THE S&P 500 may be setting new highs, but to really take the measure of market exuberance look no further than Nyan Cat. The animated meme, encoded cryptographically into what is known as a “non-fungible token” (and which is unique and distinct from unencrypted versions of the animation that can be found with a quick internet search), was recently sold at auction for nearly $600,000. Other odd collectibles are booming too. Some sports cards of relatively recent vintage now fetch millions of dollars; the prices of rare Pokémon cards have leapt. New trading platforms backed by celebrity investments are getting in on the action. The expanding mania may look like worrying evidence of a rise in the appetite for risk, and perhaps it is. Yet it also illustrates the increasingly social nature of investing—and poses new questions for financial economics.
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Markets are not fine-tuned instruments of capital…