If you think this is the first time I’ve been described as a “degenerate,” then you likely don’t know me very well. Now, it’s not that my behavior or character can be called “degenerate” in the definitional sense (i.e., an immoral or corrupt person). It absolutely cannot. Yet there does tend to be a connotation with this word that is often applied to those with a free spirit and often used as a pejorative against those who aren’t afraid to kick the banality of convention in the backside. To this definition of “degenerate,” I proudly plead guilty.
Now, when it comes to markets, the term “degenerate” actually has a particular and technical meaning. I became aware of this term a few years ago, when I heard that market maven, analyst, angel investor and hedge fund manager Howard Lindzon (co-founder of StockTwits) created what he called, “The Degenerate Economy Index.”
But what the heck is this? Well, here’s Lindzon in his own words describing The Degenerate Economy as, “The next phase of investors, ownership, gambling, living life with a wallet on/in your phone. The degenerate economy includes education, experiences and activities. We onboarded and connected hundreds of millions of young people into investing, trading, speculation, crypto and gambling/betting.”
Basically, what Lindzon has identified here is a big and growing economy that has become super connected to free time via the mobile, social and tech-heavy world — and it wants to speculate!
In a great piece of research/writing I read yesterday from the brilliant minds at Sevens Report Research (which if you don’t subscribe, you should), they pointed out that one of the reasons why we’ve recently seen the major domestic indexes push up to all-time highs is what they call “good, old-fashioned speculation.” To further illustrate this point, the team at Sevens included the following table of some of the biggest market winners of late, which also happen to be many of the stocks/cryptos/ETFs that make up The Degenerate Economy Index.
The screenshot below is a performance chart of The Degenerate Economy Index ($DEGENCOM), which year-to-date has more than doubled the performance of the S&P 500, coming in at 21.46% this year versus the $SPX performance of just 9.36%.
A screenshot of $DEGENCOM Index at https://www.gothematic.com/index/degencom.
Now, subscribers to one or more of my newsletter advisory services will no doubt recognize many of these degenerate names, as we currently own or have owned many of these stocks/Bitcoin names.
As Sevens Report Research points out, “Lindzon’s index holds the companies, both new and old, that he thinks will benefit the most from this expanding degenerate economy. (For the record, he makes changes to the index periodically.) Since the index’s inception on May 15, 2023, through August 22, 2025, the Degenerate Economy Index has returned a cumulative 156% versus 67% for a large-cap benchmark.”
For those of you in the trading game (and I suspect most of The Deep Woods readers are), then it behooves us to pay attention to The Degenerate Economy Index. I say that, because if this bull market manages to stay intact (and I think it will), then companies in this index should receive additional tailwinds as speculation on high relative strength assets continues to capture risk capital.
Finally, another good reason to be mindful of The Degenerate Economy Index is, according to Sevens Report Research, “because many of these companies are benefiting from enthusiastic speculation, they offer a loose proxy on the speculative impulse of investors in the markets. When that speculative impulse begins to wane, it could be a warning sign for the broader markets. To reinforce that point, a back test of the index from its website shows it plunging 41% in 2022, while its large-cap benchmark dropped about half as much (down 20%). Bottom line, this index gives us a loose pulse on speculative impulses in the markets, and if they begin to recede, we should see The Degenerate Economy Index begin to break down before the S&P 500.”
Hey, I always knew degenerates were a good leading indicator or society. Now I know The Degenerate Economy Index is a good leading indicator for stocks!
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On Unguarded Thoughts
“Your worst enemy cannot harm you as much as your own unguarded thoughts.”
–Buddha
The flood of unidentified thoughts and negative inner chatter that seemingly arise out of nowhere can be one of our biggest sources of sorrow. And though we cannot control the thoughts that emerge in our heads, we can learn to recognize them as merely that… thoughts. And while this process isn’t easy, it is within all of our grasps as long as we make time to learn how to, first, identify these thoughts, and second, how to let them evaporate into the ether with the same slippery ease with which they appeared.
Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.
In the name of the best within us,
Jim Woods
