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Speaker 1: Welcome to Trillions. I'm Joel Webber and I'm Eric bel

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Speaker 1: Tunis Eric. The past weekend change has been a pretty

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Speaker 1: interesting one in the market, to say the least. Uh,

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Speaker 1: we're talking about Reddit, game Stop Silver, don't forget a

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Speaker 1: m C the movie Theater. Yeah, totally it was. You know,

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Speaker 1: we've been watching all year how commission free trading plus

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Speaker 1: a lockdown plus the FED, which has helped stocks just

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Speaker 1: go up relentlessly, has created this sort of perfect storm

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Speaker 1: where you've got all these retail traders and then you

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Speaker 1: throw in stemmy checks and and yeah, and it's just

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Speaker 1: getting crazy. It's like a big gambling casino. And what

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Speaker 1: happened this week, in my opinion, is that overall trend

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Speaker 1: had like a strain that took a more angry approach,

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Speaker 1: which is, hey, let's let's use this to get back

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Speaker 1: at Wall Street. And I'll tell you I've never been

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Speaker 1: called suits so many times, um as I was last

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Speaker 1: week on Twitter and I started to get offended, but

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Speaker 1: then I realized my profile picture I'm wearing a suit,

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Speaker 1: so I couldn't really complain. But that's who the Reddit

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Speaker 1: people are trying to get back at, the suits. Who

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Speaker 1: they you know obviously Wall Street hedge funds, and it

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Speaker 1: became this fascinating national news story, and to help us

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Speaker 1: walk through how e t f s fit into it,

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Speaker 1: we brought in a couple other non suits Katherine Greifield

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Speaker 1: and Claire Valentine of Bloomberg News Um were their reporters

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Speaker 1: on e t f s and we're gonna talk to

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Speaker 1: them about what they witnessed and what it all meant

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Speaker 1: this time on Trillions. Help my e t f got hijacked,

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Speaker 1: Katie Claire, Welcome to Trillions. Thanks for having us, Yes,

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Speaker 1: thank you. Okay, I have to ask how did e

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Speaker 1: t f s figure into the the game Stop rebellion

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Speaker 1: because obviously game Stop the stock was a major target,

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Speaker 1: and all of this on on Robin Hood E t

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Speaker 1: f s, though not, didn't seem as obvious at least

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Speaker 1: at the beginning. Clear. Yeah, I thought it was interesting

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Speaker 1: because I spent a lot of time on Reddit this

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Speaker 1: week and just looking at the chat rooms and things

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Speaker 1: like that. No one's talking about e t f s.

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Speaker 1: They they want to really pump up game Stop. It's

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Speaker 1: these individual stocks, as we've seen retail investors really be

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Speaker 1: interested in. But yet, you know, game Stop is part

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Speaker 1: of E t F, so it undoubtedly had an impact

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Speaker 1: on it. And what was most striking, at least initially,

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Speaker 1: is just how game stops um price increase caused it

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Speaker 1: to have an oversized waiting and a lot of these

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Speaker 1: e t F s and what e t F s

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Speaker 1: were of particular interest Katie. Yeah, I was gonna say

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Speaker 1: it took a while to find an e t F angle,

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Speaker 1: but one emerged in the Spider SMP retail et F.

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Speaker 1: That's ticker x RT, and I mean it wasn't x RT.

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Speaker 1: You also saw it in Gamer the g A m

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Speaker 1: R and also r w J, but it's felt particularly dramatic.

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Speaker 1: And x RT, I mean game stops wait. This is

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Speaker 1: an equal weight E t F for it's supposed to be,

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Speaker 1: but game stops waiting surged as high as twenty per cent,

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Speaker 1: which felt super dramatic, and you actually saw the fund's

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Speaker 1: biggest single day outflow ever as people tried to I mean,

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Speaker 1: there's multiple theories. I spoke to Eric about it too

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Speaker 1: as I was trying to figure it out. There's multiple

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Speaker 1: theories as to why that happens. Uh. It could have

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Speaker 1: to do with the fact that people were just so

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Speaker 1: desperate to get ahold of game Stop shares, or simply

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Speaker 1: that the people who allocated to x RT for you know,

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Speaker 1: core retail sector exposure were like, I didn't set up

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Speaker 1: for this. I'm getting out. But it did shake up

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Speaker 1: a bunch of passive index tracking e t f s eventually,

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Speaker 1: which was super interesting. A couple of notes on this

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Speaker 1: was gamer the video game et F. There's like four

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Speaker 1: of them, but only one held Game Stop, and that's

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Speaker 1: g A MR. And at one point that e t

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Speaker 1: F was up like eighteen percent just on game stock alone.

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Speaker 1: The others were down and then it Now that's reversed obviously,

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Speaker 1: but at one point I think Game Stop was a

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Speaker 1: thirty two or thirty three percent waiting, and I believe

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Speaker 1: that at the time, for like I don't know, a

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Speaker 1: couple hours there, it was the biggest weight in any

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Speaker 1: e t F in the world. Um at thirty something percent.

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Speaker 1: You just don't see that. Um. The one that it

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Speaker 1: beat I think was an Argentina. Argentina et F for

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Speaker 1: like one stock there like runs the whole country, and

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Speaker 1: so it's more it makes sense they're not in a

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Speaker 1: video game et F, but then in like big ones

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Speaker 1: like v t I where you have, like most of

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Speaker 1: America is in these big broad market ones. I looked

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Speaker 1: at the performance and game Stop is a point two

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Speaker 1: percent waiting and it and it contributed point four percent

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Speaker 1: of the return that week, so you barely felt it.

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Speaker 1: Although there's indirect consequences as game Stop became as the

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Speaker 1: better game Stop did the worst the market did, So

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Speaker 1: you could argue that there is an indirect consequence on

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Speaker 1: the bigger whole of mainstream broad indexes. But inside the

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Speaker 1: index games that meant nothing outside of a couple of

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Speaker 1: these sort of more niche plays that we just discussed

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Speaker 1: Katie brought up. But but I think that that's a

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Speaker 1: significant thing for us to spend a little bit more

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Speaker 1: time on, because we we do talk a lot about

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Speaker 1: thematic e t F s here on trillions um and

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Speaker 1: you know, take your pick of the ones that we've

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Speaker 1: talked about, so even video games. Right, So all of

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Speaker 1: a sudden, a video game e t F gets hijacked

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Speaker 1: by something that's that most people might not even think

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Speaker 1: was in the in the e t F. How significant

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Speaker 1: is that? I mean to see something go from you know,

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Speaker 1: uh An also ran in the index to something of

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Speaker 1: an e t F is that really supposed to happen

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Speaker 1: that way? So what I think is interesting in this

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Speaker 1: is that, uh, you know, I I spoke to State

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Speaker 1: Street about s RT in particular, was like, what what

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Speaker 1: are you gonna do? It's a it's a passive fund.

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Speaker 1: It rebalances court of A is there any scenario in

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Speaker 1: which you would rebalance early? And the answer was no.

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Speaker 1: So basically until March, it's it feels like x RT

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Speaker 1: and these other funds that rebalance on a schedule or

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Speaker 1: kind of held hostage to game stops swings. I mean

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Speaker 1: I mentioned that it was as high as twenty percent,

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Speaker 1: and x ART Eric mentioned it was as high as

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Speaker 1: thirty percent, and gamer and now in x RT it's

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Speaker 1: down to six percent, which is still a very sizeable

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Speaker 1: waiting when you consider that it should be closer to

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Speaker 1: one percent. You know, again, this is an equal weight

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Speaker 1: at e t F that holds securities. But until March

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Speaker 1: it's really just again held hostage to the whims of

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Speaker 1: game stop And I guess read it to some extent,

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Speaker 1: and let me jump in here on the fact this

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Speaker 1: is I find this fascinating. If you look at the

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Speaker 1: e t s that hold game stop and have the

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Speaker 1: biggest allocation. One of them shows up in the top

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Speaker 1: twenties the micro CAPYTF. And this is fascinating because game

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Speaker 1: Stop we went from like basic small micro to large

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Speaker 1: cap and a big large cap. I think at one

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Speaker 1: point it was the three biggest company or in the ballpark.

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Speaker 1: I've never seen that. I mean, that's unprecedented that here

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Speaker 1: you have like the two seventy biggest stock and it's

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Speaker 1: in a microcap BTF. That so, I think it spoke

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Speaker 1: to the quickness of the rise and the idea that

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Speaker 1: the herd could lift the stock that quickly. And that's

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Speaker 1: what got national news I think is just how fast

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Speaker 1: and how quick and how intense it happened. I mean

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Speaker 1: game Stop one day traded more than Tesla and nothing

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Speaker 1: trades more than Tesla, and all week it traded over

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Speaker 1: a hundred billion. That is it's now all falling apart

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Speaker 1: and it's petering out. But it was I don't know,

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Speaker 1: like breath it was. I was breathless and my mind

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Speaker 1: was blown all week, I gotta be honest. Plus the

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Speaker 1: narrative of the little guy in the hedge fund, I mean,

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Speaker 1: it was just there was so much going on all

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Speaker 1: these different people from um, you know, celebrities were coming

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Speaker 1: in and weighing in on it. I mean, it was wild,

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Speaker 1: but again we're not We've never seen anything like that.

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Speaker 1: And it also raises just questions about, especially with e

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Speaker 1: t f s, of like these unintended consequences of a

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Speaker 1: Reddit phenomenon that's suddenly hijacks something that's maybe not supposed

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Speaker 1: to get hijacked. Clear, how have you been making sense

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Speaker 1: of that? I mean, the main takeaway for me this

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Speaker 1: week was just how weird it was. And that's everyone

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Speaker 1: that I talked to, regular fund managers were just so

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Speaker 1: baffled by this. And I think Eric kind of really

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Speaker 1: I loved his title of a note that he had

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Speaker 1: and it said Wall Street Bets is hijacking some e

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Speaker 1: t f s, but they can handle it. And I

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Speaker 1: think to me that sort of the takeaway. You know,

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Speaker 1: we're seeing game stops price come down. Now, these funds

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Speaker 1: can handle it. You know, x RT is going to

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Speaker 1: be fine. But along the way, it's really weird and

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Speaker 1: it's really throwing investors I'm sure for a loop who

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Speaker 1: have invested in some of these e t f s

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Speaker 1: thinking they're were getting one thing and now they're getting

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Speaker 1: another the Joel. Let me push back on that a

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Speaker 1: little bit, because one of the worries E t S

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Speaker 1: was that they were going to actually kill any movement

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Speaker 1: in stocks because it just this big blob that owned

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Speaker 1: everything and nothing could ever move or there would be

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Speaker 1: no price discovery. Um. I think this shows that the

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Speaker 1: e t F is in the backseat and active is

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Speaker 1: in control, and I would think that would be reassuring.

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Speaker 1: The problem is the driver in this case was out

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Speaker 1: of their mind, and I think that's the new question

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Speaker 1: is what if the driver is crazy? But that's I

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Speaker 1: think would be would maybe satiate some of those concerns

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Speaker 1: that the E t F the tailwagon the dog. Clearly,

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Speaker 1: if that were the case, then this wouldn't have happened

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Speaker 1: because some of those E t f s would have been,

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Speaker 1: you know, the passive blob would have been too much

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Speaker 1: for this to happen. But it clearly wasn't. Another takeaway.

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Speaker 1: Another a story that we're watching is the relationship with ARC.

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Speaker 1: Ten days ago on a Saturday, I remember tweeting out

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Speaker 1: that there are people selling ARC merchandise. That's how red

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Speaker 1: hot ARC was and then it just boom, game stop.

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Speaker 1: Came along. Claire had a very time capsulely headline that

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Speaker 1: said something like game stop so big, nobody's thinking about

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Speaker 1: Cathy Wood right now, or something like that, and I thought,

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Speaker 1: what a what a crazy world we're in, and it's weird.

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Speaker 1: ARCS flows went away for a week, and then as

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Speaker 1: game stops, volume and performance stopped, you know, start coming down.

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Speaker 1: The volume petered out, the flows came back, and I'm like,

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Speaker 1: it's really interesting. Perhaps there's a battle for which object

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Speaker 1: can be shinier. I don't know, Claire, what were you

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Speaker 1: seeing with this? What do you make in this sort

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Speaker 1: of tango they're doing. Yeah, I was fascinated by kind

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Speaker 1: of that inverse um between arc and game Stop, and

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Speaker 1: it highlighted to me, I mean, we knew from anecdotal evidence, um,

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Speaker 1: but it's hard to get a read on how much

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Speaker 1: of these crazes are retail driven versus institutional for funds

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Speaker 1: like ARC and you know, to me, I had talked

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Speaker 1: with fund managers professionals who were super into arc um,

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Speaker 1: but sort of this inverse and this tango highlighted to

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Speaker 1: me that there is a big portion of ARCS popularity

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Speaker 1: that is due to m retail more small time investors,

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Speaker 1: the ones who are you know, wearing ARC spreadshirts and

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Speaker 1: when they were, um, you know, sort of blindsided by

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Speaker 1: game stops rise, that distracted them or you know, caused

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Speaker 1: them to put money elsewhere, and those funds um inflows

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Speaker 1: you know, suffered as a result. Also, the other thing

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Speaker 1: about this is that, like I said, game Stop became

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Speaker 1: a bit of a vix for a minute, because if

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Speaker 1: game stock went up, the rest of the market suffered. Katie,

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Speaker 1: did you look into this all the idea that hedge

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Speaker 1: funds that were short game Stop had to sell growth

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Speaker 1: stocks to cover and was that why there was this

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Speaker 1: selling off of the market, which arguably hurt ARC because

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Speaker 1: they're long growth stocks. So this is another reason I

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Speaker 1: think ARC probably took a hit last week, or you know,

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Speaker 1: at least the their shine with their flows were diminished

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Speaker 1: a bit. Yeah. I think that's the point where this

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Speaker 1: turned from sort of a sideshow into we can't ignore this.

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Speaker 1: You know, you have the SMP, the NAZAC one hundred

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Speaker 1: are falling as well. And the theory that was raised

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Speaker 1: was that hedge funds are basically having to degross and

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Speaker 1: cut their risk exposure because they're being burned so badly

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Speaker 1: on their short bets. Goldman actually has a basket of

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Speaker 1: the most shorted stocks in the market. I think at

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Speaker 1: January was up over which is by far the best

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Speaker 1: month ever. So you have these heavily shorted stocks, and

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Speaker 1: this was exactly what Wall Street Bets was trying to do.

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Speaker 1: It was trying to engineer a short squeeze. So you

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Speaker 1: have those shots are stocks rallying like crazy, So it

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Speaker 1: makes sense that, you know, the hedge funds that were

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Speaker 1: heavily short those stocks would have to cut their positions,

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Speaker 1: and that did. We did see that bleed into the

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Speaker 1: major benchmarks, and obviously ARC was caught up in that

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Speaker 1: as well. I agree the market story was a shyde

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Speaker 1: show for a while until growth stocks started selling off.

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Speaker 1: Then it's everybody's problem and Tesla starts going down. Um.

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Speaker 1: But what was fascinating and I think, you know, if

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Speaker 1: I'm the hedge fund industry, I have to do some

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Speaker 1: I have to do some internal introspection here. They picked

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Speaker 1: hedge funds as their opponent, hedge funds that were shorting,

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Speaker 1: like these fun names that do things you love, movie theaters,

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Speaker 1: video games, And it was amazing how much of society

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Speaker 1: rallied around these Internet people just because they were against

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Speaker 1: hedge funds. When you have AOC and Ted Cruz agreeing

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Speaker 1: and uniting, that's how bad people like. That's how much

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Speaker 1: hate there is for hedge funds. I honestly they have

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Speaker 1: some image work to do, in my opinion, and Wall

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Speaker 1: Street in general, I think some people just feel like

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Speaker 1: maybe there wasn't enough balancing out after two tho eight

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Speaker 1: of some of these Wall Street firms. I think they

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Speaker 1: just hedge funds. You don't really they don't see a

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Speaker 1: lot of outreach from them. People don't know what they do,

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Speaker 1: why they do it. They just have the image. They

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Speaker 1: get stuck. But I thought that was a fascinating one,

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Speaker 1: and I don't know arguably one that I think should

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Speaker 1: be somewhat of a wake up call to the financial

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Speaker 1: industry well, and especially after the pandemic to just only

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Speaker 1: accelerated that. I mean, you saw the stock market go

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Speaker 1: up so much and yet unemployment that started Jane and

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Speaker 1: regular people are suffering. So I think I think that

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Speaker 1: just sort of exacerbated at all. I do think it's

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Speaker 1: crazy to see politicians across the aisle hopping on trying

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Speaker 1: to get a sound bite hating on hedge funds. I

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Speaker 1: think Senator Elizabeth Warren actually said that she wants to

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Speaker 1: see more day traders. It's just weird to see politicians

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Speaker 1: encouraging what is that. It's heart kind of reckless impulse

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Speaker 1: to pile into Game Stop, you know, boosted by over

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Speaker 1: sixt percent in January alone. I mean, that's going to

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Speaker 1: end painfully for a portion of people. Well. At the

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Speaker 1: same time, though, there is chatter about a transaction tax,

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Speaker 1: which could also you know, be at least a moderate

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Speaker 1: speed bump on some of this activity. Okay, so we

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Speaker 1: haven't talked about another angle in the e t F

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Speaker 1: saga that was the last week, which was exclusively an

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Speaker 1: et F story, which was silber Um s LV became

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Speaker 1: with the horde, the reddit Wall Street Bet horde moved

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Speaker 1: on too after Game Stop. Why SLV well? Silver is

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Speaker 1: an interesting case because there's a lot of sort of

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Speaker 1: dueling on Wall Street Bets about where the silver squeeze started.

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Speaker 1: It started trending on Twitter, and uh, you know, everyone

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Speaker 1: was quick to say this is Wall Street bets, and

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Speaker 1: there were a few posts on Wall Street Bets about silver.

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Speaker 1: But then you saw people say, oh my gosh, Citadel

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Speaker 1: is the sixth largest holder of SLV. We're helping the

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Speaker 1: hedge funds. This isn't Wall Street Bets. So there is

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Speaker 1: some debate as to where the short silver movement started,

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Speaker 1: and that really highlights just the whole narrative of all

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Speaker 1: this happening. It's like who knows where these sorts of

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Speaker 1: things start, but yet they do start, and they kind

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Speaker 1: of take on a life of their own. Yeah, when

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Speaker 1: I was talking about so, I camera how it came up.

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Speaker 1: But first of all, I've picked up a lot of

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Speaker 1: new Wall Street Bets followers. So now I'm getting like

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Speaker 1: information and I'm either getting helpful in from ma sure

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Speaker 1: being called a suit right and left now. But one

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Speaker 1: of them was like basically saying that. Then they had

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Speaker 1: this diagram you ever see Star Wars where they meet

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Speaker 1: to go and they look at the Death Star map

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Speaker 1: and they're like, there's this one exhaust port that's a

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Speaker 1: flaw in the Death Star, and if we can get

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Speaker 1: a shot in there, the whole thing will blow up.

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Speaker 1: That's kind of how they thought silver was there, Like

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Speaker 1: if you can just rack up the cost of silver,

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Speaker 1: all of these big banks are short silver for inflation purposes.

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Speaker 1: And whatnot, and all the dominoes will fall, the whole

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Speaker 1: structure will blow up, will get revenge for two tho eight. Finally,

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Speaker 1: it was ambitious and it was laid up by somebody

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Speaker 1: who looked like they were knowing what they were doing

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Speaker 1: with the silver market. They had a lot of information, um,

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Speaker 1: but it was just a week shot. I mean still

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Speaker 1: SLV traded seven billion. They definitely rose it about eight percent.

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Speaker 1: I mean they moved the needle. But to do what

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Speaker 1: they wanted to do, Uh, plus what the in fighting

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Speaker 1: they all had to go in because the game stop

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Speaker 1: traded about the same amount as SLV, so they were split.

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Speaker 1: And that's the thing with this move, and you kind

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Speaker 1: of have to all be in the same spot. And

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Speaker 1: that's what they were able to do with game stuff

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Speaker 1: on Wednesday last Wednesday, but they were unable to do

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Speaker 1: with silver because of what Katie said. There was some

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Speaker 1: infighting and also this is a giganic pool of money

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Speaker 1: that exists. I don't know if I think they basically

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Speaker 1: bit off more than they could chew on the silver.

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Speaker 1: On the silver situation. And and you know, the other

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Speaker 1: element here is that we go from a micro cap

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Speaker 1: stock which they inflate into something else temporarily at least

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Speaker 1: and jump over to the commodity land. And you know,

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Speaker 1: the other thing, Eric, that we've talked about with commodity

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Speaker 1: e t f s is that this stuff is, you know,

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Speaker 1: there's actually underlying hard goods that back this stuff up.

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Speaker 1: Has anybody tried to actually redeem the silver? How much

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Speaker 1: of the play was about that? I don't think you've

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Speaker 1: seen that yet. I mean, so SLV uh, it's t

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Speaker 1: plus zero, so we should be getting real time inflows

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Speaker 1: like inflows for the data we see on Wednesday should

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Speaker 1: reflect Tuesday inflows. But maybe Eric can chime in here.

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Speaker 1: I think there's some weirdness about how physical silver has

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Speaker 1: traded that it doesn't quite reflect the previous day. But

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Speaker 1: if you look at shares outstanding on SLV, it doesn't

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Speaker 1: seem that anything has been redeemed so far at this

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Speaker 1: point in time, which is interesting. But I mean, it's

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Speaker 1: seen incredible inflows, just record inflows, so I would imagine

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Speaker 1: that some of that would come out, especially now that

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Speaker 1: the squeeze silver movement seems to have Peter doubt. Yeah,

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Speaker 1: I mean SLV took in one point five. I'm doing

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Speaker 1: the math he about about three billion in three days.

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Speaker 1: That is a lot. I mean, that blows away their

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Speaker 1: record and that makes it the fifth most inflows of

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Speaker 1: any et F this year, just like that. So again

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Speaker 1: they can make a difference. But the problem is compared

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Speaker 1: to the amount of silver in the world, it's just

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Speaker 1: not that much. But the creations just mean that there's

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Speaker 1: going to be You could argue that the vault where

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Speaker 1: they keep the silver, which by the way, JP Morgan's

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Speaker 1: the custodian, some of these were like Keystone cop plans

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Speaker 1: where they just didn't quite think it all the way through.

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Speaker 1: Then there was a theory that JP Morgan was actually

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Speaker 1: very long silver and so all you're doing is helping them.

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Speaker 1: And then I'd see these people arguing with you do

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Speaker 1: with each other, like we're helping them. Stop. The whole

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Speaker 1: thing was it got game stop was more like whoa

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Speaker 1: silver was more like a funny like one was a

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Speaker 1: drama action and the next one was a comedy. I thought.

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Speaker 1: What I thought was interesting is there are questions too

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Speaker 1: about how the silver's stored in London and then how

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Speaker 1: to transport it during a lockdown, and just these wild

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Speaker 1: things that these Reddit traders are impacting. I mean, it's

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Speaker 1: just it's just so strange. How do you do how

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Speaker 1: do you transport silver during a pandemic in a lockdown?

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Speaker 1: I think I think you asked for more time. Another thing,

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Speaker 1: with these silver and gold ets that are physically back,

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Speaker 1: there's always been a sort of conspiracy wing of people

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Speaker 1: who don't believe the goals there. The silver's there. Um

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Speaker 1: that said, there's been a couple of ts that have

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Speaker 1: popped up that will let a retail investor gets the

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Speaker 1: precious metals sent to their house, and that's where some

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Speaker 1: of them wanted to go to these alternative ets, but

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Speaker 1: those don't have too much money. I mean, there's not

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Speaker 1: that many people that paranoid. Most people are fine trusting

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Speaker 1: black Rock and whoever else to store the silver in

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Speaker 1: a vault. But that's always been a concern, and that

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Speaker 1: kind of I guess came out here a little bit

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Speaker 1: with their arguing again because their goal was to try to,

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Speaker 1: I don't know, not let Wall Street benefit at all.

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Speaker 1: Compared to what we saw with the USO in the spring,

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Speaker 1: where you know the prospect of having oil delivered to

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Speaker 1: your house, I'd rather have silver delivered personally, no doubt,

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Speaker 1: but you know, for the record, Eric and I have

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Speaker 1: I think pitched in the in the course of doing

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Speaker 1: trillions every uh issuer in the Silver Actually, I don't

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Speaker 1: know about the Silver game. Eric, we should double back

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Speaker 1: on our on our first But in the Gold World,

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Speaker 1: we've asked everything person to take us to their vaults

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Speaker 1: so that we can see the underlying asset. Um. I

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Speaker 1: asked repeatedly for a bag to be put over my

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Speaker 1: head so that, you know, we could actually really have

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Speaker 1: the drama and they could maintain their secrecy. But so

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Speaker 1: far everyone has declined. But that remains an open invite

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Speaker 1: if if anybody wants to put a bag over my head. Yeah,

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Speaker 1: anybody listening who has access to one of those vaults,

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Speaker 1: we would love to do an episode from there. I

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Speaker 1: think Bob Pissani from CNBC actually got into the vault

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Speaker 1: one time and he held up the bar. But then

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Speaker 1: there was a message board that claimed that was all

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Speaker 1: like fake. I mean, I don't know. Look the when

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Speaker 1: when when you get into the Gold world and I've

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Speaker 1: I've dove down there many times, there's like goldbugs and

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Speaker 1: then there's truly paranoid and some of the truly paranoid,

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Speaker 1: some of the stuff they come up with is h

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Speaker 1: is fascinating. That's why you know. There was an E

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Speaker 1: t F that came out. I think it changed strategies,

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Speaker 1: but it stored the gold in Switzerland. That was its

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Speaker 1: only difference. Everything else is the same as j LD,

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Speaker 1: but it stored it in Switzerland, and it had a

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Speaker 1: It got a billion dollars just for that one feature.

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Speaker 1: That's how much people are you know, I guess assume

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Speaker 1: that the West may confiscate your gold. Just on the

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Speaker 1: gold angle. I just want to quickly add when Gold

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Speaker 1: g l D particularly was like at the height of

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Speaker 1: its inflows in May, I spoke to George milling Stanley,

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Speaker 1: who's now the chief gold strategist at Streight State Street

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Speaker 1: Global Advisors, but while he was with the World Gold

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Speaker 1: Council he helped create the fun back in two thousand four,

431
00:22:24,480 --> 00:22:27,440
Speaker 1: And I mean I was interviewing him about gold, but

432
00:22:27,480 --> 00:22:30,479
Speaker 1: I couldn't get off the gold vault theme. And he

433
00:22:30,560 --> 00:22:33,359
Speaker 1: was telling me obviously he's been in the vault, and

434
00:22:33,720 --> 00:22:35,840
Speaker 1: I was like, how do you fit all the gold

435
00:22:35,880 --> 00:22:38,239
Speaker 1: in the vault? That's crazy? He was like, what are

436
00:22:38,240 --> 00:22:40,159
Speaker 1: you talking about. It's a gold bar. It takes up

437
00:22:40,200 --> 00:22:43,320
Speaker 1: like one corner. Like even fifty two billion dollars worth

438
00:22:43,320 --> 00:22:46,160
Speaker 1: of gold bars only take up a corner of the vault.

439
00:22:46,240 --> 00:22:48,280
Speaker 1: So I'm dying to see it one day. If you

440
00:22:48,320 --> 00:22:51,959
Speaker 1: guys ever get into it, I think it would be

441
00:22:51,960 --> 00:22:55,879
Speaker 1: pretty underwhelming. Yeah, I mean, isn't there that isn't there

442
00:22:55,920 --> 00:22:58,400
Speaker 1: that stat that like all the gold above ground would

443
00:22:58,440 --> 00:23:01,840
Speaker 1: fit into a swing pool or a couple of lin pools. Yeah,

444
00:23:01,920 --> 00:23:04,200
Speaker 1: this is just you're just like reading off reddit right now.

445
00:23:14,960 --> 00:23:20,840
Speaker 1: So what other causes of concern did you guys witness

446
00:23:21,640 --> 00:23:23,359
Speaker 1: in all of this as it relates to E T

447
00:23:23,520 --> 00:23:28,199
Speaker 1: F or markets in general. I mean, Katie and I

448
00:23:28,240 --> 00:23:31,240
Speaker 1: worked together on an article um that came out over

449
00:23:31,240 --> 00:23:35,080
Speaker 1: the weekend, and it looked at sort of the craze Um.

450
00:23:35,119 --> 00:23:37,640
Speaker 1: You know, there's the angle that Eric was talking about

451
00:23:37,680 --> 00:23:39,719
Speaker 1: how these people are mad at Wall Street, and then

452
00:23:39,720 --> 00:23:43,000
Speaker 1: there's sort of another aspect possibly about this sort of

453
00:23:43,040 --> 00:23:47,080
Speaker 1: gambling mindset and how people are bored at home. They're

454
00:23:47,119 --> 00:23:49,560
Speaker 1: looking for a sense of community. Um, they want to

455
00:23:49,640 --> 00:23:53,200
Speaker 1: feel something, and so they're sort of gaining that through

456
00:23:53,560 --> 00:23:57,040
Speaker 1: this gambling mentality, and you know that could end up

457
00:23:57,080 --> 00:24:00,000
Speaker 1: really badly for a lot of people. Yeah, It's weird

458
00:24:00,160 --> 00:24:05,600
Speaker 1: to see this movement as being compared to in virtual

459
00:24:05,720 --> 00:24:09,840
Speaker 1: occupy Wall Street. You know, the David and Goliath theme. Uh,

460
00:24:10,160 --> 00:24:13,680
Speaker 1: you know, I've seen that bandied about many times. Um,

461
00:24:13,720 --> 00:24:16,960
Speaker 1: And I mean there's obviously an element of truth there, uh,

462
00:24:17,000 --> 00:24:18,840
Speaker 1: you know, the big guy or the little guys trying

463
00:24:18,840 --> 00:24:21,200
Speaker 1: to take on the hedge funds. But I think like

464
00:24:21,280 --> 00:24:23,479
Speaker 1: in that search for a deeper meaning, it kind of

465
00:24:23,480 --> 00:24:26,680
Speaker 1: obscures that this is just fun. You know, people are

466
00:24:27,119 --> 00:24:30,800
Speaker 1: using this as entertainment. We saw this in penny Stocks,

467
00:24:30,840 --> 00:24:34,080
Speaker 1: people punting around penny stocks, and you know, like Claire

468
00:24:34,119 --> 00:24:36,560
Speaker 1: was saying, that's what our article got at, that this

469
00:24:36,640 --> 00:24:40,320
Speaker 1: is at its root, this is gambling, and that wasn't

470
00:24:40,359 --> 00:24:43,880
Speaker 1: too well received online. One guy actually made a forty

471
00:24:43,960 --> 00:24:46,879
Speaker 1: minute YouTube video about it, which was interesting. But I

472
00:24:46,880 --> 00:24:50,520
Speaker 1: think that's an important point here that there's risks here

473
00:24:50,680 --> 00:24:54,960
Speaker 1: inherent in any gambling situation. Well, and it's not always

474
00:24:54,960 --> 00:24:56,680
Speaker 1: a bad thing, you know, So what if some people

475
00:24:56,720 --> 00:25:00,560
Speaker 1: want to, you know, gamble on stocks. I mean, you great,

476
00:25:00,440 --> 00:25:02,360
Speaker 1: it does sound kind of fun. I mean I spent

477
00:25:02,359 --> 00:25:04,320
Speaker 1: a lot of time on Reddit this week, and some

478
00:25:04,440 --> 00:25:07,600
Speaker 1: of it's kind of you know, it seems like fun. Yeah,

479
00:25:08,320 --> 00:25:10,879
Speaker 1: I'm in that camp too. I don't judge, And I

480
00:25:10,920 --> 00:25:13,440
Speaker 1: think that this is also just the product of a

481
00:25:13,480 --> 00:25:15,960
Speaker 1: late cyclable market. Again, this just goes back to the

482
00:25:15,960 --> 00:25:19,560
Speaker 1: whole theme of the TikTok videos and the Robin hood

483
00:25:19,600 --> 00:25:21,760
Speaker 1: and everything going up. It's a nice time to gamble

484
00:25:22,040 --> 00:25:25,680
Speaker 1: when the stock market's got this nice bullish base. Um.

485
00:25:25,760 --> 00:25:28,400
Speaker 1: So my theory is most of these people will learn

486
00:25:28,440 --> 00:25:30,560
Speaker 1: the hard way that they gotta you know, buy and

487
00:25:30,640 --> 00:25:33,600
Speaker 1: hold and do something a little more thoughtful after a correction.

488
00:25:34,280 --> 00:25:36,000
Speaker 1: I went back and look at articles from the like,

489
00:25:38,160 --> 00:25:40,080
Speaker 1: and there was a lot of these quote mobs that

490
00:25:40,160 --> 00:25:43,080
Speaker 1: were all, you know, they just were using different forms,

491
00:25:43,119 --> 00:25:45,439
Speaker 1: but they were making tons of money in the market,

492
00:25:45,520 --> 00:25:46,879
Speaker 1: and then it blew up in their face and a

493
00:25:46,880 --> 00:25:50,160
Speaker 1: lot of them were this is my generation converted to passive.

494
00:25:50,880 --> 00:25:53,359
Speaker 1: And also another thing on the passive thing is, you know,

495
00:25:53,440 --> 00:25:55,119
Speaker 1: I think a lot of people who are watching this

496
00:25:55,240 --> 00:25:58,320
Speaker 1: and I put myself in that boat, we think, like,

497
00:25:58,680 --> 00:26:00,480
Speaker 1: you know, if you're a passive investor and you first

498
00:26:00,480 --> 00:26:03,760
Speaker 1: subscribe the Vanguard way and whatnot, um, that is the

499
00:26:03,840 --> 00:26:06,040
Speaker 1: way to sort of get back, not get back at

500
00:26:06,080 --> 00:26:08,520
Speaker 1: Wall Street, but it keeps Wall Streets, hands off your

501
00:26:08,560 --> 00:26:11,480
Speaker 1: money for the most part, and you build wealth. So

502
00:26:11,720 --> 00:26:13,560
Speaker 1: I do think, like you know, there's a phrase in

503
00:26:13,600 --> 00:26:16,359
Speaker 1: the movie Wargames that the only winning move is to

504
00:26:16,440 --> 00:26:19,040
Speaker 1: not play, because not only are there gonna be tons

505
00:26:19,040 --> 00:26:20,960
Speaker 1: of bag holders and tears at the end of this,

506
00:26:21,560 --> 00:26:23,560
Speaker 1: but they're racking up trading costs. I mean, I did

507
00:26:23,560 --> 00:26:25,600
Speaker 1: the math, and if you look at the bit ast

508
00:26:25,640 --> 00:26:27,359
Speaker 1: spread of some of these stocks are is pretty wide.

509
00:26:27,680 --> 00:26:30,760
Speaker 1: We're looking at about, you know, five hundred million is

510
00:26:31,600 --> 00:26:34,919
Speaker 1: in trade in trading costs. Now, obviously that's as a group,

511
00:26:35,640 --> 00:26:39,880
Speaker 1: but that is is counter and productive if your goal

512
00:26:39,960 --> 00:26:42,239
Speaker 1: is to sort of starve Wall Street. So I do

513
00:26:42,359 --> 00:26:44,440
Speaker 1: think it comes back to, as Dave nade It called it,

514
00:26:44,520 --> 00:26:47,400
Speaker 1: the Vogel hack um. That's the only way I've seen

515
00:26:47,480 --> 00:26:50,800
Speaker 1: to solve this puzzle and build wealth and nobody gets

516
00:26:50,840 --> 00:26:53,560
Speaker 1: hurt um is to just buy and hold a cheap

517
00:26:53,560 --> 00:26:56,800
Speaker 1: index fun and not trade it. But I agree, it's

518
00:26:56,800 --> 00:26:58,440
Speaker 1: fun to trade, and I think if you just admit

519
00:26:58,480 --> 00:27:00,960
Speaker 1: that to yourself, I said, just in joy yourself. I

520
00:27:00,960 --> 00:27:03,480
Speaker 1: think we see a lot of portfolios being very cheap

521
00:27:03,880 --> 00:27:07,159
Speaker 1: beta in the core, and then they go crazy on

522
00:27:07,200 --> 00:27:11,119
Speaker 1: the outside with stock trading or options or arc and

523
00:27:11,200 --> 00:27:13,320
Speaker 1: that hot sauce level. If it can keep you from

524
00:27:13,359 --> 00:27:17,639
Speaker 1: like messing with great, it's actually a good behavioral tactic

525
00:27:17,680 --> 00:27:21,719
Speaker 1: as well. Okay, I have one more thing that we

526
00:27:21,760 --> 00:27:24,520
Speaker 1: want to we want to talk about and and Katie,

527
00:27:24,520 --> 00:27:28,119
Speaker 1: we're gonna troll your your Twitter Twitter feed. Here. Eric's

528
00:27:28,119 --> 00:27:30,520
Speaker 1: pulling it up so he can I like to read it.

529
00:27:31,880 --> 00:27:33,760
Speaker 1: I've tweeted a lot of dumb things this week, so

530
00:27:33,800 --> 00:27:38,159
Speaker 1: you're gonna have to scroll. Okay, here we go. This

531
00:27:38,240 --> 00:27:40,840
Speaker 1: is good because this is this is like right in

532
00:27:40,880 --> 00:27:43,479
Speaker 1: the middle of the frenzy. It's sort of like throwing

533
00:27:43,520 --> 00:27:47,360
Speaker 1: like chum in the middle of like already shark infested waters.

534
00:27:49,000 --> 00:27:52,080
Speaker 1: Here it is ready. What would the FED do if

535
00:27:52,080 --> 00:27:55,560
Speaker 1: Wall Street bets engineered a short squeeze on long term treasuries?

536
00:27:56,160 --> 00:28:02,040
Speaker 1: Good question, Yeah, I mean fifty replies is pretty good.

537
00:28:02,080 --> 00:28:05,000
Speaker 1: And then she did a quick, qualifying second treat that

538
00:28:05,080 --> 00:28:08,600
Speaker 1: just said this is a joke. And even even after

539
00:28:08,720 --> 00:28:11,560
Speaker 1: that tweet, I mean, I got so many serious, like

540
00:28:11,800 --> 00:28:14,359
Speaker 1: thought out replies, and I just I don't know what

541
00:28:14,440 --> 00:28:17,920
Speaker 1: to say, Like it's it's a joke. Someone did say that.

542
00:28:18,359 --> 00:28:20,639
Speaker 1: Isn't the FED trying to do that already. Aren't they

543
00:28:20,680 --> 00:28:23,320
Speaker 1: trying to engineer a short squeeze? Which I thought was

544
00:28:23,359 --> 00:28:27,239
Speaker 1: a pretty good reply. I saw like I saw one

545
00:28:27,280 --> 00:28:28,960
Speaker 1: of the tweets right aft the bat just said I'm

546
00:28:29,000 --> 00:28:31,760
Speaker 1: here for the ratio. That's when you know someone said

547
00:28:31,840 --> 00:28:35,159
Speaker 1: something that's just you know, outrageous and uh, people just

548
00:28:35,200 --> 00:28:37,960
Speaker 1: hanging the replies just to see everybody go wild. I

549
00:28:38,040 --> 00:28:41,080
Speaker 1: hung in there though. Let the record show, Yeah, you

550
00:28:41,080 --> 00:28:43,080
Speaker 1: didn't delete it. You hung in there. That's I give

551
00:28:43,120 --> 00:28:45,120
Speaker 1: you credit. It's tough to take that much heat on Twitter,

552
00:28:45,240 --> 00:28:49,320
Speaker 1: especially in this kind of a scenario. Katie with those

553
00:28:49,360 --> 00:28:53,400
Speaker 1: diamond hands, Katie Claire, thanks for joining us and jillions.

554
00:28:53,760 --> 00:29:05,280
Speaker 1: Thank you, thank you, Thanks for listening to Trillions until

555
00:29:05,320 --> 00:29:07,440
Speaker 1: next time. You can find us on the Bloomberg Terminal,

556
00:29:07,640 --> 00:29:11,880
Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you

557
00:29:12,000 --> 00:29:14,400
Speaker 1: like to listen. We'd love to hear from you. We're

558
00:29:14,400 --> 00:29:18,200
Speaker 1: on Twitter, I'm at Joel Webber Show, He's at Eric Baltunos.

559
00:29:18,480 --> 00:29:21,560
Speaker 1: You can find Katie at k Griidfeld and Claire at

560
00:29:21,800 --> 00:29:26,080
Speaker 1: CFB Underscore eighteen. This episode of Trillions was produced by

561
00:29:26,080 --> 00:29:29,840
Speaker 1: Magnus Hendrickson Francesca Levie is the head of Bloomberg podcast

562
00:29:30,440 --> 00:29:31,400
Speaker 1: Bye