An old Wall Street saying, often attributed to Warren Buffett, goes, “Be fearful when others are greedy, and be greedy when others are fearful.” It is more easily said than done. Humans are herd animals, and are happy to act as irrationally as society allows. It’s something we’ve seen a lot of across the world in recent months, and Latin Americans seem to have doubled down.
We’ve witnessed a flurry of mass layoffs across a tech industry that just months ago was offering cash hand over fist to tech workers. We’ve seen a crypto confidence crisis as the crypto winter looks to turn into a crypto ice age. And, just recently, we’ve seen mass hysteria over the expected collapse of Twitter, which seems unlikely to materialize in the way people are envisioning it. (Apologies if Twitter is no more than a smoldering pile of rubble by the time you get this newsletter.)
These trends have struck me particularly for two reasons. First, because they seem to come from realizations that things, as they were, were never sustainable, only leading to even more irrational decisions. And second, because, weirdly, it feels that if enough people buy into the latest irrational trend, it might just sort itself out.
Take the tech layoffs, for instance. Perhaps it was a bit silly to be offering junior programmers tons of money and luxury cars just to do their job, but the current slashing seems equally misguided. By gutting entire global teams, Twitter’s layoffs doubled down on what the company itself recognized as one of its main flaws: it was overly centralized in the U.S. The trend seems to be repeating itself in companies like Meta, which is much more dependent on Latin America and India than Twitter, yet you wouldn’t get that idea from the way many of these layoffs are taking shape.
Yet, there’s a sense that irrational behavior can retrospectively come to seem sensible if enough people jump on the trend.
Decision-making based on herd mentality can work wonders for sorting out difficult choices. As the world declared Twitter dead when most of the company’s staff resigned last week, some in Brazil turned their gaze to Koo. The Indian social media app that became the current Hindu nationalist government’s favorite may not seem like the obvious choice for Brazilians out of the existing smorgasbord of social media options out there, save for the fact that “koo” is a bit of a rude double-entendre in Portuguese. There has been no mass migration yet, but the sheer comedy value of tweets — like “My goal is to have the biggest koo [ass] in Brazil,” linked to an actual Koo account — is worth millions in marketing.
Finally, irrational behaviors can also be an expression of optimism in desperate times. This, in its own bizarre way, is what Salvadoran President Nayib Bukele seemed to be doing when he announced that his government would be using taxpayer money to buy “one #Bitcoin every day.”
Bukele is sticking to his Bitcoin guns and working on doctrine handed down by maximalists — people who believe that despite the peaks and troughs, crypto is humankind’s unavoidable future — but also Warren Buffett’s aforementioned wisdom. If Bitcoin does go up again someday, Bukele and everyone else who hodl’d will have the last laugh.
I’d argue that Bukele actually has an additional leg up on his critics here. By focusing attention on the seemingly irrational crypto question, he has distracted people from his atrocious human rights record and the fact is that even if Bitcoin’s value fell to zero tomorrow, it would only amount to a tiny portion of the country’s $24 billion debt.
Irrationality can take many forms and its consequences are less obvious than they may seem at first. In uncertain times, many — like the big tech companies — act straight out of fear, while others — like Bukele and those who “buy the dip” — go for greed. I myself rather like Brazil’s absurdist take — perhaps potty humor should decide the next place we’ll all be shitposting on.