Comedy gold: the economics of internet irony

If you’re looking for proof we live in a computer simulation, consider the farcical story of dogecoin. Named after an internet meme about a talking dog, the joke currency was created as a parody of bitcoin. Dogecoin has no practical uses, yet online investors have ploughed billions into it. ‘We thought it would just make the viral rounds on social media,’ said founder Jackson Palmer. Last week the valuation passed $68 billion — more than Kraft Heinz and Ford. Palmer is now worth several hundred million dollars. Not bad for a Twitter gag.

Although it’s seven years old, dogecoin wasn’t a big deal until a few months ago, when supportive tweets from Elon Musk, the world’s richest man, fuelled an explosion in popularity. It is the most successful in the new ‘comedy gold’ asset class: ludicrous investments which reach dizzying valuations simply because people find them funny.

In January, an online mob of day traders banded together to pump the price of a struggling American video games shop called GameStop. They made reckless bets, pouring in their life savings and taking out payday loans. Its valuation soared 85 times and many of them are now millionaires. The GameStop investors had a superficial political goal: to hurt hedge funds which had bet against the company. But really, it was just about the thrill. And soon it spread to other unloved nostalgic stocks, such as Nokia and Blockbuster, which were selected purely because they were so unfashionable.

This was the beginning of the 2021 comedy gold rush. A few weeks ago, it emerged that a deli in New Jersey was trading on the stock market for $100 million. This was mainly down to financial engineering by a Chinese investment fund, yet Hometown Deli quickly became a favourite of irony speculators who pile into anything making headlines.