1 00:00:03,120 --> 00:00:10,799 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Way back in twenty nineteen, 2 00:00:11,039 --> 00:00:15,840 Speaker 1: financial analyst Keith Gill started buying shares in GameStop, a 3 00:00:15,920 --> 00:00:20,200 Speaker 1: lot of shares for years. He posted about his position 4 00:00:20,360 --> 00:00:21,520 Speaker 1: on YouTube. 5 00:00:21,280 --> 00:00:23,680 Speaker 2: Himself was one of the most compelling asymmetric opportunities in 6 00:00:23,680 --> 00:00:24,280 Speaker 2: the market today. 7 00:00:24,360 --> 00:00:26,119 Speaker 3: Really, I don't understand howy can disagree with that. 8 00:00:26,120 --> 00:00:27,120 Speaker 2: That's why it's the top position. 9 00:00:27,200 --> 00:00:29,960 Speaker 1: Gill argued on YouTube and on the Reddit forum All 10 00:00:30,000 --> 00:00:34,640 Speaker 1: Street Bets that GameStop stock was undervalued because greedy hedge 11 00:00:34,640 --> 00:00:37,600 Speaker 1: funds were betting the company would fail. He thought these 12 00:00:37,640 --> 00:00:40,680 Speaker 1: funds just didn't care about brick and mortar businesses with 13 00:00:40,760 --> 00:00:45,000 Speaker 1: real value. Well, you probably remember what happened next. We've 14 00:00:45,040 --> 00:00:48,159 Speaker 1: never seen redit traders have such an impact on the 15 00:00:48,200 --> 00:00:50,440 Speaker 1: stock market such as we've seen with games stopt. 16 00:00:50,800 --> 00:00:53,960 Speaker 2: Just what is going on with game stop shares closing 17 00:00:53,960 --> 00:00:56,280 Speaker 2: it over three hundred and forty seven dollars a piece. 18 00:00:56,320 --> 00:00:58,880 Speaker 3: Here, you're witnessing the French revolution of finance. 19 00:00:59,440 --> 00:01:03,440 Speaker 1: Tends, rocket ships, diamond hands. For a brief period in 20 00:01:03,520 --> 00:01:06,120 Speaker 1: early twenty twenty one, when so many of us were 21 00:01:06,120 --> 00:01:09,319 Speaker 1: trapped at home, the particular language of Wall Street Bets 22 00:01:09,360 --> 00:01:13,200 Speaker 1: became mainstream. That's when a group of Motley retail investors 23 00:01:13,240 --> 00:01:16,360 Speaker 1: collaborated to buy shares in game Stop and then in 24 00:01:16,440 --> 00:01:20,039 Speaker 1: AMC in order to send their stock prices to the moon. 25 00:01:20,840 --> 00:01:23,280 Speaker 1: The group's leader was Gil, who by this point in 26 00:01:23,360 --> 00:01:32,039 Speaker 1: time was known as Roaring Kitty. Whoa oh damn, what 27 00:01:32,160 --> 00:01:36,800 Speaker 1: a day. Regular investors and sophisticated hedge funds made and 28 00:01:36,959 --> 00:01:40,600 Speaker 1: lost millions during the memestock craze. But a few years on, 29 00:01:40,880 --> 00:01:44,040 Speaker 1: with the benefit of hindsight, the rise of memestock seemed 30 00:01:44,200 --> 00:01:47,200 Speaker 1: less like the French Revolution of finance and more like 31 00:01:47,360 --> 00:01:49,880 Speaker 1: a product of what happens when we're all bored at 32 00:01:49,880 --> 00:01:52,640 Speaker 1: home with a bit of extra savings, or so it 33 00:01:52,680 --> 00:01:54,320 Speaker 1: seemed until this week. 34 00:01:56,320 --> 00:01:59,520 Speaker 2: Roaring Kitty is back, at least on social media, and 35 00:01:59,560 --> 00:02:02,840 Speaker 2: so too is the memesock madness for GameStop it is 36 00:02:02,880 --> 00:02:03,480 Speaker 2: our stat. 37 00:02:03,280 --> 00:02:06,560 Speaker 1: After a three year hiatus. On Sunday, Guild posted an 38 00:02:06,600 --> 00:02:09,800 Speaker 1: image on x It's a crude drawing of a guy 39 00:02:09,919 --> 00:02:13,200 Speaker 1: leaning forward in his chair holding a video game controller. 40 00:02:13,800 --> 00:02:17,480 Speaker 1: Well that reanimated legions of redditors, who once again started 41 00:02:17,480 --> 00:02:21,000 Speaker 1: posting rocket ships and started asking are you ready for 42 00:02:21,040 --> 00:02:21,600 Speaker 1: the ride? 43 00:02:21,800 --> 00:02:24,400 Speaker 3: Certainly feels like twenty twenty one all over again. You 44 00:02:24,480 --> 00:02:26,560 Speaker 3: had game Stop surging as much as one hundred and 45 00:02:26,560 --> 00:02:30,160 Speaker 3: thirty percent. That's the motions early twenty twenty one, AMC 46 00:02:30,320 --> 00:02:32,560 Speaker 3: climbing as much as three hundred percent. 47 00:02:32,919 --> 00:02:35,360 Speaker 1: As of Friday, the rally seems to have fizzled. Those 48 00:02:35,400 --> 00:02:38,240 Speaker 1: shares in GameStop are still up over twenty percent for 49 00:02:38,280 --> 00:02:41,680 Speaker 1: the year. Let's attempting to dismiss this week's frenzy as 50 00:02:41,720 --> 00:02:44,480 Speaker 1: a kind of sad attempt to recapture the drama of 51 00:02:44,520 --> 00:02:48,120 Speaker 1: twenty twenty one. But Bloomberg's Matt Levine has a theory 52 00:02:48,240 --> 00:02:51,160 Speaker 1: about what happened back then and what's been happening in 53 00:02:51,200 --> 00:02:52,680 Speaker 1: stock markets ever since. 54 00:02:53,000 --> 00:02:54,760 Speaker 2: I think people learned a real lesson from this in 55 00:02:54,840 --> 00:02:57,480 Speaker 2: terms of like how a stock can be valued. 56 00:03:00,040 --> 00:03:03,679 Speaker 1: Today. On the show Our Best Attempt at memestock Analysis, 57 00:03:04,280 --> 00:03:06,680 Speaker 1: we ask what a shift away from investing based on 58 00:03:06,720 --> 00:03:10,320 Speaker 1: the fundamentals of companies could mean for anyone putting money 59 00:03:10,320 --> 00:03:13,440 Speaker 1: in the stock market. I'm David Gerat, and this is 60 00:03:13,440 --> 00:03:20,600 Speaker 1: the big take from Bloomberg News. Hey, Matt, it's good 61 00:03:20,600 --> 00:03:23,160 Speaker 1: to see you. Good to see you, Matt Levine, writes 62 00:03:23,200 --> 00:03:26,680 Speaker 1: Bloomberg's Money Stuff newsletter, and he recently suggested that the 63 00:03:26,880 --> 00:03:30,760 Speaker 1: MBA curriculum shouldn't just include a course on stock market analysis, 64 00:03:30,800 --> 00:03:35,880 Speaker 1: but also a course on memestocks. Meme financial markets shares 65 00:03:35,920 --> 00:03:39,280 Speaker 1: in companies like GameStop, AMC, and Hertz have been operating 66 00:03:39,280 --> 00:03:43,280 Speaker 1: recently under a completely different set of rules. I told 67 00:03:43,320 --> 00:03:45,560 Speaker 1: Matt I liked the idea and I wanted to take 68 00:03:45,600 --> 00:03:48,320 Speaker 1: the course for a dry run. So say it's day 69 00:03:48,360 --> 00:03:51,280 Speaker 1: one of meme financial markets, and I haven't been in 70 00:03:51,280 --> 00:03:53,640 Speaker 1: a classroom in a long time, but I remember. Professor 71 00:03:53,680 --> 00:03:56,320 Speaker 1: comes in, gives the students the lay of the land, 72 00:03:57,240 --> 00:04:01,600 Speaker 1: introduces them to the topic at hand. Let's start the professor, levine, 73 00:04:02,520 --> 00:04:04,320 Speaker 1: what is a meme stock? How have we come to 74 00:04:04,360 --> 00:04:05,200 Speaker 1: define the term? 75 00:04:05,560 --> 00:04:09,160 Speaker 2: A meme stock is a stock that I mean, this 76 00:04:09,200 --> 00:04:11,400 Speaker 2: is my definition, so I'm teaching the class. It's a 77 00:04:11,440 --> 00:04:16,440 Speaker 2: stock that people trade and people buy because they find 78 00:04:16,480 --> 00:04:19,200 Speaker 2: it entertaining, because they're part of some sort of like 79 00:04:19,279 --> 00:04:22,920 Speaker 2: usually online community that gives them a sense of kinship 80 00:04:22,920 --> 00:04:27,040 Speaker 2: and fun, and they buy it through that community rather 81 00:04:27,120 --> 00:04:30,200 Speaker 2: than because they've done deep fundamental analysis and decided that 82 00:04:30,240 --> 00:04:31,279 Speaker 2: the stock is undervalued. 83 00:04:31,720 --> 00:04:34,400 Speaker 1: Well, let's take a beat here, Professor Levine. Before we 84 00:04:34,440 --> 00:04:37,719 Speaker 1: had meme financial analysis, there was fundamental analysis. And I 85 00:04:37,760 --> 00:04:39,560 Speaker 1: wonder if you can just draw the distinction between the 86 00:04:39,560 --> 00:04:40,120 Speaker 1: two things. 87 00:04:40,440 --> 00:04:42,320 Speaker 2: Oh, you know, like you look at you know, you 88 00:04:42,320 --> 00:04:44,760 Speaker 2: look at GameStop and you say, I mean part of 89 00:04:44,760 --> 00:04:46,800 Speaker 2: the case is like the stock was so low at 90 00:04:46,839 --> 00:04:48,960 Speaker 2: some point that you could say even if they just 91 00:04:48,960 --> 00:04:50,640 Speaker 2: like sold this thing for parts and just like give 92 00:04:50,640 --> 00:04:52,600 Speaker 2: back the cash, there would probably be enough to more 93 00:04:52,640 --> 00:04:55,080 Speaker 2: than pay for the stock. The deep value investor is 94 00:04:55,080 --> 00:04:57,039 Speaker 2: the person who's like, actually, this company is more cash 95 00:04:57,080 --> 00:04:59,000 Speaker 2: than the stock is worth. Right, But also, like with 96 00:04:59,040 --> 00:05:01,280 Speaker 2: game Stop, you could make you know, you could make 97 00:05:01,320 --> 00:05:05,120 Speaker 2: a bold case about game Stop somehow becoming a better business, right, 98 00:05:05,160 --> 00:05:07,520 Speaker 2: Like I mean if you sort of intuitively think, oh, 99 00:05:07,640 --> 00:05:10,680 Speaker 2: it's a mall based video game retailer. Yeah, it sounds 100 00:05:10,720 --> 00:05:12,800 Speaker 2: like it's kind of on the way out. Games are 101 00:05:12,839 --> 00:05:16,039 Speaker 2: mostly downloaded online now, But you could tell a story 102 00:05:16,040 --> 00:05:20,480 Speaker 2: about game Stop like pivoting to an online e commerce approach. 103 00:05:20,920 --> 00:05:23,080 Speaker 2: And like, if you think of this as like a 104 00:05:23,120 --> 00:05:26,120 Speaker 2: declining business, like you know, how much can it possibly 105 00:05:26,320 --> 00:05:27,840 Speaker 2: be worth? But if you think they're going to turn 106 00:05:27,880 --> 00:05:30,520 Speaker 2: it around and become actually a massively growing business, then 107 00:05:30,680 --> 00:05:32,880 Speaker 2: that's good, right, And that's the sort of kind of 108 00:05:32,920 --> 00:05:36,040 Speaker 2: fundamental analysis people did as like the first step of 109 00:05:36,040 --> 00:05:37,200 Speaker 2: this process. 110 00:05:37,120 --> 00:05:40,880 Speaker 1: And even beyond Game Stop itself, this idea of fundamental 111 00:05:40,880 --> 00:05:44,440 Speaker 1: analysis of thinking about how good the underlying business is 112 00:05:44,680 --> 00:05:47,720 Speaker 1: before you buy a stock, well, it's sort of baked 113 00:05:47,760 --> 00:05:49,440 Speaker 1: into financial markets. 114 00:05:49,440 --> 00:05:52,920 Speaker 2: I think, like five years ago. If you asked people, like, 115 00:05:52,960 --> 00:05:54,960 Speaker 2: what are financial markets for, like, you get like a 116 00:05:55,000 --> 00:05:57,240 Speaker 2: fairly straightforward answer, which is that they're like to allocate 117 00:05:57,320 --> 00:05:59,560 Speaker 2: capital to like the best uses, and that like, there 118 00:05:59,560 --> 00:06:01,520 Speaker 2: are a lot of very smart people who do a 119 00:06:01,520 --> 00:06:04,680 Speaker 2: lot of work using data to determine whether price or 120 00:06:04,720 --> 00:06:07,640 Speaker 2: other stocks are over or underpriced, and you get a 121 00:06:07,760 --> 00:06:10,560 Speaker 2: market that like makes lots of mistakes, but like is 122 00:06:10,640 --> 00:06:14,359 Speaker 2: ultimately sort of pointed in the direction of having accurately 123 00:06:14,400 --> 00:06:16,760 Speaker 2: priced stocks. And one thing that does is that it 124 00:06:16,800 --> 00:06:20,039 Speaker 2: allows retirement savers to put their money into the market 125 00:06:20,160 --> 00:06:24,120 Speaker 2: and essentially earn like the returns to business right Like, 126 00:06:24,400 --> 00:06:28,000 Speaker 2: Essentially like the economy grows and like corporations make money 127 00:06:28,160 --> 00:06:29,960 Speaker 2: and you can get a piece of that as a 128 00:06:30,000 --> 00:06:32,800 Speaker 2: retirement saver. Not because you've done a lot of fundamental assets, 129 00:06:32,800 --> 00:06:34,240 Speaker 2: but because the market kind of is right and the 130 00:06:34,240 --> 00:06:36,800 Speaker 2: market kind of gets the fair prices, right. So that's 131 00:06:36,880 --> 00:06:40,000 Speaker 2: a good aspect of modern of you know, pre twenty 132 00:06:40,040 --> 00:06:42,360 Speaker 2: twenty one financial markets. And then the other good aspect 133 00:06:42,400 --> 00:06:44,960 Speaker 2: is like, yeah, if you're running a company, like you 134 00:06:45,000 --> 00:06:48,400 Speaker 2: can raise money to do a thing, and that, you 135 00:06:48,440 --> 00:06:51,200 Speaker 2: know is if you're running a big company and you 136 00:06:51,240 --> 00:06:52,840 Speaker 2: need to build a factory, you can issue stock to 137 00:06:53,080 --> 00:06:55,320 Speaker 2: build a factory. But more fundamentally, if you're running if 138 00:06:55,360 --> 00:06:57,640 Speaker 2: you have a startup idea, you can sell stock to 139 00:06:57,720 --> 00:07:01,040 Speaker 2: venture capitalists because they know somewhere down the line they'll 140 00:07:01,040 --> 00:07:02,880 Speaker 2: be able to sell into a public market that like 141 00:07:03,120 --> 00:07:06,200 Speaker 2: appropriately values companies. Right, So there's always like apparatus of 142 00:07:06,240 --> 00:07:10,440 Speaker 2: like funding and like sharing the benefits of economic growth, 143 00:07:10,840 --> 00:07:14,120 Speaker 2: and none of that is like and it's a fun gamble. 144 00:07:13,840 --> 00:07:15,520 Speaker 1: Right, But that that wasn't always the case. 145 00:07:15,640 --> 00:07:17,760 Speaker 2: Yeah, if you go back, like, you know, one hundred years, 146 00:07:17,800 --> 00:07:20,680 Speaker 2: like it would be you know, there was a lot 147 00:07:20,720 --> 00:07:23,680 Speaker 2: of fraud and insider trading and like not a lot 148 00:07:23,720 --> 00:07:25,680 Speaker 2: of fundamental data, not a lot of disclosure, and so 149 00:07:25,720 --> 00:07:28,320 Speaker 2: you did have financial markets that were much more of 150 00:07:28,400 --> 00:07:31,160 Speaker 2: a gambling game, right, And I think that like part 151 00:07:31,160 --> 00:07:33,520 Speaker 2: of the last one hundred years of securities has been 152 00:07:33,960 --> 00:07:37,680 Speaker 2: securities regulation to make better disclosure, and it's been people 153 00:07:37,720 --> 00:07:41,120 Speaker 2: getting better at analyzing financial markets so that you could 154 00:07:41,120 --> 00:07:43,600 Speaker 2: with a straight face tell this story about efficient markets 155 00:07:43,600 --> 00:07:47,600 Speaker 2: and about allocating capital to its best uses. But like, right, 156 00:07:48,040 --> 00:07:49,720 Speaker 2: there was that residue of like this is a fun 157 00:07:49,800 --> 00:07:53,240 Speaker 2: gambling game, this is a hobby, right, and people found 158 00:07:53,240 --> 00:07:54,800 Speaker 2: a way to bring that back back. 159 00:07:54,800 --> 00:07:57,240 Speaker 1: In twenty twenty one, you wrote, and I quote, if 160 00:07:57,320 --> 00:07:59,760 Speaker 1: we are still here in a month, I will absolutely 161 00:08:00,000 --> 00:08:01,880 Speaker 1: freak out. And I know it's unfair to hold you 162 00:08:01,920 --> 00:08:04,360 Speaker 1: to this, but are you surprised that we're still here, 163 00:08:04,440 --> 00:08:05,640 Speaker 1: that we're living through this again? 164 00:08:05,800 --> 00:08:07,680 Speaker 2: That's the line that has been quoted at me more 165 00:08:08,120 --> 00:08:10,200 Speaker 2: anything else I've written. I think, to be clear, what 166 00:08:10,240 --> 00:08:12,480 Speaker 2: I meant was like, it's fun to have fun. It's 167 00:08:12,480 --> 00:08:14,520 Speaker 2: fun to like, you know, have this like meme moment, 168 00:08:14,800 --> 00:08:17,160 Speaker 2: but like you can't like have a stock traded irrational 169 00:08:17,240 --> 00:08:19,120 Speaker 2: crisis for months and months and months. I think I 170 00:08:19,160 --> 00:08:21,240 Speaker 2: was basically wrong. I think like games Up did come 171 00:08:21,280 --> 00:08:24,000 Speaker 2: down after that first wild month, but like it stayed 172 00:08:24,040 --> 00:08:25,880 Speaker 2: pretty high for a pretty long time, but then it 173 00:08:25,920 --> 00:08:28,720 Speaker 2: did dissipate and like three years on, like it's you 174 00:08:28,720 --> 00:08:30,560 Speaker 2: wouldn't have said a month ago that game Stop was 175 00:08:30,600 --> 00:08:33,960 Speaker 2: still in that like meme driven boom, but then it 176 00:08:34,000 --> 00:08:36,360 Speaker 2: came back this week and am I freaked out by that? 177 00:08:36,559 --> 00:08:38,640 Speaker 2: Like I don't know. 178 00:08:39,000 --> 00:08:41,960 Speaker 1: So moving past twenty twenty one, how is your thinking 179 00:08:42,000 --> 00:08:46,360 Speaker 1: about the significance of what happened then evolved or change 180 00:08:46,360 --> 00:08:48,760 Speaker 1: what's shifted in terms of how you see the significance 181 00:08:48,800 --> 00:08:49,360 Speaker 1: of that moment. 182 00:08:49,760 --> 00:08:52,680 Speaker 2: I think there's there's two parts of that moment. There's 183 00:08:52,760 --> 00:08:56,320 Speaker 2: like the particulars of like the message boards and the 184 00:08:56,360 --> 00:08:59,480 Speaker 2: stocks that were involved, and like the entertainment value there. 185 00:09:00,040 --> 00:09:02,480 Speaker 2: It feels transitory and it's like interesting and weird that 186 00:09:02,679 --> 00:09:04,440 Speaker 2: like they're trying to get the band back together and 187 00:09:04,440 --> 00:09:06,040 Speaker 2: like it's yeah, sort of work like more than I 188 00:09:06,080 --> 00:09:08,720 Speaker 2: would have expected, but like it's kind of fizzled. But 189 00:09:08,800 --> 00:09:12,040 Speaker 2: I do think that there's this like bigger picture of 190 00:09:12,920 --> 00:09:16,160 Speaker 2: and I tie this up often to crypto people like 191 00:09:16,800 --> 00:09:21,600 Speaker 2: realized that you can have like an electronically traded token 192 00:09:22,280 --> 00:09:25,920 Speaker 2: that has value because people have agreed that it has value, right, 193 00:09:26,200 --> 00:09:28,600 Speaker 2: and like that's sort of always been true in some form, 194 00:09:28,640 --> 00:09:31,479 Speaker 2: but it's like it's very sort of like crisply isolated 195 00:09:31,480 --> 00:09:35,560 Speaker 2: in things like bitcoin and doagecoin and and all the 196 00:09:35,600 --> 00:09:38,640 Speaker 2: sort of meme crypto tokens. But it's also more or 197 00:09:38,720 --> 00:09:40,840 Speaker 2: less true of game Stop. You know, you can be like, 198 00:09:41,200 --> 00:09:43,439 Speaker 2: if everyone wants to buy game Stop at four hundred 199 00:09:43,440 --> 00:09:45,079 Speaker 2: and eighty dollars a share, and nobody wants to sell 200 00:09:45,120 --> 00:09:46,640 Speaker 2: it for less than that, then like, you get a 201 00:09:46,679 --> 00:09:48,680 Speaker 2: four hundred eighty dollars share a price for game Stop, 202 00:09:48,920 --> 00:09:51,160 Speaker 2: and if everyone wants to buy it, then like that 203 00:09:51,360 --> 00:09:54,000 Speaker 2: that's what it's worth. And like, in some ways that's 204 00:09:54,040 --> 00:09:55,760 Speaker 2: the lesson of the meme slock craze. It's like, if 205 00:09:55,760 --> 00:09:56,880 Speaker 2: you want to pay a high price for it and 206 00:09:56,920 --> 00:09:58,440 Speaker 2: everyone else does, and like, that's what it's worth. 207 00:09:59,160 --> 00:10:02,400 Speaker 1: So that's the first lesson in memestock analysis, that if 208 00:10:02,440 --> 00:10:04,200 Speaker 1: a bunch of people want to pay more for a 209 00:10:04,240 --> 00:10:08,000 Speaker 1: stock than its value unrelated to how profitable that company 210 00:10:08,120 --> 00:10:11,200 Speaker 1: is now or could be in the future, well that's 211 00:10:11,200 --> 00:10:14,439 Speaker 1: what it's worth. Coming up after the break, what memestock 212 00:10:14,520 --> 00:10:21,400 Speaker 1: mania means for those of us who invest in stocks. 213 00:10:24,559 --> 00:10:27,559 Speaker 1: It's easy to see memestocks and crypto as kind of 214 00:10:27,600 --> 00:10:30,000 Speaker 1: their own thing, a special part of markets for those 215 00:10:30,040 --> 00:10:32,920 Speaker 1: of us who like to take risks, which to be clear, 216 00:10:33,040 --> 00:10:35,679 Speaker 1: is not me, but Matt Levine covers a lot more 217 00:10:35,720 --> 00:10:37,840 Speaker 1: than just the wilder parts of the market in his 218 00:10:37,920 --> 00:10:41,000 Speaker 1: Money Stuff newsletter. So I asked Matt, how we should 219 00:10:41,080 --> 00:10:43,240 Speaker 1: view what's happened this week and what happened in twenty 220 00:10:43,280 --> 00:10:47,160 Speaker 1: twenty one in the broader context of what's happening in markets? 221 00:10:47,600 --> 00:10:51,240 Speaker 1: Should we look at this in isolation? So, yes, it's 222 00:10:51,240 --> 00:10:54,240 Speaker 1: the memestocks from back in twenty twenty one, it's crypto? 223 00:10:54,520 --> 00:10:57,280 Speaker 1: Or do you see this as part and parcel of 224 00:10:57,360 --> 00:11:00,680 Speaker 1: kind of a broader shift in how people view stocks 225 00:11:00,760 --> 00:11:01,720 Speaker 1: or view the stock market. 226 00:11:02,080 --> 00:11:04,000 Speaker 2: It's hard to answer that because, like, I think that 227 00:11:04,440 --> 00:11:07,960 Speaker 2: professional investors are sort of embarrassed by this and like 228 00:11:08,000 --> 00:11:09,480 Speaker 2: wish it were you know, kind of wish it would 229 00:11:09,480 --> 00:11:11,679 Speaker 2: go away and be more rational. Right, A lot of people, Yeah, 230 00:11:11,720 --> 00:11:12,960 Speaker 2: there are a lot of people out there who like 231 00:11:13,120 --> 00:11:15,000 Speaker 2: their job is to buy stocks that are undervalued and 232 00:11:15,040 --> 00:11:17,520 Speaker 2: like short stocks that are overvalued. And now that doesn't work, 233 00:11:17,600 --> 00:11:19,360 Speaker 2: right because now, like, if it's overvalued, that probably means 234 00:11:19,360 --> 00:11:21,840 Speaker 2: it'll be more overvalued, right, I think, like to a 235 00:11:21,920 --> 00:11:25,000 Speaker 2: large segment of like the financial world, this is embarrassing. 236 00:11:26,160 --> 00:11:27,960 Speaker 2: The other side of that question is like how do 237 00:11:28,000 --> 00:11:31,040 Speaker 2: you regular people perceive the stock market? How do like 238 00:11:31,720 --> 00:11:34,560 Speaker 2: retail investors, ordinary investors purceie the stock market? And I 239 00:11:34,559 --> 00:11:37,240 Speaker 2: think that part of that is, like for one hundred years, 240 00:11:37,280 --> 00:11:41,520 Speaker 2: there's been this hobbyist component to investing, right, And part 241 00:11:41,559 --> 00:11:43,920 Speaker 2: of that is, like some people find it fun to 242 00:11:44,000 --> 00:11:46,800 Speaker 2: like analyze companies, and like there's like a gambling element, right, 243 00:11:46,880 --> 00:11:49,560 Speaker 2: you have fun trying to beat the market. Some of 244 00:11:49,600 --> 00:11:51,840 Speaker 2: it is like a sort of real economically motivated thing, 245 00:11:51,840 --> 00:11:54,760 Speaker 2: where like you have a job where you feel you'll 246 00:11:54,800 --> 00:11:56,720 Speaker 2: never get ahead and you'll never pay off your student loans, 247 00:11:56,720 --> 00:11:58,760 Speaker 2: and like the stock market is this like sort of 248 00:11:58,760 --> 00:12:00,839 Speaker 2: mysterious source of wealth and like if you do the 249 00:12:00,920 --> 00:12:02,480 Speaker 2: right things in the stock market, you can get rich 250 00:12:02,520 --> 00:12:04,520 Speaker 2: without like a lot of work. Right, It's like a 251 00:12:04,559 --> 00:12:08,120 Speaker 2: perception that some people have always had. And in recent years, 252 00:12:08,480 --> 00:12:10,600 Speaker 2: in the last like twenty years, the sort of like 253 00:12:10,760 --> 00:12:12,920 Speaker 2: normal way of looking at the stock market has frankly 254 00:12:12,960 --> 00:12:15,360 Speaker 2: become more boring. Right, people have really driven home the 255 00:12:15,400 --> 00:12:19,000 Speaker 2: message of like use index funtons. You know, like people 256 00:12:19,040 --> 00:12:20,679 Speaker 2: get like four roh one k's where they're putt into 257 00:12:20,760 --> 00:12:22,439 Speaker 2: target dat funds that are just like there's one right, 258 00:12:22,440 --> 00:12:25,040 Speaker 2: way to invest. So I'm like normal default way and 259 00:12:25,120 --> 00:12:26,720 Speaker 2: we'll do it for you. You don't have to worry 260 00:12:26,720 --> 00:12:28,960 Speaker 2: about it. You know, it's like buy Apple stock because 261 00:12:28,960 --> 00:12:31,439 Speaker 2: you like Apple, computers like you. Just like you get 262 00:12:31,440 --> 00:12:34,760 Speaker 2: the market, you get like the boring standard thing. And 263 00:12:35,040 --> 00:12:38,840 Speaker 2: I think part of the Meme stock reaction is like 264 00:12:38,880 --> 00:12:40,199 Speaker 2: a lot of the fund has been sucked out of 265 00:12:40,240 --> 00:12:43,040 Speaker 2: normal investing, and so it's like popping up in this weird, 266 00:12:43,080 --> 00:12:45,439 Speaker 2: like extremely fun focused area. 267 00:12:45,520 --> 00:12:47,920 Speaker 1: A lot of this what we've been talking about sounds 268 00:12:47,960 --> 00:12:50,840 Speaker 1: a lot like a casino, and I wonder where it's 269 00:12:51,120 --> 00:12:54,679 Speaker 1: too too very much like one. Where are regulators in 270 00:12:54,720 --> 00:12:57,120 Speaker 1: all of this? And I remember after the initial game 271 00:12:57,160 --> 00:13:01,320 Speaker 1: stop saga, the SEC commissioned this report, made the report, 272 00:13:01,360 --> 00:13:04,040 Speaker 1: publish this report. What did we learn from that? And 273 00:13:04,440 --> 00:13:07,800 Speaker 1: what did we learn about their aptitude to navigate this 274 00:13:07,800 --> 00:13:09,200 Speaker 1: world in which you have stocks like this? 275 00:13:09,480 --> 00:13:11,640 Speaker 2: I think that I think that people are too hard 276 00:13:11,679 --> 00:13:15,200 Speaker 2: on the SEC here, because the SEC regulates a number 277 00:13:15,240 --> 00:13:20,160 Speaker 2: of things. Principally, it regulates like disclosure by companies. It's 278 00:13:20,200 --> 00:13:22,960 Speaker 2: not in the business of preventing you from gambling on stocks, right, 279 00:13:23,240 --> 00:13:25,600 Speaker 2: It's just not And like it is a little tiny 280 00:13:25,679 --> 00:13:27,560 Speaker 2: bit like there are a couple of things, you know, 281 00:13:27,600 --> 00:13:30,480 Speaker 2: like regulators have been critical of Robinhood because Robinhood used 282 00:13:30,480 --> 00:13:32,679 Speaker 2: to like show confetti on the screen when you bought 283 00:13:32,679 --> 00:13:35,120 Speaker 2: a stock, and they're like, that's gamifying stocks. That's making 284 00:13:35,160 --> 00:13:38,840 Speaker 2: me exciting. It very confetti, And they're like, we don't 285 00:13:38,840 --> 00:13:41,160 Speaker 2: want styck treading to be a game, but like fundamentally, 286 00:13:41,280 --> 00:13:43,760 Speaker 2: like they're not going to ban buying stocks that you 287 00:13:43,800 --> 00:13:46,080 Speaker 2: think will go up, right, And so like there's just 288 00:13:46,160 --> 00:13:48,559 Speaker 2: like a lot of this beam stock stuff is i 289 00:13:48,559 --> 00:13:52,160 Speaker 2: think embarrassing to the sec until like big institutional investors, 290 00:13:52,240 --> 00:13:55,320 Speaker 2: but there's just like there's nothing illegal, there's nothing wrong 291 00:13:55,400 --> 00:13:58,280 Speaker 2: with it. It's just like people like to buy stocks 292 00:13:58,280 --> 00:13:59,800 Speaker 2: that they think will go up, and like that's that's 293 00:13:59,840 --> 00:14:04,760 Speaker 2: not prohibited or really subject to regulation. Now. One thing 294 00:14:04,760 --> 00:14:07,800 Speaker 2: that people are worried about in the initial bemstock boom 295 00:14:07,880 --> 00:14:10,960 Speaker 2: and a little bit today is market manipulation, right, And 296 00:14:10,960 --> 00:14:14,720 Speaker 2: then you could imagine some alternative facts where like you know, 297 00:14:15,240 --> 00:14:17,240 Speaker 2: someone was like, a ah, I will manipulate up the 298 00:14:17,240 --> 00:14:20,120 Speaker 2: price of the stock by like writing fake due diligence 299 00:14:20,160 --> 00:14:23,480 Speaker 2: reports on Reddit and making people think that gamestop's business 300 00:14:23,720 --> 00:14:25,360 Speaker 2: is going to the moon, and there's just like no 301 00:14:25,400 --> 00:14:28,200 Speaker 2: evidence of that. And in fact, the people who wrote 302 00:14:28,200 --> 00:14:31,000 Speaker 2: these like detailed due diligence posts about games stop seem 303 00:14:31,000 --> 00:14:32,960 Speaker 2: to have really believed it, you know, and like made 304 00:14:33,040 --> 00:14:36,720 Speaker 2: interesting points and we're clearly kind of honest, and like 305 00:14:37,200 --> 00:14:39,640 Speaker 2: the big if you want to call it manipulative thing, 306 00:14:39,720 --> 00:14:41,520 Speaker 2: was just that they all got together and said, let's 307 00:14:41,520 --> 00:14:43,000 Speaker 2: all buy the stock to send it to the moon. 308 00:14:43,600 --> 00:14:46,320 Speaker 2: And you could imagine a world where that was illegal, 309 00:14:46,400 --> 00:14:48,240 Speaker 2: but I think in our world it's not like it's 310 00:14:48,320 --> 00:14:49,800 Speaker 2: just you know, if you all want to get together 311 00:14:49,840 --> 00:14:51,640 Speaker 2: and say let's buy the same stock, you can, it 312 00:14:51,680 --> 00:14:52,280 Speaker 2: turns out. 313 00:14:52,320 --> 00:14:54,760 Speaker 1: Professor Levin, I look forward to the course in full. 314 00:14:54,920 --> 00:14:56,640 Speaker 1: But until then, let me ask you to put you 315 00:14:56,640 --> 00:14:58,000 Speaker 1: on the spot once again. If you had to make 316 00:14:58,000 --> 00:15:00,040 Speaker 1: a prediction that then invariably we're going to hold you 317 00:15:00,240 --> 00:15:02,800 Speaker 1: in three years time, yes or no or memes stucks. 318 00:15:02,840 --> 00:15:05,920 Speaker 1: You think a permanent feature of financial markets, now. 319 00:15:05,960 --> 00:15:07,960 Speaker 2: I think I'll be using that term in three years. 320 00:15:08,000 --> 00:15:11,200 Speaker 2: I think that like exactly how this operates might change. 321 00:15:11,760 --> 00:15:13,720 Speaker 2: But yeah, I think people learned a real lesson from 322 00:15:13,720 --> 00:15:16,440 Speaker 2: this in terms of like how a stock can be valued, 323 00:15:16,480 --> 00:15:18,640 Speaker 2: And I do think that like this is gonna be 324 00:15:19,240 --> 00:15:20,680 Speaker 2: kind of a permanent tool in the kit. 325 00:15:21,480 --> 00:15:23,760 Speaker 1: Malvin, thank you, thank you. 326 00:15:23,800 --> 00:15:26,440 Speaker 2: Oh shoot, I'm sure extended to my podcast. 327 00:15:26,640 --> 00:15:28,760 Speaker 1: I should have given you the entre for the shameless plug. 328 00:15:28,800 --> 00:15:30,520 Speaker 1: How should I do that? Matt, you write the money 329 00:15:30,560 --> 00:15:32,360 Speaker 1: Stuff newsletter. I here, there's another way that we can 330 00:15:33,040 --> 00:15:35,640 Speaker 1: get your wisdom downloaded straight to our our brands. 331 00:15:35,720 --> 00:15:37,760 Speaker 2: There's a money Stuff podcast, all right. This week we 332 00:15:37,800 --> 00:15:39,320 Speaker 2: talked about memestocks. 333 00:15:40,400 --> 00:15:42,840 Speaker 1: You can find the Money Stuff podcast wherever you get 334 00:15:42,880 --> 00:15:45,320 Speaker 1: your podcasts, and you can sign up for Matt's newsletter 335 00:15:45,600 --> 00:15:49,040 Speaker 1: at Bloomberg dot com. This is the Big Take from 336 00:15:49,080 --> 00:15:52,360 Speaker 1: Bloomberg News. I'm David Gurat. This episode was produced by 337 00:15:52,440 --> 00:15:55,560 Speaker 1: David Fox and Jessica Beck. It was mixed by Blake 338 00:15:55,640 --> 00:15:59,600 Speaker 1: Maple's back check by Adriana Tapia. Our senior producers are 339 00:15:59,640 --> 00:16:03,920 Speaker 1: Kim and Naomi Shavin, who also edited this episode. Our 340 00:16:04,000 --> 00:16:07,360 Speaker 1: senior editor is Elizabeth Ponso. Nicole Beemster Borr is our 341 00:16:07,360 --> 00:16:11,560 Speaker 1: executive producer. Sage Bauman is our head of podcasts. Thanks 342 00:16:11,560 --> 00:16:14,320 Speaker 1: for listening. Please follow and review The Big Take wherever 343 00:16:14,360 --> 00:16:17,040 Speaker 1: you get your podcasts. It helps new listeners find the 344 00:16:17,080 --> 00:16:18,960 Speaker 1: show we'll be back on Monday.