Datastream
Risk On: $45 Billion Injected Into Stock Market Funds In One Week
The Briefing
- The end of 2020 witnessed a $44.5 billion weekly inflow into stock funds, a historic high
- Diminishing uncertainty around the pandemic and U.S. presidential election are contributing factors to this increased investor appetite
Risk On, Risk Off
Few events can grasp the world’s attention in the same manner the pandemic and U.S. presidential election have. This attention also sparks conflict and discord—and thus, for some time, they’ve been identifiable risks as it pertains to financial markets.
The uncertainty that arises in relation to these two events is subsiding. The election is over and the roll out of vaccines has commenced.
For Wall Street and their forward looking estimates, greener pastures appear to be on the horizon. As a result, this has translated into record-breaking inflows into stock market funds near the end of 2020.
Stock Market Funds
In the week through November 11, 2020, $44.5 billion of stock market inflows were injected into markets through various funds—the largest weekly inflow into equity funds ever recorded.
The appetite for risk is also reflected in the options market, where call option volume is breaking all-time highs.
Taking a step back, here are the funds with the largest inflows in 2020:
| Ticker | Fund Name | 2020 Net Inflows ($ Millions) |
|---|---|---|
| VTI | Vanguard Total Stock Market ETF | $32,623 |
| VOO | Vanguard S&P 500 ETF | $21,431 |
| BND | Vanguard Total Bond Market ETF | $17,217 |
| QQQ | Invesco QQQ Trust | $16,733 |
| VXUS | Vanguard Total International Stock ETF | $16,002 |
| GLD | SPDR Gold Trust | $15,129 |
| LQD | iShares iBoxx USD Investment Grade Corporate Bond ETF | $15,020 |
| VCIT | Vanguard Intermediate-Term Corporate Bond ETF | $14,790 |
| AGG | iShares Core U.S. Aggregate Bond ETF | $12,475 |
| BNDX | Vanguard Total International Bond ETF | $11,929 |
One Funds Inflow Is Another Funds Outflow
Gold and fixed income, which tend to thrive in times of uncertainty, saw net outflows during the same week. Fixed income in particular has fared worse. The spread between U.S. bond and U.S. stock ETFs is widening, with almost $3 trillion more dollars in stock funds.
As Wall Street re-evaluates for rosier forecasts ahead, this may further widen the growing gap between these respective assets. Despite a volatile year where markets whipsawed, the S&P 500 finished 2020 up 16%, a boost from its historical average of 10-11%.
Where does this data come from?
Source: BofA Investment Strategies
Notes: Financial Data is for the week through November 11, 2020
Datastream
The Link Between Entrepreneurship and Mental Health Conditions
Research explores the link between entrepreneurship and mental health conditions such as ADHD and bipolar disorder
The Briefing
- Prevalence of ADHD, substance use disorders, and mood disorders appears to be higher in entrepreneurs than in the general public
- One-third of entrepreneurs reported two or more co-occurring mental health conditions
The Link Between Entrepreneurship and Mental Health Conditions
Entrepreneurship has long been associated with traits like risk-taking, persistence, and creativity. It’s no surprise, then, many of the world’s most successful companies were brought to life by neurodivergent founders.
Neurodivergence refers to natural differences in brain function among individuals with conditions such as autism, ADHD, dyslexia, and bipolar disorder. As this 2019 study demonstrates, entrepreneurs appear to experience mental health and addiction issues more frequently than the general public, and tend to have families with these illnesses at a higher rate.
Nearly half of entrepreneurs included in the study have one or more mental health conditions. Below the are the numbers for four of the conditions studied.
| Entrepreneurs | General Sample Group | |
|---|---|---|
| ADHD | 29% | 5% |
| Depression | 30% | 15% |
| Bipolar | 11% | 1% |
| Addiction | 12% | 4% |
The research also looked at anxiety, but found that levels were similar between entrepreneurs and the sample group.
Obsessive-compulsive disorder (OCD), dyslexia, and Asperger’s Syndrome, which are not included in this research, are other noteworthy conditions that are sometimes connected with entrepreneurship.
Asperger’s, in particular, is present in a number of successful founders, including Elon Musk and Bill Gates. Peter Thiel, billionaire investor and serial entrepreneur, has argued that this mild version of autism could be an asset in founding successful companies.
An Open Question
There are two competing ideas around the link between entrepreneurship and mental health conditions.
First, some posit that traits associated with mental health conditions (e.g. hyperfocus for ADHD, or attention to detail for Asperger’s) are assets in the startup world.
Secondly, it is also thought that because neurodivergent individuals have more trouble succeeding in conventional frameworks in academia and business, they are more likely to forge their own path by founding companies and pursuing self-employment.
It’s entirely possible that both these ideas are true. The more research that is published around mental health and entrepreneurship, the clearer view we have on the traits associated with creating successful businesses.
The more open the conversation is around mental health, the more we can create conditions in the workplace that empower neurodivergent individuals.
Source: Freeman, M.A., Staudenmaier, P.J., Zisser, M.R. et al. The prevalence and co-occurrence of psychiatric conditions among entrepreneurs and their families. Small Bus Econ 53, 323–342 (2019).
Data notes: Data was analyzed from 76 MBA student and faculty pool participants, 149 psychology students, and 110 entrepreneurs not affiliated with the university. Participants from either recruitment group who reported a history of self-employment or founding or co-founding a for-profit or non-profit business were categorized as entrepreneurs (n = 242).
Hat tip: We discovered this research via The Generalist who published a fantastic post on who becomes an entrepreneur.
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