1 00:00:14,400 --> 00:00:18,000 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:18,239 --> 00:00:20,520 Speaker 1: My name is Mike Reagan. I'm a senior editor at 3 00:00:20,520 --> 00:00:24,200 Speaker 1: Bloomberg and humbled Onna Higher Across Acid reporter with Bloomberg. 4 00:00:24,560 --> 00:00:27,240 Speaker 1: And this week on the show, Well, do you remember 5 00:00:27,320 --> 00:00:31,040 Speaker 1: during the COVID lockdowns, when the meme stocks like game 6 00:00:31,120 --> 00:00:35,000 Speaker 1: Stop and a m C started going crazy and social 7 00:00:35,040 --> 00:00:38,120 Speaker 1: media was filled with posts about amateur tradings who are 8 00:00:38,120 --> 00:00:41,640 Speaker 1: making a killing trading their options. Well, like many things 9 00:00:41,680 --> 00:00:45,199 Speaker 1: on social media, that wasn't exactly the whole story. It 10 00:00:45,200 --> 00:00:48,960 Speaker 1: turns out that collectively, day traders took a massive beating 11 00:00:49,080 --> 00:00:53,279 Speaker 1: on options trades between November two thousand and nineteen and 12 00:00:53,440 --> 00:00:58,080 Speaker 1: June of that's according to some researchers from the London 13 00:00:58,200 --> 00:01:00,920 Speaker 1: Business School who did an in depth study of that 14 00:01:01,000 --> 00:01:04,480 Speaker 1: wild era of trading, and we're lucky enough to have 15 00:01:04,600 --> 00:01:07,160 Speaker 1: them on the show this week to discuss it. But 16 00:01:07,200 --> 00:01:09,720 Speaker 1: what do you tell us about our guests here? Who 17 00:01:09,720 --> 00:01:12,400 Speaker 1: do we have? Yeah, let me introduce them. We have 18 00:01:12,440 --> 00:01:17,960 Speaker 1: so Atlanta, Briska Loova, Anna Pavlova and Ticea Sikorskaya. They're 19 00:01:18,000 --> 00:01:21,000 Speaker 1: all researchers from the London Business School and they're they're 20 00:01:21,040 --> 00:01:23,280 Speaker 1: the authors of the report you mentioned, and I want 21 00:01:23,280 --> 00:01:24,760 Speaker 1: to welcome all of you to the show. Thanks so 22 00:01:24,840 --> 00:01:27,600 Speaker 1: much for joining us, thank you, thank you for having us. 23 00:01:29,520 --> 00:01:32,000 Speaker 1: And I want to start with you. I wanted to 24 00:01:32,040 --> 00:01:35,800 Speaker 1: ask you what you saw happening with retail investor trading, 25 00:01:35,840 --> 00:01:38,120 Speaker 1: what you saw happening in the space, all the mania 26 00:01:38,200 --> 00:01:40,759 Speaker 1: and hype that we had been seeing back in at 27 00:01:40,800 --> 00:01:44,360 Speaker 1: the start of one and what made you guys come 28 00:01:44,400 --> 00:01:48,000 Speaker 1: together and start looking into this topic. We have a 29 00:01:48,040 --> 00:01:51,920 Speaker 1: sample starting from November twenty nineteen going until mid the 30 00:01:54,080 --> 00:01:57,559 Speaker 1: and what we so seeing that sample is a huge 31 00:01:57,680 --> 00:02:02,000 Speaker 1: growth in the trading volume in options. In fact, our 32 00:02:02,200 --> 00:02:06,360 Speaker 1: data is in daily files and you can even measure 33 00:02:06,400 --> 00:02:11,960 Speaker 1: this in megabytes, gigabytes, terabytes. How these files, the size 34 00:02:12,000 --> 00:02:14,520 Speaker 1: of these files grow. Towards the end of the sample, 35 00:02:15,120 --> 00:02:19,280 Speaker 1: we had a huge increase in retail interest during the pandemic. 36 00:02:20,040 --> 00:02:26,200 Speaker 1: Then of course June July twenty we had a major 37 00:02:26,880 --> 00:02:32,840 Speaker 1: peak in our data set, and yeah, it just went 38 00:02:32,919 --> 00:02:36,680 Speaker 1: on from there. It's um, it's growing this volume and 39 00:02:36,760 --> 00:02:41,920 Speaker 1: it's there's no stopping for now. And Sedlanta, can you 40 00:02:41,919 --> 00:02:44,680 Speaker 1: maybe talk about what exactly you guys found, because the 41 00:02:44,720 --> 00:02:48,600 Speaker 1: big takeaway from me. Obviously you looked a lot into wholesalers. 42 00:02:48,760 --> 00:02:50,720 Speaker 1: But the big takeaway and something I ended up writing 43 00:02:50,760 --> 00:02:54,640 Speaker 1: about is the losses accrued by retail investors trading options. 44 00:02:54,760 --> 00:02:58,799 Speaker 1: Can you tell us more about that? Well, we were 45 00:02:58,880 --> 00:03:01,680 Speaker 1: interested in reading, understand and what three investors do in 46 00:03:01,720 --> 00:03:04,240 Speaker 1: the options market, because, to be honest, one of the 47 00:03:04,240 --> 00:03:07,400 Speaker 1: big problems there is that we actually don't really have 48 00:03:07,520 --> 00:03:10,720 Speaker 1: a good measure or good data will allow us to distinguish, 49 00:03:10,960 --> 00:03:13,040 Speaker 1: you know, which of those trade day trades are going 50 00:03:13,080 --> 00:03:15,280 Speaker 1: to be retail and which are going to be coming 51 00:03:15,320 --> 00:03:19,320 Speaker 1: from institutional investors. The only proxy is that people have 52 00:03:19,400 --> 00:03:22,560 Speaker 1: been looking at before were for example, small trades when 53 00:03:22,600 --> 00:03:25,080 Speaker 1: I will receive like somebody buying you know, one lord 54 00:03:25,240 --> 00:03:27,079 Speaker 1: or like five lads, just you know, a little bit 55 00:03:27,880 --> 00:03:30,760 Speaker 1: of the underlying contracts. But we also know that this 56 00:03:30,840 --> 00:03:33,800 Speaker 1: is not a good measure of retail trading because there 57 00:03:33,880 --> 00:03:37,280 Speaker 1: is a lot of institutional investors who actually split the 58 00:03:37,360 --> 00:03:39,960 Speaker 1: big orders in those tiny little bits, and so we 59 00:03:40,000 --> 00:03:42,200 Speaker 1: really wanted to see what the little guils are doing 60 00:03:42,600 --> 00:03:45,080 Speaker 1: because obviously we're concerned about them, and a lot of 61 00:03:45,080 --> 00:03:48,000 Speaker 1: my own students, you know, the trade and financial markets, 62 00:03:48,000 --> 00:03:51,480 Speaker 1: so everyone was watching game stuff and I was teaching 63 00:03:51,640 --> 00:03:54,640 Speaker 1: an asset management class for them, so you know, every 64 00:03:54,680 --> 00:03:56,680 Speaker 1: session we would go back to the news and just 65 00:03:56,760 --> 00:03:59,240 Speaker 1: talk what has been happening in the last three days, 66 00:03:59,320 --> 00:04:02,800 Speaker 1: and every time they would be something new. UM, So 67 00:04:02,960 --> 00:04:06,600 Speaker 1: naturally kind of looking at their strategies, what they do, 68 00:04:06,640 --> 00:04:08,600 Speaker 1: what kind of contracts they like, and if there is 69 00:04:08,640 --> 00:04:11,760 Speaker 1: a better way to identify those trades. Just exactly what 70 00:04:12,200 --> 00:04:14,560 Speaker 1: you know is the core of the paper, and it 71 00:04:14,720 --> 00:04:16,960 Speaker 1: was just a natural thing, you know, following all the 72 00:04:17,000 --> 00:04:20,400 Speaker 1: discussions with the students. But their performance, as you mentioned, 73 00:04:20,600 --> 00:04:24,800 Speaker 1: was exactly what really UM not surprised us. UM. We 74 00:04:24,880 --> 00:04:27,800 Speaker 1: do know that retail investors tend to trade a lot 75 00:04:27,800 --> 00:04:30,720 Speaker 1: more and quite often they as a result, encour much 76 00:04:30,800 --> 00:04:34,440 Speaker 1: larger losses, but we did not expect to see anything 77 00:04:34,520 --> 00:04:37,400 Speaker 1: like this in the options market. So that focus on 78 00:04:37,600 --> 00:04:40,640 Speaker 1: super short term contracts a lot really like pictures of 79 00:04:40,680 --> 00:04:43,840 Speaker 1: all the payoffs and of course those massive aggregate losses 80 00:04:43,920 --> 00:04:47,120 Speaker 1: during such a short period of time. That was mind 81 00:04:47,160 --> 00:04:50,680 Speaker 1: bolting for us. And the lasses are something around one 82 00:04:50,720 --> 00:04:54,800 Speaker 1: billion dollars plus if you account for trading carts, it's 83 00:04:54,880 --> 00:04:59,120 Speaker 1: even higher than that, right, absolutely, absolutely so, not only 84 00:04:59,160 --> 00:05:02,440 Speaker 1: they basically make mistake on you know, which type of contracts, 85 00:05:02,440 --> 00:05:04,640 Speaker 1: which direction you know the price is going to go, 86 00:05:05,040 --> 00:05:08,159 Speaker 1: but they also underestimate clearly is a total cost got 87 00:05:08,160 --> 00:05:11,000 Speaker 1: to pay for making this type of test. Yeah, and 88 00:05:11,040 --> 00:05:14,560 Speaker 1: we asked the question whether their investors perhaps learned from 89 00:05:14,600 --> 00:05:18,400 Speaker 1: their mistakes. So we cut our data month by month 90 00:05:18,760 --> 00:05:22,640 Speaker 1: and looked at their performance each month, and we were 91 00:05:22,640 --> 00:05:25,480 Speaker 1: hoping to see that it was bad in the beginning, 92 00:05:25,640 --> 00:05:30,320 Speaker 1: but it became much better towards the end of the sample. Well, 93 00:05:30,680 --> 00:05:34,600 Speaker 1: we found the reverse. It was actually okay in the 94 00:05:34,640 --> 00:05:39,080 Speaker 1: beginning of the sample, but then it got really bad. Well, 95 00:05:39,120 --> 00:05:41,039 Speaker 1: I see. Can I ask you to come in and 96 00:05:41,040 --> 00:05:43,479 Speaker 1: talk about what actually was happening with the broader market 97 00:05:43,520 --> 00:05:46,599 Speaker 1: at the time, Like how striking was it to come 98 00:05:46,680 --> 00:05:50,279 Speaker 1: to this conclusion considering that we actually had the stock 99 00:05:50,320 --> 00:05:54,320 Speaker 1: market overall, the SMP having a really really great year 100 00:05:54,480 --> 00:06:01,320 Speaker 1: in Yeah. Sure, if you look at the return overall 101 00:06:01,320 --> 00:06:04,520 Speaker 1: of let sels and if a hundred, you do see, uh, 102 00:06:04,880 --> 00:06:08,520 Speaker 1: overall good return for the thousand twenties. But then what 103 00:06:08,640 --> 00:06:11,320 Speaker 1: you should also remember is that there was a huge 104 00:06:11,320 --> 00:06:14,320 Speaker 1: amount of volatility at that time, and this is exactly 105 00:06:14,360 --> 00:06:17,440 Speaker 1: what attracts option traders, you need to have a lot 106 00:06:17,440 --> 00:06:20,839 Speaker 1: of volatility to be able to, you know, hit those 107 00:06:21,400 --> 00:06:24,960 Speaker 1: very rare playoffs that clan I was talking about. And 108 00:06:25,160 --> 00:06:28,359 Speaker 1: so I just wanted to say that probably an options market, 109 00:06:28,400 --> 00:06:30,640 Speaker 1: you don't really need the market to go up to 110 00:06:31,440 --> 00:06:34,320 Speaker 1: have your beds working out. And that's why even now, 111 00:06:34,360 --> 00:06:38,560 Speaker 1: you would not expect people to reduce this bigheraor or 112 00:06:38,680 --> 00:06:41,760 Speaker 1: to stop gambling because the market is going down, because 113 00:06:41,800 --> 00:06:45,920 Speaker 1: you can still trade contracts with the same way of profile. 114 00:06:47,160 --> 00:06:49,000 Speaker 1: And can I also ask you, tay see what sort 115 00:06:49,000 --> 00:06:53,039 Speaker 1: of feedback you guys received after the research paper came out. 116 00:06:53,640 --> 00:06:57,560 Speaker 1: What were people telling you, Well, it's so far in progress, 117 00:06:57,600 --> 00:07:00,839 Speaker 1: we're still presenting it in conferences, but it has definitely 118 00:07:00,880 --> 00:07:03,440 Speaker 1: received a lot of attention. When we are happy that 119 00:07:03,520 --> 00:07:05,919 Speaker 1: we can attract this attention to this topic because it 120 00:07:05,920 --> 00:07:09,920 Speaker 1: seems like it is important, particularly important for this new 121 00:07:09,920 --> 00:07:15,840 Speaker 1: generation of retail traders. And what I find uh sort 122 00:07:15,840 --> 00:07:18,800 Speaker 1: of fascinating about this topic, um is there's been a 123 00:07:18,800 --> 00:07:22,200 Speaker 1: lot of scrutiny in the US towards the wholesalers or 124 00:07:22,240 --> 00:07:25,680 Speaker 1: the internalizers however you want to call him, the the 125 00:07:25,880 --> 00:07:29,800 Speaker 1: market makers who UH engage in payment for order flow. 126 00:07:30,640 --> 00:07:34,400 Speaker 1: I'm wondering if in this research a if if you 127 00:07:34,960 --> 00:07:39,840 Speaker 1: sort of detected anything that would suggest that these players 128 00:07:40,400 --> 00:07:42,680 Speaker 1: did anything that was against the rules. I mean, obviously 129 00:07:42,720 --> 00:07:46,200 Speaker 1: there's a debate about whether this type of practice should 130 00:07:46,240 --> 00:07:49,720 Speaker 1: be allowed or should be reformed to some degree, but 131 00:07:50,000 --> 00:07:54,640 Speaker 1: were they playing within the rules. Well, we haven't found anything, 132 00:07:54,920 --> 00:07:58,440 Speaker 1: I'm afraid to tell you, but they are some facts 133 00:07:58,520 --> 00:08:02,880 Speaker 1: about these wholesalers to be document For example, did you 134 00:08:02,960 --> 00:08:09,080 Speaker 1: know that eighty five of payment for other flow people 135 00:08:09,400 --> 00:08:15,920 Speaker 1: in options comes from just three wholesalers? Sit adele, says Quehanna, 136 00:08:16,120 --> 00:08:21,280 Speaker 1: and we'll we're in. That is amazing. Yeah, And you know, 137 00:08:21,280 --> 00:08:25,760 Speaker 1: there's spent a lot of talk in years past about, um, 138 00:08:25,800 --> 00:08:31,720 Speaker 1: you know, options are incredibly complicated products that perhaps retail 139 00:08:32,040 --> 00:08:35,280 Speaker 1: traders should not be going near there. I remember in 140 00:08:35,360 --> 00:08:37,840 Speaker 1: years past there was talk about, well, in order to 141 00:08:37,920 --> 00:08:40,760 Speaker 1: actually trade options, you should have to undergo some sort 142 00:08:40,760 --> 00:08:43,679 Speaker 1: of education program and pass a test that sort of thing. 143 00:08:44,520 --> 00:08:46,440 Speaker 1: Do you guys think there's some merit to that is? 144 00:08:46,679 --> 00:08:50,199 Speaker 1: Should maybe that be you know, the way the direction 145 00:08:50,240 --> 00:08:53,800 Speaker 1: this should go, that retail traders should perhaps not be 146 00:08:54,480 --> 00:08:57,840 Speaker 1: allowed to engage in this type of really risky trading 147 00:08:57,880 --> 00:09:03,040 Speaker 1: without some sort of education. First, well, during our day job, 148 00:09:03,400 --> 00:09:06,960 Speaker 1: we teach students how to invest their money, and what 149 00:09:07,080 --> 00:09:10,800 Speaker 1: we tell them that even if they make mistakes paying 150 00:09:10,800 --> 00:09:13,240 Speaker 1: too high a fee, they should still invest in the 151 00:09:13,240 --> 00:09:16,800 Speaker 1: stock market because the worst they can do to themselves 152 00:09:16,960 --> 00:09:21,640 Speaker 1: is to not participate in options. There is no such thing. 153 00:09:22,840 --> 00:09:25,680 Speaker 1: There is no such thing as losing on the equity 154 00:09:25,720 --> 00:09:28,920 Speaker 1: premium because there is no such thing as an option premium. 155 00:09:28,920 --> 00:09:32,000 Speaker 1: It's a zero some game. It's a win to some 156 00:09:32,200 --> 00:09:35,640 Speaker 1: one side and the loss to another side. So what 157 00:09:35,679 --> 00:09:40,200 Speaker 1: we tell students is that they should not invest in options. 158 00:09:40,760 --> 00:09:44,600 Speaker 1: Retail investors should not invest in options unless they have 159 00:09:44,679 --> 00:09:48,960 Speaker 1: some risk to hedge. We have looked very carefully in 160 00:09:49,000 --> 00:09:53,200 Speaker 1: our data whether the patterns we find are consistent with hedging, 161 00:09:53,960 --> 00:09:59,199 Speaker 1: and tell you what not at all your speculation as 162 00:09:59,240 --> 00:10:02,560 Speaker 1: far as we can tell. While we talk a lot 163 00:10:02,600 --> 00:10:06,160 Speaker 1: about the recent growth of options popularity inm on retail 164 00:10:06,200 --> 00:10:09,720 Speaker 1: investors and all the technology you know, all these apps 165 00:10:09,800 --> 00:10:12,480 Speaker 1: that go along with it, but it is actually also 166 00:10:12,559 --> 00:10:16,560 Speaker 1: worth remembering that actually people have been trading options for 167 00:10:16,640 --> 00:10:20,640 Speaker 1: not just years, but centuries, and in fact, the first 168 00:10:20,920 --> 00:10:24,840 Speaker 1: ever book that was written about financial markets in six 169 00:10:25,720 --> 00:10:29,880 Speaker 1: in Amsterdam is almost all about options training and it 170 00:10:29,920 --> 00:10:32,880 Speaker 1: talks about exactly the same issues that we see in 171 00:10:32,920 --> 00:10:37,880 Speaker 1: the markets today, herding behavior, over confidence, you know, short 172 00:10:38,000 --> 00:10:41,920 Speaker 1: term mism of the investors, and of course real underestimation 173 00:10:42,000 --> 00:10:45,600 Speaker 1: of the risks of the financial art. I love that 174 00:10:45,679 --> 00:10:48,200 Speaker 1: you have these facts sort of just sitting on the 175 00:10:48,240 --> 00:10:50,320 Speaker 1: top of your head. But Atlanta, I actually have a 176 00:10:50,320 --> 00:10:52,240 Speaker 1: follow up for you, which is when you and I 177 00:10:52,280 --> 00:10:54,240 Speaker 1: spoke a couple of weeks ago, you had told me 178 00:10:54,280 --> 00:10:57,440 Speaker 1: that the type of contracts that retail investors tend to 179 00:10:57,800 --> 00:11:01,200 Speaker 1: favor have sort of lottery features, and I wanted you 180 00:11:01,320 --> 00:11:04,360 Speaker 1: to sort of explain that and what you mean when 181 00:11:04,360 --> 00:11:09,000 Speaker 1: you say lottery like features. Well, what are the usual 182 00:11:09,040 --> 00:11:12,199 Speaker 1: features of the lottery. Um, Usually you pay a small 183 00:11:12,240 --> 00:11:15,440 Speaker 1: fee to participate in this lottery in and raw to 184 00:11:15,480 --> 00:11:18,520 Speaker 1: win something big, but the chances of your winning are 185 00:11:18,559 --> 00:11:21,920 Speaker 1: actually incredibly small, right, So this is the type of 186 00:11:21,960 --> 00:11:25,320 Speaker 1: or bet, but in this case some financial market where 187 00:11:25,360 --> 00:11:28,319 Speaker 1: you pay some fee up front and then there is 188 00:11:28,320 --> 00:11:31,559 Speaker 1: a small probability that you can win, but actually very 189 00:11:31,640 --> 00:11:34,560 Speaker 1: high probabilities that you're not going to get anything. And 190 00:11:34,640 --> 00:11:38,320 Speaker 1: these are exactly the features of the option contracts that 191 00:11:38,360 --> 00:11:41,599 Speaker 1: we find out to be really popular among retail investors. 192 00:11:42,280 --> 00:11:45,040 Speaker 1: So for example, these are the contracts which are very 193 00:11:45,080 --> 00:11:48,920 Speaker 1: short in terms of the maturity, like weekly options that 194 00:11:48,960 --> 00:11:51,559 Speaker 1: are going to expire maybe two or three days from now. 195 00:11:52,320 --> 00:11:54,920 Speaker 1: These are the contracts they like that are going to 196 00:11:55,000 --> 00:11:56,880 Speaker 1: be on the stocks that do not cost a lot 197 00:11:56,920 --> 00:11:59,960 Speaker 1: of money, so the fee of participating is also quite 198 00:12:00,040 --> 00:12:04,040 Speaker 1: not And these are unfortunately also the contracts on securities 199 00:12:04,080 --> 00:12:06,720 Speaker 1: that have been all over the news. So it doesn't 200 00:12:06,800 --> 00:12:10,040 Speaker 1: look like, you know, they're really doing it for you know, 201 00:12:10,080 --> 00:12:13,240 Speaker 1: hedging purpose of doing some sort of deep analysis. It 202 00:12:13,280 --> 00:12:16,120 Speaker 1: seems like they're just following whatever is trendy and try 203 00:12:16,200 --> 00:12:20,000 Speaker 1: to bet on the price going off. An I know 204 00:12:20,120 --> 00:12:23,920 Speaker 1: this is this is gonna be a tough question to answer, um, 205 00:12:24,040 --> 00:12:27,760 Speaker 1: but do you think, what if you have any opinions 206 00:12:27,760 --> 00:12:31,280 Speaker 1: on whether this was sort of a one time phenomenon 207 00:12:31,640 --> 00:12:35,240 Speaker 1: that it was a confluence of you know, people stuck 208 00:12:35,240 --> 00:12:37,959 Speaker 1: at home, too much time on their hands, maybe a 209 00:12:38,000 --> 00:12:41,400 Speaker 1: little too much cash, and sort of a perfect storm 210 00:12:41,440 --> 00:12:44,199 Speaker 1: that created the type of environment for this type of 211 00:12:44,800 --> 00:12:48,320 Speaker 1: as you say, crowd behavior and hurting or you know, 212 00:12:48,800 --> 00:12:50,480 Speaker 1: is there a risk that we could see something like 213 00:12:50,520 --> 00:12:53,720 Speaker 1: this happened again sort of after you know, the traders 214 00:12:53,720 --> 00:12:58,080 Speaker 1: who who lost their shirts in this round of trading, uh, 215 00:12:58,160 --> 00:13:00,520 Speaker 1: you know, get some more money to trade or more 216 00:13:00,559 --> 00:13:02,640 Speaker 1: traders come in. How do you think, you know, how 217 00:13:02,640 --> 00:13:05,400 Speaker 1: do you think of it as as terms of risk 218 00:13:05,480 --> 00:13:09,120 Speaker 1: going forward or was it just sort of one of 219 00:13:09,120 --> 00:13:11,680 Speaker 1: the crazy things that happened during the pandemic And we 220 00:13:11,760 --> 00:13:15,800 Speaker 1: probably won't see something like this again. Haven't we seen 221 00:13:16,000 --> 00:13:19,600 Speaker 1: something like this? Just last week? Bloomberg wrote about Revlon 222 00:13:20,280 --> 00:13:27,440 Speaker 1: that's new game stop true, it's probably speaks more to just, uh, 223 00:13:27,480 --> 00:13:31,560 Speaker 1: you know, that get rich quick mentality that's been been 224 00:13:31,600 --> 00:13:33,560 Speaker 1: with us forever, I guess. And and this is just 225 00:13:33,640 --> 00:13:37,040 Speaker 1: really a drastic example of it, of of it really 226 00:13:37,120 --> 00:13:43,120 Speaker 1: getting out of control, absolutely, and it's gambling and seems 227 00:13:43,400 --> 00:13:53,320 Speaker 1: and hey, it's cheap than Las Vegas. So you mentioned 228 00:13:53,320 --> 00:13:56,440 Speaker 1: that a lot of retail investors tend to favor the 229 00:13:56,520 --> 00:13:59,120 Speaker 1: stocks that they see online or you know, read it 230 00:13:59,160 --> 00:14:01,520 Speaker 1: as often mentioned and Twitter as well, and you had 231 00:14:01,520 --> 00:14:05,400 Speaker 1: found that stacks mentioned on Wall Street, um, those that 232 00:14:05,640 --> 00:14:09,760 Speaker 1: actually didn't totally pay off for retail investors. Right, So 233 00:14:09,800 --> 00:14:13,320 Speaker 1: you have a list of tap losers for retail trades, 234 00:14:13,400 --> 00:14:17,080 Speaker 1: and that includes game Stop and am C in your research. 235 00:14:17,480 --> 00:14:19,880 Speaker 1: But both of those stocks were stuck that were in 236 00:14:19,880 --> 00:14:23,480 Speaker 1: the top five winner's basket for the market as a whole, 237 00:14:23,600 --> 00:14:27,000 Speaker 1: So can you tell us about that? And you're absolutely right, 238 00:14:27,480 --> 00:14:30,440 Speaker 1: you know, the common narrative was that during the time 239 00:14:30,480 --> 00:14:33,200 Speaker 1: of the Game Stop, it was the retail investors that 240 00:14:33,320 --> 00:14:36,800 Speaker 1: finally took control of the markets and managed to get 241 00:14:37,080 --> 00:14:40,000 Speaker 1: a good profit out of those transactions. But that's actually 242 00:14:40,040 --> 00:14:42,760 Speaker 1: not what we see in the data. In fact, game 243 00:14:42,800 --> 00:14:47,040 Speaker 1: Stop and AMC Entertainment, which was another really popular meme 244 00:14:47,120 --> 00:14:51,400 Speaker 1: stop back at the time, they were among the worst 245 00:14:51,480 --> 00:14:55,240 Speaker 1: performing contracts that the retail investors have been dealing with 246 00:14:55,600 --> 00:14:58,800 Speaker 1: during the whole sample that we consider. So not only 247 00:14:58,920 --> 00:15:01,680 Speaker 1: that they definitely so we've lost a lot of money 248 00:15:01,680 --> 00:15:05,920 Speaker 1: on these type of securities. But surprisingly, as they also mentioned, 249 00:15:06,320 --> 00:15:09,880 Speaker 1: it's actually the transactions that were utenated by other market 250 00:15:09,920 --> 00:15:14,520 Speaker 1: participants that is usually petge funds, you know, professional investors 251 00:15:14,840 --> 00:15:18,120 Speaker 1: who managed to win a lot on building on options 252 00:15:18,160 --> 00:15:21,560 Speaker 1: at the same time exactly the same theme stocks Jimmy 253 00:15:21,880 --> 00:15:26,800 Speaker 1: and AMC, and I wonder you know, clearly the narrative 254 00:15:26,840 --> 00:15:28,800 Speaker 1: in the press and the media was that this was 255 00:15:29,080 --> 00:15:33,280 Speaker 1: so driven by Reddit and social media and these influential 256 00:15:33,440 --> 00:15:36,840 Speaker 1: characters on Reddit. Um. I know it's hard to sort 257 00:15:36,880 --> 00:15:39,920 Speaker 1: of suss that out from just crunching through the data 258 00:15:40,400 --> 00:15:42,920 Speaker 1: like you guys did, but I'm curious if if any 259 00:15:42,960 --> 00:15:45,560 Speaker 1: of you have any opinions on if there's something that 260 00:15:45,600 --> 00:15:50,040 Speaker 1: should be done about that phenomenon. Clearly there were some 261 00:15:50,240 --> 00:15:54,800 Speaker 1: dishonest people on social media, I believe, who tried to 262 00:15:55,480 --> 00:16:01,680 Speaker 1: convince amateur new traders that you know, I remember, you know, 263 00:16:01,920 --> 00:16:04,640 Speaker 1: posts about AMC is going to go to a hundred 264 00:16:04,680 --> 00:16:08,240 Speaker 1: thousand dollars of share once the Hedge funds cover, you know, 265 00:16:08,440 --> 00:16:12,520 Speaker 1: some ridiculous sort of notions being thrown around on social 266 00:16:12,600 --> 00:16:15,920 Speaker 1: media that, um, you know, if you're a brand new 267 00:16:16,000 --> 00:16:19,000 Speaker 1: trader and you get sucked into this rabbit hole. Uh, 268 00:16:19,320 --> 00:16:21,480 Speaker 1: it seems like some of them felt worth. I mean, 269 00:16:21,720 --> 00:16:24,080 Speaker 1: you know, we live in a society where freedom of 270 00:16:24,160 --> 00:16:26,600 Speaker 1: speech is highly valued. But is there you know, is 271 00:16:26,600 --> 00:16:28,680 Speaker 1: there something you think that could be done to prevent 272 00:16:28,760 --> 00:16:32,320 Speaker 1: that sort of manipulative behavior that that sort of draws 273 00:16:32,360 --> 00:16:37,440 Speaker 1: people into these losing trades. That's a great question, Mike, 274 00:16:37,640 --> 00:16:42,320 Speaker 1: and to bell STI also really difficult one. Um, defining 275 00:16:42,440 --> 00:16:44,480 Speaker 1: kind of the rules of the freedom of speech is 276 00:16:44,640 --> 00:16:49,720 Speaker 1: incredibly complicated topic, and finance in particular. But one thing 277 00:16:49,800 --> 00:16:52,560 Speaker 1: that I think it's worth always remembering for investors is 278 00:16:52,640 --> 00:16:55,480 Speaker 1: that whatever you do on various forums, that does not 279 00:16:55,600 --> 00:16:58,880 Speaker 1: necessarily mean that this is actually what those people implement 280 00:16:58,960 --> 00:17:01,160 Speaker 1: in real life. So they could be just chip talk 281 00:17:01,280 --> 00:17:02,960 Speaker 1: and a lot of the people would be, you know, 282 00:17:03,120 --> 00:17:06,359 Speaker 1: talking about different strategies or the performance that, but that 283 00:17:06,600 --> 00:17:08,919 Speaker 1: often has nothing to do with reality. Let me give 284 00:17:08,960 --> 00:17:12,280 Speaker 1: you one example. Back at the height of the you know, 285 00:17:12,440 --> 00:17:17,280 Speaker 1: game stop Frenzy um Citadel actually released a report based 286 00:17:17,359 --> 00:17:21,520 Speaker 1: on their transactions of the same retail investors that they 287 00:17:21,640 --> 00:17:24,480 Speaker 1: actually implement, and what they find out is that during 288 00:17:24,520 --> 00:17:27,520 Speaker 1: the week or that incredible increase in the price where 289 00:17:27,520 --> 00:17:30,520 Speaker 1: the Wolstree Bad forum was all about, you know, holding 290 00:17:30,640 --> 00:17:33,320 Speaker 1: too the moon and hoping that the price of Jimmy 291 00:17:33,359 --> 00:17:36,320 Speaker 1: and It's going to reach all the way to one dollars, 292 00:17:36,960 --> 00:17:42,560 Speaker 1: that was the time where the amount of buying investors 293 00:17:42,640 --> 00:17:47,240 Speaker 1: and selling investors was almost exactly identically. So the retail 294 00:17:47,400 --> 00:17:50,080 Speaker 1: or the flow was incredibly balanced, and there was actually 295 00:17:50,200 --> 00:17:52,760 Speaker 1: not much evidence that they were really not holding too 296 00:17:52,800 --> 00:17:56,320 Speaker 1: the moon. So yes, forums are quite trickier, and I 297 00:17:56,400 --> 00:17:58,480 Speaker 1: honestly we don't think that there is any reason to 298 00:17:58,560 --> 00:18:00,760 Speaker 1: believe whatever you read them. After all, these are not 299 00:18:00,880 --> 00:18:04,480 Speaker 1: financial advisors. They're not bound to you by any code 300 00:18:04,520 --> 00:18:07,359 Speaker 1: of ethic. You cannot see, Um, you know a person 301 00:18:07,480 --> 00:18:10,880 Speaker 1: who's been writing, you know, some dishonest information or convincing 302 00:18:10,920 --> 00:18:13,680 Speaker 1: other people to be in a certain way. The best 303 00:18:13,720 --> 00:18:16,440 Speaker 1: thing is just, you know, to remember that you have 304 00:18:16,520 --> 00:18:19,320 Speaker 1: to think very very careful about what to trust in 305 00:18:19,480 --> 00:18:23,040 Speaker 1: terms of the information. I think only read Wildonna's stories 306 00:18:23,200 --> 00:18:27,840 Speaker 1: is what you're saying, right, Definitely, That's not how the 307 00:18:28,480 --> 00:18:31,240 Speaker 1: Twitter responses I get sometimes. But T see, I want 308 00:18:31,240 --> 00:18:33,320 Speaker 1: to bring you in here because a big part of 309 00:18:33,400 --> 00:18:35,440 Speaker 1: what you guys were looking into where the trading costs 310 00:18:35,480 --> 00:18:39,320 Speaker 1: that were associated with retail investors trading these options, and 311 00:18:39,480 --> 00:18:42,080 Speaker 1: so you guys wrote the retail investors might have been 312 00:18:42,240 --> 00:18:46,400 Speaker 1: underestimating the trading costs associated a bit ask spreads were 313 00:18:46,440 --> 00:18:49,600 Speaker 1: super vide for retail versus the overall market. Why is that? 314 00:18:49,680 --> 00:18:52,840 Speaker 1: And can you explain that to us? Yeah? Probably it's 315 00:18:52,880 --> 00:18:57,040 Speaker 1: just for us mentioning that the zero commissioned profit promise 316 00:18:57,200 --> 00:19:01,399 Speaker 1: that typically comes from the broker is only part of 317 00:19:01,480 --> 00:19:04,959 Speaker 1: the cost that you wear when you trade in this market. 318 00:19:05,520 --> 00:19:07,560 Speaker 1: So the price that you will actually pay will not 319 00:19:07,800 --> 00:19:11,800 Speaker 1: be the midpoint, you know, the uh, somewhere in between 320 00:19:11,840 --> 00:19:15,240 Speaker 1: the asking and the big price in the market. UH. So, 321 00:19:15,440 --> 00:19:18,480 Speaker 1: in fact, you will always kind of imagine, if you're 322 00:19:18,480 --> 00:19:21,080 Speaker 1: buying a contract and then you're selling it, you will 323 00:19:21,119 --> 00:19:24,040 Speaker 1: be paying this round trip costs each time. And this 324 00:19:24,200 --> 00:19:26,640 Speaker 1: is what happens in markets with such high ron over 325 00:19:26,960 --> 00:19:31,600 Speaker 1: like options, and that is why investors paidous costs. And 326 00:19:31,680 --> 00:19:34,639 Speaker 1: what we see is also as we mentioned before, this 327 00:19:34,800 --> 00:19:38,480 Speaker 1: investors seemed to prefer really short term contracts. And imagine 328 00:19:38,520 --> 00:19:42,480 Speaker 1: if you were, like, let's say, interested in weeklies on Amazon, 329 00:19:42,720 --> 00:19:45,400 Speaker 1: for example, so you buy it this week and then 330 00:19:45,440 --> 00:19:48,520 Speaker 1: within the wicket will expire. But if you again want 331 00:19:48,560 --> 00:19:50,639 Speaker 1: to gamble, you will buy one more contract and then 332 00:19:50,720 --> 00:19:52,720 Speaker 1: one more one more, so you turn over will be 333 00:19:52,800 --> 00:19:55,760 Speaker 1: pretty high, and each time you will pay around twelve 334 00:19:55,880 --> 00:19:59,640 Speaker 1: percent UH with ask spread. That is what we document 335 00:19:59,760 --> 00:20:03,040 Speaker 1: and the payment sure, zero commission, but twelve percent is 336 00:20:03,080 --> 00:20:07,080 Speaker 1: still a lot. And I'm sure every market maker in 337 00:20:07,160 --> 00:20:11,879 Speaker 1: the world is their eyes pop out their heads when 338 00:20:11,920 --> 00:20:16,000 Speaker 1: they hear the a twelve percent that has spread there's 339 00:20:16,000 --> 00:20:19,000 Speaker 1: a lot of potential than the profit from that. I 340 00:20:19,080 --> 00:20:24,440 Speaker 1: suppose you're absolutely right. And by the way, this spread 341 00:20:24,600 --> 00:20:26,760 Speaker 1: is even higher than what you get for used cars. 342 00:20:27,400 --> 00:20:30,840 Speaker 1: That tells me something about you know, how this market opulates. 343 00:20:33,000 --> 00:20:35,680 Speaker 1: That's great, you can higher than used cars. I like that. 344 00:20:36,119 --> 00:20:38,280 Speaker 1: That might be the craziest thing of the week. So 345 00:20:38,400 --> 00:20:41,000 Speaker 1: when we looked at payment for other flow for the 346 00:20:41,240 --> 00:20:45,680 Speaker 1: very first time, we got data from all retail brokerages 347 00:20:45,720 --> 00:20:49,879 Speaker 1: in the US, and what shocked us is that payment 348 00:20:49,960 --> 00:20:53,719 Speaker 1: for other flow for options is so much higher than 349 00:20:53,800 --> 00:20:57,800 Speaker 1: for stocks. Two thirds of payment for other flow comes 350 00:20:57,840 --> 00:21:00,920 Speaker 1: from options, and you would think only a very small 351 00:21:01,000 --> 00:21:05,560 Speaker 1: fraction of those retails and that there's trade options. That's 352 00:21:05,600 --> 00:21:08,560 Speaker 1: how we started digging, and that's when we discovered that 353 00:21:08,680 --> 00:21:14,080 Speaker 1: twelve percent. That is surely the answer why it is 354 00:21:14,240 --> 00:21:19,679 Speaker 1: so attractive to be a wholesaler in intermediating options transactions 355 00:21:20,359 --> 00:21:22,639 Speaker 1: at Lana. Can I ask you about the new some 356 00:21:22,760 --> 00:21:24,560 Speaker 1: of the headlines that we had seen recently about the 357 00:21:24,800 --> 00:21:28,280 Speaker 1: SEC waying changes to its trading rules. I'm wanting, just 358 00:21:29,320 --> 00:21:34,360 Speaker 1: like from your personal view, what you make of those Well, um, 359 00:21:34,760 --> 00:21:37,240 Speaker 1: to be honest, we still are going to be waiting 360 00:21:37,240 --> 00:21:39,440 Speaker 1: to see kind of the final decision on how those 361 00:21:39,520 --> 00:21:42,560 Speaker 1: changes are going to be implemented in the markets. But 362 00:21:42,680 --> 00:21:44,879 Speaker 1: I think there is definitely a lot of the interest 363 00:21:44,960 --> 00:21:47,800 Speaker 1: in this topic and both equities and options, and that's 364 00:21:48,680 --> 00:21:51,080 Speaker 1: actually one of the reason why we think that looking 365 00:21:51,160 --> 00:21:54,400 Speaker 1: at the options market is becoming more and more important 366 00:21:54,480 --> 00:21:57,840 Speaker 1: because one of the points that the SEC chairman was 367 00:21:58,080 --> 00:22:00,960 Speaker 1: mentioning and there isn't announcement, is that they are thinking 368 00:22:01,000 --> 00:22:04,680 Speaker 1: about potentially adopting some of the elements of this trade, 369 00:22:04,720 --> 00:22:08,280 Speaker 1: how it's organized in the auctions market and then transferred 370 00:22:08,440 --> 00:22:11,600 Speaker 1: into the trading in stocks, in particular the so called 371 00:22:12,000 --> 00:22:15,720 Speaker 1: auctions um during which are the pricing of those contractors 372 00:22:15,760 --> 00:22:19,040 Speaker 1: being determined. So we definitely need to, you know, learn 373 00:22:19,080 --> 00:22:21,720 Speaker 1: more about this market, is how they operate, what's the 374 00:22:21,760 --> 00:22:25,080 Speaker 1: market power of different participants, and how it all fixed together, 375 00:22:25,160 --> 00:22:28,399 Speaker 1: because ultimately we need to design the system that's going 376 00:22:28,440 --> 00:22:32,080 Speaker 1: to benefit retail investors first and foremost. And there are 377 00:22:32,160 --> 00:22:34,359 Speaker 1: lots of questions on which we still don't belt up 378 00:22:34,400 --> 00:22:40,639 Speaker 1: really good data, really good answers. Well, so far, this 379 00:22:40,760 --> 00:22:46,480 Speaker 1: attention of politymaker has been focused primarily on equities. Why equities, 380 00:22:47,280 --> 00:22:53,240 Speaker 1: because these trades and equities retail trades are crossed by 381 00:22:53,359 --> 00:23:01,439 Speaker 1: these wholesalers on their own private platforms. That's what internalization is. Technically, 382 00:23:01,840 --> 00:23:07,359 Speaker 1: options trades cannot be internalized because all options in the 383 00:23:07,440 --> 00:23:13,240 Speaker 1: United States trade on exchanges. But what we've found is 384 00:23:13,359 --> 00:23:18,080 Speaker 1: that some of these orders are effectively internalized, and they 385 00:23:18,160 --> 00:23:22,560 Speaker 1: do it through the so called price improvement auctions. The 386 00:23:22,640 --> 00:23:29,920 Speaker 1: wholesaler engages an affiliated market maker, and the market maker 387 00:23:30,480 --> 00:23:35,840 Speaker 1: brings retail order with its own contra order and pushes 388 00:23:35,920 --> 00:23:41,920 Speaker 1: it through these price improvement auctions. Theoretically, these price improvement auctions, 389 00:23:42,440 --> 00:23:45,800 Speaker 1: they have an exposure period a hundred milliseconds, which is 390 00:23:46,240 --> 00:23:49,560 Speaker 1: a lot in the trading world, and other market makers 391 00:23:49,680 --> 00:23:55,600 Speaker 1: can compete for these orders, but practically the fees to 392 00:23:55,680 --> 00:24:00,440 Speaker 1: break these auctions are quite high, so many orders just 393 00:24:00,600 --> 00:24:07,359 Speaker 1: go through without competition. Therefore, they're effectively internalized. And Garrett 394 00:24:07,400 --> 00:24:11,040 Speaker 1: Gasler mentioned that one of the things they want to 395 00:24:11,160 --> 00:24:16,000 Speaker 1: do is to institute auctions like price improvement auctions we 396 00:24:16,080 --> 00:24:21,399 Speaker 1: have in the options market. This is a little concerning, 397 00:24:21,520 --> 00:24:26,360 Speaker 1: isn't it, because that's exactly how options orders are effectively 398 00:24:26,480 --> 00:24:33,360 Speaker 1: internalized in bright daylight on national exchange. Well, I want 399 00:24:33,400 --> 00:24:35,359 Speaker 1: to actually have a follow up for you on that, 400 00:24:35,600 --> 00:24:37,560 Speaker 1: which is that a lot of the talk about the 401 00:24:37,600 --> 00:24:41,800 Speaker 1: new SEC rules revolved around potentially the zero commissions going 402 00:24:41,880 --> 00:24:45,000 Speaker 1: away should new rules be implemented, And I'm wondering if 403 00:24:45,040 --> 00:24:48,640 Speaker 1: you think that's potentially a possibility if something new does 404 00:24:48,720 --> 00:24:51,320 Speaker 1: come about from the SEC. And by the way, if 405 00:24:51,440 --> 00:24:55,000 Speaker 1: I'm sure listeners can hear a kitty cat yawing in 406 00:24:55,080 --> 00:25:00,440 Speaker 1: the background, she's the six member of our little talk here, 407 00:25:00,480 --> 00:25:06,600 Speaker 1: which I'm I'm all in favor of. Mhm. So well, um, 408 00:25:07,680 --> 00:25:13,200 Speaker 1: there payment for other flow would exist even without the 409 00:25:13,320 --> 00:25:18,520 Speaker 1: actual payment for other flow for brokerages, so exchanges have 410 00:25:18,680 --> 00:25:21,560 Speaker 1: been using a payment for other flow model for a 411 00:25:21,680 --> 00:25:26,200 Speaker 1: long time. There are the maker taker fees, so I 412 00:25:26,280 --> 00:25:29,160 Speaker 1: think effectively this payment for other flow might just move 413 00:25:29,280 --> 00:25:33,959 Speaker 1: to exchanges. So you know, people have to make money anyway. 414 00:25:34,080 --> 00:25:37,199 Speaker 1: They were not going to close all the brokerages, right, 415 00:25:37,320 --> 00:25:40,680 Speaker 1: so it's just they will still be payment for other flow, 416 00:25:40,720 --> 00:25:43,000 Speaker 1: it just will not be all payment for other flow 417 00:25:43,119 --> 00:25:48,240 Speaker 1: and will be in a different form. I think one 418 00:25:48,680 --> 00:25:51,280 Speaker 1: issue that people should always remember is that there is 419 00:25:51,440 --> 00:25:53,720 Speaker 1: no such a thing as free lunch on the market. 420 00:25:54,359 --> 00:25:56,560 Speaker 1: So the fact that there is zero commission that means 421 00:25:56,680 --> 00:25:59,160 Speaker 1: that these fees are just being paid by somebody else. 422 00:25:59,800 --> 00:26:02,480 Speaker 1: So is the question is cool? And ultimately you know 423 00:26:02,560 --> 00:26:04,200 Speaker 1: which pocket is going to be the one where it 424 00:26:04,280 --> 00:26:07,080 Speaker 1: all sort of don't So is it going to be, 425 00:26:07,680 --> 00:26:10,879 Speaker 1: you know, through spreads, is it going to be through commissions, 426 00:26:11,000 --> 00:26:13,000 Speaker 1: is it going to be through other forms of payment? 427 00:26:15,160 --> 00:26:16,880 Speaker 1: And and I just to wrap things up, I want 428 00:26:16,920 --> 00:26:18,600 Speaker 1: to ask you if there's something you're seeing in the 429 00:26:18,720 --> 00:26:21,080 Speaker 1: market or something new that you guys have noticed or 430 00:26:21,240 --> 00:26:24,960 Speaker 1: that has interested you in recent months that you're potentially 431 00:26:25,040 --> 00:26:30,879 Speaker 1: thinking about researching going forward. We see this increase in 432 00:26:31,160 --> 00:26:36,639 Speaker 1: volume across the board in financial markets, not just retail 433 00:26:36,800 --> 00:26:43,280 Speaker 1: trading volume, but some very sophisticated the investors trading volume, 434 00:26:43,720 --> 00:26:46,600 Speaker 1: all sorts of things. So and we are wondering what's 435 00:26:46,680 --> 00:26:52,920 Speaker 1: happening to this ecosystem. It this market is growing and changing. 436 00:26:53,080 --> 00:26:56,600 Speaker 1: It's a big transformational change. And this is what we're 437 00:26:56,640 --> 00:27:01,080 Speaker 1: trying to understand. Who came to that more kit alongside 438 00:27:01,200 --> 00:27:04,640 Speaker 1: retail investors and what the ecosystem is going to look 439 00:27:04,720 --> 00:27:23,320 Speaker 1: like going forward. But first of all, Donna, I have 440 00:27:23,480 --> 00:27:27,000 Speaker 1: to say, you know, this show's tradition is to end 441 00:27:27,119 --> 00:27:29,600 Speaker 1: with the craziest things we've seen in markets this week. 442 00:27:30,320 --> 00:27:33,280 Speaker 1: I don't think I can top something as crazy as 443 00:27:33,400 --> 00:27:36,880 Speaker 1: the options trading in meme stocks. Uh that happened during 444 00:27:36,880 --> 00:27:38,840 Speaker 1: the pandemic. So I'm at a loss for for a 445 00:27:38,880 --> 00:27:40,879 Speaker 1: crazy thing this week. I think the whole show is 446 00:27:40,920 --> 00:27:45,399 Speaker 1: kind of the crazy thing for me. It's fascinating, isn't it. 447 00:27:45,600 --> 00:27:47,800 Speaker 1: It's absolutely fascinating. The first time I'll have to take 448 00:27:48,240 --> 00:27:53,320 Speaker 1: a pass on the crazy thing. That's that's that's very 449 00:27:53,440 --> 00:27:55,359 Speaker 1: rare for you. It is very very rare. As you know, 450 00:27:55,440 --> 00:27:58,680 Speaker 1: I'm an officiate auto of crazy. Are you feeling okay? Yeah, 451 00:28:00,160 --> 00:28:02,240 Speaker 1: I might need to lie down. I might need to 452 00:28:02,280 --> 00:28:05,959 Speaker 1: lie down. As Mike mentioned, all of this has been 453 00:28:06,000 --> 00:28:09,080 Speaker 1: one of the craziest things that we've seen in markets 454 00:28:09,119 --> 00:28:11,840 Speaker 1: in the last year, year and a half, two years. 455 00:28:12,400 --> 00:28:16,040 Speaker 1: But as listeners know, we play the craziest thing we've 456 00:28:16,119 --> 00:28:19,600 Speaker 1: seen at the end of each episode, and since six 457 00:28:19,720 --> 00:28:23,720 Speaker 1: months have passed so far in I know one of 458 00:28:23,800 --> 00:28:26,960 Speaker 1: you has come with the craziest thing that you've collectively 459 00:28:27,080 --> 00:28:31,080 Speaker 1: gathered right about markets or the economy, or something really 460 00:28:31,200 --> 00:28:34,520 Speaker 1: interesting besides obviously what you've been researching that that has 461 00:28:34,600 --> 00:28:38,240 Speaker 1: really uh sort of caught your caught your eyes. So 462 00:28:38,440 --> 00:28:41,120 Speaker 1: c Atlanta, I'll hand it over to you and you 463 00:28:41,160 --> 00:28:43,760 Speaker 1: can sort of present us your craziest thing of of 464 00:28:44,960 --> 00:28:47,800 Speaker 1: two that you've seen so far. Yes, I have one 465 00:28:48,160 --> 00:28:51,960 Speaker 1: good one for you. So apparently many people already know 466 00:28:52,080 --> 00:28:55,120 Speaker 1: about it, but I have literally just found out about 467 00:28:55,160 --> 00:28:58,120 Speaker 1: it a few days ago, that there was a hamster 468 00:28:58,480 --> 00:29:02,360 Speaker 1: called Mr Gox who would choose what type of cryptop 469 00:29:02,400 --> 00:29:05,280 Speaker 1: parnce is to invest in using around in the world. 470 00:29:06,280 --> 00:29:08,960 Speaker 1: And it's really mind blowing. You know, he had live 471 00:29:09,040 --> 00:29:13,719 Speaker 1: streams on Twitch that almost like eighteen thousand followers on Twitter, 472 00:29:14,280 --> 00:29:18,280 Speaker 1: and um he had been performing in exactly the same 473 00:29:18,280 --> 00:29:20,440 Speaker 1: way that he would sort of expect from a random 474 00:29:20,640 --> 00:29:24,280 Speaker 1: hamster choice. So, you know, when the crypto market was starting, 475 00:29:24,400 --> 00:29:27,000 Speaker 1: when everything was going well, or so did his beds. 476 00:29:27,720 --> 00:29:30,520 Speaker 1: And at that time, you know, there are newspapers all 477 00:29:30,600 --> 00:29:34,000 Speaker 1: over the world, you know, Forbes and others are saying, 478 00:29:34,040 --> 00:29:37,280 Speaker 1: you know, this is the hamster that manages to outperform 479 00:29:37,400 --> 00:29:41,440 Speaker 1: more on Buffett in terms of the investors. Yeah, not surprising, right, 480 00:29:41,880 --> 00:29:45,160 Speaker 1: But then obviously when the market decided to go down 481 00:29:45,480 --> 00:29:48,560 Speaker 1: and as we saw those you know, absolutely crushing you 482 00:29:48,640 --> 00:29:51,840 Speaker 1: know movements and the crypto exchanges as and so did 483 00:29:51,920 --> 00:29:55,400 Speaker 1: his portfolio. So ultimately over the last year he lost 484 00:29:55,520 --> 00:29:58,640 Speaker 1: like cent of it starting capital or something like this, 485 00:29:59,080 --> 00:30:01,480 Speaker 1: which I think it's a really good remind us that, 486 00:30:01,640 --> 00:30:04,200 Speaker 1: you know, we all hear the stories about you know, 487 00:30:04,280 --> 00:30:06,760 Speaker 1: there was a stock picking cat back in like two 488 00:30:06,800 --> 00:30:10,280 Speaker 1: thousand fourteen, I think named Orlando. Unfortunately not the one 489 00:30:10,320 --> 00:30:14,960 Speaker 1: that we heard today. Um, maybe next time. The next time. 490 00:30:15,040 --> 00:30:18,320 Speaker 1: That's right, there is a kipto picking hamster. So we 491 00:30:18,440 --> 00:30:20,920 Speaker 1: all hear about the times of their success. But what 492 00:30:21,080 --> 00:30:24,080 Speaker 1: you don't hear is that obviously, you know, one that 493 00:30:24,400 --> 00:30:26,800 Speaker 1: random luck runs out they do of course on the 494 00:30:26,840 --> 00:30:29,560 Speaker 1: perform and a loose a lot of money overall. So 495 00:30:29,920 --> 00:30:32,600 Speaker 1: that's my fun factor for you guys. Yeah, now I 496 00:30:32,720 --> 00:30:35,120 Speaker 1: love it. That's perfect. I actually use the hamster as 497 00:30:35,200 --> 00:30:38,200 Speaker 1: my craziest thing on an episode maybe at the start 498 00:30:38,240 --> 00:30:40,200 Speaker 1: of the year, maybe it was January, I don't remember 499 00:30:40,200 --> 00:30:42,080 Speaker 1: when it was, but I remember seeing an article about 500 00:30:42,120 --> 00:30:44,719 Speaker 1: it and a little hamster wheel and everything, and how 501 00:30:44,840 --> 00:30:48,440 Speaker 1: great the hamster had been doing apparently. And my craziest 502 00:30:48,480 --> 00:30:52,280 Speaker 1: thing also actually is has to do with what's been 503 00:30:52,320 --> 00:30:55,320 Speaker 1: happening in crypto. I've been fascinated by all the implosions 504 00:30:55,800 --> 00:30:57,840 Speaker 1: that have been happening in the crypto space with different 505 00:30:57,880 --> 00:31:01,080 Speaker 1: hedge funds and lenders. But I wanted to point one 506 00:31:01,520 --> 00:31:06,000 Speaker 1: really amazing story out from Bloomberg. Actually it's by our 507 00:31:06,080 --> 00:31:10,200 Speaker 1: colleague Seek Fox, and it's it's about how how how 508 00:31:10,280 --> 00:31:14,000 Speaker 1: to watch the world's biggest bitcoin hack. And it's about 509 00:31:14,120 --> 00:31:18,280 Speaker 1: two I suppose alleged fraudsters who were able to very 510 00:31:18,400 --> 00:31:22,320 Speaker 1: skillfully steal steal something that turned out to be worth 511 00:31:22,480 --> 00:31:26,640 Speaker 1: eight billion dollars worth of bitcoin from bitfit x many 512 00:31:26,760 --> 00:31:29,640 Speaker 1: years ago, and and and they were they were caught. Uh, 513 00:31:30,680 --> 00:31:32,240 Speaker 1: I believe it was a couple of months ago, and 514 00:31:32,800 --> 00:31:35,360 Speaker 1: our colleague Seek just really dives into it and how 515 00:31:35,440 --> 00:31:37,720 Speaker 1: it all happened and how they were able to do it. 516 00:31:37,880 --> 00:31:40,560 Speaker 1: So there's lots of crazy stuff happening in krypto and 517 00:31:41,640 --> 00:31:44,280 Speaker 1: with the hamster with everything, and that really that one also, 518 00:31:44,400 --> 00:31:47,880 Speaker 1: that's sorry, really stuck out to me. But thank you 519 00:31:47,960 --> 00:31:49,840 Speaker 1: guys so much for joining us. I'm so happy you 520 00:31:49,920 --> 00:31:52,840 Speaker 1: were able to come on and talk about everything, and 521 00:31:54,000 --> 00:31:56,200 Speaker 1: hopefully we can have you back on for your next 522 00:31:56,280 --> 00:31:59,480 Speaker 1: big research project. Our pleasure. It was a lot of fun. 523 00:32:07,840 --> 00:32:09,880 Speaker 1: What goes up will be back next week and so 524 00:32:10,000 --> 00:32:12,280 Speaker 1: then you can find us on the Bloomberg Terminal website 525 00:32:12,320 --> 00:32:15,680 Speaker 1: and app, or wherever you get your podcast. We love 526 00:32:15,720 --> 00:32:17,480 Speaker 1: it if you took the time to rate and review 527 00:32:17,560 --> 00:32:20,600 Speaker 1: the show on Apple Podcasts, so more listeners can find us. 528 00:32:21,200 --> 00:32:24,200 Speaker 1: And you can find us on Twitter follow me at Reaganonymous. 529 00:32:24,880 --> 00:32:28,560 Speaker 1: Bildanna Hira is at Coldanna Hira. You can also follow 530 00:32:28,600 --> 00:32:33,160 Speaker 1: Bloomberg Podcasts at podcast What Goes Up is produced by 531 00:32:33,240 --> 00:32:36,000 Speaker 1: Stacy Wan. Thanks for listening, See you next time.