Speaker 1: Welcome to Trillions. I'm Joel Webber and I'm Eric bel
Speaker 1: Tunis Eric. The past weekend change has been a pretty
Speaker 1: interesting one in the market, to say the least. Uh,
Speaker 1: we're talking about Reddit, game Stop Silver, don't forget a
Speaker 1: m C the movie Theater. Yeah, totally it was. You know,
Speaker 1: we've been watching all year how commission free trading plus
Speaker 1: a lockdown plus the FED, which has helped stocks just
Speaker 1: go up relentlessly, has created this sort of perfect storm
Speaker 1: where you've got all these retail traders and then you
Speaker 1: throw in stemmy checks and and yeah, and it's just
Speaker 1: getting crazy. It's like a big gambling casino. And what
Speaker 1: happened this week, in my opinion, is that overall trend
Speaker 1: had like a strain that took a more angry approach,
Speaker 1: which is, hey, let's let's use this to get back
Speaker 1: at Wall Street. And I'll tell you I've never been
Speaker 1: called suits so many times, um as I was last
Speaker 1: week on Twitter and I started to get offended, but
Speaker 1: then I realized my profile picture I'm wearing a suit,
Speaker 1: so I couldn't really complain. But that's who the Reddit
Speaker 1: people are trying to get back at, the suits. Who
Speaker 1: they you know obviously Wall Street hedge funds, and it
Speaker 1: became this fascinating national news story, and to help us
Speaker 1: walk through how e t f s fit into it,
Speaker 1: we brought in a couple other non suits Katherine Greifield
Speaker 1: and Claire Valentine of Bloomberg News Um were their reporters
Speaker 1: on e t f s and we're gonna talk to
Speaker 1: them about what they witnessed and what it all meant
Speaker 1: this time on Trillions. Help my e t f got hijacked,
Speaker 1: Katie Claire, Welcome to Trillions. Thanks for having us, Yes,
Speaker 1: thank you. Okay, I have to ask how did e
Speaker 1: t f s figure into the the game Stop rebellion
Speaker 1: because obviously game Stop the stock was a major target,
Speaker 1: and all of this on on Robin Hood E t
Speaker 1: f s, though not, didn't seem as obvious at least
Speaker 1: at the beginning. Clear. Yeah, I thought it was interesting
Speaker 1: because I spent a lot of time on Reddit this
Speaker 1: week and just looking at the chat rooms and things
Speaker 1: like that. No one's talking about e t f s.
Speaker 1: They they want to really pump up game Stop. It's
Speaker 1: these individual stocks, as we've seen retail investors really be
Speaker 1: interested in. But yet, you know, game Stop is part
Speaker 1: of E t F, so it undoubtedly had an impact
Speaker 1: on it. And what was most striking, at least initially,
Speaker 1: is just how game stops um price increase caused it
Speaker 1: to have an oversized waiting and a lot of these
Speaker 1: e t F s and what e t F s
Speaker 1: were of particular interest Katie. Yeah, I was gonna say
Speaker 1: it took a while to find an e t F angle,
Speaker 1: but one emerged in the Spider SMP retail et F.
Speaker 1: That's ticker x RT, and I mean it wasn't x RT.
Speaker 1: You also saw it in Gamer the g A m
Speaker 1: R and also r w J, but it's felt particularly dramatic.
Speaker 1: And x RT, I mean game stops wait. This is
Speaker 1: an equal weight E t F for it's supposed to be,
Speaker 1: but game stops waiting surged as high as twenty per cent,
Speaker 1: which felt super dramatic, and you actually saw the fund's
Speaker 1: biggest single day outflow ever as people tried to I mean,
Speaker 1: there's multiple theories. I spoke to Eric about it too
Speaker 1: as I was trying to figure it out. There's multiple
Speaker 1: theories as to why that happens. Uh. It could have
Speaker 1: to do with the fact that people were just so
Speaker 1: desperate to get ahold of game Stop shares, or simply
Speaker 1: that the people who allocated to x RT for you know,
Speaker 1: core retail sector exposure were like, I didn't set up
Speaker 1: for this. I'm getting out. But it did shake up
Speaker 1: a bunch of passive index tracking e t f s eventually,
Speaker 1: which was super interesting. A couple of notes on this
Speaker 1: was gamer the video game et F. There's like four
Speaker 1: of them, but only one held Game Stop, and that's
Speaker 1: g A MR. And at one point that e t
Speaker 1: F was up like eighteen percent just on game stock alone.
Speaker 1: The others were down and then it Now that's reversed obviously,
Speaker 1: but at one point I think Game Stop was a
Speaker 1: thirty two or thirty three percent waiting, and I believe
Speaker 1: that at the time, for like I don't know, a
Speaker 1: couple hours there, it was the biggest weight in any
Speaker 1: e t F in the world. Um at thirty something percent.
Speaker 1: You just don't see that. Um. The one that it
Speaker 1: beat I think was an Argentina. Argentina et F for
Speaker 1: like one stock there like runs the whole country, and
Speaker 1: so it's more it makes sense they're not in a
Speaker 1: video game et F, but then in like big ones
Speaker 1: like v t I where you have, like most of
Speaker 1: America is in these big broad market ones. I looked
Speaker 1: at the performance and game Stop is a point two
Speaker 1: percent waiting and it and it contributed point four percent
Speaker 1: of the return that week, so you barely felt it.
Speaker 1: Although there's indirect consequences as game Stop became as the
Speaker 1: better game Stop did the worst the market did, So
Speaker 1: you could argue that there is an indirect consequence on
Speaker 1: the bigger whole of mainstream broad indexes. But inside the
Speaker 1: index games that meant nothing outside of a couple of
Speaker 1: these sort of more niche plays that we just discussed
Speaker 1: Katie brought up. But but I think that that's a
Speaker 1: significant thing for us to spend a little bit more
Speaker 1: time on, because we we do talk a lot about
Speaker 1: thematic e t F s here on trillions um and
Speaker 1: you know, take your pick of the ones that we've
Speaker 1: talked about, so even video games. Right, So all of
Speaker 1: a sudden, a video game e t F gets hijacked
Speaker 1: by something that's that most people might not even think
Speaker 1: was in the in the e t F. How significant
Speaker 1: is that? I mean to see something go from you know,
Speaker 1: uh An also ran in the index to something of
Speaker 1: an e t F is that really supposed to happen
Speaker 1: that way? So what I think is interesting in this
Speaker 1: is that, uh, you know, I I spoke to State
Speaker 1: Street about s RT in particular, was like, what what
Speaker 1: are you gonna do? It's a it's a passive fund.
Speaker 1: It rebalances court of A is there any scenario in
Speaker 1: which you would rebalance early? And the answer was no.
Speaker 1: So basically until March, it's it feels like x RT
Speaker 1: and these other funds that rebalance on a schedule or
Speaker 1: kind of held hostage to game stops swings. I mean
Speaker 1: I mentioned that it was as high as twenty percent,
Speaker 1: and x ART Eric mentioned it was as high as
Speaker 1: thirty percent, and gamer and now in x RT it's
Speaker 1: down to six percent, which is still a very sizeable
Speaker 1: waiting when you consider that it should be closer to
Speaker 1: one percent. You know, again, this is an equal weight
Speaker 1: at e t F that holds securities. But until March
Speaker 1: it's really just again held hostage to the whims of
Speaker 1: game stop And I guess read it to some extent,
Speaker 1: and let me jump in here on the fact this
Speaker 1: is I find this fascinating. If you look at the
Speaker 1: e t s that hold game stop and have the
Speaker 1: biggest allocation. One of them shows up in the top
Speaker 1: twenties the micro CAPYTF. And this is fascinating because game
Speaker 1: Stop we went from like basic small micro to large
Speaker 1: cap and a big large cap. I think at one
Speaker 1: point it was the three biggest company or in the ballpark.
Speaker 1: I've never seen that. I mean, that's unprecedented that here
Speaker 1: you have like the two seventy biggest stock and it's
Speaker 1: in a microcap BTF. That so, I think it spoke
Speaker 1: to the quickness of the rise and the idea that
Speaker 1: the herd could lift the stock that quickly. And that's
Speaker 1: what got national news I think is just how fast
Speaker 1: and how quick and how intense it happened. I mean
Speaker 1: game Stop one day traded more than Tesla and nothing
Speaker 1: trades more than Tesla, and all week it traded over
Speaker 1: a hundred billion. That is it's now all falling apart
Speaker 1: and it's petering out. But it was I don't know,
Speaker 1: like breath it was. I was breathless and my mind
Speaker 1: was blown all week, I gotta be honest. Plus the
Speaker 1: narrative of the little guy in the hedge fund, I mean,
Speaker 1: it was just there was so much going on all
Speaker 1: these different people from um, you know, celebrities were coming
Speaker 1: in and weighing in on it. I mean, it was wild,
Speaker 1: but again we're not We've never seen anything like that.
Speaker 1: And it also raises just questions about, especially with e
Speaker 1: t f s, of like these unintended consequences of a
Speaker 1: Reddit phenomenon that's suddenly hijacks something that's maybe not supposed
Speaker 1: to get hijacked. Clear, how have you been making sense
Speaker 1: of that? I mean, the main takeaway for me this
Speaker 1: week was just how weird it was. And that's everyone
Speaker 1: that I talked to, regular fund managers were just so
Speaker 1: baffled by this. And I think Eric kind of really
Speaker 1: I loved his title of a note that he had
Speaker 1: and it said Wall Street Bets is hijacking some e
Speaker 1: t f s, but they can handle it. And I
Speaker 1: think to me that sort of the takeaway. You know,
Speaker 1: we're seeing game stops price come down. Now, these funds
Speaker 1: can handle it. You know, x RT is going to
Speaker 1: be fine. But along the way, it's really weird and
Speaker 1: it's really throwing investors I'm sure for a loop who
Speaker 1: have invested in some of these e t f s
Speaker 1: thinking they're were getting one thing and now they're getting
Speaker 1: another the Joel. Let me push back on that a
Speaker 1: little bit, because one of the worries E t S
Speaker 1: was that they were going to actually kill any movement
Speaker 1: in stocks because it just this big blob that owned
Speaker 1: everything and nothing could ever move or there would be
Speaker 1: no price discovery. Um. I think this shows that the
Speaker 1: e t F is in the backseat and active is
Speaker 1: in control, and I would think that would be reassuring.
Speaker 1: The problem is the driver in this case was out
Speaker 1: of their mind, and I think that's the new question
Speaker 1: is what if the driver is crazy? But that's I
Speaker 1: think would be would maybe satiate some of those concerns
Speaker 1: that the E t F the tailwagon the dog. Clearly,
Speaker 1: if that were the case, then this wouldn't have happened
Speaker 1: because some of those E t f s would have been,
Speaker 1: you know, the passive blob would have been too much
Speaker 1: for this to happen. But it clearly wasn't. Another takeaway.
Speaker 1: Another a story that we're watching is the relationship with ARC.
Speaker 1: Ten days ago on a Saturday, I remember tweeting out
Speaker 1: that there are people selling ARC merchandise. That's how red
Speaker 1: hot ARC was and then it just boom, game stop.
Speaker 1: Came along. Claire had a very time capsulely headline that
Speaker 1: said something like game stop so big, nobody's thinking about
Speaker 1: Cathy Wood right now, or something like that, and I thought,
Speaker 1: what a what a crazy world we're in, and it's weird.
Speaker 1: ARCS flows went away for a week, and then as
Speaker 1: game stops, volume and performance stopped, you know, start coming down.
Speaker 1: The volume petered out, the flows came back, and I'm like,
Speaker 1: it's really interesting. Perhaps there's a battle for which object
Speaker 1: can be shinier. I don't know, Claire, what were you
Speaker 1: seeing with this? What do you make in this sort
Speaker 1: of tango they're doing. Yeah, I was fascinated by kind
Speaker 1: of that inverse um between arc and game Stop, and
Speaker 1: it highlighted to me, I mean, we knew from anecdotal evidence, um,
Speaker 1: but it's hard to get a read on how much
Speaker 1: of these crazes are retail driven versus institutional for funds
Speaker 1: like ARC and you know, to me, I had talked
Speaker 1: with fund managers professionals who were super into arc um,
Speaker 1: but sort of this inverse and this tango highlighted to
Speaker 1: me that there is a big portion of ARCS popularity
Speaker 1: that is due to m retail more small time investors,
Speaker 1: the ones who are you know, wearing ARC spreadshirts and
Speaker 1: when they were, um, you know, sort of blindsided by
Speaker 1: game stops rise, that distracted them or you know, caused
Speaker 1: them to put money elsewhere, and those funds um inflows
Speaker 1: you know, suffered as a result. Also, the other thing
Speaker 1: about this is that, like I said, game Stop became
Speaker 1: a bit of a vix for a minute, because if
Speaker 1: game stock went up, the rest of the market suffered. Katie,
Speaker 1: did you look into this all the idea that hedge
Speaker 1: funds that were short game Stop had to sell growth
Speaker 1: stocks to cover and was that why there was this
Speaker 1: selling off of the market, which arguably hurt ARC because
Speaker 1: they're long growth stocks. So this is another reason I
Speaker 1: think ARC probably took a hit last week, or you know,
Speaker 1: at least the their shine with their flows were diminished
Speaker 1: a bit. Yeah. I think that's the point where this
Speaker 1: turned from sort of a sideshow into we can't ignore this.
Speaker 1: You know, you have the SMP, the NAZAC one hundred
Speaker 1: are falling as well. And the theory that was raised
Speaker 1: was that hedge funds are basically having to degross and
Speaker 1: cut their risk exposure because they're being burned so badly
Speaker 1: on their short bets. Goldman actually has a basket of
Speaker 1: the most shorted stocks in the market. I think at
Speaker 1: January was up over which is by far the best
Speaker 1: month ever. So you have these heavily shorted stocks, and
Speaker 1: this was exactly what Wall Street Bets was trying to do.
Speaker 1: It was trying to engineer a short squeeze. So you
Speaker 1: have those shots are stocks rallying like crazy, So it
Speaker 1: makes sense that, you know, the hedge funds that were
Speaker 1: heavily short those stocks would have to cut their positions,
Speaker 1: and that did. We did see that bleed into the
Speaker 1: major benchmarks, and obviously ARC was caught up in that
Speaker 1: as well. I agree the market story was a shyde
Speaker 1: show for a while until growth stocks started selling off.
Speaker 1: Then it's everybody's problem and Tesla starts going down. Um.
Speaker 1: But what was fascinating and I think, you know, if
Speaker 1: I'm the hedge fund industry, I have to do some
Speaker 1: I have to do some internal introspection here. They picked
Speaker 1: hedge funds as their opponent, hedge funds that were shorting,
Speaker 1: like these fun names that do things you love, movie theaters,
Speaker 1: video games, And it was amazing how much of society
Speaker 1: rallied around these Internet people just because they were against
Speaker 1: hedge funds. When you have AOC and Ted Cruz agreeing
Speaker 1: and uniting, that's how bad people like. That's how much
Speaker 1: hate there is for hedge funds. I honestly they have
Speaker 1: some image work to do, in my opinion, and Wall
Speaker 1: Street in general, I think some people just feel like
Speaker 1: maybe there wasn't enough balancing out after two tho eight
Speaker 1: of some of these Wall Street firms. I think they
Speaker 1: just hedge funds. You don't really they don't see a
Speaker 1: lot of outreach from them. People don't know what they do,
Speaker 1: why they do it. They just have the image. They
Speaker 1: get stuck. But I thought that was a fascinating one,
Speaker 1: and I don't know arguably one that I think should
Speaker 1: be somewhat of a wake up call to the financial
Speaker 1: industry well, and especially after the pandemic to just only
Speaker 1: accelerated that. I mean, you saw the stock market go
Speaker 1: up so much and yet unemployment that started Jane and
Speaker 1: regular people are suffering. So I think I think that
Speaker 1: just sort of exacerbated at all. I do think it's
Speaker 1: crazy to see politicians across the aisle hopping on trying
Speaker 1: to get a sound bite hating on hedge funds. I
Speaker 1: think Senator Elizabeth Warren actually said that she wants to
Speaker 1: see more day traders. It's just weird to see politicians
Speaker 1: encouraging what is that. It's heart kind of reckless impulse
Speaker 1: to pile into Game Stop, you know, boosted by over
Speaker 1: sixt percent in January alone. I mean, that's going to
Speaker 1: end painfully for a portion of people. Well. At the
Speaker 1: same time, though, there is chatter about a transaction tax,
Speaker 1: which could also you know, be at least a moderate
Speaker 1: speed bump on some of this activity. Okay, so we
Speaker 1: haven't talked about another angle in the e t F
Speaker 1: saga that was the last week, which was exclusively an
Speaker 1: et F story, which was silber Um s LV became
Speaker 1: with the horde, the reddit Wall Street Bet horde moved
Speaker 1: on too after Game Stop. Why SLV well? Silver is
Speaker 1: an interesting case because there's a lot of sort of
Speaker 1: dueling on Wall Street Bets about where the silver squeeze started.
Speaker 1: It started trending on Twitter, and uh, you know, everyone
Speaker 1: was quick to say this is Wall Street bets, and
Speaker 1: there were a few posts on Wall Street Bets about silver.
Speaker 1: But then you saw people say, oh my gosh, Citadel
Speaker 1: is the sixth largest holder of SLV. We're helping the
Speaker 1: hedge funds. This isn't Wall Street Bets. So there is
Speaker 1: some debate as to where the short silver movement started,
Speaker 1: and that really highlights just the whole narrative of all
Speaker 1: this happening. It's like who knows where these sorts of
Speaker 1: things start, but yet they do start, and they kind
Speaker 1: of take on a life of their own. Yeah, when
Speaker 1: I was talking about so, I camera how it came up.
Speaker 1: But first of all, I've picked up a lot of
Speaker 1: new Wall Street Bets followers. So now I'm getting like
Speaker 1: information and I'm either getting helpful in from ma sure
Speaker 1: being called a suit right and left now. But one
Speaker 1: of them was like basically saying that. Then they had
Speaker 1: this diagram you ever see Star Wars where they meet
Speaker 1: to go and they look at the Death Star map
Speaker 1: and they're like, there's this one exhaust port that's a
Speaker 1: flaw in the Death Star, and if we can get
Speaker 1: a shot in there, the whole thing will blow up.
Speaker 1: That's kind of how they thought silver was there, Like
Speaker 1: if you can just rack up the cost of silver,
Speaker 1: all of these big banks are short silver for inflation purposes.
Speaker 1: And whatnot, and all the dominoes will fall, the whole
Speaker 1: structure will blow up, will get revenge for two tho eight. Finally,
Speaker 1: it was ambitious and it was laid up by somebody
Speaker 1: who looked like they were knowing what they were doing
Speaker 1: with the silver market. They had a lot of information, um,
Speaker 1: but it was just a week shot. I mean still
Speaker 1: SLV traded seven billion. They definitely rose it about eight percent.
Speaker 1: I mean they moved the needle. But to do what
Speaker 1: they wanted to do, Uh, plus what the in fighting
Speaker 1: they all had to go in because the game stop
Speaker 1: traded about the same amount as SLV, so they were split.
Speaker 1: And that's the thing with this move, and you kind
Speaker 1: of have to all be in the same spot. And
Speaker 1: that's what they were able to do with game stuff
Speaker 1: on Wednesday last Wednesday, but they were unable to do
Speaker 1: with silver because of what Katie said. There was some
Speaker 1: infighting and also this is a giganic pool of money
Speaker 1: that exists. I don't know if I think they basically
Speaker 1: bit off more than they could chew on the silver.
Speaker 1: On the silver situation. And and you know, the other
Speaker 1: element here is that we go from a micro cap
Speaker 1: stock which they inflate into something else temporarily at least
Speaker 1: and jump over to the commodity land. And you know,
Speaker 1: the other thing, Eric, that we've talked about with commodity
Speaker 1: e t f s is that this stuff is, you know,
Speaker 1: there's actually underlying hard goods that back this stuff up.
Speaker 1: Has anybody tried to actually redeem the silver? How much
Speaker 1: of the play was about that? I don't think you've
Speaker 1: seen that yet. I mean, so SLV uh, it's t
Speaker 1: plus zero, so we should be getting real time inflows
Speaker 1: like inflows for the data we see on Wednesday should
Speaker 1: reflect Tuesday inflows. But maybe Eric can chime in here.
Speaker 1: I think there's some weirdness about how physical silver has
Speaker 1: traded that it doesn't quite reflect the previous day. But
Speaker 1: if you look at shares outstanding on SLV, it doesn't
Speaker 1: seem that anything has been redeemed so far at this
Speaker 1: point in time, which is interesting. But I mean, it's
Speaker 1: seen incredible inflows, just record inflows, so I would imagine
Speaker 1: that some of that would come out, especially now that
Speaker 1: the squeeze silver movement seems to have Peter doubt. Yeah,
Speaker 1: I mean SLV took in one point five. I'm doing
Speaker 1: the math he about about three billion in three days.
Speaker 1: That is a lot. I mean, that blows away their
Speaker 1: record and that makes it the fifth most inflows of
Speaker 1: any et F this year, just like that. So again
Speaker 1: they can make a difference. But the problem is compared
Speaker 1: to the amount of silver in the world, it's just
Speaker 1: not that much. But the creations just mean that there's
Speaker 1: going to be You could argue that the vault where
Speaker 1: they keep the silver, which by the way, JP Morgan's
Speaker 1: the custodian, some of these were like Keystone cop plans
Speaker 1: where they just didn't quite think it all the way through.
Speaker 1: Then there was a theory that JP Morgan was actually
Speaker 1: very long silver and so all you're doing is helping them.
Speaker 1: And then I'd see these people arguing with you do
Speaker 1: with each other, like we're helping them. Stop. The whole
Speaker 1: thing was it got game stop was more like whoa
Speaker 1: silver was more like a funny like one was a
Speaker 1: drama action and the next one was a comedy. I thought.
Speaker 1: What I thought was interesting is there are questions too
Speaker 1: about how the silver's stored in London and then how
Speaker 1: to transport it during a lockdown, and just these wild
Speaker 1: things that these Reddit traders are impacting. I mean, it's
Speaker 1: just it's just so strange. How do you do how
Speaker 1: do you transport silver during a pandemic in a lockdown?
Speaker 1: I think I think you asked for more time. Another thing,
Speaker 1: with these silver and gold ets that are physically back,
Speaker 1: there's always been a sort of conspiracy wing of people
Speaker 1: who don't believe the goals there. The silver's there. Um
Speaker 1: that said, there's been a couple of ts that have
Speaker 1: popped up that will let a retail investor gets the
Speaker 1: precious metals sent to their house, and that's where some
Speaker 1: of them wanted to go to these alternative ets, but
Speaker 1: those don't have too much money. I mean, there's not
Speaker 1: that many people that paranoid. Most people are fine trusting
Speaker 1: black Rock and whoever else to store the silver in
Speaker 1: a vault. But that's always been a concern, and that
Speaker 1: kind of I guess came out here a little bit
Speaker 1: with their arguing again because their goal was to try to,
Speaker 1: I don't know, not let Wall Street benefit at all.
Speaker 1: Compared to what we saw with the USO in the spring,
Speaker 1: where you know the prospect of having oil delivered to
Speaker 1: your house, I'd rather have silver delivered personally, no doubt,
Speaker 1: but you know, for the record, Eric and I have
Speaker 1: I think pitched in the in the course of doing
Speaker 1: trillions every uh issuer in the Silver Actually, I don't
Speaker 1: know about the Silver game. Eric, we should double back
Speaker 1: on our on our first But in the Gold World,
Speaker 1: we've asked everything person to take us to their vaults
Speaker 1: so that we can see the underlying asset. Um. I
Speaker 1: asked repeatedly for a bag to be put over my
Speaker 1: head so that, you know, we could actually really have
Speaker 1: the drama and they could maintain their secrecy. But so
Speaker 1: far everyone has declined. But that remains an open invite
Speaker 1: if if anybody wants to put a bag over my head. Yeah,
Speaker 1: anybody listening who has access to one of those vaults,
Speaker 1: we would love to do an episode from there. I
Speaker 1: think Bob Pissani from CNBC actually got into the vault
Speaker 1: one time and he held up the bar. But then
Speaker 1: there was a message board that claimed that was all
Speaker 1: like fake. I mean, I don't know. Look the when
Speaker 1: when when you get into the Gold world and I've
Speaker 1: I've dove down there many times, there's like goldbugs and
Speaker 1: then there's truly paranoid and some of the truly paranoid,
Speaker 1: some of the stuff they come up with is h
Speaker 1: is fascinating. That's why you know. There was an E
Speaker 1: t F that came out. I think it changed strategies,
Speaker 1: but it stored the gold in Switzerland. That was its
Speaker 1: only difference. Everything else is the same as j LD,
Speaker 1: but it stored it in Switzerland, and it had a
Speaker 1: It got a billion dollars just for that one feature.
Speaker 1: That's how much people are you know, I guess assume
Speaker 1: that the West may confiscate your gold. Just on the
Speaker 1: gold angle. I just want to quickly add when Gold
Speaker 1: g l D particularly was like at the height of
Speaker 1: its inflows in May, I spoke to George milling Stanley,
Speaker 1: who's now the chief gold strategist at Streight State Street
Speaker 1: Global Advisors, but while he was with the World Gold
Speaker 1: Council he helped create the fun back in two thousand four,
Speaker 1: And I mean I was interviewing him about gold, but
Speaker 1: I couldn't get off the gold vault theme. And he
Speaker 1: was telling me obviously he's been in the vault, and
Speaker 1: I was like, how do you fit all the gold
Speaker 1: in the vault? That's crazy? He was like, what are
Speaker 1: you talking about. It's a gold bar. It takes up
Speaker 1: like one corner. Like even fifty two billion dollars worth
Speaker 1: of gold bars only take up a corner of the vault.
Speaker 1: So I'm dying to see it one day. If you
Speaker 1: guys ever get into it, I think it would be
Speaker 1: pretty underwhelming. Yeah, I mean, isn't there that isn't there
Speaker 1: that stat that like all the gold above ground would
Speaker 1: fit into a swing pool or a couple of lin pools. Yeah,
Speaker 1: this is just you're just like reading off reddit right now.
Speaker 1: So what other causes of concern did you guys witness
Speaker 1: in all of this as it relates to E T
Speaker 1: F or markets in general. I mean, Katie and I
Speaker 1: worked together on an article um that came out over
Speaker 1: the weekend, and it looked at sort of the craze Um.
Speaker 1: You know, there's the angle that Eric was talking about
Speaker 1: how these people are mad at Wall Street, and then
Speaker 1: there's sort of another aspect possibly about this sort of
Speaker 1: gambling mindset and how people are bored at home. They're
Speaker 1: looking for a sense of community. Um, they want to
Speaker 1: feel something, and so they're sort of gaining that through
Speaker 1: this gambling mentality, and you know that could end up
Speaker 1: really badly for a lot of people. Yeah, It's weird
Speaker 1: to see this movement as being compared to in virtual
Speaker 1: occupy Wall Street. You know, the David and Goliath theme. Uh,
Speaker 1: you know, I've seen that bandied about many times. Um,
Speaker 1: And I mean there's obviously an element of truth there, uh,
Speaker 1: you know, the big guy or the little guys trying
Speaker 1: to take on the hedge funds. But I think like
Speaker 1: in that search for a deeper meaning, it kind of
Speaker 1: obscures that this is just fun. You know, people are
Speaker 1: using this as entertainment. We saw this in penny Stocks,
Speaker 1: people punting around penny stocks, and you know, like Claire
Speaker 1: was saying, that's what our article got at, that this
Speaker 1: is at its root, this is gambling, and that wasn't
Speaker 1: too well received online. One guy actually made a forty
Speaker 1: minute YouTube video about it, which was interesting. But I
Speaker 1: think that's an important point here that there's risks here
Speaker 1: inherent in any gambling situation. Well, and it's not always
Speaker 1: a bad thing, you know, So what if some people
Speaker 1: want to, you know, gamble on stocks. I mean, you great,
Speaker 1: it does sound kind of fun. I mean I spent
Speaker 1: a lot of time on Reddit this week, and some
Speaker 1: of it's kind of you know, it seems like fun. Yeah,
Speaker 1: I'm in that camp too. I don't judge, And I
Speaker 1: think that this is also just the product of a
Speaker 1: late cyclable market. Again, this just goes back to the
Speaker 1: whole theme of the TikTok videos and the Robin hood
Speaker 1: and everything going up. It's a nice time to gamble
Speaker 1: when the stock market's got this nice bullish base. Um.
Speaker 1: So my theory is most of these people will learn
Speaker 1: the hard way that they gotta you know, buy and
Speaker 1: hold and do something a little more thoughtful after a correction.
Speaker 1: I went back and look at articles from the like,
Speaker 1: and there was a lot of these quote mobs that
Speaker 1: were all, you know, they just were using different forms,
Speaker 1: but they were making tons of money in the market,
Speaker 1: and then it blew up in their face and a
Speaker 1: lot of them were this is my generation converted to passive.
Speaker 1: And also another thing on the passive thing is, you know,
Speaker 1: I think a lot of people who are watching this
Speaker 1: and I put myself in that boat, we think, like,
Speaker 1: you know, if you're a passive investor and you first
Speaker 1: subscribe the Vanguard way and whatnot, um, that is the
Speaker 1: way to sort of get back, not get back at
Speaker 1: Wall Street, but it keeps Wall Streets, hands off your
Speaker 1: money for the most part, and you build wealth. So
Speaker 1: I do think, like you know, there's a phrase in
Speaker 1: the movie Wargames that the only winning move is to
Speaker 1: not play, because not only are there gonna be tons
Speaker 1: of bag holders and tears at the end of this,
Speaker 1: but they're racking up trading costs. I mean, I did
Speaker 1: the math, and if you look at the bit ast
Speaker 1: spread of some of these stocks are is pretty wide.
Speaker 1: We're looking at about, you know, five hundred million is
Speaker 1: in trade in trading costs. Now, obviously that's as a group,
Speaker 1: but that is is counter and productive if your goal
Speaker 1: is to sort of starve Wall Street. So I do
Speaker 1: think it comes back to, as Dave nade It called it,
Speaker 1: the Vogel hack um. That's the only way I've seen
Speaker 1: to solve this puzzle and build wealth and nobody gets
Speaker 1: hurt um is to just buy and hold a cheap
Speaker 1: index fun and not trade it. But I agree, it's
Speaker 1: fun to trade, and I think if you just admit
Speaker 1: that to yourself, I said, just in joy yourself. I
Speaker 1: think we see a lot of portfolios being very cheap
Speaker 1: beta in the core, and then they go crazy on
Speaker 1: the outside with stock trading or options or arc and
Speaker 1: that hot sauce level. If it can keep you from
Speaker 1: like messing with great, it's actually a good behavioral tactic
Speaker 1: as well. Okay, I have one more thing that we
Speaker 1: want to we want to talk about and and Katie,
Speaker 1: we're gonna troll your your Twitter Twitter feed. Here. Eric's
Speaker 1: pulling it up so he can I like to read it.
Speaker 1: I've tweeted a lot of dumb things this week, so
Speaker 1: you're gonna have to scroll. Okay, here we go. This
Speaker 1: is good because this is this is like right in
Speaker 1: the middle of the frenzy. It's sort of like throwing
Speaker 1: like chum in the middle of like already shark infested waters.
Speaker 1: Here it is ready. What would the FED do if
Speaker 1: Wall Street bets engineered a short squeeze on long term treasuries?
Speaker 1: Good question, Yeah, I mean fifty replies is pretty good.
Speaker 1: And then she did a quick, qualifying second treat that
Speaker 1: just said this is a joke. And even even after
Speaker 1: that tweet, I mean, I got so many serious, like
Speaker 1: thought out replies, and I just I don't know what
Speaker 1: to say, Like it's it's a joke. Someone did say that.
Speaker 1: Isn't the FED trying to do that already. Aren't they
Speaker 1: trying to engineer a short squeeze? Which I thought was
Speaker 1: a pretty good reply. I saw like I saw one
Speaker 1: of the tweets right aft the bat just said I'm
Speaker 1: here for the ratio. That's when you know someone said
Speaker 1: something that's just you know, outrageous and uh, people just
Speaker 1: hanging the replies just to see everybody go wild. I
Speaker 1: hung in there though. Let the record show, Yeah, you
Speaker 1: didn't delete it. You hung in there. That's I give
Speaker 1: you credit. It's tough to take that much heat on Twitter,
Speaker 1: especially in this kind of a scenario. Katie with those
Speaker 1: diamond hands, Katie Claire, thanks for joining us and jillions.
Speaker 1: Thank you, thank you, Thanks for listening to Trillions until
Speaker 1: next time. You can find us on the Bloomberg Terminal,
Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you
Speaker 1: like to listen. We'd love to hear from you. We're
Speaker 1: on Twitter, I'm at Joel Webber Show, He's at Eric Baltunos.
Speaker 1: You can find Katie at k Griidfeld and Claire at
Speaker 1: CFB Underscore eighteen. This episode of Trillions was produced by
Speaker 1: Magnus Hendrickson Francesca Levie is the head of Bloomberg podcast
Speaker 1: Bye