Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisn't All, and I'm Tracy Alloway. Tracy, I
Speaker 1: can't tell whether I feel bad for you, uh that
Speaker 1: you're in Hong Kong and missing out on US trading
Speaker 1: hours these days, or whether I'm really jealous of you
Speaker 1: that you're in Hong Kong and missing out on US
Speaker 1: trading hours these days. Feel bad for me? I feel
Speaker 1: bad for me. I would love to be in New
Speaker 1: York during like the most dramatic moments of some of
Speaker 1: the recent US market action that we've seen. Yeah, no,
Speaker 1: I do feel bad for you. I mean it is
Speaker 1: really fun, Like I've definitely never before had a whole
Speaker 1: like Bloomberg monitor just devoted to the real time price
Speaker 1: of game Stop. So that's pretty cool. On the other hand,
Speaker 1: you are missing out blessedly just truly awful takes about
Speaker 1: all this, and every cable news channel and pundit and
Speaker 1: everything is like pontificating about what all this means. And
Speaker 1: I'm not um, I don't feel bad that you're missing that. Okay,
Speaker 1: So it's true. I haven't seen a lot of what
Speaker 1: the US television channels are saying I will I will
Speaker 1: say though, I'm on Twitter basically at nighttime in the US,
Speaker 1: and so I get a lot of cranks and crazy
Speaker 1: e's around, you know, the hours of like midnight to
Speaker 1: four am, So I do see some of the conspiracy
Speaker 1: theories stuff. I get enough of that, Yeah, exactly, But um,
Speaker 1: I get the sense that I'm missing something in the
Speaker 1: whole Game Stop commentary that that has been annoying you. Yes, So,
Speaker 1: I mean, look, I love this story and I don't
Speaker 1: really want it to end any time soon. Let's get
Speaker 1: that out. And I've learned. I've already like learned a
Speaker 1: bunch just like over the last week about how the
Speaker 1: markets were, Like it's been very educational. But I do
Speaker 1: think there is this proclivity of everyone who has an
Speaker 1: agenda to find a way to like work it in.
Speaker 1: And you have like Donald Trump Jr. Talking about it,
Speaker 1: and Ted Cruise and AOC and Dave Portnoy and the
Speaker 1: winkle Foss brothers and like Glenn Greenwald and Mad Stoler
Speaker 1: and like literally anyone who has an opinion on anything,
Speaker 1: the Game Stop trade bolsters their view. So I totally
Speaker 1: agree with that agenda point. There's something for everyone in
Speaker 1: the game Stop story, whether it's true or not. But
Speaker 1: but I do think the fact that it's this sort
Speaker 1: of raw, sharsh test for a bunch of people talking
Speaker 1: about it, like, I think that is part of the
Speaker 1: game Stop phenomenon, and so I think you have to
Speaker 1: talk about it and you have to recognize its importance. Yeah,
Speaker 1: And a big question too, is like is there some
Speaker 1: thing like political, like because they're a big class warfare
Speaker 1: element of this, and like, obviously the enter is kind
Speaker 1: of yes, and people like on the Wall Street bets
Speaker 1: love the idea that they're like sticking it to the bankers.
Speaker 1: On the other hand, you know, you have these people
Speaker 1: like this is finally the mission of Occupy Wall Street
Speaker 1: is now but fulfilled. And like, my eyes just roll
Speaker 1: out the side of my head when I see stuff
Speaker 1: like that. So we're gonna try to figure out, like
Speaker 1: what does this mean? Is there a political message? Is
Speaker 1: this Occupy Wall Street two point oh? Or is this
Speaker 1: just something fun? Is it just a trade? Like what
Speaker 1: does this all mean? All right, Um, this is gonna
Speaker 1: be an interesting episode. Let's let's do it. And we
Speaker 1: should note we have we have not one, but two
Speaker 1: guests because it's such a such a polarizing topic, I suppose. Yeah,
Speaker 1: we're gonna have a debate, although I'm worried that our
Speaker 1: guests are going to be too friendly and then it's
Speaker 1: just gonna be me and you fighting against each other.
Speaker 1: That's okay. But I'm very excited about our two guests today,
Speaker 1: two of our absolute favorite uh people here to the
Speaker 1: sharpest people who understand markets and market structure and finance
Speaker 1: and even politics. Very excited. Um, We're gonna be speaking
Speaker 1: with George Perks, he is a macro strategist at Bespoke
Speaker 1: Investment Group. And Jill Carlson, she is a partner at
Speaker 1: Slow Ventures and does a lot. We've talked to her
Speaker 1: in the past about bitcoin and blockchain stuff and money,
Speaker 1: and they've also they've both written, um, I guess you
Speaker 1: could say takes for the last week. George has a
Speaker 1: great piece up on Business Insider that you should check out,
Speaker 1: and Jill has a great piece on Coin Desk that
Speaker 1: you should check out. Um. And so we're gonna we're
Speaker 1: gonna hopefully get the full range of perspective here. So
Speaker 1: George and Jill, thank you very much for joining us. Yeah,
Speaker 1: thank you. And and I will know the irony that
Speaker 1: both George and I have now contributed to the sea
Speaker 1: of bad takes and are continuing to do so. No,
Speaker 1: both of you are, both of your takes, both you,
Speaker 1: both of your takes are the only good takes. Sometimes
Speaker 1: the best take is that the takes are bad, and
Speaker 1: you know, we we can't have when having someone saying that.
Speaker 1: And I think both joll and I tried to do
Speaker 1: a little bit of that this past week. The ultimate
Speaker 1: meta take, the Meda take. That's what, that's what. That's
Speaker 1: my role, the Meda take. Okay, um, let's start and
Speaker 1: maybe we'll get on some opening statements for me west
Speaker 1: Aret with George, George, what you're you're more on the view,
Speaker 1: it's like this is a trade to an interesting trade.
Speaker 1: It probably does not fit into anyone's political narrative to well,
Speaker 1: what's your what's your take? So the sort of way
Speaker 1: that this has been described by a lot of people
Speaker 1: is that these are sort of neck beardy editors who
Speaker 1: are all in their basements and spending their stimulus checks
Speaker 1: their last few dollars on out of the money calls
Speaker 1: and uh margin bets on Jimmy, and that's you know,
Speaker 1: somehow a revenge against the big bad hedge funds and
Speaker 1: one percenters and billionaires that have been stepping on the
Speaker 1: necks of this class of people for a long time.
Speaker 1: And it's just really hard to take that with a
Speaker 1: straight face. Um, the single biggest holder of game Stop
Speaker 1: is the guy that pioneered sub prime model finance. He's
Speaker 1: a billionaire named Donald Fossive of the company. Um, Like,
Speaker 1: I'm sorry, Just that fact alone, forget anything else. Just
Speaker 1: that fact alone suggests that, oh, this is a proletarian
Speaker 1: revolution of the day traders. Is the wrong take straight up? Um,
Speaker 1: If you look at the composition of the sort of
Speaker 1: folks that are that are in game Stop, I mean,
Speaker 1: the the guy that has benefited the most in terms
Speaker 1: of um percentage return is this, as far as anyone
Speaker 1: can tell, as this guy, um who goes by Roaring
Speaker 1: Kitty on Twitter, who's who had a position that was
Speaker 1: worth upwards a fifty million at various points over the
Speaker 1: past week. Thanks, you know million by the time people
Speaker 1: are right, who knows where it's at? But he put
Speaker 1: up fifty k and it's it's you know, so Um.
Speaker 1: You know this is a guy who's a financial advisor
Speaker 1: for financial advisor for a Massachusetts insurance company. UM. You know,
Speaker 1: and I'm not trying to come out and bash this guy,
Speaker 1: but UM, I'm sorry that that's that's not you know,
Speaker 1: the masses in the United States. Fifty dollars that he
Speaker 1: you know, you'll owd into the stock is half of
Speaker 1: US media net worth, um, and most of that net
Speaker 1: worth isn't liquid assets. It's tied up in real estate.
Speaker 1: So you know, really, anyone that can come up with
Speaker 1: fift k to put into the stock market on this
Speaker 1: kind of bet is doing substantially better than the typical person. UM.
Speaker 1: I think it's it's fair to say, so, you know,
Speaker 1: I just my basic take is just this is not
Speaker 1: some working class revolution against capital as represented by hedge funds.
Speaker 1: So I I understand the point about deep effing value
Speaker 1: as he's known around here, and the fact that a
Speaker 1: lot of the people on Reddit are quite sophisticated in
Speaker 1: the way they talk about options, and the fact that
Speaker 1: they're targeting Agama squeezes is a very you know, non
Speaker 1: retail activity. But your point about one of the biggest
Speaker 1: holders in gm E being the subprime auto finance guy
Speaker 1: like you can have a bad populist movement or a
Speaker 1: bad coordinated or effective populist movement. I mean, we arguably
Speaker 1: just saw one of those in the US at the
Speaker 1: beginning of the year with the storming of the capital.
Speaker 1: Could it not just be that these people are trying
Speaker 1: to make a political statement, but they're just not doing
Speaker 1: a very good job. I mean, I think if you
Speaker 1: ask the people on Wall Street bets like, why are
Speaker 1: you in this? I mean, you know, if the tendees
Speaker 1: didn't exist, they wouldn't be in it, right, This is
Speaker 1: not a political project as a you know, as a
Speaker 1: first order um, you know, goal there's definitely some political
Speaker 1: um spin on it, but that's always true. I Mean.
Speaker 1: One of my favorite memories from my career in markets
Speaker 1: is watching Bill Ackman and um, uh what's his name? Icon?
Speaker 1: Do get out with Scott Wapner on SNBC. Um, Scott
Speaker 1: Watner moderating on SNBC. And I think it was over
Speaker 1: herbal Life, which was this similar situation where there was
Speaker 1: a large short interest and Icon was long and um,
Speaker 1: you know, it turned into a political question, right, like
Speaker 1: herbal Life is extracting rents from these these poor folks,
Speaker 1: and you know it's a pyramid scheme and that's evil
Speaker 1: and we need to stop that. And you know, whereas
Speaker 1: something oside saying, actually, people get a lot of value
Speaker 1: out of this, and you know, I don't particularly find
Speaker 1: a compelling but hey, they like it and it seems
Speaker 1: to work for them. So with the issue here, you know,
Speaker 1: everything gets politicized. Um and um. You know, I think
Speaker 1: with Game Stop, we've seen that to a degree that's
Speaker 1: just so over the top. So you know that the
Speaker 1: takes that have emerged out of it are so beyond
Speaker 1: the pale that you've got avowed communists saying that this
Speaker 1: is like the best thing that's ever happened to workers,
Speaker 1: and you know, at the start of the giant Revolution,
Speaker 1: and it's like, what are you people talking about? Right? Like, um,
Speaker 1: so yeah, I just think it's it's hyperbolate. That's the
Speaker 1: I want to Yeah, I want to hop in there
Speaker 1: because George, I actually remember watching that acmen Icon debate
Speaker 1: as well, and I'm pretty sure that you and I
Speaker 1: were probably texting each other at the time or bantering
Speaker 1: about it, because that was around the time we got
Speaker 1: to know each other. But what I think is so
Speaker 1: beautif full about the last couple of weeks and about
Speaker 1: what this sort of Reddit revolution has shown is that
Speaker 1: now anyone can be Akmin or icon, anyone can get
Speaker 1: up on their soapbox and make a case for how
Speaker 1: the market should be playing out, for what should be
Speaker 1: happening in a given single name stock. And yes, of
Speaker 1: course that's going to be politicized, and I think to
Speaker 1: a degree it should be because to your point about
Speaker 1: the fact that some of these redditors are quite sophisticated,
Speaker 1: that's actually part of the point that just goes to
Speaker 1: show how high the bar to entry is and how
Speaker 1: big you can still be in the sense of education
Speaker 1: or even net worth and still be a little guy
Speaker 1: compared to one of these big institutions. You know, formerly
Speaker 1: you had to be akmin to be Akman, you had
Speaker 1: to have raised hundreds of millions, if not billions, from LPs,
Speaker 1: you had to have your own fund, and you had
Speaker 1: to be candidly, probably a white guy in a suit
Speaker 1: getting on CNBC to have that kind of a soap box.
Speaker 1: And that's not the case anymore. And I think that
Speaker 1: that's a really important part of the paradigm shift here
Speaker 1: that says to me that this is not actually just
Speaker 1: about the tendees. You know, these are not just purely
Speaker 1: kind of rational economic actors here, because if you look
Speaker 1: at the discourse at least around who's taking money off
Speaker 1: the table, who's taking profit on these trades, there are
Speaker 1: a lot of people with irrational money still in the
Speaker 1: game who are holding the line, as they like to say,
Speaker 1: just to stick it to the suits. And that sounds
Speaker 1: pretty political to me, George, can ever, can anyone be
Speaker 1: an acment now? I wasn't around during the Internet stock
Speaker 1: bubble of the late and early two thousand's. I was
Speaker 1: still in grad school back then. But I know, Joe,
Speaker 1: you've told anecdotes about reading message boards back then, about
Speaker 1: people hyping stocks and about stocks doing the kind of
Speaker 1: thing that stocks you today, and maybe not through a
Speaker 1: short squeeze in a gamma squeeze, by through you know,
Speaker 1: mass participation in markets. UM, you know, the democratization as
Speaker 1: it were. I think that's the wrong word for it,
Speaker 1: But I think what people will identify of of going
Speaker 1: to decimalization of um having expanded access to brokerage accounts
Speaker 1: that happened in the es like that all happened before,
Speaker 1: right um people signed up for e trade accounts to
Speaker 1: ride the Internet stock bubble higher in the late nineteen nineties. Um,
Speaker 1: and you know, we're able to participate, We're able to
Speaker 1: coordinate in just the same way that we're seeing now.
Speaker 1: I think you could make the case that the specific
Speaker 1: strategy is a little bit more complex now. Um. But
Speaker 1: I don't think it's actually something new. Um. And I
Speaker 1: don't think it's actually something that's changed significantly. I will
Speaker 1: admit that there it's easier to get into the market
Speaker 1: and speculate today with an app like robin Hood than
Speaker 1: it would have been twenty years ago. And it probably
Speaker 1: is a little bit easier to coordinate via some of
Speaker 1: these large scale network effect online communities like Reddit, Wall
Speaker 1: Street bets or like Twitter or whatever. Um, But I
Speaker 1: don't think that's an phenomenon at his core. It's maybe
Speaker 1: a more intense version of something we've seen previously. But um,
Speaker 1: I think there has been ample precedent in relatively recent
Speaker 1: history for this exact same pattern of behavior, and so
Speaker 1: we're not seeing some new emergent um factor, but just
Speaker 1: standard rehash of what's happened before. Maybe Joe knows the
Speaker 1: answer to this, But I wasn't trading in the late
Speaker 1: early two thousand's. But I don't remember anyone talking about
Speaker 1: specific options contracts that they could gang up on to
Speaker 1: create a gamma squeeze. Like that feels relatively new to me. Yeah,
Speaker 1: I mean, you know, I just um, you know, my
Speaker 1: twenty second take is like, yeah, there were message boards. Yeah,
Speaker 1: the message boards moving market there a. I do think
Speaker 1: George is right, the coordination is sort of more intense
Speaker 1: these days, and I think the sophistication is just um
Speaker 1: way more intense these days. I mean, the level of
Speaker 1: intelligent at would agree at least on some say like
Speaker 1: Wall Street beds posters, is extremely high. They're under some
Speaker 1: of them at least have very good understanding of how
Speaker 1: the derivatives markets work and where the pressure points are emerging,
Speaker 1: and they know how to communicate as such. And also
Speaker 1: in the case of DFV the Roaring Kitty like also
Speaker 1: very high level understanding of business. I mean, Joel, I
Speaker 1: guess I would ask you though, like, yes, the markets
Speaker 1: are changing and that is new and anyone can sort
Speaker 1: of like tell a story in a way that maybe
Speaker 1: previously would be reserved for a hedge fund manager. But
Speaker 1: is that like, is that political or is that just
Speaker 1: changing market? Well, part of what I love about all
Speaker 1: of the commentary that has occurred around this is that
Speaker 1: for the first time, people are paying attention to market
Speaker 1: structure and paying attention to all of the implications that
Speaker 1: come along with market structure in a way that frankly,
Speaker 1: even Wall Street didn't um. You know, Church and I
Speaker 1: will both remember when we're working on banks, right at
Speaker 1: working at banks, excuse me, right out of college, you know,
Speaker 1: the least loved task was interfacing with middle and back office,
Speaker 1: was waiting through all of the new regulations that were
Speaker 1: coming out post two thousand eight. It turns out, you know,
Speaker 1: now looking back ten years later, for me, that was
Speaker 1: some of the most important work that I did, because
Speaker 1: it gave me this understanding of how the market is structured,
Speaker 1: why it's structured this way, and all of the knock
Speaker 1: on effects and implications that that has on who can
Speaker 1: access the market, who can access the market in what ways,
Speaker 1: who can access information and data flow, who can access leverage,
Speaker 1: who can access various financial products? And again, I think
Speaker 1: that that should be political. And I think that we've
Speaker 1: seen over the last year people waking up to the
Speaker 1: system around them, the fish waking up to the water.
Speaker 1: And I think that this is yet another example of that.
Speaker 1: Whether you know, we look at the storming of the
Speaker 1: Capitol Building or even the election of Donald Rump. You know,
Speaker 1: that was a subset of the American people waking up
Speaker 1: and say, you know what, the current system it's not
Speaker 1: working for me. It doesn't serve me. Even the BLM
Speaker 1: protests last spring. Of course, that was a very different
Speaker 1: sort of belief system and ideology that was driving that,
Speaker 1: but still it was people waking up and saying this
Speaker 1: system doesn't serve me. And I think that this fits
Speaker 1: somehow with all of those other examples of this sort
Speaker 1: of zeitgeist in context of the time that we're in,
Speaker 1: of people waking up this time to market structure and
Speaker 1: saying the market structure is broken. I like that idea
Speaker 1: that market structure market access should be political. I think
Speaker 1: that's a good way of framing it. Um So I
Speaker 1: just want to go back to, you know, the notion
Speaker 1: of what is actually motivating Wall Street bets on aggregate.
Speaker 1: So if you spend time on the message board, it's
Speaker 1: pretty clear to me that there is a wrong sense
Speaker 1: of community. Although I guess you could argue over the
Speaker 1: past week that might be changing, since they've gone up
Speaker 1: to seven million followers or something crazy like that, and
Speaker 1: it's starting to change the makeup of the form. But
Speaker 1: if you go back to like a few months, like
Speaker 1: Wall Street Bets had a very defined identity, It had
Speaker 1: its own language, its own culture, And it feels to
Speaker 1: me like when you have that commonality, when you have
Speaker 1: that much in common, you have that unity. And part
Speaker 1: of that unity is developed by having a common identifiable enemy.
Speaker 1: And it feels like Wall Street Bets settled on Wall
Speaker 1: Street or parts of Wall Street and the financial industry
Speaker 1: as their common enemy. So I don't really get how
Speaker 1: how we can ignore that side of things. Well, I mean,
Speaker 1: if you're someone who is well off, who's done well
Speaker 1: in society, who has five figures to risk on relatively high,
Speaker 1: relatively low expected return trades which is what deep out
Speaker 1: of the money call options and highly concentrated positions and
Speaker 1: margin all you know imply, Um, if you're if you're
Speaker 1: resentful towards someone who's you know, got a nice suit on,
Speaker 1: that works at a business that ends in the word capital, Um,
Speaker 1: I mean that that that's all well and good. I
Speaker 1: mean I don't deny that there's a certain group of
Speaker 1: people on you know, the Wall Street bets or however
Speaker 1: you want to frame this community is is resentful of
Speaker 1: the classic hedge fund crowd. But I would also say
Speaker 1: that that's very different from something like the Occupy Wall
Speaker 1: Street movement in the post crisis period, right where you
Speaker 1: know that that was not upper middle class people getting
Speaker 1: super mad about UM. You know, the fact that they
Speaker 1: didn't get enough respect in markets, or that they you know,
Speaker 1: that that hedge funds got all the attention and their
Speaker 1: ideas were overlooked like that was. That was a rejection
Speaker 1: of the larger distribution of wealth, the distribution of resources
Speaker 1: this country, so on and so forth. It did end
Speaker 1: up being, you know, something that UM metastasized into the
Speaker 1: broader politics of of the United States, but at least
Speaker 1: not long term. But I do think you can make
Speaker 1: that that case. Whereas the you know, I'm glad Jill
Speaker 1: brought up the US capital sacking. I mean that group
Speaker 1: of people was by any measure a diverse group of
Speaker 1: people in terms of the amount of UM social resources
Speaker 1: they controlled, around the types of work they do, around
Speaker 1: you know, their status as labor capital. Right. You have
Speaker 1: people flying to that event on private planes, and you
Speaker 1: also have people who were solid by any definition, working
Speaker 1: class and not doing as well as other folks in society.
Speaker 1: You know. So to me, both the US capital and
Speaker 1: the Wall Street pets phenomenon and game stop whatever um
Speaker 1: are really good examples of trying to paint over, you know,
Speaker 1: a people group of people with diverse and you know,
Speaker 1: unified interests, but unified interests that don't really break down
Speaker 1: along the lines of UM broader political economy. Right, it's it's,
Speaker 1: it's and and that's really what I object to most
Speaker 1: about some of the takes is that you're trying to
Speaker 1: fit um, interesting shaped pegs into holes that are just
Speaker 1: a different shape. And so, yeah, haven't you just painted
Speaker 1: over this group as a bunch of people who have
Speaker 1: the five figures to throw away, as a bunch of
Speaker 1: people who are jealous of the students? Want to absolutely people, Yeah,
Speaker 1: there are absolutely people in this in this diverse range
Speaker 1: of folks that use walls bats, who are not super
Speaker 1: high income, who may be spending their last couple hundred
Speaker 1: dollars on gm E calls or whatever the trade is, right,
Speaker 1: I totally acknowledge there are people like that in there.
Speaker 1: My point is, my point is not is that if
Speaker 1: you're just going to ignore those people, you shouldn't ignore
Speaker 1: those people anymore than you should ignore the people that
Speaker 1: are also benefiting at benefiting who don't fit into that category. Right.
Speaker 1: You can't. You can't decide that this, you know, this
Speaker 1: is not a universal group of little guys. There's certainly
Speaker 1: some little guys in there, and there's some big fish
Speaker 1: in there too. That's that's my point. I think it's
Speaker 1: I think that it's super worth acknowledging that so many
Speaker 1: of the people on the Wall Street Beds forum and
Speaker 1: participating in discourse and in the ways that they are here,
Speaker 1: whether that's on the discord or wherever wherever you want
Speaker 1: to point to, they're doing an under anonymous accounts or pseudonyms, right,
Speaker 1: And I think that that, to me just drives home
Speaker 1: this point that in a way, it doesn't matter who
Speaker 1: they are, it doesn't matter what their associated economic background is,
Speaker 1: what their motivations are, but they're all participating in this
Speaker 1: kind of stick it to the man, stick it to
Speaker 1: the suits narrative. And sure, I'm sure that you can
Speaker 1: break down from each individual the nuanced differences of how
Speaker 1: they see the world and why they're doing this, you
Speaker 1: know why they've put money into game Stop. I'm sure
Speaker 1: that there are some who are more rational economic actors
Speaker 1: than others. But at the end of the day, you
Speaker 1: have this population of folks who are again populating this
Speaker 1: this message board that is driving home this narrative that
Speaker 1: is fundamentally political, and I think that that's that's a
Speaker 1: huge paradigm shift from what Wall Street has been to date,
Speaker 1: where again you had to be a known name and
Speaker 1: have a track record in order to have power. Now
Speaker 1: you have people who are you know, going under inappropriate
Speaker 1: names uh and and going by cat avatars having the
Speaker 1: same level of influence and voice. So, George, I mean,
Speaker 1: you're a finance professional and you've written on Business Insider
Speaker 1: about game Stop. I'm curious how much vitriol have you
Speaker 1: encountered on social media, because I'm sure between Joe and
Speaker 1: myself we've gotten quite a lot of abuse over the
Speaker 1: past week just by working at Bloomberg and therefore being
Speaker 1: considered part of the financial establishment. People must be responding
Speaker 1: to you, right, not really, I mean like I anytime
Speaker 1: I say something that's like at all just us. Anytime
Speaker 1: I say something that's at all like outside of consensus
Speaker 1: opinion on Twitter, I'm going to have people in my
Speaker 1: mentions being annoyed, but like it hasn't been anything unreasonable
Speaker 1: in my opinion, I haven't had people Maybe I don't know,
Speaker 1: maybe Twitter's quality filter is doing a good job or something.
Speaker 1: But I haven't been harassed or anything like that. I'm
Speaker 1: sorry y'all have and um, you know, I don't say
Speaker 1: that to say that you'll have it. You know, it's awful.
Speaker 1: The other night I made a chicken tenders and I
Speaker 1: tweeted about it and someone said, I work at Bloomberg,
Speaker 1: so I could never really appreciate tenders someone uh, they
Speaker 1: said someone, Yeah, I can't eat tends the way the
Speaker 1: common men, so that, yeah, I do. It is just
Speaker 1: so interesting that back to what Jill said, like I
Speaker 1: just should we I mean, maybe we should care if
Speaker 1: the petite bougeois is really mad at you know, capitalists, Um,
Speaker 1: but to me, like they're bigger, more pressing political narratives here,
Speaker 1: that that ascribing these groups is like they're the underdog,
Speaker 1: when like socio economically, they're definitely not the clear underdog, right, um,
Speaker 1: compared to like the worst of people in this country
Speaker 1: or in any other country around the world right now, Like,
Speaker 1: is that the people we should be holding up as
Speaker 1: like the the underdogs who are fighting against injustice and
Speaker 1: being shut out of the system. Like I'm a lot
Speaker 1: more worried about my friends who you know, have been
Speaker 1: formally incarcerated and therefore can't rent rent an apartment Like
Speaker 1: that to me is like the people we should be
Speaker 1: worried about underdogs, not people who are mad that they
Speaker 1: can't get as many tendees as they want. On robin Hood,
Speaker 1: everyone will have their own fight to fight, and I
Speaker 1: don't I don't think it's for me to uh to
Speaker 1: dismiss this fight over another fight, although even if personally
Speaker 1: I I don't disagree. And again, you know, we covered
Speaker 1: this earlier, but in the macro sense of what defines
Speaker 1: the haves versus the haves have not in the United States,
Speaker 1: You're absolutely right, Torch, anyone with fifty k to throw
Speaker 1: into a high risk trade goes into the category of
Speaker 1: the haves. Under that, under that more macro framing, but
Speaker 1: again it just goes to highlight how unequal access is
Speaker 1: markets today. Let me ask a question, and I'm I'm
Speaker 1: glad you ended on that note because there's been part
Speaker 1: of the narrative that's been bugging me a little bit,
Speaker 1: but maybe others have different views. And the story that
Speaker 1: I hear a lot of people saying is why are
Speaker 1: people um complaining about people on Reddit manipulating the price
Speaker 1: of stocks? The market has been manipulated forever. People on
Speaker 1: Wall Street are manipulating the stock market all the time,
Speaker 1: and my I do not I know this is going
Speaker 1: to be very Actually, the thing that I said that
Speaker 1: got the most abuse so far in the last week
Speaker 1: was when I tweeted that prior to this, I do
Speaker 1: not think that US capital markets are actually particularly manipulated.
Speaker 1: I think they're pretty transparent by and large. I think
Speaker 1: that access has been pretty level for a while thanks
Speaker 1: to Index CTF, people of low cost ways of investing
Speaker 1: that are are probably better than they've ever been, and
Speaker 1: then the old days it was much worse. But other
Speaker 1: people think like, oh, it's like Riven with manipulation. I'd
Speaker 1: love to hear both of your takes. Like was prior
Speaker 1: to the Wall Street bets emerging, were big players on
Speaker 1: Wall Street constantly manipulating US capital I'm gonna let the
Speaker 1: former m bond trader go first. I was gonna say, Joe,
Speaker 1: I mean, I think it's all relative, right, Certainly US
Speaker 1: markets relative to some of the emerging markets, uh that
Speaker 1: I dealt with in my former life once upon a time. Sure,
Speaker 1: very transparent, very fair and equal market access. Um. But
Speaker 1: you know, I think that that doesn't mean that it's
Speaker 1: good enough. And I think that that's the distinction that
Speaker 1: I would draw. But you know it is it is
Speaker 1: very easy to uh, to make that argument and to
Speaker 1: to have that come back of well, look at how
Speaker 1: lucky we are here relative to most of the world. Yeah,
Speaker 1: I agree with that. I mean it's so if you
Speaker 1: look at a market like Hong Kong, um, like the
Speaker 1: sort of capital structure manipulation that goes on with property
Speaker 1: developers over there. UM. I mean, Tracy, I'm sure you
Speaker 1: can speak to ever Grand and some of these companies, right,
Speaker 1: I mean, we would not fly in the US, UM.
Speaker 1: You know, um yeah, just not gonna happen. Um. So
Speaker 1: comparing a relatively developed emerging market, UM, infrastructure, financial markets,
Speaker 1: infrastructure like Hong Kong's UM. And I'm sure you could
Speaker 1: pick out other examples. Um. You know, look at Japan
Speaker 1: and how companies over there are able to avoid acting
Speaker 1: and shareholder interests, you know, in favor of UM long
Speaker 1: term holders or UM even some of the stuff that
Speaker 1: goes on in Europe sometimes. I mean, the US markets
Speaker 1: are are accessible and you know, cheap and generally fair
Speaker 1: also compared to history of the US markets, UM. Right, Uh,
Speaker 1: we've come a long way, and honestly, a lot of
Speaker 1: the part of the reason for that is this sort
Speaker 1: of market mechanics that drove Robin to stop people from trading. Right.
Speaker 1: We that ultimately they were following a course prescribed by regulation. Right,
Speaker 1: and that regulation in the long run does a really
Speaker 1: a much better job than it could protecting UM individual
Speaker 1: investors and making sure things are equitable. UM. But you know,
Speaker 1: that doesn't mean we can't go further. And I definitely
Speaker 1: agree with the idea that things could be more equitable,
Speaker 1: things could be more fair, and that there are instances
Speaker 1: of manipulation where um, you know, they need to be enforced.
Speaker 1: And maybe I'm not a lawyer, but maybe the Wall
Speaker 1: Street bet stuff falls into that category. It's possible we're
Speaker 1: going to find out that the SEC has evidence that
Speaker 1: people were posting from multiple accounts and people were misleading
Speaker 1: people in a public forum. And you know, YadA YadA, YadA,
Speaker 1: UM not to say that everything that was going on
Speaker 1: was manipulation or anything like that, UM, but you know,
Speaker 1: I do think we could see a lot more enforcement
Speaker 1: of um, you know, general anti manipulate of law and
Speaker 1: securities law in this country, and it would only do
Speaker 1: good things for individual investors. I have been down this
Speaker 1: whole kind of rabbit hole about what market manipulation actually
Speaker 1: means over the last week, and it's it's actually a
Speaker 1: very weird kind of question if you remove it from
Speaker 1: obviously the legal parameters and definitions of just can you
Speaker 1: be a market participant without in some way manipulating the market,
Speaker 1: because people now take market manipulation just to mean influence
Speaker 1: or outside influence on the market. And I think that
Speaker 1: the problem that people are appointing to when they talk
Speaker 1: about market manipulation in this context is just that a
Speaker 1: few big market players have become or can be in
Speaker 1: the market as it stands, kingmakers or world destroyers. And
Speaker 1: the question is, should a few hedge funds get to
Speaker 1: decide that game Stop is a bad company and should
Speaker 1: go under? Equally, should retail investors get to decide that
Speaker 1: AMC lives and should get this big cash infusion, and
Speaker 1: I don't really know what to make of that, but
Speaker 1: I think that that is more what we're getting at
Speaker 1: when we talk about market manipulation. Now, I definitely agree
Speaker 1: that there's a technical issue where there's what the actual
Speaker 1: definition is and versus the popular perception are way on
Speaker 1: different planets. Yeah, I think Jill's point about this idea
Speaker 1: that eventually what's going on in markets might have an
Speaker 1: impact on an actual company. So AMC averted bankruptcy recently
Speaker 1: because it's stock had been squeezed up so high, and
Speaker 1: we even saw its bond prices start to go up,
Speaker 1: so you know, the influence of Wall Street Bets was
Speaker 1: really felt across the capital structure of am C. GameStop
Speaker 1: hasn't really done much with its searching stock price, but
Speaker 1: who knows, maybe that will change. I think that idea
Speaker 1: is really really interesting. I also think on the manipulation point,
Speaker 1: it's going to be We've seen talk about maybe prosecuting
Speaker 1: Wall Street Bets people for some sort of coordinated manipulation,
Speaker 1: but I think it's going to be really hard to
Speaker 1: to accuse someone of you know, buying game Stop shares
Speaker 1: because they like them and then planning to hold them
Speaker 1: for a long time Like that doesn't really seem like
Speaker 1: a coordinated pump and dump effort. But anyway, sorry, I'm
Speaker 1: getting slightly off, I respond to the really quick Yeah,
Speaker 1: of course. It just begs the question to me of
Speaker 1: why is it okay when hedge fund managers get together
Speaker 1: at Lebernadine, you know, the smokey back room of the
Speaker 1: restaurant in New York, and they share their trade positions
Speaker 1: with each other. Why is it okay that even sell
Speaker 1: side research is still totally restricted to the clients of
Speaker 1: that of that given firm. You know, why why are
Speaker 1: we okay with these elements of the way that the
Speaker 1: markets are structured? And we're talking about prosecuting people who
Speaker 1: are posting openly on a Reddit forum. That to me
Speaker 1: is just a big part of what is so insane
Speaker 1: here and what the rebellion is against. The last thing,
Speaker 1: I'll say, the one thing you definitely can't fault Street
Speaker 1: Bets for his transparency, right, Like everything is in the open,
Speaker 1: and it is, in one way, like one of the
Speaker 1: most level playing fields out there. Um. I wanted to
Speaker 1: go back to robin Hood though, because when we're talking
Speaker 1: about populist outrage. I feel like a lot of that
Speaker 1: has been directed at robin Hood in recent days, ever
Speaker 1: since they decided to shut down availability of trading on
Speaker 1: game Stop and some other companies. People are really really
Speaker 1: upset about that decision. And then there are people on
Speaker 1: the other side, uh, maybe like George, who are describing
Speaker 1: this as a pretty rational stance by robin Hood. It
Speaker 1: wants to preserve its business. But how should we be
Speaker 1: thinking about that? So it's really important to understand why
Speaker 1: robin Hood restricts of trading. Right. They didn't do it
Speaker 1: because Ken Griffin called them up and said you're not
Speaker 1: allowed to trade in these stocks anymore. That's not what happened. Right.
Speaker 1: They had a mechanical margin call from the Depository Trust
Speaker 1: and Clearing Corporation that was due to huge new exposure
Speaker 1: in robin Hood accounts that operate under reg T their
Speaker 1: margin accounts Type two accounts, call them a bunch of
Speaker 1: different things that created a need for robin Hood to
Speaker 1: post large amounts of cash to ensure that they performed
Speaker 1: on their end of trades during the T plus two
Speaker 1: settlement cycle UM and the amount of cash they had
Speaker 1: to post went up in part because these stocks are
Speaker 1: so volatile, and in part because they just had so
Speaker 1: many people in their platform opening exposure to them. All
Speaker 1: of that, the increase in margin related to volatility, the
Speaker 1: fact that robin Hood had to come up with the
Speaker 1: cash itself, all of that is designed to protect the
Speaker 1: people that own stocks via robin Hood. It's designed to
Speaker 1: make sure that robin Hood is able to perform on
Speaker 1: their behalf from a financial perspective, and they did. Robin
Speaker 1: Hood did have to go out and raise cash through
Speaker 1: bank loans and through credit lines and through a new
Speaker 1: capital raise. And that is how the system is supposed
Speaker 1: to work. And the reason it's supposed to work that
Speaker 1: way is so that robin Hood doesn't end up blowing
Speaker 1: up because they can't perform on their obligations to this
Speaker 1: the clearing house and end up having all of their
Speaker 1: customer accounts liquidated through what amounts to a bankruptcy process.
Speaker 1: And so, you know, Jill and I early in our careers,
Speaker 1: we we hit the street right after something related happened
Speaker 1: at MF Global. Right, John Corzine was being too aggressive
Speaker 1: with UM customer collateral and it ended up going the
Speaker 1: wrong way on him. His trades actually ended up being correct.
Speaker 1: It's just he got margin squeeze in the in the
Speaker 1: interim and it it created a big blow up related
Speaker 1: to collateral, and so you know, I just I really
Speaker 1: it's really frustrating to see regulation that is definitely in
Speaker 1: customers interests, that is definitely you know, especially over the
Speaker 1: long term UM, and that is being rationally managed by
Speaker 1: um the broker Robin Hood um be sort of ascribed
Speaker 1: to some shadowy back room plot involving Citadel and some
Speaker 1: other people. And I don't really understand, you know, because
Speaker 1: people just don't understand how the plumbing works. And it's okay,
Speaker 1: pole don't understand bunny works. But that's another thing that's
Speaker 1: frustrating about these takes is that they were also unaware
Speaker 1: of the mechanics of the market. UM. So that yeah,
Speaker 1: this is why I like, so Tracy got mad at
Speaker 1: maybe this morning over Ivy and she's like, why are
Speaker 1: you anti takes? And it was actually mostly this because
Speaker 1: it's not that I really, you know, everyone is an
Speaker 1: opinion that's fine. Is that I actually think like some
Speaker 1: of the misunderstandings about this stuff was like worsening the
Speaker 1: public's understanding of this to very negative to a negative degree.
Speaker 1: I mean some of it. I don't like the whole,
Speaker 1: like you know, Occupy Wall Street stuff, but also like
Speaker 1: people miss explaining why you know, the margin call aspect
Speaker 1: of everything and plotting what is a sort of system
Speaker 1: rules designed to keep the system from blowing up, as
Speaker 1: rules designed to punish the little guy or prevent the
Speaker 1: little guy from doing the same trades as hedge funds do.
Speaker 1: That was like the part where I think, like, Okay,
Speaker 1: some of these takes are like actually corrosive. Um, so
Speaker 1: that's that's why, Tracy, But Jill, where you gonna I
Speaker 1: mean here? So wait I have to respond to that.
Speaker 1: Wait wait, wait, wait wait, I think look, I think
Speaker 1: you need to be more specific when you do your
Speaker 1: own takes on how there are too many takes because
Speaker 1: you just go out and say, oh, all these takes suck,
Speaker 1: But you need to be much much more specific about
Speaker 1: which ones you're talking about, because otherwise it just sounds
Speaker 1: like you don't want anyone to have an opinion on
Speaker 1: same goes to you. No, I mean, I think, look,
Speaker 1: I as someone who has worked for a long time
Speaker 1: in the cryptocurrency and blockchain space, I can absolutely sympathize
Speaker 1: with the feeling that there are too many takes and
Speaker 1: that those takes are actually educating people in the wrong
Speaker 1: direction um and and leaving them with misconceptions. I think
Speaker 1: there's no doubt that we're going to come out the
Speaker 1: other side of this whole game stop thing and the
Speaker 1: whole Robin Hood halting trading fiasco with a whole bunch
Speaker 1: of conspiracy theories, as George points to around Ken Griffin.
Speaker 1: But my perspective is that if even one percent of
Speaker 1: the people who were affected by this learned something about
Speaker 1: the dt c C and settlement cycles in the United
Speaker 1: States and have an opinion on that, I'll call that
Speaker 1: a win. That's my own hot take there. I agree
Speaker 1: that's a win, and it's awesome that I mean, first off,
Speaker 1: it's really harmful that Robin Hood signed up everybody by
Speaker 1: default for a margin account for a reg TEA marginalis,
Speaker 1: in my opinion, not something that no one is talking about,
Speaker 1: and we should absolutely hold their feet to the fire
Speaker 1: for that, because I think that's that that harmed a
Speaker 1: lot of people, because, by the way, if they hadn't
Speaker 1: been signed up for margin accounts, if they had been
Speaker 1: signed up in regular cash accounts, the margining works different.
Speaker 1: They wouldn't have had to shut down trading if everyone
Speaker 1: had been trading in cash accounts as opposed to margin accounts.
Speaker 1: They did the margin account stuff for other reasons. They
Speaker 1: want to get people trading quickly. They want to get
Speaker 1: people doing stuff that's volatile, so you know, you get
Speaker 1: the gambling aspect that growth exactly exactly. And so yeah,
Speaker 1: I think I think that I'm totally I'm thrilled that
Speaker 1: people are talking about collateral settlement and you know how
Speaker 1: T plus two works, and you know how we just
Speaker 1: went from T plus three a few years ago to
Speaker 1: T plus two and what the DTCC is. That's great, awesome, Um,
Speaker 1: but you've got people with huge platforms, with millions of
Speaker 1: people able to see what they're saying, who are trying
Speaker 1: to hold themselves forward as experts, and are saying stuff
Speaker 1: that has nothing to do with all that. And so
Speaker 1: I agree that there's a benefit to this that more
Speaker 1: knowledge and market infrastructure for everyone involved is good. We
Speaker 1: should that's great, we should celebrate that. But if the
Speaker 1: cost to that is ten times as many people having
Speaker 1: the complete opposite level of information, I'm not I don't
Speaker 1: think that's worth the cost at all. I'm sorry, but
Speaker 1: I think it's really harmful for venture capitalists to go
Speaker 1: out and say, well, you know, my company that is
Speaker 1: a competitor of robin Hood offer, you know you should
Speaker 1: be using them instead because they won't do with these
Speaker 1: people Robin Hood guys are doing, which is listening to
Speaker 1: Riffin when their company that they're referring to does the
Speaker 1: same did the exact same thing for the exact same reasons.
Speaker 1: That's really harmful, right, and we need to say that. So, um,
Speaker 1: you know, I'm with you. Joe say his name, George
Speaker 1: say his name. I've actually never a massive sub tweet.
Speaker 1: I've never heard Jonath's last name pronounced, so I'm not
Speaker 1: going to be able to pronouce the last time. I'm
Speaker 1: really sorry about that. I don't want to guest. M
Speaker 1: Poliopatia is who you're referring to called out Robin Hood
Speaker 1: and who is as part of a spack taking so
Speaker 1: far public and SOFI is stock trading operations. People come
Speaker 1: on the episode again at some point have a similar
Speaker 1: business model to Robin and did put put restrictions on
Speaker 1: trading and had the same kind of margin calls at
Speaker 1: the d triple D D t CC Like, I'm sorry,
Speaker 1: what what well, Joe, I want to go to you because, um,
Speaker 1: we're going to get to the blockchain discussion in a second.
Speaker 1: We're going to leave that to the very end. But
Speaker 1: where we get there was sort of the transition she
Speaker 1: used to be a trader and now you're on the
Speaker 1: West Coast. You're surrounded by fintech people, in VC people
Speaker 1: and so like on this whole like growth hack conversation
Speaker 1: and the game of gamification of trading and stuff like that. Like,
Speaker 1: is this sort of, in your view, like a sort
Speaker 1: of pivotal moment where perhaps there's like a limit to
Speaker 1: the degree to which sort of like the West Coast
Speaker 1: mindset when brought to bear on something like finance and
Speaker 1: trading like kind of reaches its limit. And maybe it's
Speaker 1: sort of like a wake up moment for a lot
Speaker 1: of the people on your half, on your side of
Speaker 1: the your side of the country, when you think about
Speaker 1: disrupting Wall Street and stuff like that, and the sort
Speaker 1: of the limits there. Oh, Joe, I wish that I
Speaker 1: could say that that that was at all part of
Speaker 1: the narrative here. I mean, I I have long been
Speaker 1: a proponent of the narrative that you can't move fast
Speaker 1: and break things when you're building something in finance, when
Speaker 1: you're building something that actually touches people money, people's money.
Speaker 1: But that is not really the narrative that is playing
Speaker 1: out on the back of this. If anything, I think
Speaker 1: that the narrative is, how do we speed up the
Speaker 1: ability of people to get involved and play the markets.
Speaker 1: How do we build infrastructure, forums, social apps, you name
Speaker 1: it that will continue to reduce the frictions at play
Speaker 1: without any regard really to the fact that those frictions,
Speaker 1: as George very well pointed out earlier, we're built in
Speaker 1: for the integrity of the system and also to some
Speaker 1: degree at least to protect the little guy. Um. But no,
Speaker 1: it's all been emphasis on apps like common Stock and
Speaker 1: public and Adam, there's a new one that I've heard
Speaker 1: of coming out called Tendees Tendees dot af Yes, I
Speaker 1: am serious. Um, that's where all of the hype and
Speaker 1: it excitement around innovation is. There has not been a
Speaker 1: whole lot of self reflection or self awareness. It's too
Speaker 1: bad we're not saving the video for this because we
Speaker 1: you know, we're looking at each other on video and
Speaker 1: George's face right now with his hands and his face
Speaker 1: is just like capturing at all is ten days that
Speaker 1: you know, I just the year is. I think it's awesome.
Speaker 1: I think it's awesome that people are getting exposed to
Speaker 1: the stock market, you know, like financial markets are fascinating,
Speaker 1: fascinating things to you know, be involved with from almost
Speaker 1: any perspective. You know, I just really hope that this
Speaker 1: whether there are people that have come to the stock
Speaker 1: market in the past week because of all the headlines,
Speaker 1: are come to the past, to the stock market in
Speaker 1: the past couple of years, because of the advances apps
Speaker 1: like robin Hood, etcetera. I just really hope that they
Speaker 1: understand that they're taking big risk by just piling in
Speaker 1: and you know whatever. I had a conversation with someone
Speaker 1: last night who said, yeah, I own um G m E,
Speaker 1: and I own AMC, and I own a couple other
Speaker 1: you know, I think Nokia and maybe BlackBerry, like all
Speaker 1: the meme socks like I put but if they all
Speaker 1: go to zero, it's fine, Like I'm comfortable with that outcome.
Speaker 1: It's not so much money that it'll it'll ruin me.
Speaker 1: And I said, great, that's awesome. Good for you like,
Speaker 1: you're getting involved with the market, but you're doing it
Speaker 1: in a way that isn't betting your entire existence on it.
Speaker 1: And I think that's awesome. And I just really hope
Speaker 1: that as these you know, as the successibility, whether it's
Speaker 1: to the stock market, crypto, whatever thing right as it
Speaker 1: continues to expand, that we also try and do the
Speaker 1: best we can educating people around the rest are taking
Speaker 1: I think that tone does have a lot to do
Speaker 1: with it, George, and I think that the tone in
Speaker 1: which the education is happening really matters. And I think that,
Speaker 1: you know, if I look back at sort of the
Speaker 1: history of fintech innovation, none of this is really that new.
Speaker 1: I think certainly the degree to which it's taking off
Speaker 1: right now is that new. But something that a lot
Speaker 1: of people don't realize about Wealth Front is that it
Speaker 1: actually started as basically a social app geared towards getting
Speaker 1: people involved in the markets. I think it was called
Speaker 1: catching UM, which you can even take the name of
Speaker 1: the company and ask questions about sort of the motivations,
Speaker 1: probably that that it was imbuing in its customer base UM.
Speaker 1: But I think that it's notable that that then ended
Speaker 1: up as Wealth Front, which I think arguably has done
Speaker 1: a lot to democratize finance in a very responsible way.
Speaker 1: So we'll see where all of the the tech innovation
Speaker 1: that's happening around the markets right now ends up this
Speaker 1: time around. But I do agree George, it's about sort
Speaker 1: of responsibility. Can we go back to the settlement issue,
Speaker 1: because I unfortunately am old enough to remember not just
Speaker 1: when T plus three changed into T plus two, but
Speaker 1: when the dtc C actually started talking about it and
Speaker 1: looking into this, and that was I think back in
Speaker 1: two thousand twelve, and so it was a multi year
Speaker 1: process to get down from T plus three to T
Speaker 1: plus two. So to eliminate one day in the clearing time,
Speaker 1: what are the chances that this actually sparks some sort
Speaker 1: of improvement in the clearing system, because I gotta say,
Speaker 1: like it would be quite unexpected and ironic if you know,
Speaker 1: a sub bredit basically lead to a more efficient US
Speaker 1: back office clearing system. But I'm curious what you think, Well,
Speaker 1: I mean, everything's going to settle it a a leg no
Speaker 1: matter what. There is no way to um have instant
Speaker 1: you know, settlement UM in a in an exchange environment,
Speaker 1: It's not possible. If you look at other markets as
Speaker 1: an example, whether it's for an exchange, treasuries, futures, whatever,
Speaker 1: there's always a settlement leg and it has to be
Speaker 1: that way. Um, and there are ways to you know,
Speaker 1: shorten it. Um. So I don't know, does T plus
Speaker 1: two versus T plus one actually M mean that this
Speaker 1: situation wouldn't have played out the way it does. It's
Speaker 1: a technical question that I don't think we can know,
Speaker 1: um from where we all sit. But um, you know,
Speaker 1: I do think lower settlement cycles or shorter settlement cycles
Speaker 1: reduced risk, but you're always going to have some kind
Speaker 1: of settlement cycles, so you know, trying to avoid it entirely.
Speaker 1: I've seen takes where people are like, we need to
Speaker 1: have stock settling in microseconds, and it's like, no, that's
Speaker 1: not gonna work. Um, like we're just not going to
Speaker 1: get there. Um, you know. I I don't think it's realistic.
Speaker 1: If Jill might have a different perspective on that with
Speaker 1: her rooting and blockchain, but yeah, I mean, if if
Speaker 1: you wade deep enough into the sea of bad takes
Speaker 1: on all of this, many of those takes that have
Speaker 1: been coming out of the corner of the Internet that
Speaker 1: I frequent anyway have been around the fact that blockchain
Speaker 1: would have prevented this, or blockchains would save us from
Speaker 1: let's let's hear it. And look, I I don't want
Speaker 1: to say that that is hard and fast, not true,
Speaker 1: but I think at a minute, mom, you don't need
Speaker 1: a blockchain to reduce settlement times right like you can
Speaker 1: do that with a centralized database. If you look at
Speaker 1: certificates of deposits and other short term paper, they already
Speaker 1: settle on a T plus zero basis um. And I
Speaker 1: think that there's this kind of techno utopian angle that
Speaker 1: people want to impose upon this situation and say, oh,
Speaker 1: you know, we can fix this with technology and wave
Speaker 1: this magic wand blockchain is going to be a panacea. No, no, no,
Speaker 1: It is much more about getting alignment within the current
Speaker 1: actors of the financial system to want to change things,
Speaker 1: to want to change processes in particular. And look, do
Speaker 1: I think that it is insane the amount of power
Speaker 1: that the dt c C wields over market structure. Yes,
Speaker 1: I do think that they are effectively a monopoly and
Speaker 1: as long as they don't want something to change, probably won't.
Speaker 1: So I'm hopeful that Joe, to your point this whole
Speaker 1: conversation that this this subreddit may in fact start to
Speaker 1: change the tide of where that power lies. That would
Speaker 1: be great, but it is going to be much more
Speaker 1: about getting them on board and getting other market participants
Speaker 1: on board. And I think it will be much easier
Speaker 1: to do that using existing technology than it will be
Speaker 1: to get the whole system to rip and replace and
Speaker 1: uh and put in a blockchain. Well, on that note, Um,
Speaker 1: that was a fantastic discussion. Love talking to both of you.
Speaker 1: I think we struck the right tone of politeness without
Speaker 1: being too friendly. So Joe Carlson and George Parks, thanks
Speaker 1: for coming on, Navot, thanks for having me. Yeah, thanks
Speaker 1: so much. This is fun. Uh, Tragy, George and Jill
Speaker 1: are great to talk to you. I actually I definitely
Speaker 1: have probably moved off. I actually, I mean I haven't
Speaker 1: like changing my overall views too much. But I think um,
Speaker 1: Jill's argument, which is that although we have seen versions
Speaker 1: of this kind of class conflict and political conflict in
Speaker 1: the past, then it's kind of like a new thing
Speaker 1: when applied to the stock market. The idea of like
Speaker 1: sticking it to the man, going after the suits but
Speaker 1: within the context of trading is kind of new and interesting.
Speaker 1: It's like, maybe it's like I give the political story
Speaker 1: a little bit more credit than I previously did, Like
Speaker 1: maybe I'm like somewhere in the middle. Now, I'm gonna
Speaker 1: chalk that up as a win. I will note that
Speaker 1: in an episode in which, uh, you know, two of
Speaker 1: the four people on it were complaining about how many
Speaker 1: takes there were, I am the only one who did
Speaker 1: not deliver a take in that, So I'm going to
Speaker 1: do it right now too. But okay, so to me,
Speaker 1: So to me, my take is that it's impossible to
Speaker 1: separate the takes, both good and bad, from the success
Speaker 1: of Game Stop. So the whole thing depends on creating
Speaker 1: a short squeeze or a Gama squeeze, forcing the share
Speaker 1: price up. And in order to do that, you have
Speaker 1: to get as many people as possible actually coming into
Speaker 1: the trade. And in order to get as many people
Speaker 1: as possible, you have to serve up these different narratives,
Speaker 1: these different motivations, and you have to have things that
Speaker 1: appealed to as wide range of people as possible. And
Speaker 1: to me, that's why the takes, even if they're terrible,
Speaker 1: are very, very important because there are things that get
Speaker 1: people involved in it, you know that, And you know,
Speaker 1: like I don't think it's occupy Wall Street or like
Speaker 1: the Proletary Revolution or whatever. But I do think that
Speaker 1: the idea that I can download an app and be
Speaker 1: on the other side of a trade from like Steve
Speaker 1: Cohen or Melvin Capital or whatever is really irresistible. And
Speaker 1: I can see why that narrative is a big part
Speaker 1: of what drove the trade. Now, what I object to
Speaker 1: are the people who are like saying it's too real,
Speaker 1: Like I don't really think, Like I guess that's where
Speaker 1: I like like a lot where I sort of like
Speaker 1: draw or like where I start to make the distinction,
Speaker 1: Like that narrative is so good, it's fantastic, it's it's
Speaker 1: it's absolutely irresistible. I can see why people are doing it.
Speaker 1: On the other hand, sort of like people who know better,
Speaker 1: who are like feeding into this idea that you're like
Speaker 1: helping overthrow capitalism or overthrowing the one percent by trading
Speaker 1: on this VC funded app on your iPhone with your
Speaker 1: spare cash, Like I don't buy that, and I think
Speaker 1: that's been way over sold and way over agged. But
Speaker 1: you're a percent right like that, without that, if it's
Speaker 1: just a mechanical trade, if it's just a short squeeze,
Speaker 1: like if we're like like, people wouldn't have gotten excited
Speaker 1: about this. It was like that, like the Porsche v
Speaker 1: W short squeeze's from a few years ago. Like that
Speaker 1: class angle is a big part of like what I
Speaker 1: think made the trade work. So agree with you there, Okay,
Speaker 1: another win. Um, I think that's right. But it also
Speaker 1: begs the question. I mean, the thing that we're getting
Speaker 1: at with the bad takes is that at some point
Speaker 1: it becomes really difficult to counter them because they just
Speaker 1: kind of get out there and take a life on
Speaker 1: their own. So so for instance, if you tweet anything
Speaker 1: in defense of Robin Hood at the moment, you're going
Speaker 1: to get a bunch of people um talking about Citadel
Speaker 1: and and all of that, and it just it becomes
Speaker 1: really hard to change the narrative. And I mean, I
Speaker 1: can tell you from personal experience that of course, I've
Speaker 1: spoken to my dad about this, who is a noted
Speaker 1: conspiracy theorist and fairly right wing, and you know, he
Speaker 1: thinks it's all market manipulation, it's the hedge funds, getting
Speaker 1: up with Robin Hood all of that, and even though
Speaker 1: I'm a financial journalist, his daughter, who presumably he has
Speaker 1: a reasonable amount of confidence in, I cannot change his
Speaker 1: mind about how all of this is working. It's just impossible. Well,
Speaker 1: this is like the thing which is that there's no
Speaker 1: way to actually like disprove it, and that like if
Speaker 1: you if you try to like say, well, this actually
Speaker 1: is not that exciting that you know, this is the DCCC.
Speaker 1: These are capital requirements that actually protect the unbroken and
Speaker 1: users of Robin Hood. You're just like a hedge fund shill.
Speaker 1: And if you sort of like make up a story
Speaker 1: this is it's it's very difficult. This is I actually
Speaker 1: feel like you're coming around to my view a little
Speaker 1: bit that like a lot of these takes need to
Speaker 1: be brained in. No, I told I, I agree, there
Speaker 1: are terrible takes, but they're sort of part they're part
Speaker 1: of the success because you can have you can have
Speaker 1: an alluring yet factually incorrect story around something that brings
Speaker 1: a lot of people in and it's probably going to
Speaker 1: be more interesting and probably more simple um than the
Speaker 1: explanation of what's actually happening. We talked about this with
Speaker 1: bitcoin and inflation. Remember, like, it's much easier to talk,
Speaker 1: you know what. Yeah, we could just go on and
Speaker 1: on about this, so I'm gonna say, uh yeah, let's
Speaker 1: um all right, let's leave it there. Let's leave it there. Okay.
Speaker 1: This has been another episode of the All Thoughts Podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway and I'm Joe Wisn't You can follow me
Speaker 1: on Twitter at the Stalwark. Definitely follow our great guests
Speaker 1: on Twitter. George Parks. His handle is at Parks. Jill Carlson.
Speaker 1: She's at Jill Ruth Carlson. Follow our producers. Thank you
Speaker 1: to our substitute producer Today Till for for his He's
Speaker 1: for his tea. Thank you to our follow our producer
Speaker 1: Rack Carlson. She's at Laura M. Carlson. Follow the Bloomberg
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