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Speaker 1: Hello, and welcome to another episode of the Odd LODs podcast.

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Speaker 1: I'm Joe Wisenthal and I'm Tracy alliwit Uh, Tracy. It

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Speaker 1: really feels like, from a market's perspective, this is the

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Speaker 1: closest we've been lately to uh sort of two thousand

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Speaker 1: and eight financial crisis vibes well since the financial crisis,

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Speaker 1: wouldn't you say? I would say so, and I would

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Speaker 1: certainly say the statistics back you up. Biggest weekly sell

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Speaker 1: off since the financial crisis. We've just seen, right right,

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Speaker 1: massive sell off and risk assets, an extraordinary amount of

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Speaker 1: repricing of expectations for central banks all around the world

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Speaker 1: to come in and intervene. And we've had other periods

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Speaker 1: of sort of semi crisis, um uh since the Great

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Speaker 1: Financial Crisis, during periods to say the Eurozone, but it's

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Speaker 1: just never felt as extremely uncertain as it does right now.

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Speaker 1: I don't know, I sort of remember late two thousand fifteen.

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Speaker 1: Uh yeah, I mean late two thousand and fifteen you

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Speaker 1: had all the issues going on with credit and you

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Speaker 1: had one big fund blow up. So I'm still waiting.

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Speaker 1: I'm still waiting for the second order effects of the

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Speaker 1: market sell off that we've seen to emerge. That's true,

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Speaker 1: Like we haven't actually seen any sort of major liquidations

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Speaker 1: or institutions of various size like truly go bust yet

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Speaker 1: amid the volatility. Obviously nobody, uh, you know, we're not

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Speaker 1: hoping that that happens. For now. It's mostly been like

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Speaker 1: a sort of markets reaction. But as you say, there

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Speaker 1: hasn't really been a second order effect just yet. Ye,

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Speaker 1: very true. So obviously the coronavirus is um you know,

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Speaker 1: the leer contributing factor. It's people are gripped, my panic

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Speaker 1: all around the world. It started in China late last

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Speaker 1: year and now it seems to be spreading to countries

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Speaker 1: basically everywhere. But I also think that there is another

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Speaker 1: contributor to the top. It's not just the virus that

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Speaker 1: caused the top. Well, I mean, the virus didn't cause

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Speaker 1: the top. The virus was the catalyst for the top

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Speaker 1: to no longer be the top and for markets to

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Speaker 1: sell off. But but what are you thinking about, Joe, Well,

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Speaker 1: I mean, obviously it's our recent Business Week cover story

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Speaker 1: that our colleague Luke Cowo wrote about when the bull

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Speaker 1: market got weird and uh about all these traders and

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Speaker 1: online forums making crazy big beds, and I think in

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Speaker 1: retrospect many people will see the recent cover as what

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Speaker 1: really did the bull market in? Yeah, it was good timing,

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Speaker 1: but in the history of of market crashes, people always

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Speaker 1: go back and sort of look for retail investors who

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Speaker 1: start to become really overconfident. Some people actually look at

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Speaker 1: retail investor participation in the market as evidence of the

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Speaker 1: top coming. And so some of the behavior that we

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Speaker 1: have seen embodied in places like um what Luke was

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Speaker 1: talking about, Uh, you could maybe see that as an

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Speaker 1: indication that markets were a little frothy. Yeah. So for

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Speaker 1: those who actually haven't been paying attention to this particular subplot,

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Speaker 1: which is probably most people, because there's bigger things going

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Speaker 1: on in the world. Over the last several weeks, prior

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Speaker 1: to this extreme bout of selling in volatility that we saw,

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Speaker 1: there was a lot of attention paid to the behavior

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Speaker 1: of people on a certain Internet web page or chat

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Speaker 1: room or message board, whatever you want to call it,

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Speaker 1: in which there was an extreme subreddit. It was on Reddit,

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Speaker 1: an extreme level of speculative activity, particularly the options market,

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Speaker 1: the likes of which we haven't really seen, arguably since

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Speaker 1: the glory days of the Ahoo message boards back during

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Speaker 1: the dot com bubble, and it's a really fascinating story.

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Speaker 1: It's really uh interesting look at how the markets work,

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Speaker 1: um and how retail players can really make a dent

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Speaker 1: in publicly publicly listed equities. Yeah. So this is the

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Speaker 1: thing that I find the most fascinating about this sub breddit.

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Speaker 1: It's called Wall Street bets, and in recent months or

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Speaker 1: over the past year or so, a lot of the

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Speaker 1: people on it don't just think that they found good

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Speaker 1: ways to make money through investing in the market. They

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Speaker 1: think that they found a good way to sort of

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Speaker 1: force the market into or force the market to do

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Speaker 1: what they wanted to do. So they actually think that

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Speaker 1: they're impacting how Wall Street functions and pushing up the

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Speaker 1: stock price. And that's where it gets really really interesting.

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Speaker 1: Are they in fact having this impact on the market? Right?

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Speaker 1: And I remember the message boards, the Raging Bull message

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Speaker 1: boards Silicon Investor Yahoo message boards from nine and two

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Speaker 1: thousand and I think they were far less ambitious than

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Speaker 1: what people are doing uh these days. So for more,

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Speaker 1: for more on this, let's start by bringing in uh

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Speaker 1: Bloomberg's own Luke Kala, who did have the cover story

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Speaker 1: that cursed the market overall. Uh luke, thanks for joining us.

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Speaker 1: So first of all, it just basically describe what it

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Speaker 1: was that was worth covering here about this uh about

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Speaker 1: this subread Well, I think for so long we've been

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Speaker 1: waiting for the return of the retail investor, and you know,

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Speaker 1: it's been this kind of long awaited thing that's never

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Speaker 1: really happened throughout any time during this bullmarket. And this

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Speaker 1: is kind of like the be careful what you wish

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Speaker 1: for story, because what became quite interesting is how you

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Speaker 1: were seeing retail enthusiasm get to express in the markets.

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Speaker 1: And so I remember there was one day, it was

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Speaker 1: January eight, and this is when Tesla was still below

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Speaker 1: five hundred, if you can imagine a day in which

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Speaker 1: that existed. But it was a Wednesday, and you saw

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Speaker 1: a lot of bidding for the Tesla seven hundred strike

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Speaker 1: call options that would expire at the end of that week.

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Speaker 1: Tesla had already been up like that week, as was

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Speaker 1: its want earlier this year. But it just seemed like

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Speaker 1: this is this is such a ridiculous bet. Why would

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Speaker 1: anyone do this? This doesn't make sense as a hedge.

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Speaker 1: There's got to be a better way to express a

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Speaker 1: hedge if you're you know, if you're short the stock

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Speaker 1: or if you sold calls like what's going on here?

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Speaker 1: And someone said, you know, this is just a yolo bed.

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Speaker 1: And the second I heard, you know, yolo bed, I

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Speaker 1: went to Wall Street bets and tried to see what

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Speaker 1: what they were in. You only live once, why not

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Speaker 1: make a huge exactly? And you know when I when

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Speaker 1: I went there, I saw you know a lot of

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Speaker 1: people just uh that were seemingly enjoying a lot of

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Speaker 1: success on Tesla. And then that spiral to kind of

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Speaker 1: other story stocks where they, you know, thought the it

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Speaker 1: would do nothing but go up and up and up.

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Speaker 1: And you know, Virgin Galactic is the you know, the

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Speaker 1: next example. Plug Power another one that had its kind

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Speaker 1: of time and the headlights, and then lumber Liquidators is

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Speaker 1: one I find very interesting because it's not like it's

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Speaker 1: not that fun of stock, like Lumber Liquidators compared to

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Speaker 1: Virgin Galactic, compared to Plug Power, like it's it's really

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Speaker 1: hard to wrap an enthusiastic you know, big story around it. Uh.

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Speaker 1: And yet you know a lot of the ones of

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Speaker 1: the three ones I've lastlisted, they have in common. It's

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Speaker 1: relatively low float relatively high amount of short interest. So

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Speaker 1: when you got a group of people together, that thought,

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Speaker 1: you know, if we're all interested in the same thing,

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Speaker 1: and if we are all kind of you know, combining

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Speaker 1: buying power, where can it have an impact. Well, in

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Speaker 1: names like this, it can. And you were seeing at

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Speaker 1: least the volumes go up like crazy in it. Uh,

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Speaker 1: it became too much to call it coincident, coincident timing,

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Speaker 1: or coincidence after a certain amount of time, So luke

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Speaker 1: to things here. Can you walk us through exactly what

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Speaker 1: the options trading strategy was here, because you know, Joe

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Speaker 1: and I kind of alluded to this in the intro.

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Speaker 1: But it wasn't just that they could push the stock up.

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Speaker 1: It was that they could actually exploit a loophole in

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Speaker 1: the way certain financial contracts or Wall Street actually works

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Speaker 1: in order to make the stock go up. And then secondly,

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Speaker 1: would you say that Wall Street bets is representative of

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Speaker 1: the average retail investor? So on the on the first part,

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Speaker 1: the and this this relates to I'm not sure if

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Speaker 1: if people actually believe this or this just becomes a

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Speaker 1: you know, very happy supporting evidence and something that makes

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Speaker 1: you feel a lot better about making your moon shot

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Speaker 1: at the you know, the fact that someone might be

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Speaker 1: there to help accentuated and help bail you out. So

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Speaker 1: the thinking here is that when you like, say you're

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Speaker 1: buying a call option on on the other side of that,

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Speaker 1: if it's a fresh option, there's going to be a dealer,

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Speaker 1: and dealers are not in the business of taking directional exposure.

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Speaker 1: So when they're selling that call, what are they doing.

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Speaker 1: They're also you know, buying a certain amount of stock

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Speaker 1: to hedge their exposure. That's called delta hedging. And as

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Speaker 1: if the stock does continue to go up from there,

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Speaker 1: it you know, resetting your delta hedge your which would

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Speaker 1: be kind of gama hedging, but it's really just resetting

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Speaker 1: your delta hedge would entail that as the stock goes up,

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Speaker 1: you would be required to kind of buy more and

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Speaker 1: more to make sure that your directional exposure to the

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Speaker 1: stock hasn't changed. So when we describe this dynamic, when

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Speaker 1: we were talking about the Tesla calls, the testas see

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Speaker 1: one thousand straight calls, and I believe late January, someone

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Speaker 1: on Reddit latched onto this and said, you know, l

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Speaker 1: O L. Bloomberg is admitting that the stock can only

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Speaker 1: go up if we continue to buy calls because of

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Speaker 1: the hedging algorithms, which is, you know, it's it's very

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Speaker 1: much an overstatement of of what can actually happen. Can

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Speaker 1: I just step in real quickly, because you mentioned delta

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Speaker 1: hedging and gam hedging and all this stuff just for

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Speaker 1: people who need a little bit of time to catch up,

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Speaker 1: walk us through very simply. The idea is people buy

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Speaker 1: a lot of call options. The dealer who sells it,

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Speaker 1: sells the call options, are then on the hook if

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Speaker 1: the call options essentially are become in the money right,

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Speaker 1: and so in order to avoid that risk of having

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Speaker 1: to pay out a big wager, just like a casino,

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Speaker 1: they have to sort of balance their own books, and

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Speaker 1: that requires them to purchase the underlying stock. Yeah, dealers

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Speaker 1: are trying to make money from from the bid ask

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Speaker 1: spread and making you pay both sides of it during

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Speaker 1: your transaction. They're not in the business of really making

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Speaker 1: sure that or or hoping that tesla goes down. They'd

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Speaker 1: like to be, you know, cover their butts in all

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Speaker 1: contingencies in all cases. So that's what's kind of going

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Speaker 1: on there, and it's just you know, with some Greek

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Speaker 1: letters surrounding it. But that's the that's the basic kind

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Speaker 1: of scenario and mechanism you described perfectly. So trying to

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Speaker 1: exploit the fact that dealers are big banks on Wall

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Speaker 1: Street need to maintain a neutral position when they're writing

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Speaker 1: all these contracts doesn't strike me as something that your

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Speaker 1: average retail mom and pop investor is really doing. So

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Speaker 1: is Wall Street beats a little bit different? I'd say

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Speaker 1: there are a lot more aggressive about certain tactics being

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Speaker 1: used and the kind of the hurting behavior. I don't

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Speaker 1: think the average retail trader is really trying to think of. Okay,

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Speaker 1: like if I get together with Jim down the street,

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Speaker 1: and you know, Marry across the road, who I play

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Speaker 1: bridge with, if we really get together and start, you know,

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Speaker 1: stockpiling our potential buying power that we can kind of,

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Speaker 1: you know, maybe maybe lift some bids here, maybe get

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Speaker 1: some dealers offside, maybe cause some kind of a gamma chase. So, yeah,

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Speaker 1: it does seem from that from that point of view,

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Speaker 1: a lot more sophisticated and ambitious than you know, some

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Speaker 1: people others speculating options might be. On the other hand,

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Speaker 1: just because it sounds more sophisticated, doesn't mean, it's a

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Speaker 1: our strategy doesn't make what's being said more true, because

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Speaker 1: if we've learned anything about kind of the recent market dynamics,

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Speaker 1: presuming you are the only actor in the market and

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Speaker 1: able to move it is kind of it's it's a

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Speaker 1: fool's errand. And that's why you know, if some if

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Speaker 1: there's power out there too to buy all these options,

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Speaker 1: you have to recognize it. On the other side of it,

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Speaker 1: there's going to be uh, potentially a desire to sell,

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Speaker 1: and we've seen you know, a lot of selling pressure

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Speaker 1: come into the market that's completely overwhelmed whatever retail buying.

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Speaker 1: The markets probably, I mean the markets kind absolutely clover

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Speaker 1: rejuice to your article came out and presumably if you

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Speaker 1: had been buying a bunch of call options ahead of that,

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Speaker 1: you are one is not doing particularly well this week

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Speaker 1: with that strategy. Yeah, Like we we saw a bunch

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Speaker 1: of ten thousand percent updates for a lot of these

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Speaker 1: mood shot options, but most out of the money and

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Speaker 1: very low delta options are going to expire worthless. It's

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Speaker 1: just the kind of the name of the game. Okay.

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Speaker 1: So on that note, in addition to having Luke join

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Speaker 1: us for our episode. Today we have another guest. Luke

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Speaker 1: has said, uh set the stage, but we actually have

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Speaker 1: the founder of the subreddit Wall street Bets joining us now,

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Speaker 1: Jamie Ugazinski. He uh founded the page, got it launched

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Speaker 1: in twelve. Jamie, Thank you very much for joining us.

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Speaker 1: Thank you for having me. Okay, so I want to

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Speaker 1: obviously get to everything that Luke talked about and this

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Speaker 1: sort of crazy phenomenon and force in the market that

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Speaker 1: Wall street Bets has become. But you started it in

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Speaker 1: what was the purpose? What? What do you're like, Okay,

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Speaker 1: I'm gonna start a new page on Reddit called Wall

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Speaker 1: street Bets. What what were you thinking? Well, I mean

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Speaker 1: back when I started it, I was looking for a

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Speaker 1: forum where we can discuss high risk trades, um work

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Speaker 1: into day trading, or high risk or active investing. All

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Speaker 1: the forums that I found on my both on Reddit

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Speaker 1: and off wridit we're traditional, diversified, long term, long time

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Speaker 1: time horizon type investing, and so I since I couldn't

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Speaker 1: find find it, I decided to found Wall Street Bets

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Speaker 1: and has evolved a bit from what they originally intended,

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Speaker 1: but that was the original idea behind it. Can you

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Speaker 1: describe the Wall Street. That's demographic like who is your

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Speaker 1: average user on Wall Street bets? And why are they

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Speaker 1: on that subpreddit versus something like the investing subreddit. So

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Speaker 1: the I don't actually have access to the specific demographics,

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Speaker 1: but I'm going to take a very educated guest and

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Speaker 1: say it's going to be mostly males young probably eighteen uh.

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Speaker 1: I mean, obviously there are old enough to open a

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Speaker 1: brokerage account and and have enough of an income so

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Speaker 1: that they can, um they make the type of bets

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Speaker 1: that they're trying to make. And why are they hanging

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Speaker 1: out on Wall Street bets? I mean, for I have

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Speaker 1: various reasons or various ideas as to why they I

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Speaker 1: want to be doing it, but for uh, probably similar

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Speaker 1: motivations that got me in the first place. Right, I

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Speaker 1: was single at the time, out of disposable income, had

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Speaker 1: a reason to be a little bit more aggressive. When

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Speaker 1: when people are older and they have a family and

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Speaker 1: they have to be a little bit more cautious, well

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Speaker 1: defin whally they want to start taking um more of

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Speaker 1: a precautious person to investing. But when they're younger, thing

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Speaker 1: can afford to take the risks, and so you know,

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Speaker 1: all Street Bets is a place where what we welcomes

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Speaker 1: that type of behavior, and the welcome welcomes the type

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Speaker 1: of you know, on some capacity it's aggressive investing, active investing,

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Speaker 1: and you know, oftentimes it's straight of gambling. So um,

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Speaker 1: I'd say it's people that are just in that demographic

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Speaker 1: that they're looking to make some quick money. Yeah, we

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Speaker 1: haven't really talked about this aspect. But in addition to

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Speaker 1: the demographic, and you mentioned people who are willing to

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Speaker 1: take more risk, there's a certain like Wall Street Bets mindset.

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Speaker 1: And I've been reading the page off and on for

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Speaker 1: several years, and it's not it's not only that it

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Speaker 1: seems like there is a high degree of sort of

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Speaker 1: like risk taking or thrill seeking. There seems to be

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Speaker 1: also like a certain amount of nihilism associated with it,

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Speaker 1: in which people seem just as excited to massochism. To

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Speaker 1: people seem just as excited about posting screenshots of them

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Speaker 1: losing a hundred thousand dollars or losing a fortune in

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Speaker 1: a single day, um, as they are as excited about

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Speaker 1: making a bunch of money. There's a lot of egging

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Speaker 1: people on to take more and more risks. What talk

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Speaker 1: to us about that mindset, just the sort of the

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Speaker 1: thrill seeking, massochistic, nihilistic aspect that we see on Wall

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Speaker 1: Street Bets and why you think that's that emerges. I'm

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Speaker 1: not sure necessarily that I've people egging people on to

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Speaker 1: take on more risk. I think that the peer pressures

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Speaker 1: certainly exists. Uh, you know, I see where you're coming out,

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Speaker 1: but I have have yet to see somebody to say, oh,

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Speaker 1: I think you should increase your possession position. I think

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Speaker 1: it's more of a peer PRESSU your type scenario that

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Speaker 1: people try to maybe just attention. People want to impress

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Speaker 1: each other, right, is that kind of what you're saying,

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Speaker 1: They just want to be cool and impress each other

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Speaker 1: for to who took the wildest riscue. Yeah, it would

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Speaker 1: probably be more of motivation like that. But um, you know,

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Speaker 1: as far as the massacre is, I think it's more

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Speaker 1: it's a very honest forum. Right. If you go outside

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Speaker 1: of Wall Street Bets, for you know, you go on

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Speaker 1: Twitter or finn Twitter, you go any of the other areas,

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Speaker 1: you have a lot of people that have just these

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Speaker 1: huge egos that show these really impressive trading track records.

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Speaker 1: You know, look at my fancy car that I'm driving.

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Speaker 1: I know, you know, check out this impressive statistics for

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Speaker 1: my uh, you know, trading history and whatnot. And so

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Speaker 1: you you have these glorified people that it's almost impossible

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Speaker 1: to become them, whereas in Wall Street, bets are just

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Speaker 1: very honest with each other and to say no, no, houn,

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Speaker 1: it's very difficult to actually recreate what they're talking about

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Speaker 1: in some cases statistically very improbable. Some people obviously can

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Speaker 1: do it, but most people cannot. I'm the statistics also

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Speaker 1: backed that up. People who want to actively beatreud most

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Speaker 1: of them to. So I think that it's more of

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Speaker 1: an honest approach to it, where they say, okay, I

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Speaker 1: know that I'm likely going to lose money into it,

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Speaker 1: so let's just be honest about this. Let's let's not

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Speaker 1: try and pretend that I'm something that I'm not. And

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Speaker 1: uh and I think it's would celebrate it is more

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Speaker 1: the honesty behind that more so then hey, check it out, guys,

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Speaker 1: I lost a lot of money. Go ahead and give

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Speaker 1: me some some up votes. In karma, it's hey, guys,

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Speaker 1: look I try this. I put my money online. I

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Speaker 1: said this was gonna happen, and I failed and so

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Speaker 1: people celebrate that follow up honesty and they say, wow,

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Speaker 1: this is a genuine conversation that we're having. So I

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Speaker 1: think that's more the motivation that that you and it

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Speaker 1: comes off more as the celebratory law. I mean, i'd

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Speaker 1: agree totally in my in my time very good because

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Speaker 1: you know, thinking about all of these stocks that were

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Speaker 1: you know, going up, there's there are people on all

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Speaker 1: street that's going, no, no, I'm I'm selling Tesla calls,

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Speaker 1: I'm doing I'm doing this, I'm doing that, and then

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Speaker 1: you'd see them come back, you know, a week, two

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Speaker 1: weeks later and go okay. So yeah, all those positions

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Speaker 1: I was talking about earlier, I'm getting completely completely host.

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Speaker 1: If you want to know how much I'm going to

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Speaker 1: get host in the future. Here's the other strikes. I'm

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Speaker 1: short out of the money, have fun ruining my life

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Speaker 1: type of thing. But it's it's very much a an unpretentious,

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Speaker 1: honest conversation and it's, uh, it is refreshing for those

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Speaker 1: who have spent uh, you know, their their lifetimes are

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Speaker 1: most of their waking hours on finance Twitter. But you know,

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Speaker 1: on the on the other side of things, the there

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Speaker 1: the degree of you know, kind of willingness to go

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Speaker 1: in with no information. On the other hand, the I

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Speaker 1: think the best example would be, you know, one person posting,

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Speaker 1: you know, I don't know what I don't know what

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Speaker 1: options are, and I don't know what l L is,

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Speaker 1: but I'm up ten thousand this morning and thank you.

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Speaker 1: This is my lunch break, coming on to post it.

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Speaker 1: Thank you very much. And then you know one person going,

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Speaker 1: you know what, what the hell can you expect? It's

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Speaker 1: lumber liquid it or they liquidate lumber. It's right there

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Speaker 1: in the name, and uh yeah, it's it's fun, it's entertaining,

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Speaker 1: and it's definitely it's definitely a different scene from what

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Speaker 1: I've been used to on the internet. Right. One can

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Speaker 1: never admit on finance Twitter that they made a mistake,

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Speaker 1: but on Wall Street Bets, it's almost a badge of

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Speaker 1: honor if you have this big loss. Jamie, you actually

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Speaker 1: wrote a book about Wall Street bets. And this is

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Speaker 1: gonna sound really condescending, but I thought it was surprisingly

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Speaker 1: thoughtful and kind of earnest, which wasn't what I was

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Speaker 1: expecting because the subredit itself tends to be the sarcastic, jokey,

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Speaker 1: macho place. But there was this one chart in your book,

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Speaker 1: and it shows robin Hood account openings alongside the growth

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Speaker 1: of users on the Wall Street Bets subbredit. Can you

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Speaker 1: talk to us about the importance of this new crop

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Speaker 1: of online brokers or the dynamics in the brokerage industry

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Speaker 1: currently in fueling Wall Street bets. Yeah, I mean to

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Speaker 1: be honest with you, when when I came up with

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Speaker 1: that chart, I was not expecting that. I was very

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Speaker 1: surprised and uh and even more so surprised when I

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Speaker 1: broke down that chart a little bit further. So I'll

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Speaker 1: first describe that chart. What I did is I superimposed

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Speaker 1: the growth of Wall Street bets since the inception of

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Speaker 1: robin Hood. Uh, you know, the growth in terms of subscribers,

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Speaker 1: and then the growth of users of robin Hood, and

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Speaker 1: those lines were pretty much right on top of each other,

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Speaker 1: and you know, the growth right on part of the

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Speaker 1: correlation was very easy to see. And the the what

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Speaker 1: was even more surprising was, I think it was around

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Speaker 1: two thousand eighteen, if I'm not mistaken, robin Hood introduced

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Speaker 1: stock options as part of their offering, the product offering

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Speaker 1: to their users, and they saw a very steep change

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Speaker 1: in their growth, they ended up having a dramatic increase

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Speaker 1: um and users and Wall Street bets had the exact

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Speaker 1: same slope change, right, So the the adoption or increase,

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Speaker 1: and so you know it does ask the questions, Okay,

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Speaker 1: what is there a correlation here? And I obviously, I

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Speaker 1: mean it's hard to um repeat those because both of

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Speaker 1: those numbers are big enough to distally significant. I think

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Speaker 1: the proliferation of not just robin Hood, but just all

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Speaker 1: these low commissions now zero commission burke ridges are making

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Speaker 1: lowering the barriers to entry for pretty much anyone and

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Speaker 1: all the even traditional brokers. I mean I'm talking merrit

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Speaker 1: Trade and Charles Schwab and even Vanguard is now offering

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Speaker 1: stock options, Vanguard being the holy grail of you know,

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Speaker 1: stafe ets for index fund uh the type investing. Right. So,

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Speaker 1: the fact that you have all these brokers making it

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Speaker 1: really cheap, lowering the barriers to entry. Have a lot

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Speaker 1: of let's call them younger people, are people that have

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Speaker 1: they want to enter this market with less money or

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Speaker 1: or want to even experiment. Maybe they have them on

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Speaker 1: even maybe they just want to play with less now

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Speaker 1: that they're able to do so. Anyone that wants to

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Speaker 1: play with it just by definition would want to find

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Speaker 1: a way to experiment. And I think that experimenting with

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Speaker 1: a place that has more aggressive or more diverse type

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Speaker 1: of conversations of different types of security is more more

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Speaker 1: so than just the stock stock options. We don't talk

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Speaker 1: about cryptocurrencies very much on the Wall Street Bets, so

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Speaker 1: it's obviously that's also part. I'm glad you mentioned cryptocurrencies

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Speaker 1: because when you talked about the honesty of Wall Street

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Speaker 1: bets reminded me of an important point I saw someone

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Speaker 1: make with your that there are a lot of similarities

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Speaker 1: between this sort of like casino options betting that you're

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Speaker 1: seeing now on Wall Street Bets and the crypto craze,

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Speaker 1: especially of late. But the differences, to me one is

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Speaker 1: that you guys seem fundamentally more honest, because I remember

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Speaker 1: and all the people going crazy for crypto, we're also

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Speaker 1: trying to pretend that they like understood something about the technology,

429
00:23:54,440 --> 00:23:57,840
Speaker 1: or like, oh, we're like building some really important decentralized

430
00:23:57,920 --> 00:24:01,200
Speaker 1: system here, or we're gonna like run to all these Uh,

431
00:24:01,240 --> 00:24:04,240
Speaker 1: this is gonna be a really important smart contract platform

432
00:24:04,400 --> 00:24:07,159
Speaker 1: upon which all these apps can be built and stuff

433
00:24:07,320 --> 00:24:11,239
Speaker 1: like all they're gambling was couched in the language of

434
00:24:11,280 --> 00:24:16,560
Speaker 1: technological innovation, whereas it seems like you're gambling is couch

435
00:24:16,640 --> 00:24:19,760
Speaker 1: to the language of gambling fundamentally just way more truthful

436
00:24:19,800 --> 00:24:24,879
Speaker 1: and honest than cryptos right there in the names. But

437
00:24:25,000 --> 00:24:28,200
Speaker 1: I wanted to ask you a little bit more about

438
00:24:28,200 --> 00:24:32,000
Speaker 1: the sort of mentality because I think the tagline on

439
00:24:32,040 --> 00:24:35,280
Speaker 1: the page is like if the if the Bloomberg terminal

440
00:24:35,440 --> 00:24:38,879
Speaker 1: met forte and message boards or something like that, and

441
00:24:38,960 --> 00:24:42,919
Speaker 1: there is you know, it's extremely crude. It's extremely uh

442
00:24:43,080 --> 00:24:46,680
Speaker 1: politically incorrect, to say the least. Uh. There's a lot

443
00:24:46,720 --> 00:24:49,639
Speaker 1: of people who like refer to each other using homophobic

444
00:24:49,680 --> 00:24:52,440
Speaker 1: slurs and other things that we have to edit out

445
00:24:52,480 --> 00:24:56,000
Speaker 1: whenever we do an article or talk about a comment

446
00:24:56,520 --> 00:24:59,119
Speaker 1: on the page. So I'm just like sort of curious, like,

447
00:24:59,160 --> 00:25:02,120
Speaker 1: could you explore or explain that aspect of it more

448
00:25:02,600 --> 00:25:05,000
Speaker 1: this sort of like I don't know if it's a

449
00:25:05,040 --> 00:25:07,840
Speaker 1: deep irony or profanity. I mean, it's right there in

450
00:25:07,880 --> 00:25:11,000
Speaker 1: the description with the four chune aspect of it. And

451
00:25:11,240 --> 00:25:14,560
Speaker 1: from whence that aspect of it emerged? Why is Wall

452
00:25:14,560 --> 00:25:18,600
Speaker 1: Street that's so offensive? Yes, that's a good that's a

453
00:25:18,600 --> 00:25:22,879
Speaker 1: good way to put it um all right, So the

454
00:25:23,520 --> 00:25:26,960
Speaker 1: tagline itself, Yeah, I came across it when I was

455
00:25:27,000 --> 00:25:30,120
Speaker 1: reading a different forum. It was the Finance Forum, many

456
00:25:30,160 --> 00:25:34,280
Speaker 1: many years ago, and when people were trying to find

457
00:25:34,280 --> 00:25:36,760
Speaker 1: a way to describe Wall Street bets, it was very difficult. Case.

458
00:25:36,800 --> 00:25:39,960
Speaker 1: Somebody just said, hey, Wall Street bets is like a

459
00:25:40,000 --> 00:25:43,199
Speaker 1: four jan or to find a Bloomberg terminal. So I like,

460
00:25:43,320 --> 00:25:45,280
Speaker 1: I mean, I do really like it. There is there

461
00:25:45,359 --> 00:25:48,840
Speaker 1: is a petition underway to potentially change the tagline to

462
00:25:49,119 --> 00:25:51,159
Speaker 1: how can we have insider knowledge when we don't have

463
00:25:51,200 --> 00:25:56,719
Speaker 1: any knowledge? And I fully, I fully endorse that one. Anyway,

464
00:25:56,760 --> 00:26:00,280
Speaker 1: go on, Yeah, you have that tagline. I put it

465
00:26:00,320 --> 00:26:02,359
Speaker 1: up there, and it's still true to this day. So

466
00:26:02,400 --> 00:26:04,439
Speaker 1: we get that one, you know, with regards to the

467
00:26:04,480 --> 00:26:08,080
Speaker 1: overall culture of it, the crudeness of it, the language. Look,

468
00:26:08,280 --> 00:26:11,919
Speaker 1: anyone that's been following Wall Street beds for for a

469
00:26:11,920 --> 00:26:15,040
Speaker 1: long time is realized that the the I guess there's

470
00:26:15,080 --> 00:26:18,880
Speaker 1: a locker room mentality, the the instults, slurs they are

471
00:26:19,240 --> 00:26:21,600
Speaker 1: they come and go and fad. I guess it's just

472
00:26:21,640 --> 00:26:24,240
Speaker 1: the way that to add on to the fact that

473
00:26:24,280 --> 00:26:28,880
Speaker 1: this place has you know, no filter, No, Yeah, there's

474
00:26:28,920 --> 00:26:32,879
Speaker 1: there's no reason to contain the way that you're expressing yourself,

475
00:26:32,960 --> 00:26:34,359
Speaker 1: the way that you're trading on the way that these

476
00:26:34,359 --> 00:26:36,560
Speaker 1: people are trading. And you know, I can't really explain

477
00:26:36,600 --> 00:26:38,360
Speaker 1: how or why it is that that came out that way,

478
00:26:38,400 --> 00:26:40,720
Speaker 1: but what I do know is, you know, the way

479
00:26:40,760 --> 00:26:43,359
Speaker 1: that these guys come off, it's very seldom offensive. So

480
00:26:43,520 --> 00:26:47,159
Speaker 1: for example, recently, you know, they've been referring to anyone

481
00:26:47,200 --> 00:26:51,439
Speaker 1: that's been bearished in a homophobic manner. And now that

482
00:26:51,480 --> 00:26:54,160
Speaker 1: we've had a pretty rough week class week, a lot

483
00:26:54,160 --> 00:26:56,720
Speaker 1: of these guys are in the form of endearing saying, hey, guys,

484
00:26:56,880 --> 00:26:59,920
Speaker 1: you know now I'm part of that category, and there's

485
00:27:00,000 --> 00:27:05,720
Speaker 1: an endearing passion, not in a derogatory extent. Obviously it's insulting, obviously,

486
00:27:05,840 --> 00:27:09,840
Speaker 1: it is you know, offensive, um and uh and and

487
00:27:09,880 --> 00:27:13,000
Speaker 1: I realized that. But I think that having watched these

488
00:27:13,160 --> 00:27:15,640
Speaker 1: terms come and go, give it a year, and now

489
00:27:15,640 --> 00:27:18,760
Speaker 1: it's instead of you know, referring to homophobic, it's going

490
00:27:18,800 --> 00:27:21,760
Speaker 1: to be maybe you know, tall people or people that

491
00:27:21,880 --> 00:27:25,439
Speaker 1: drive certain types of cars, or people with certain color eyes.

492
00:27:25,560 --> 00:27:29,760
Speaker 1: You know, they they're equal opportunity insulters. And I've seen

493
00:27:30,160 --> 00:27:33,439
Speaker 1: these trends come and go so often that I've no

494
00:27:33,560 --> 00:27:37,240
Speaker 1: longer taken and taken it too seriously. At one point, obviously,

495
00:27:37,320 --> 00:27:39,280
Speaker 1: I was like, Wow, this is really distasteful. I can't

496
00:27:39,560 --> 00:27:42,040
Speaker 1: you know, I can't be associated with this. But having

497
00:27:42,080 --> 00:27:45,240
Speaker 1: seen the way that it's not used in hateful fashion,

498
00:27:45,320 --> 00:27:47,040
Speaker 1: it's not used in a in a way that it's

499
00:27:47,240 --> 00:27:51,719
Speaker 1: means spirited, it's obviously offensive, I acknowledge that, but it's, uh,

500
00:27:52,000 --> 00:27:54,520
Speaker 1: you know, it's I guess, a phenomenon that I can't

501
00:27:54,560 --> 00:27:58,359
Speaker 1: really explain. So we've talked a little bit about the

502
00:27:58,400 --> 00:28:01,960
Speaker 1: mentality behind Wall Street bets, and we've talked a little

503
00:28:01,960 --> 00:28:05,800
Speaker 1: bit about the language used on Wall Street bets, and

504
00:28:06,000 --> 00:28:09,120
Speaker 1: Luke knows very well that it has its own terminology

505
00:28:09,320 --> 00:28:12,040
Speaker 1: at this point. But Jamie, maybe you could talk a

506
00:28:12,119 --> 00:28:17,000
Speaker 1: little bit about why certain investments seem to be favored,

507
00:28:17,119 --> 00:28:20,640
Speaker 1: or why certain bets seem to be favored over others,

508
00:28:20,720 --> 00:28:26,119
Speaker 1: Like why options versus futures, Why the emphasis on stocks

509
00:28:26,280 --> 00:28:29,760
Speaker 1: instead of say currency trading, which used to be where

510
00:28:29,800 --> 00:28:33,040
Speaker 1: we used to get these big leveraged bets, or we

511
00:28:33,080 --> 00:28:34,920
Speaker 1: still get a lot of leverage bets, but it seems

512
00:28:34,920 --> 00:28:37,159
Speaker 1: like an obvious choice for for Wall Street bets and

513
00:28:37,160 --> 00:28:41,800
Speaker 1: instead they've focused on some very particular types of investments.

514
00:28:41,800 --> 00:28:45,000
Speaker 1: Why is that an excellent question? I want that actually

515
00:28:45,080 --> 00:28:48,840
Speaker 1: blowed in the book the the I guess I'd break

516
00:28:48,880 --> 00:28:51,760
Speaker 1: it down into two separate components, right, So why going

517
00:28:51,840 --> 00:28:55,480
Speaker 1: for leverage versus not leverage? UM? And that's I think

518
00:28:55,520 --> 00:28:58,120
Speaker 1: self explanatory. If you're going to go out and make

519
00:28:58,120 --> 00:29:00,120
Speaker 1: a bet, you wanted to be leveraged. If you want

520
00:29:00,120 --> 00:29:01,800
Speaker 1: to buy a lottery ticket, you want to be able

521
00:29:01,880 --> 00:29:07,280
Speaker 1: to the multiplayer money by a huge percentage, so buying

522
00:29:07,400 --> 00:29:10,840
Speaker 1: you know, almost impossible to do that with stocks, uh,

523
00:29:10,840 --> 00:29:12,880
Speaker 1: and the leverage is the way to go. So looking

524
00:29:12,880 --> 00:29:17,040
Speaker 1: at the scope, you know the tools that are available

525
00:29:17,080 --> 00:29:20,160
Speaker 1: and the leveraged the universe. I've asked myself the same question,

526
00:29:20,200 --> 00:29:24,520
Speaker 1: why why future specifically UM a tool that I personally favor,

527
00:29:24,880 --> 00:29:27,400
Speaker 1: Why what if they want to use that as opposed

528
00:29:27,400 --> 00:29:31,239
Speaker 1: to stock options? And my thesis I can't back it up.

529
00:29:31,280 --> 00:29:34,960
Speaker 1: My thesis is straight up, it's more available. Right if

530
00:29:35,000 --> 00:29:38,080
Speaker 1: you want to get approved for stock options on your

531
00:29:38,160 --> 00:29:40,719
Speaker 1: robin Hood account, you can do it instantly or not.

532
00:29:40,800 --> 00:29:42,600
Speaker 1: Just I don't only can pick on robin Hood, just

533
00:29:42,880 --> 00:29:45,840
Speaker 1: all of the stockbrokers. You go in there and you

534
00:29:45,920 --> 00:29:49,640
Speaker 1: answer a quick little survey and UH, for a lot

535
00:29:49,640 --> 00:29:52,120
Speaker 1: of these guys, the answer is obvious what they want

536
00:29:52,160 --> 00:29:57,920
Speaker 1: you to answer. And many cases even if they answer honestly,

537
00:29:58,080 --> 00:29:59,920
Speaker 1: you know, I do have a lot of dependence on

538
00:30:00,000 --> 00:30:01,840
Speaker 1: don't have a lot of income, but you know, I

539
00:30:01,880 --> 00:30:03,760
Speaker 1: think that they want me to say that I don't

540
00:30:03,760 --> 00:30:05,840
Speaker 1: want to lose my money. They'll get approved right away

541
00:30:05,840 --> 00:30:09,040
Speaker 1: for stock options and they can instantly start treating them. Um.

542
00:30:09,160 --> 00:30:10,880
Speaker 1: And so I'm going to say that it's because it's

543
00:30:10,920 --> 00:30:15,520
Speaker 1: the most widely available. My guess would be if futures

544
00:30:16,480 --> 00:30:19,920
Speaker 1: or if for you know, for x uh or to

545
00:30:21,000 --> 00:30:24,800
Speaker 1: become just as easily available would probably also start getting

546
00:30:24,840 --> 00:30:28,320
Speaker 1: more popular when when you look at the combination of

547
00:30:28,880 --> 00:30:33,560
Speaker 1: you know, new retail online focus brokerage UH that combined

548
00:30:33,840 --> 00:30:37,640
Speaker 1: with you know, also high nominal prices on a lot

549
00:30:37,680 --> 00:30:41,200
Speaker 1: of stocks, your Amazon and your Tesla increasingly and then

550
00:30:41,240 --> 00:30:45,040
Speaker 1: the potential for nonlinear payoffs. So like that's that's just

551
00:30:45,120 --> 00:30:48,280
Speaker 1: the recipe for options in general. And you've you've seen

552
00:30:48,320 --> 00:30:51,600
Speaker 1: it really be taken up by the market. First six

553
00:30:51,680 --> 00:30:56,200
Speaker 1: weeks of twenty you had single stock options up seventy

554
00:30:56,280 --> 00:30:59,880
Speaker 1: seven percent the notional volume off of record levels already

555
00:31:00,040 --> 00:31:02,800
Speaker 1: at the end of so this is this is the

556
00:31:03,040 --> 00:31:06,600
Speaker 1: Wall Street Bets field search. So I want to uh

557
00:31:06,760 --> 00:31:09,520
Speaker 1: talk about the evolution a little bit of the page

558
00:31:09,600 --> 00:31:14,280
Speaker 1: because when I first came across Wall Street Bets, maybe

559
00:31:14,280 --> 00:31:16,840
Speaker 1: it was I don't know, twenty fifteen. I forget when

560
00:31:16,840 --> 00:31:19,560
Speaker 1: I started really looking at it early on, Like it

561
00:31:19,600 --> 00:31:22,480
Speaker 1: always had this sort of like you know, crude, offensive

562
00:31:22,840 --> 00:31:25,880
Speaker 1: gambling nature, but you know, a lot of memes. I

563
00:31:25,880 --> 00:31:28,640
Speaker 1: remember in the early days when I was paying attention,

564
00:31:28,720 --> 00:31:31,320
Speaker 1: there were a lot of memes about say, the CEO

565
00:31:31,400 --> 00:31:34,440
Speaker 1: of a m D, Lisa Sue, because that stock was

566
00:31:34,480 --> 00:31:37,240
Speaker 1: doing really well and she was making everyone a lot

567
00:31:37,240 --> 00:31:39,040
Speaker 1: of money, and so there was a lot of like

568
00:31:39,120 --> 00:31:42,120
Speaker 1: sort of glowing memes about her and all the money

569
00:31:42,120 --> 00:31:43,520
Speaker 1: they were making and stuff like that. And it is

570
00:31:43,600 --> 00:31:46,160
Speaker 1: sort of, you know, just normal sort of message board

571
00:31:46,240 --> 00:31:51,000
Speaker 1: chatter and so forth. When did this new phenomenon emerge

572
00:31:51,400 --> 00:31:55,479
Speaker 1: where it became less about sort of just posting stuff

573
00:31:55,480 --> 00:31:59,959
Speaker 1: and ideas versus what the emergent coordination where we started

574
00:32:00,040 --> 00:32:03,280
Speaker 1: seeing it earlier this year maybe last year, where the

575
00:32:03,360 --> 00:32:05,520
Speaker 1: idea is like, oh, we can all be a team.

576
00:32:05,840 --> 00:32:09,720
Speaker 1: We can all jam the call option purchases, and at

577
00:32:09,720 --> 00:32:13,280
Speaker 1: the same time it became less about just trading ideas

578
00:32:13,440 --> 00:32:16,360
Speaker 1: versus let's see if we can move the market. Well,

579
00:32:16,720 --> 00:32:19,160
Speaker 1: I'm not sure that I still seen that, to be

580
00:32:19,200 --> 00:32:20,760
Speaker 1: honest with you. You You know, like you've had a lot

581
00:32:20,800 --> 00:32:24,320
Speaker 1: of this group think mentality going back from for for

582
00:32:24,360 --> 00:32:26,600
Speaker 1: a long time. Just like you just mentioned with m D.

583
00:32:26,880 --> 00:32:29,000
Speaker 1: You know, that was what they referred to as a

584
00:32:29,040 --> 00:32:31,520
Speaker 1: meme stock or even there was an article on market

585
00:32:31,520 --> 00:32:35,920
Speaker 1: watchman years ago, uh when they covered Wall Street Pets.

586
00:32:35,920 --> 00:32:37,920
Speaker 1: They were talking about the stock at the time where

587
00:32:37,960 --> 00:32:40,640
Speaker 1: it was an ef the u w T I, which

588
00:32:40,720 --> 00:32:43,000
Speaker 1: was like a crew A Creed early TF. You know,

589
00:32:43,000 --> 00:32:45,360
Speaker 1: they mentioned a lot in that article. A couple of

590
00:32:45,400 --> 00:32:48,240
Speaker 1: months ago, somebody brought that article on on Wall Street

591
00:32:48,280 --> 00:32:50,200
Speaker 1: Pets and when people read it, they said, what in

592
00:32:50,240 --> 00:32:52,600
Speaker 1: the world is what you w T? I've never even

593
00:32:52,600 --> 00:32:55,719
Speaker 1: heard of this thing before? And how come this market

594
00:32:55,720 --> 00:32:58,560
Speaker 1: Watch article is pumping that stock so much? You know,

595
00:32:58,600 --> 00:33:00,840
Speaker 1: it seems like that's Allably the didn't the thing that

596
00:33:00,880 --> 00:33:03,480
Speaker 1: we care Obviously the crowd that was reading this article

597
00:33:03,600 --> 00:33:06,320
Speaker 1: didn't remember or wasn't a part of it. I think

598
00:33:06,360 --> 00:33:08,960
Speaker 1: there's always been a kind of a group mentality, So

599
00:33:09,520 --> 00:33:12,120
Speaker 1: I wouldn't go so far as connecting it as trying

600
00:33:12,160 --> 00:33:15,680
Speaker 1: to come up with a coordinated um buying a tent.

601
00:33:16,720 --> 00:33:19,360
Speaker 1: I think that what we you know, what we've said,

602
00:33:19,400 --> 00:33:22,720
Speaker 1: what we saw this year, or you know what Lucas

603
00:33:23,200 --> 00:33:25,120
Speaker 1: wrote about her has been writing about. You know, it's

604
00:33:25,160 --> 00:33:28,840
Speaker 1: definitely interesting. But I've yet to see a group effort

605
00:33:28,840 --> 00:33:30,840
Speaker 1: where they say, oh, gay guys, let's let's try to

606
00:33:30,920 --> 00:33:35,560
Speaker 1: manipulate the market. So this phenomenon was first spotted by

607
00:33:36,240 --> 00:33:40,600
Speaker 1: by him using tesla. I believe obviously Tesla had already

608
00:33:40,600 --> 00:33:43,400
Speaker 1: been u somewhat of a meme or a meme stock

609
00:33:43,520 --> 00:33:46,960
Speaker 1: or a focused stock of a subreddit. And so you

610
00:33:47,000 --> 00:33:50,719
Speaker 1: know that one, I think inherently was already being the

611
00:33:50,720 --> 00:33:52,920
Speaker 1: focus of a subreddit, and maybe it was receiving a

612
00:33:52,960 --> 00:33:55,800
Speaker 1: lot of attention, a lot of additional volume on the

613
00:33:55,800 --> 00:33:58,480
Speaker 1: stock options, just because I'd be curious to see if

614
00:33:58,480 --> 00:34:01,120
Speaker 1: you did a similar study, like at dating back all

615
00:34:01,160 --> 00:34:05,480
Speaker 1: the way am B was popular, if you find something similar.

616
00:34:05,480 --> 00:34:07,800
Speaker 1: So you know the point of this is, I'm not

617
00:34:07,840 --> 00:34:11,040
Speaker 1: really sure that some new campaign came out there. He says,

618
00:34:11,040 --> 00:34:12,840
Speaker 1: all right, guys, this is a new name of the game.

619
00:34:13,360 --> 00:34:16,120
Speaker 1: Let's try and you know, pump stocks. This This one

620
00:34:16,120 --> 00:34:20,120
Speaker 1: guy that came out shortly after this article. Obviously, the article,

621
00:34:20,440 --> 00:34:23,520
Speaker 1: you know, put it in their heads that they can

622
00:34:23,520 --> 00:34:27,080
Speaker 1: now you know, found a new cheat code the way

623
00:34:27,120 --> 00:34:29,799
Speaker 1: they like, they're referred to it as, so that that

624
00:34:29,880 --> 00:34:34,359
Speaker 1: kind of became a thing. And that brought one guy

625
00:34:34,440 --> 00:34:38,680
Speaker 1: that posted an article on what was the liquid Lumberjacks

626
00:34:38,719 --> 00:34:40,560
Speaker 1: or whatever. I don't want to pump their name anymore,

627
00:34:40,600 --> 00:34:43,600
Speaker 1: but they they put the article up there and there

628
00:34:43,680 --> 00:34:46,040
Speaker 1: was whatever happened and that that post was removed and

629
00:34:46,080 --> 00:34:47,799
Speaker 1: they tried again with the second stock and that was

630
00:34:47,840 --> 00:34:50,640
Speaker 1: removed as well. But that wasn't a case where everybody

631
00:34:50,680 --> 00:34:53,160
Speaker 1: decided to all right, this is the this is how

632
00:34:53,200 --> 00:34:56,080
Speaker 1: we're going to try and and play the stocks from

633
00:34:56,120 --> 00:34:58,480
Speaker 1: now on. Now. I think that it's I think it's

634
00:34:58,480 --> 00:35:02,800
Speaker 1: always just been the focus. If they have a stock

635
00:35:02,880 --> 00:35:04,239
Speaker 1: this a lot of focus is going to get a

636
00:35:04,280 --> 00:35:06,040
Speaker 1: lot of volume, is gonna get a lot of activity.

637
00:35:06,080 --> 00:35:08,760
Speaker 1: And I'm be surprised if they both put them calls

638
00:35:08,800 --> 00:35:11,520
Speaker 1: depending especially right now that we're entering into a shop

639
00:35:11,600 --> 00:35:13,279
Speaker 1: of your market, that they're going to see some more

640
00:35:13,560 --> 00:35:16,040
Speaker 1: disagreements with regards to which direction these things are going

641
00:35:16,120 --> 00:35:19,200
Speaker 1: to go on, the disagreements with regards to how to

642
00:35:19,239 --> 00:35:22,520
Speaker 1: play any particular stock. Yeah, the places where I go

643
00:35:22,640 --> 00:35:24,640
Speaker 1: to kind of hang my hat on this are well,

644
00:35:24,880 --> 00:35:27,120
Speaker 1: lumber liquid it. This is the best example because nobody

645
00:35:27,120 --> 00:35:29,359
Speaker 1: in the world was talking about it. And then there

646
00:35:29,440 --> 00:35:32,440
Speaker 1: was the post from someone who had been a member

647
00:35:32,480 --> 00:35:34,560
Speaker 1: of Wall Street Bests for three years but it never

648
00:35:34,600 --> 00:35:39,160
Speaker 1: posted anything. And that morning you suh, you know, the

649
00:35:39,239 --> 00:35:42,360
Speaker 1: equivalent of the last twenty days and call options trade

650
00:35:42,360 --> 00:35:45,040
Speaker 1: in the first twenty minutes and ultimately call volumes of

651
00:35:45,080 --> 00:35:48,120
Speaker 1: over seventy x the twenty day average when nobody else

652
00:35:48,120 --> 00:35:50,160
Speaker 1: in the world was talking about it. That's that's where

653
00:35:50,160 --> 00:35:52,360
Speaker 1: I go to hang my hat. And Microsoft is another

654
00:35:52,360 --> 00:35:55,759
Speaker 1: one because it really blew my mind that uh, And

655
00:35:55,840 --> 00:35:58,799
Speaker 1: this was the discovery soon after the kind of the

656
00:35:58,880 --> 00:36:02,120
Speaker 1: delta hedging cheap ode was first kind of bandied about

657
00:36:02,200 --> 00:36:05,000
Speaker 1: more on Wall Street Bets, was Microsoft became a target,

658
00:36:05,040 --> 00:36:07,439
Speaker 1: which is odd to me because I you know, it's

659
00:36:07,480 --> 00:36:09,640
Speaker 1: it's a big company and the the idea that you know,

660
00:36:09,680 --> 00:36:12,520
Speaker 1: moving that would be very difficult. And the next morning

661
00:36:12,520 --> 00:36:16,200
Speaker 1: you did see the unusual call activity a pre market

662
00:36:16,719 --> 00:36:20,680
Speaker 1: kind of activity that was suggested as the desired tactic

663
00:36:20,719 --> 00:36:23,359
Speaker 1: that people should take up. So it and mapped out

664
00:36:23,360 --> 00:36:27,000
Speaker 1: a little too well. No, so I so I agree

665
00:36:27,040 --> 00:36:30,680
Speaker 1: with you on percent. What my point is not, um,

666
00:36:31,000 --> 00:36:37,360
Speaker 1: you know whether or not the your observations are or correct.

667
00:36:37,480 --> 00:36:41,600
Speaker 1: My point is, as an overall community that says, hey, community,

668
00:36:41,640 --> 00:36:43,160
Speaker 1: this is all what we're gonna do. What you found

669
00:36:43,239 --> 00:36:45,920
Speaker 1: is one actor that decided to come up with one stock,

670
00:36:46,200 --> 00:36:48,919
Speaker 1: as you say, is a boring stock that doesn't quite

671
00:36:48,920 --> 00:36:51,360
Speaker 1: fit the thesis of what they usually like to talk about.

672
00:36:51,760 --> 00:36:54,560
Speaker 1: Comes off and yes, he makes the post and and

673
00:36:54,840 --> 00:36:58,040
Speaker 1: you make the argument that he had a measurable impact

674
00:36:58,040 --> 00:37:01,800
Speaker 1: on the on the market. So that's that's fine. UM.

675
00:37:02,000 --> 00:37:05,080
Speaker 1: My point is as a community, that's not what their

676
00:37:05,120 --> 00:37:07,440
Speaker 1: efforts start to be. This is this one guy that

677
00:37:07,440 --> 00:37:11,239
Speaker 1: that came on there with a shady history, like you said,

678
00:37:11,239 --> 00:37:14,919
Speaker 1: o lack thereof and therefore you know, the moderator team

679
00:37:14,960 --> 00:37:18,080
Speaker 1: took action, and not only with that particular guy, but

680
00:37:18,160 --> 00:37:22,399
Speaker 1: now a proactive action before identifying those types of individuals.

681
00:37:22,400 --> 00:37:24,560
Speaker 1: But that's that's what they are, their individuals. They're not

682
00:37:24,600 --> 00:37:27,560
Speaker 1: necessarily as much as the as a collective of Wall

683
00:37:27,600 --> 00:37:30,080
Speaker 1: Street Bets. You know, I think the Microsoft observation I

684
00:37:30,080 --> 00:37:32,800
Speaker 1: think is more um accurate and that and that's that

685
00:37:33,040 --> 00:37:36,200
Speaker 1: I don't think. You know, obviously they joke around a

686
00:37:36,200 --> 00:37:38,319
Speaker 1: lot and the joke and I did see what you're

687
00:37:38,320 --> 00:37:40,279
Speaker 1: talking with regards to Microsoft, like, all right, now, let's

688
00:37:40,280 --> 00:37:43,319
Speaker 1: do it with Microsoft, because that one is more of

689
00:37:43,360 --> 00:37:47,600
Speaker 1: a spot that fits into the Wall Street Bets portfolio

690
00:37:47,600 --> 00:37:49,560
Speaker 1: of stot to like to play with. And obviously it

691
00:37:49,600 --> 00:37:51,600
Speaker 1: would be a much harder stock to move if they

692
00:37:51,600 --> 00:37:54,320
Speaker 1: were ready to do that, but they fail, you know,

693
00:37:54,360 --> 00:37:57,120
Speaker 1: they want for it anyways, because the stocks are volatible

694
00:37:57,160 --> 00:37:59,239
Speaker 1: and they're you know, oftentimes they pick these stocks because

695
00:37:59,239 --> 00:38:01,040
Speaker 1: they're already on the move, and that's how they get

696
00:38:01,040 --> 00:38:05,600
Speaker 1: on their reader Jamie. I've tweeted a couple of screenshots

697
00:38:05,600 --> 00:38:08,399
Speaker 1: from conversations going on in Wall Street Bets, and I've

698
00:38:08,400 --> 00:38:11,840
Speaker 1: had at least one instance of someone ceasing in the

699
00:38:11,960 --> 00:38:15,279
Speaker 1: U S Securities and Exchange Commission, and even on the

700
00:38:15,320 --> 00:38:17,919
Speaker 1: subreddit itself, every once in a while, people will joke

701
00:38:18,040 --> 00:38:22,200
Speaker 1: and say, hello, Hi, the SEC is watching that sort

702
00:38:22,239 --> 00:38:25,239
Speaker 1: of thing. Do you worry about the regulators coming in

703
00:38:25,480 --> 00:38:28,920
Speaker 1: and seeing some of that activity and viewing it as

704
00:38:28,960 --> 00:38:33,640
Speaker 1: a pump and dump scheme. Yeah, so ever since you know,

705
00:38:33,719 --> 00:38:37,120
Speaker 1: we started with wall streets, we've always been conscious not

706
00:38:37,239 --> 00:38:42,640
Speaker 1: just with the sec just with overall UM laws and regulations. Right,

707
00:38:42,680 --> 00:38:45,439
Speaker 1: So this this goes all the way to anyone that's

708
00:38:45,440 --> 00:38:48,920
Speaker 1: making any types of threats or any type of suicide

709
00:38:48,960 --> 00:38:53,360
Speaker 1: threats are or any type of activities is just considered

710
00:38:53,480 --> 00:38:57,719
Speaker 1: UM gray area. So this, this dates back to this

711
00:38:57,880 --> 00:39:01,640
Speaker 1: is just part of the terms of service with Reddit,

712
00:39:01,760 --> 00:39:04,600
Speaker 1: and it's also part of our moral obligation is is

713
00:39:04,760 --> 00:39:08,640
Speaker 1: UM as moderators and we have a big moderator team.

714
00:39:08,640 --> 00:39:10,839
Speaker 1: We have about fifty moderators, and many of them are

715
00:39:11,440 --> 00:39:14,200
Speaker 1: very experienced, and many of them are professionals that actually

716
00:39:14,200 --> 00:39:16,160
Speaker 1: do have Bloomberg terminals and they do you know what

717
00:39:16,239 --> 00:39:20,279
Speaker 1: they're they're uh talking about, and they're they're helpful with

718
00:39:20,320 --> 00:39:23,480
Speaker 1: trying to identify this. So they're answering your question. I'm

719
00:39:23,520 --> 00:39:26,160
Speaker 1: not worried necessarily that they're they're going to come after

720
00:39:26,719 --> 00:39:31,319
Speaker 1: UM walls, be bets, uh specifically if they're doing any

721
00:39:31,360 --> 00:39:33,880
Speaker 1: type of investigation, Well, I guess they're gonna make whatever

722
00:39:33,960 --> 00:39:35,880
Speaker 1: kind of investigation they want to make. I know that

723
00:39:36,239 --> 00:39:39,600
Speaker 1: from the moderator standpoint, we do everything that we can

724
00:39:39,719 --> 00:39:42,839
Speaker 1: to try and be responsible with this. We do have

725
00:39:43,080 --> 00:39:46,319
Speaker 1: very clear rules listed on the subwada, which include, do

726
00:39:46,400 --> 00:39:49,320
Speaker 1: not manipulate the market, do not attempt to manipulate the market,

727
00:39:49,360 --> 00:39:52,960
Speaker 1: do not give any type of false information, do not

728
00:39:53,040 --> 00:39:56,200
Speaker 1: try to pump any particular stops of stock, do not

729
00:39:56,280 --> 00:39:58,520
Speaker 1: pump and dump, I mean all this stuff that that

730
00:39:58,719 --> 00:40:02,359
Speaker 1: is clearly again the laws or against the regulations or

731
00:40:02,200 --> 00:40:04,920
Speaker 1: against the rules, and we enforced those very strictly. And

732
00:40:04,960 --> 00:40:07,120
Speaker 1: not only because there against the laws, that it's also

733
00:40:07,160 --> 00:40:09,560
Speaker 1: against the spirit of the subreddit. You know, we're we're

734
00:40:09,560 --> 00:40:12,040
Speaker 1: all out there to try and hopefully make some money

735
00:40:12,120 --> 00:40:15,839
Speaker 1: or to learn and and keep the community entertaining. And

736
00:40:15,960 --> 00:40:18,840
Speaker 1: um that's that's what we're there to do. And uh

737
00:40:18,880 --> 00:40:21,239
Speaker 1: and so as long as we're doing our part to

738
00:40:21,800 --> 00:40:25,520
Speaker 1: actively proactively handle any types of things, and look, they

739
00:40:25,560 --> 00:40:27,279
Speaker 1: come up all the time, you'd be surprised a lot

740
00:40:27,280 --> 00:40:28,920
Speaker 1: of a lot of them never even make out the

741
00:40:29,000 --> 00:40:31,640
Speaker 1: light of day. You know. There was, for example, a

742
00:40:31,680 --> 00:40:35,320
Speaker 1: couple of months ago, a situation in which somebody posted

743
00:40:35,480 --> 00:40:39,759
Speaker 1: a link to a um A tour and onion site. Right,

744
00:40:39,840 --> 00:40:43,400
Speaker 1: these are these underground I guess you could refer to

745
00:40:43,440 --> 00:40:47,120
Speaker 1: them as websites. Really sure the league activity and these

746
00:40:47,120 --> 00:40:49,279
Speaker 1: guys were trying to share inside information. And not only

747
00:40:49,320 --> 00:40:53,080
Speaker 1: that that post it removed within seconds of getting up there.

748
00:40:53,120 --> 00:40:56,719
Speaker 1: We change the logic of the moderator to make sure

749
00:40:56,760 --> 00:40:59,600
Speaker 1: that it can automatically filter out any type of conversation,

750
00:40:59,640 --> 00:41:04,440
Speaker 1: regard any links uh to these court sites or in

751
00:41:04,520 --> 00:41:07,000
Speaker 1: cet information. There's a lot of stuff that never makes

752
00:41:07,040 --> 00:41:08,680
Speaker 1: it out to the light of day. So if he

753
00:41:08,800 --> 00:41:12,000
Speaker 1: ever wanted to make an investigation, they'd see without a

754
00:41:12,000 --> 00:41:16,040
Speaker 1: reasonable doubt that we have done very much, um everything

755
00:41:16,080 --> 00:41:19,480
Speaker 1: that we do uh in order to uh to keep

756
00:41:19,480 --> 00:41:23,200
Speaker 1: this place, you know, fun and legal. I'm curious or

757
00:41:24,200 --> 00:41:27,280
Speaker 1: what do you see as where the typical Wall Street

758
00:41:27,280 --> 00:41:31,279
Speaker 1: Bets user eventually goes. Do they go broke and get

759
00:41:31,400 --> 00:41:35,760
Speaker 1: so angry with the markets that they sort of walk away?

760
00:41:35,920 --> 00:41:38,759
Speaker 1: Or do a lot of them sort of graduate two? Okay,

761
00:41:38,760 --> 00:41:40,839
Speaker 1: this was their fun intro to the space, but they

762
00:41:40,880 --> 00:41:44,920
Speaker 1: want to learn more about investing or do they invest?

763
00:41:45,000 --> 00:41:48,800
Speaker 1: But this is sort of like their version of gambling,

764
00:41:48,880 --> 00:41:51,200
Speaker 1: like you know, like after what what do you what

765
00:41:51,239 --> 00:41:54,719
Speaker 1: do you see is the trajectory of a typical Wall

766
00:41:54,719 --> 00:42:00,200
Speaker 1: Street betsh participants. Well, what I see is probably not

767
00:42:00,280 --> 00:42:03,080
Speaker 1: what actually happens. Once again, I'm gonna take an educated

768
00:42:03,120 --> 00:42:06,439
Speaker 1: guest just based off from my experience. Specifically speaking, most

769
00:42:06,520 --> 00:42:11,000
Speaker 1: people probably lose their money. Um, it's just the name

770
00:42:11,040 --> 00:42:12,920
Speaker 1: of the game. Especially with the types of trades that

771
00:42:12,960 --> 00:42:15,320
Speaker 1: they're doing. They are not only going with stock options

772
00:42:15,360 --> 00:42:18,600
Speaker 1: one of their favorite types of plays. Obviously, stock options

773
00:42:18,600 --> 00:42:21,440
Speaker 1: aren't just unlike for X or futures where you can

774
00:42:21,480 --> 00:42:24,600
Speaker 1: just put on direction, there's there's more variables to it,

775
00:42:24,719 --> 00:42:26,759
Speaker 1: and they choose the types of variables that are the

776
00:42:26,880 --> 00:42:30,919
Speaker 1: riskiest possible, that the highest likelihood that they lose their money. Um.

777
00:42:31,080 --> 00:42:33,880
Speaker 1: And so just just given that, common sense tells me

778
00:42:33,920 --> 00:42:37,080
Speaker 1: that most people probably lose money. UM. That's that's not

779
00:42:37,120 --> 00:42:39,120
Speaker 1: necessarily what we get to see on the step ddit

780
00:42:39,160 --> 00:42:41,479
Speaker 1: because maybe they don't post it as much, or maybe

781
00:42:41,480 --> 00:42:43,920
Speaker 1: they're not as animated to give the stories, or maybe

782
00:42:43,960 --> 00:42:46,320
Speaker 1: you don't get as much visibility. When somebody makes millions

783
00:42:46,320 --> 00:42:49,000
Speaker 1: of dollars, they do get a lot more tension, and

784
00:42:49,080 --> 00:42:54,360
Speaker 1: so it's easier to make the assumption that everyone's making money. Um.

785
00:42:54,920 --> 00:42:57,759
Speaker 1: But what I have seen, which is very surprising, is

786
00:42:58,000 --> 00:43:00,279
Speaker 1: a lot of people that make money, a lot people

787
00:43:00,280 --> 00:43:03,319
Speaker 1: that do end up winning the lottery tickets turned out

788
00:43:03,320 --> 00:43:06,640
Speaker 1: to be extremely rational people. And obviously with exceptions, but

789
00:43:06,920 --> 00:43:09,000
Speaker 1: a lot of these guys. You know, there was an

790
00:43:09,040 --> 00:43:13,160
Speaker 1: example that I think even Bloomberg covered it um back

791
00:43:13,200 --> 00:43:16,640
Speaker 1: in October of twenty nineteen. You know, some guy put

792
00:43:16,640 --> 00:43:19,360
Speaker 1: in seven hundred dollars or seven hundred sixty dollars and

793
00:43:19,840 --> 00:43:23,319
Speaker 1: over a hundred thousand dollars. I spoke to him as

794
00:43:23,440 --> 00:43:25,360
Speaker 1: as part of the book to see how he was

795
00:43:25,400 --> 00:43:27,680
Speaker 1: doing it, to get some of his idea behind the trade.

796
00:43:27,680 --> 00:43:31,320
Speaker 1: And you know, he immediately after making that trade closed

797
00:43:31,400 --> 00:43:34,759
Speaker 1: up his brokerage account. He deposited that money into his

798
00:43:35,000 --> 00:43:37,319
Speaker 1: retirement fun. I don't know if the I R or

799
00:43:37,400 --> 00:43:39,959
Speaker 1: the one K or whatnot, but you know, he said

800
00:43:39,960 --> 00:43:41,719
Speaker 1: he couldn't focus on work anymore and he had to

801
00:43:41,760 --> 00:43:43,600
Speaker 1: keep focusing on his job. So he did, and he

802
00:43:43,640 --> 00:43:46,520
Speaker 1: has not to this day, at least until last months,

803
00:43:46,680 --> 00:43:48,480
Speaker 1: trading a getting or is he interested because he knows

804
00:43:48,480 --> 00:43:51,759
Speaker 1: he can't replicate it? Um. That's you know, that's an

805
00:43:51,760 --> 00:43:54,200
Speaker 1: extreme example if I'm straight up closing his brokerage account.

806
00:43:54,200 --> 00:43:57,120
Speaker 1: But I've seen a lot of people that make it big,

807
00:43:57,239 --> 00:44:01,040
Speaker 1: take that money, stash it away and uh and use

808
00:44:01,080 --> 00:44:04,239
Speaker 1: that money responsibly, you know, to buy a house, to

809
00:44:04,480 --> 00:44:08,319
Speaker 1: invest it into these dividend baying ets. They're well diversified,

810
00:44:08,600 --> 00:44:10,799
Speaker 1: they like to make fun of and they they're able

811
00:44:10,840 --> 00:44:14,239
Speaker 1: to u to be responsible with the market. So you

812
00:44:14,280 --> 00:44:17,600
Speaker 1: know my thesis at this point, there's a lot of

813
00:44:17,640 --> 00:44:21,719
Speaker 1: these these this demographic which there's a lot of millennials

814
00:44:21,800 --> 00:44:24,919
Speaker 1: and Generation Z. You know, they may they may want

815
00:44:24,960 --> 00:44:26,960
Speaker 1: to actually build the next stag and they don't have

816
00:44:27,440 --> 00:44:29,760
Speaker 1: what to do it with. Maybe it's because their students

817
00:44:29,800 --> 00:44:33,080
Speaker 1: that maybe it's because of wages are cost of living.

818
00:44:33,280 --> 00:44:35,600
Speaker 1: I really can tell you. I'm next putting that matter.

819
00:44:35,640 --> 00:44:38,000
Speaker 1: But you know they're they're looking to try and get

820
00:44:38,360 --> 00:44:40,319
Speaker 1: ahead or get out of this rat race. And the

821
00:44:40,400 --> 00:44:42,080
Speaker 1: ones that do and there's been a lot of them

822
00:44:42,080 --> 00:44:45,080
Speaker 1: that have made hundreds of thousands and even millions. And

823
00:44:45,120 --> 00:44:47,399
Speaker 1: if it started to pull back and say, all right,

824
00:44:47,440 --> 00:44:50,880
Speaker 1: now I've set aside, I've accomplished what I wanted to accomplish.

825
00:44:51,200 --> 00:44:52,880
Speaker 1: I don't think I can do this again. You know,

826
00:44:53,000 --> 00:44:55,560
Speaker 1: I don't want to become a date trader. Uh. If

827
00:44:55,640 --> 00:44:58,399
Speaker 1: they've made enough money to retire, then you know they

828
00:44:58,440 --> 00:45:00,200
Speaker 1: do that even if they've made enough money of it,

829
00:45:00,280 --> 00:45:04,840
Speaker 1: they can continue with their ordinary job and invest responsibly.

830
00:45:05,080 --> 00:45:07,480
Speaker 1: They've done that too, So that leads me to believe

831
00:45:07,520 --> 00:45:10,680
Speaker 1: that there's more to that group than with the surface

832
00:45:11,880 --> 00:45:15,680
Speaker 1: leads people to believe. So one of the themes running

833
00:45:15,680 --> 00:45:19,640
Speaker 1: through Luke's article is this question of whether or not

834
00:45:20,160 --> 00:45:24,000
Speaker 1: the bets made by the subreddit the options trading can

835
00:45:24,120 --> 00:45:27,960
Speaker 1: impact the wider market. And in your own book, Jamie,

836
00:45:28,120 --> 00:45:31,839
Speaker 1: you also talk about the notion of systemic risks. So

837
00:45:32,040 --> 00:45:35,279
Speaker 1: talk to us about when a bunch of people are

838
00:45:35,320 --> 00:45:40,200
Speaker 1: taking these kind of levered bets on online brokerage. Is

839
00:45:40,680 --> 00:45:44,600
Speaker 1: who's the loser here? Like, where does the lost money

840
00:45:44,680 --> 00:45:48,279
Speaker 1: actually come from? And is there a chance that this

841
00:45:48,360 --> 00:45:51,560
Speaker 1: could negatively impact the market if enough people do it?

842
00:45:52,239 --> 00:45:55,040
Speaker 1: You know, if we're if we're talking specifically about these

843
00:45:55,120 --> 00:45:58,840
Speaker 1: options trades that that Luke was referring to, you know,

844
00:45:58,880 --> 00:46:01,640
Speaker 1: I guess the losers whoever's on the other side of

845
00:46:01,640 --> 00:46:04,000
Speaker 1: this bet. But it's really difficult to measure. I mean,

846
00:46:04,000 --> 00:46:05,879
Speaker 1: you guys understand it just as well as I do.

847
00:46:06,480 --> 00:46:08,600
Speaker 1: It's not as easy to measure. Is just the winner

848
00:46:08,640 --> 00:46:11,360
Speaker 1: a loser? Because there's a lot of things that play.

849
00:46:11,600 --> 00:46:13,960
Speaker 1: You know that the market is fluid, and it goes

850
00:46:14,040 --> 00:46:15,960
Speaker 1: up and it goes down, and it depends on when

851
00:46:16,000 --> 00:46:19,080
Speaker 1: people enter and exit. A lot of these brokers are

852
00:46:19,080 --> 00:46:21,480
Speaker 1: not necessarily just making money off the bid asked spread.

853
00:46:21,520 --> 00:46:24,480
Speaker 1: They're making money off to the premium from these options.

854
00:46:24,520 --> 00:46:28,239
Speaker 1: And so if they do end up buying the stocks um,

855
00:46:28,680 --> 00:46:30,680
Speaker 1: you know, and the stocks go off, one could argue

856
00:46:30,680 --> 00:46:33,880
Speaker 1: that they're making money as well. If the entire stock

857
00:46:33,920 --> 00:46:36,680
Speaker 1: market goes up and everybody is long the stock market,

858
00:46:37,440 --> 00:46:40,319
Speaker 1: you know, it's difficult to argue that anyone's losing. But

859
00:46:40,400 --> 00:46:44,040
Speaker 1: it's not that simple, right, you know, It's happened last week,

860
00:46:44,040 --> 00:46:47,400
Speaker 1: and anyone that had all those shares in their possession

861
00:46:47,520 --> 00:46:50,120
Speaker 1: is no longer as happy as they were two weeks ago.

862
00:46:50,200 --> 00:46:53,880
Speaker 1: So yeah, I'm not assarily sure who the winner the

863
00:46:53,880 --> 00:46:56,640
Speaker 1: loser is, Like I suppose, it really depends what about

864
00:46:56,680 --> 00:46:59,120
Speaker 1: more generally, I guess what I'm getting at is if

865
00:46:59,120 --> 00:47:01,799
Speaker 1: someone takes a big levered bet, uh, and you know,

866
00:47:01,880 --> 00:47:05,360
Speaker 1: they put in a thousand dollars, make some sort of trade,

867
00:47:05,520 --> 00:47:08,640
Speaker 1: and they end up ten thousand or even a hundred

868
00:47:08,640 --> 00:47:12,040
Speaker 1: thousand in the red, who's the loser on that one,

869
00:47:12,160 --> 00:47:14,720
Speaker 1: and what happens to the brokerage that let that trade

870
00:47:14,719 --> 00:47:18,320
Speaker 1: go through. So you have a huge number of people

871
00:47:18,640 --> 00:47:22,200
Speaker 1: that are taking that are playing with some very sophisticated

872
00:47:22,400 --> 00:47:24,960
Speaker 1: tools right um, and they're using it in ways that

873
00:47:24,960 --> 00:47:28,359
Speaker 1: they don't fully understand them um and and and they're

874
00:47:28,360 --> 00:47:31,560
Speaker 1: posing what I believe to be a systemic risk um

875
00:47:31,760 --> 00:47:35,799
Speaker 1: and so you know that some examples of this, which

876
00:47:35,840 --> 00:47:39,040
Speaker 1: I find to be extremely fascinating, which was one of

877
00:47:39,080 --> 00:47:41,839
Speaker 1: the biggest motivators that I had to write this book

878
00:47:41,840 --> 00:47:46,279
Speaker 1: in the first place, was the securities like the VIX

879
00:47:46,360 --> 00:47:49,400
Speaker 1: that they revolve around the volatility index that then have

880
00:47:49,440 --> 00:47:51,520
Speaker 1: ets on top of them, and then they have leverage

881
00:47:51,560 --> 00:47:54,040
Speaker 1: dts and they have you know, stock options on top

882
00:47:54,080 --> 00:47:58,520
Speaker 1: of those. Um. Those are extremely extremely complicated. People that

883
00:47:58,600 --> 00:48:00,960
Speaker 1: know what they're doing don't know how to explain it

884
00:48:01,000 --> 00:48:06,480
Speaker 1: to other people that also know what they're doing. So

885
00:48:06,480 --> 00:48:10,120
Speaker 1: so if you have a kid that opens up his

886
00:48:10,120 --> 00:48:13,000
Speaker 1: his broker account on his cellphone during his lunch break

887
00:48:13,360 --> 00:48:17,000
Speaker 1: and types the U v X Y or TVIX or whatever,

888
00:48:17,440 --> 00:48:19,680
Speaker 1: you know, it's just a symbol like Apple. They don't

889
00:48:19,680 --> 00:48:21,680
Speaker 1: know they've just got a price that moves up and down,

890
00:48:21,719 --> 00:48:23,360
Speaker 1: and it moves up and down a lot, so it

891
00:48:23,360 --> 00:48:25,600
Speaker 1: looks like fun, right because it seems like it's got

892
00:48:25,600 --> 00:48:27,759
Speaker 1: one of the properties that requires for them to make

893
00:48:27,800 --> 00:48:30,279
Speaker 1: a trade. So maybe they'll look it up and they say, oh,

894
00:48:30,560 --> 00:48:33,040
Speaker 1: something to do with alatility or whatever. I'm only gonna

895
00:48:33,040 --> 00:48:34,759
Speaker 1: hold this for a few minutes or a few days,

896
00:48:34,800 --> 00:48:37,360
Speaker 1: so I could care less what the what the company

897
00:48:37,440 --> 00:48:42,040
Speaker 1: does or what their earnings reports BIGGS has to do.

898
00:48:41,400 --> 00:48:43,640
Speaker 1: So you know, they buy options on top of that

899
00:48:43,680 --> 00:48:45,200
Speaker 1: because it turns out to those as well, and then

900
00:48:45,239 --> 00:48:48,840
Speaker 1: they'll just you know, lever up, you know, in ridiculous amounts,

901
00:48:49,080 --> 00:48:52,879
Speaker 1: not realizing that there's a huge mechanism behind this, right,

902
00:48:52,920 --> 00:48:55,839
Speaker 1: like we all well maybe you guys remember the big

903
00:48:55,920 --> 00:49:00,440
Speaker 1: volmageddon February fifty think that you know, we're we had

904
00:49:00,440 --> 00:49:06,000
Speaker 1: an example the the market showed a weakness in because

905
00:49:06,000 --> 00:49:08,480
Speaker 1: of the existence of all these tools, right, because there's

906
00:49:08,520 --> 00:49:11,120
Speaker 1: so many of these kas that they had to rebalance

907
00:49:11,160 --> 00:49:12,480
Speaker 1: at the end of the day, both the ones that

908
00:49:12,520 --> 00:49:15,000
Speaker 1: were There's was the ones that were leveraged long the

909
00:49:15,120 --> 00:49:18,440
Speaker 1: vixit spiked so much that particular day that you know

910
00:49:18,560 --> 00:49:20,680
Speaker 1: that come four o'clock they were all going to have

911
00:49:20,800 --> 00:49:23,560
Speaker 1: to buy vixity cures, and so all the participants that

912
00:49:23,640 --> 00:49:26,359
Speaker 1: know this, which is pretty much everyone, decided the front

913
00:49:26,400 --> 00:49:28,440
Speaker 1: on this during the daytime, so they drove up the

914
00:49:28,520 --> 00:49:31,320
Speaker 1: vix even further, you know, and that made part market

915
00:49:31,360 --> 00:49:34,400
Speaker 1: participants even more nervously ended up buying put options on

916
00:49:34,440 --> 00:49:37,319
Speaker 1: the SMP, which obviously drive the vix even higher, which

917
00:49:37,600 --> 00:49:39,600
Speaker 1: you know, made people nervous, and they started to start

918
00:49:39,640 --> 00:49:42,520
Speaker 1: selling some of their stocks, which you know, probably the

919
00:49:42,560 --> 00:49:46,680
Speaker 1: bigger drop. And this feedback was disastrous and a lot

920
00:49:46,719 --> 00:49:48,799
Speaker 1: of what happened that particular they had nothing to do

921
00:49:48,880 --> 00:49:52,359
Speaker 1: with coronavirus or some you know that that maybe that

922
00:49:52,440 --> 00:49:56,759
Speaker 1: was a complete systemic failure of these really sophisticated tools.

923
00:49:56,760 --> 00:49:59,200
Speaker 1: And so now you have these kids that are you know,

924
00:49:59,480 --> 00:50:01,520
Speaker 1: they're really is of them and millions of millions, and

925
00:50:01,560 --> 00:50:04,600
Speaker 1: they're using very leverage tools to exploit these millions of

926
00:50:04,640 --> 00:50:09,880
Speaker 1: millions of uh, very complex securities, and they're plugged into

927
00:50:09,960 --> 00:50:12,759
Speaker 1: you know, this interconnected system. And yes, I believe that

928
00:50:12,840 --> 00:50:16,000
Speaker 1: there is uh that there is a risk of play.

929
00:50:16,400 --> 00:50:19,200
Speaker 1: Once again, I'll struggle to define the winner and a loser,

930
00:50:19,440 --> 00:50:23,600
Speaker 1: but you know, but I do worry, um with the

931
00:50:23,640 --> 00:50:27,239
Speaker 1: fragility of the of the system. Jamie. Uh. Before we

932
00:50:27,280 --> 00:50:30,200
Speaker 1: wrap up real quickly, I have to note the sort

933
00:50:30,239 --> 00:50:34,000
Speaker 1: of poetry or perfection of this moment that we're interviewing,

934
00:50:34,040 --> 00:50:38,759
Speaker 1: because literally, while we're talking and recording this podcast, I

935
00:50:38,840 --> 00:50:43,359
Speaker 1: see that Robin Hood is experiencing an outage. Uh So

936
00:50:43,400 --> 00:50:46,680
Speaker 1: amid this extraordinary volatility that we're seeing in the market.

937
00:50:47,120 --> 00:50:49,520
Speaker 1: I'm sure there are a lot of frustrated Wall Street

938
00:50:49,560 --> 00:50:52,520
Speaker 1: Bets users. They have a thing on their status page

939
00:50:52,520 --> 00:50:55,279
Speaker 1: saying right now we're experiencing a system wide outage. We're

940
00:50:55,280 --> 00:50:57,759
Speaker 1: working to resolve this issue as soon as possible, So

941
00:50:58,000 --> 00:51:01,560
Speaker 1: presumably a lot of people not to trade frustrated that

942
00:51:01,600 --> 00:51:04,600
Speaker 1: they can't take advantage of the volatility one way or another.

943
00:51:04,880 --> 00:51:09,560
Speaker 1: Kind of perfect timing. Final question, just in terms of

944
00:51:09,719 --> 00:51:12,200
Speaker 1: I have two very quick questions for you. Is one,

945
00:51:12,560 --> 00:51:16,640
Speaker 1: have you yourself made money overall trading options? And to

946
00:51:17,360 --> 00:51:20,080
Speaker 1: where do you want to take Wall Street Bets? What

947
00:51:20,120 --> 00:51:21,960
Speaker 1: do you see is it's a future or you're just

948
00:51:21,960 --> 00:51:23,879
Speaker 1: going to sort of let the people do their thing

949
00:51:26,080 --> 00:51:30,200
Speaker 1: um with options. I have not made money. Uh. I

950
00:51:30,239 --> 00:51:32,399
Speaker 1: guess that's that's probably the first of it. I've said

951
00:51:32,440 --> 00:51:37,160
Speaker 1: that the options are really tricky, um and uh uh

952
00:51:37,200 --> 00:51:40,480
Speaker 1: and I I lost a fair amount of money with them,

953
00:51:40,480 --> 00:51:43,600
Speaker 1: but you know, I also learned a huge amount about

954
00:51:43,640 --> 00:51:45,759
Speaker 1: the market with that, and I've since moved on to

955
00:51:45,840 --> 00:51:49,279
Speaker 1: different instruments that have there's being more profitable. But but

956
00:51:49,360 --> 00:51:55,520
Speaker 1: now the stock options are appreciate thing to make money with. Um.

957
00:51:55,600 --> 00:51:58,000
Speaker 1: And with regards to the direction of Wall Street bets,

958
00:51:58,640 --> 00:52:01,200
Speaker 1: I guess there's twofold number one. You know, it has

959
00:52:01,280 --> 00:52:04,200
Speaker 1: to some extent of life of us. Uh. So I

960
00:52:04,239 --> 00:52:07,919
Speaker 1: haven't directed Wall Street Bets into what it is now,

961
00:52:08,120 --> 00:52:11,759
Speaker 1: you know, I have uh let the community take it

962
00:52:11,760 --> 00:52:14,040
Speaker 1: wherever it wants to go, and the moderator teams take

963
00:52:14,080 --> 00:52:16,160
Speaker 1: it to where it wants to go. And so we'll

964
00:52:16,200 --> 00:52:17,799
Speaker 1: see what that means for the future. And as far

965
00:52:17,800 --> 00:52:19,640
Speaker 1: as what I might want to do with it, well,

966
00:52:19,880 --> 00:52:23,560
Speaker 1: you might be hearing about some ideas here in a

967
00:52:23,600 --> 00:52:27,680
Speaker 1: couple of weeks. I have no doubt about it. Okay, great, Well, Jamie,

968
00:52:27,960 --> 00:52:31,279
Speaker 1: really appreciate you joining us. It's obviously sort of a

969
00:52:31,280 --> 00:52:36,280
Speaker 1: fascinating experiment window into a psyche of uh at least

970
00:52:36,280 --> 00:52:39,319
Speaker 1: a handful of market participants, and I really appreciate you

971
00:52:39,400 --> 00:52:43,640
Speaker 1: taking your time to uh explain the history and perhaps

972
00:52:43,680 --> 00:52:46,920
Speaker 1: the future Ball Street Bets. I'm I'm problem. Thank you

973
00:52:47,000 --> 00:52:49,920
Speaker 1: very much for having me, Thanks Jamie, Thanks so much, Shamie.

974
00:52:50,280 --> 00:52:52,719
Speaker 1: And we want to thank Luke Kawa of course for

975
00:52:52,840 --> 00:52:56,200
Speaker 1: coming on and walking us through the technical details a

976
00:52:56,280 --> 00:52:58,439
Speaker 1: lot of a lot of this options trading as well

977
00:52:58,440 --> 00:53:01,480
Speaker 1: as for his great bus this week cover story. So

978
00:53:01,560 --> 00:53:04,520
Speaker 1: thank you to Luke Kawa as well. Oh my pleasure,

979
00:53:04,520 --> 00:53:18,279
Speaker 1: My pleasure. So one thing I was thinking about is this, um,

980
00:53:18,280 --> 00:53:22,120
Speaker 1: this difference between our investing and our Wall Street bets.

981
00:53:22,239 --> 00:53:24,279
Speaker 1: And on the one hand, you have a group of

982
00:53:24,320 --> 00:53:27,000
Speaker 1: people who are sort of playing by the rules and

983
00:53:27,520 --> 00:53:30,440
Speaker 1: investing a little bit of money in you know, passive

984
00:53:30,600 --> 00:53:34,239
Speaker 1: stuff like s SMP five hundred funds and sort of

985
00:53:34,280 --> 00:53:36,440
Speaker 1: eking out little returns every once in a while. And

986
00:53:36,480 --> 00:53:39,160
Speaker 1: then you have the our Wall Street bets people who

987
00:53:39,160 --> 00:53:43,279
Speaker 1: are making this big money and sort of well big

988
00:53:43,320 --> 00:53:45,879
Speaker 1: money and big losses and also trying to find cheat

989
00:53:45,960 --> 00:53:50,239
Speaker 1: codes to exploit the system. And I guess the big

990
00:53:50,320 --> 00:53:53,719
Speaker 1: question that I'm thinking now is which one of those

991
00:53:53,760 --> 00:53:56,920
Speaker 1: should the stock market be Like? There's an argument that

992
00:53:56,960 --> 00:53:59,200
Speaker 1: the stock market or the market in general should be

993
00:53:59,200 --> 00:54:05,960
Speaker 1: about efficient allocating companies capital or capital to companies, And

994
00:54:06,960 --> 00:54:11,480
Speaker 1: I don't know, I could sort of argue it both ways. Yeah, absolutely,

995
00:54:11,520 --> 00:54:13,680
Speaker 1: I think both need to exist. And you know, there's

996
00:54:13,719 --> 00:54:17,600
Speaker 1: always been this spectrum in any given market, right between

997
00:54:17,960 --> 00:54:22,560
Speaker 1: the sort of pure speculation short term gambling mentality and

998
00:54:22,719 --> 00:54:26,480
Speaker 1: the longer term fundamental investing mentality. And we did a

999
00:54:26,840 --> 00:54:30,720
Speaker 1: some episodes recently looking at how the sort of pure

1000
00:54:31,000 --> 00:54:36,759
Speaker 1: long term passive investing mentality has been gone to a

1001
00:54:36,840 --> 00:54:41,279
Speaker 1: very large extreme, with people not taking any risks of

1002
00:54:41,440 --> 00:54:45,400
Speaker 1: individual stock selection or market timing and just blindly buying

1003
00:54:45,960 --> 00:54:49,680
Speaker 1: the entire index every paycheck. And so it's not surprising

1004
00:54:49,760 --> 00:54:54,440
Speaker 1: that if the sort of long term passive approach is

1005
00:54:54,480 --> 00:54:57,560
Speaker 1: getting more and more extreme, more and more vanilla, that

1006
00:54:57,680 --> 00:55:01,640
Speaker 1: you have then see the sort of mirror image happening

1007
00:55:01,680 --> 00:55:03,960
Speaker 1: on the other end. And so then you see the

1008
00:55:04,000 --> 00:55:06,560
Speaker 1: people who do try to like quote beat the market

1009
00:55:06,719 --> 00:55:11,400
Speaker 1: or take idiosyncretic security risk going absolutely to the extreme

1010
00:55:11,440 --> 00:55:14,040
Speaker 1: the other way. And what you get is you sort

1011
00:55:14,040 --> 00:55:16,200
Speaker 1: of hollow out that middle of the old days of like,

1012
00:55:16,920 --> 00:55:20,000
Speaker 1: you know, people buying thirty stocks for their portfrait value

1013
00:55:20,000 --> 00:55:23,399
Speaker 1: of investment seems really quaint. Yeah, stuff like that. Yeah,

1014
00:55:23,440 --> 00:55:26,759
Speaker 1: it's sort of two extremes um at the end of

1015
00:55:27,000 --> 00:55:29,680
Speaker 1: a sort of barbell. I guess the other thing I'm

1016
00:55:29,680 --> 00:55:33,520
Speaker 1: wondering is, you know, it's fine to see people taking

1017
00:55:33,560 --> 00:55:36,439
Speaker 1: these sorts of bets and blowing up their robin Hood

1018
00:55:36,440 --> 00:55:38,719
Speaker 1: accounts as long as it's their own money and as

1019
00:55:38,760 --> 00:55:41,040
Speaker 1: long as it doesn't affect the wider market. But then

1020
00:55:41,440 --> 00:55:43,799
Speaker 1: the point that Jamie touched on at the end, which is,

1021
00:55:43,920 --> 00:55:48,680
Speaker 1: we do have some instances where options trading has impacted

1022
00:55:48,719 --> 00:55:52,040
Speaker 1: the underlying index, such as x I V and the

1023
00:55:52,120 --> 00:55:55,800
Speaker 1: vix back and form and ged in and uh again,

1024
00:55:55,840 --> 00:55:59,080
Speaker 1: we mentioned the robin Hood blowout at the end, and

1025
00:55:59,640 --> 00:56:01,480
Speaker 1: you so would have to think whether or not a

1026
00:56:01,520 --> 00:56:05,000
Speaker 1: lot of the brokerages and the zero commission trading are

1027
00:56:05,600 --> 00:56:08,120
Speaker 1: encouraging a race to the bottom when it comes to

1028
00:56:08,320 --> 00:56:11,840
Speaker 1: enabling these sorts of levered bets. A yes, But B

1029
00:56:12,040 --> 00:56:14,279
Speaker 1: I'll just say, you know, for as big as they are,

1030
00:56:14,800 --> 00:56:18,960
Speaker 1: you know, there are institutions that are ten times bigger

1031
00:56:19,520 --> 00:56:24,920
Speaker 1: throughout history, established serious, respectable institutions where people have PhD

1032
00:56:25,160 --> 00:56:27,960
Speaker 1: s and right equations and they all wear a tidal

1033
00:56:28,000 --> 00:56:31,520
Speaker 1: work that have caused far more damage than anything on

1034
00:56:31,560 --> 00:56:33,600
Speaker 1: the message board. So while I'm sure that that is

1035
00:56:33,640 --> 00:56:38,000
Speaker 1: a potential phenomenon, uh, if Wall Street Bets did create

1036
00:56:38,080 --> 00:56:42,080
Speaker 1: some sort of endogenous volatility, they would not be the

1037
00:56:42,120 --> 00:56:45,680
Speaker 1: first buy any stretch. No, that is totally a fair point,

1038
00:56:45,760 --> 00:56:49,799
Speaker 1: and no ties or PhDs, presumably on Wall Street Bets.

1039
00:56:50,040 --> 00:56:52,360
Speaker 1: I gotta say it's probably a few now to be fair.

1040
00:56:52,800 --> 00:56:55,799
Speaker 1: Well yeah, okay, Well that kind of brought me to

1041
00:56:55,840 --> 00:56:59,120
Speaker 1: my last point, which was in Jamie's book The Guy

1042
00:56:59,239 --> 00:57:02,080
Speaker 1: that lost bunch of money on X I V who

1043
00:57:02,200 --> 00:57:04,239
Speaker 1: was on Wall Street Bets. I think this was the

1044
00:57:04,280 --> 00:57:07,960
Speaker 1: biggest loss ever on Wall Street Bets. Jamie says he

1045
00:57:08,040 --> 00:57:14,239
Speaker 1: ended up working for a unnamed financial institution, so there

1046
00:57:14,320 --> 00:57:19,240
Speaker 1: is some overlap between professionals. He wouldn't be the first

1047
00:57:19,320 --> 00:57:22,400
Speaker 1: person who made his name and career by losing a

1048
00:57:22,400 --> 00:57:25,040
Speaker 1: lot of money or so. Somehow, I feel like in finance,

1049
00:57:25,520 --> 00:57:27,560
Speaker 1: if you if you lose a little bit money or

1050
00:57:27,600 --> 00:57:29,400
Speaker 1: in trouble, if you lose a lot of money, you

1051
00:57:29,400 --> 00:57:31,720
Speaker 1: could probably uh you know, find a new job and

1052
00:57:31,760 --> 00:57:36,240
Speaker 1: do something else. Yeah, so weird and yet so true. Okay,

1053
00:57:36,560 --> 00:57:39,520
Speaker 1: this has been another episode of the All Thoughts podcast.

1054
00:57:39,680 --> 00:57:42,200
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at

1055
00:57:42,240 --> 00:57:45,680
Speaker 1: Tracy Alloway and I'm Joe Wisn'tal. You can follow me

1056
00:57:45,840 --> 00:57:49,080
Speaker 1: on Twitter at The Stalwart, and you should follow our

1057
00:57:49,120 --> 00:57:52,800
Speaker 1: colleague Luke Colla on Twitter at l J Cola and

1058
00:57:52,880 --> 00:57:56,200
Speaker 1: follow Jamie on Twitter. He has the handle at Wall

1059
00:57:56,240 --> 00:57:59,560
Speaker 1: Street Bets. And be sure to follow our producer on Twitter,

1060
00:57:59,640 --> 00:58:04,120
Speaker 1: Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg

1061
00:58:04,160 --> 00:58:08,160
Speaker 1: head of podcasts, Francesco Levi at Francesca Today, and for

1062
00:58:08,240 --> 00:58:11,440
Speaker 1: all the Bloomberg podcasts, check them out under the handle

1063
00:58:11,960 --> 00:58:13,720
Speaker 1: at podcasts. Thanks for listening