. Events past, present or even anticipated, often showing no apparent connection with its fluctuations, yet have repercussions on its course." — Louis Bachelier, "The Theory of Speculation" (1900)

Though Bachelier could never have envisioned Uranium ETFs or zero-commission trading apps, his observation perfectly captures the confounding nature of today's financial markets. What's particularly striking about the 2025 market landscape is not just complexity, but the narrative of "democratization" that surrounds it.

What We Mean by "Democratization"

Financial news media frequently celebrate the "democratization" of markets—the idea that anyone can now participate in wealth creation through investing. The evidence seems compelling:

• Zero-commission trading (pioneered by Robinhood in 2013, now industry standard)
• 24/7 market access through mobile apps
• Fractional shares allowing investment with minimal capital
• As of December 2024, 3,620 ETFs listed in the U.S. with approximately $10.30 trillion in assets under management

One person, one vote. One person, one share. The barriers have fallen, or so we're told. But is this democratization genuine? And more importantly, is it beneficial to new market entrants? ETF assets have soared and soon will reach 20T.

‍The Price Volatility Question

But as ETF AUM has grown, so has market volatility. The modern market shows unprecedented upside and downside in well known and not-so well known names.

• Nvidia (NVDA): $1 per share in mid-2016, now trading above $1,000
• Palantir (PLTR): Below $10 for most of 2022-2023, now significantly higher
• Align Technology (ALGN): $66 in early 2016, spiked to $700 in mid-2021, currently trading around 175$.
• Texas Pacific Land (TPL): Approximately $50 in 2016, now around $1,300

Returns of 1,000% were once relegated to high-risk ventures and biotech startups. Now they're appearing in publicly traded, heavily margined securities. This extreme volatility raises questions about market function and efficiency. 87% of adults with houseehold incomes of 100k or more own stocks. While only 25% of those with household incomes under 30k own stocks. In drawdowns, who is getting out early or buying at lows? In updrafts, who is reaping the benefits from stock appreciation?

The Democratization Illusion

What's presented as democratization more closely resembles commercialization. Trading platforms are businesses, and "free" services come with hidden costs:

1. Payment for order flow: Your trades are the product, sold to market makers
2. Securities lending: Your holdings generate fees when lent to short sellers
3. Cash balance interest: Brokerages earn interest on uninvested funds
4. Gamification: Confetti animations, rewards, and constant notifications designed to increase trading frequency

The confetti that rains down after completing a trade isn't a celebration of your financial empowerment—it's advertising. The "democratization" narrative masks a business model that profits from increased trading volume, not investor success.

The Real Cost of Easy Access

True democratization would focus on equitable outcomes, not merely access. Today's markets feature:

• Retail investors trading against algorithmic systems and institutional investors
• Complex derivatives and leveraged products marketed to inexperienced traders
• Social media-driven investment strategies disconnected from fundamentals
• Shorter holding periods and higher turnover, benefiting platforms over investors

Investing remains fundamentally competitive. The best part of capitalism might be just that.. competition. By lowering barriers to entry without addressing information asymmetry or providing adequate education, we've created an environment where many investors rely on "vibes," market momentum, and online chatrooms rather than fundamentals and modern investment mental models.

The democratization of financial markets may have widened participation, but it hasn't necessarily leveled the playing field. Perhaps what we're seeing isn't democracy at all, but a carnival where the games remain rigged just with more players donating money and receiving participation trophies.

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