WEBVTT - This Is What Happened to the Meme Stock Mania 0:00:10.920 --> 0:00:14.960 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:15.040 --> 0:00:18.959 I'm Joe Wisenthal and I'm Tracy. Tracy. You know, it 0:00:19.040 --> 0:00:22.880 was really fun last year was Game to Stop? That 0:00:22.960 --> 0:00:25.520 was a really good time, wasn't it. Yeah, plus a 0:00:25.640 --> 0:00:28.680 land war in Europe that we haven't seen for many, 0:00:28.720 --> 0:00:33.599 many decades. But yeah, retail mania was this big thing 0:00:33.600 --> 0:00:37.279 that happened in early one And I'm just looking at 0:00:37.280 --> 0:00:39.600 the chart of Game Stop that was sort of the 0:00:39.960 --> 0:00:44.839 flagship stock for mean stock Madia Mania, and it looks 0:00:44.920 --> 0:00:47.360 like if you zoom out now, it kind of looks 0:00:47.360 --> 0:00:50.040 like an earthquake, which in some sense it kind of was, 0:00:50.159 --> 0:00:52.239 Like it was this thing that just shook up the 0:00:52.440 --> 0:00:54.640 entire market and people at the time we're saying that 0:00:54.680 --> 0:00:57.959 this was like the end of capitalism as we know it. 0:00:58.480 --> 0:01:01.720 It does. It definitely feels like so much has happened 0:01:01.760 --> 0:01:03.480 over the last year. I mean, we've had a pretty 0:01:03.480 --> 0:01:05.800 big sell off in areas of the market that are 0:01:05.840 --> 0:01:09.440 really hot. It's been a long year. So many different 0:01:09.440 --> 0:01:12.759 things have happened over that time, so many new narratives, 0:01:12.800 --> 0:01:16.320 obviously tons of focus these days on inflation and so forth. 0:01:16.760 --> 0:01:19.959 That whole period, it really seems like ancient history, but honestly, 0:01:20.120 --> 0:01:22.520 it was really not that long ago. I think Matt 0:01:22.600 --> 0:01:25.840 Levine has had some columns saying things that like, oh, 0:01:25.880 --> 0:01:28.080 of game Stop is still trading above a hundred and 0:01:28.120 --> 0:01:30.520 three months, I have to retire because all of markets 0:01:30.520 --> 0:01:33.240 are broken. And I think it was still there or 0:01:33.440 --> 0:01:36.800 definitely lasted a long time. And that's kind of the 0:01:36.840 --> 0:01:39.440 other weird thing about these sort of these manias, which 0:01:39.480 --> 0:01:42.880 is that you can identify them as a mania sometimes 0:01:42.920 --> 0:01:45.760 in real time, or say this is ridiculous, this is 0:01:45.880 --> 0:01:49.400 over overvalued, but it's really hard to call them at 0:01:49.400 --> 0:01:51.960 the time. It's really hard to time the trades. Yeah, 0:01:52.000 --> 0:01:54.120 I think that's right. But there was also this aspect 0:01:54.160 --> 0:01:56.840 of game Stop where people were treating it, you know, 0:01:56.920 --> 0:02:00.520 not necessarily as there were plenty of people treating it 0:02:00.600 --> 0:02:03.400 as a speculative bubble, but there were some people who 0:02:03.440 --> 0:02:06.200 just said I like the company, or I like whatever 0:02:06.240 --> 0:02:09.280 this stock represents to me, and I'm going to buy it, 0:02:09.400 --> 0:02:12.040 almost using it as a sort of like go fund 0:02:12.120 --> 0:02:15.680 me for the business. And I honestly, one of the 0:02:15.720 --> 0:02:17.800 things that I think is really important in all this, 0:02:17.919 --> 0:02:19.720 which is that you know, at the peak, you know 0:02:19.760 --> 0:02:22.280 it got started in the spring of like that's really 0:02:22.320 --> 0:02:24.720 when it kicked off. That's when we had the explosion 0:02:24.760 --> 0:02:27.079 of new people trading. A lot of people who are 0:02:27.080 --> 0:02:30.560 staying home, either they were working from home, people have 0:02:30.680 --> 0:02:33.440 lost their jobs, and so you had this explosion of 0:02:33.440 --> 0:02:37.600 people who are getting into retail trading options, trading, opening 0:02:37.720 --> 0:02:40.480 up a robin Hood account, and for the first time, 0:02:40.680 --> 0:02:42.920 like I guess really since the late nineties into the 0:02:42.960 --> 0:02:45.840 dot com bubble, it was the first time and basically 0:02:45.880 --> 0:02:48.280 twenty years in which it felt like stock trading was 0:02:48.520 --> 0:02:51.480 like part of the environment, part of the culture, and 0:02:51.560 --> 0:02:54.560 something that people are just talking about their individual stockholdings 0:02:54.880 --> 0:02:56.840 in a way that really, yeah, I don't think had 0:02:56.880 --> 0:02:59.880 been the case for at least twenty years, right, I mean, 0:02:59.880 --> 0:03:03.200 I remember there's a there's a dorman who works at 0:03:03.200 --> 0:03:04.840 a hotel in New York who I know who was 0:03:04.880 --> 0:03:07.960 asking me about Tesla options around that time, and that, 0:03:08.040 --> 0:03:11.160 you know, like it's verging on the famous JP Morgan 0:03:11.280 --> 0:03:14.600 shoeshine boy kind of thing when the doorman starts asking 0:03:14.639 --> 0:03:18.120 you about what options you should be buying for tesla um. 0:03:18.120 --> 0:03:21.880 But yeah, it definitely was a cultural event, right, it 0:03:21.919 --> 0:03:24.160 was really it was really a cultural moment, and so 0:03:24.240 --> 0:03:26.239 I'm really interested in like what became of that. And 0:03:26.280 --> 0:03:28.920 I have my suspicions, you know, my guests would be 0:03:28.960 --> 0:03:30.640 that a lot of people have now lost their money, 0:03:31.160 --> 0:03:34.200 they lost their gains that they experienced during the pandemic, 0:03:34.560 --> 0:03:37.839 maybe their disillusion. We know that trading volume is down, 0:03:38.120 --> 0:03:39.880 but I also have to imagine there's at least some 0:03:39.960 --> 0:03:42.760 people that have done well, you know, they've used this 0:03:42.800 --> 0:03:46.640 moment perhaps to learn more, wanted to further their own education, 0:03:46.760 --> 0:03:51.400 become deeply interested in how the markets work, options are prized, 0:03:51.440 --> 0:03:54.520 how trading works, how to evaluate an investment, And so 0:03:54.640 --> 0:03:57.280 I suspected at least some decent percentage of people got 0:03:57.280 --> 0:04:02.960 excited about the market from Spring twenty one one have 0:04:03.080 --> 0:04:07.560 stuck around and really further their knowledge to quite a degree. Yeah. Absolutely, 0:04:07.560 --> 0:04:09.600 And this is something that you see on you know, 0:04:10.000 --> 0:04:12.800 the classic message board for a lot of the retail training, 0:04:12.800 --> 0:04:15.400 which is Wall Street bets. A lot of the posts 0:04:15.400 --> 0:04:19.720 that go up on there are incredibly sophisticated in trading strategies, 0:04:19.760 --> 0:04:21.559 and a lot of them aren't, I have to admit, 0:04:21.839 --> 0:04:25.880 but you can learn a lot by by reading some 0:04:25.960 --> 0:04:29.200 of that. Now, I think you make a really important 0:04:29.240 --> 0:04:32.520 point like some are, they're not great, some are extremely great. 0:04:32.600 --> 0:04:34.960 Some people have learned quite a bit, some got really smart. 0:04:35.200 --> 0:04:38.080 Some are much smarter than anything I know about, much 0:04:38.120 --> 0:04:41.919 more knowledge of market mechanics, how to price volatility. So 0:04:42.000 --> 0:04:44.359 I think we don't know yet the final chapter of 0:04:44.400 --> 0:04:48.240 this story and what this new cohort of traders that 0:04:48.480 --> 0:04:50.880 uh and what became of them that really started at 0:04:50.880 --> 0:04:53.359 the beginning of the pandemic. I'm really excited. We have 0:04:53.440 --> 0:04:56.480 two guests to great commenters who've followed for a long time, 0:04:56.839 --> 0:04:59.080 get to give us different perspectives on the world. What 0:04:59.200 --> 0:05:03.040 happened all those memes dogs, what's going on with retail trading. 0:05:03.080 --> 0:05:05.880 We're gonna be speaking with Lily Francis. She's the director 0:05:05.920 --> 0:05:09.160 of quant research at Moody's Analytics. And we're also going 0:05:09.200 --> 0:05:13.320 to be speaking with Kyla Scanlon, fantastic content creator, founder 0:05:13.360 --> 0:05:18.599 of a new finance education startup, awesome on Twitter and Instagram, TikTok, 0:05:18.839 --> 0:05:22.080 her newsletter all great stuff. So Lily and Kyla, thank 0:05:22.080 --> 0:05:24.800 you so much to both of you for coming on. Yeah, 0:05:24.880 --> 0:05:27.440 thanks stoving us. So what do we kick it off? 0:05:27.480 --> 0:05:29.240 You know, let's say both of you be such great 0:05:29.279 --> 0:05:31.559 commenters over the last year, of the last couple of years, 0:05:31.880 --> 0:05:36.560 building up significant audiences, great insights into the world of memestocks, 0:05:36.839 --> 0:05:40.159 retail trading, the sort of new cohort of investors. But 0:05:40.480 --> 0:05:42.880 why don't you just give us your perspective, Like, how 0:05:42.920 --> 0:05:47.480 does right now in Spring two feel different than a 0:05:47.560 --> 0:05:51.840 year ago? Yeah? Sure, So I'll take you first and 0:05:51.839 --> 0:05:54.880 then lily up stuff to you. F for for me. So, 0:05:55.120 --> 0:05:57.800 I wasn't really in the still working at an institution 0:05:57.839 --> 0:06:00.680 back when game stock kicked off in February. Orry, but 0:06:00.760 --> 0:06:03.240 I think you have noticed a little bit of a downturn, 0:06:03.279 --> 0:06:06.440 whether that be from people you know participating in discussions 0:06:06.440 --> 0:06:09.039 on Twitter or on Reddit. But I think the people 0:06:09.120 --> 0:06:11.960 that you see who have stuck around, they're even more 0:06:11.960 --> 0:06:16.960 impassioned than they were back in February April twenty April, 0:06:18.120 --> 0:06:21.719 um February. So I think that you're seeing a decline 0:06:21.800 --> 0:06:24.520 in the number of people who might be participating, But 0:06:24.600 --> 0:06:28.120 the people who are still around are incredibly into a 0:06:28.279 --> 0:06:30.600 m C G M ME And you still do see 0:06:30.839 --> 0:06:33.799 these stocks continue to tick back up. And I also 0:06:33.839 --> 0:06:35.880 see think that you're starting to see people get a 0:06:35.920 --> 0:06:39.360 little bit more interested in monetary policy. Jerome Powell has 0:06:39.440 --> 0:06:41.919 become a household name, and I don't think that was 0:06:42.040 --> 0:06:43.920 the case maybe you know two or three years ago 0:06:43.960 --> 0:06:47.359 where people knew the Federal Reserve president name. So I 0:06:47.360 --> 0:06:49.960 think that's a big one as well. Yeah, really, what 0:06:49.960 --> 0:06:53.159 do you think? Yeah, so I want to echo callus 0:06:53.160 --> 0:06:56.960 sent men here essentially, And you can see this pretty saliently, 0:06:57.720 --> 0:07:00.800 and you know Google trends or app any if you've 0:07:00.960 --> 0:07:04.400 looked at those about the rise and fall of Robin Hood. 0:07:04.480 --> 0:07:08.560 I mean fundamentally, you can't talk about the meme stock 0:07:09.480 --> 0:07:12.640 episode without thinking about Robin has impact on the options 0:07:12.680 --> 0:07:15.840 market in particular. I mean, in my own data you 0:07:15.880 --> 0:07:19.400 can see fundamental differences over time and the growth of 0:07:19.440 --> 0:07:24.560 options with a pretty dramatic change in their volumes, as 0:07:24.640 --> 0:07:28.360 well as impact the paddle the markets when Robin Hood 0:07:28.440 --> 0:07:33.960 essentially announced the trading of zero costs their transaction options. 0:07:34.040 --> 0:07:37.120 So I think that you know, you can see now 0:07:37.520 --> 0:07:41.600 that there's definitely a decline in retail participation, especially in 0:07:41.640 --> 0:07:46.320 the options market. I think, as you know, I discussed 0:07:46.360 --> 0:07:50.520 this with something I speculated back in January that when 0:07:50.600 --> 0:07:53.560 you look at these meme stocks based on the fact 0:07:53.640 --> 0:07:59.200 that fundamentally, they're trading well disconnected from stuff like fundamentals 0:07:59.480 --> 0:08:01.960 or even you know, kind of an understanding your future 0:08:02.040 --> 0:08:06.000 value of the company itself. Then what you're seeing really 0:08:06.080 --> 0:08:09.280 is the evolution of something that kind of looks for 0:08:09.360 --> 0:08:11.560 the cults. And I don't even mean this in a 0:08:11.640 --> 0:08:14.960 bad way or a good way, but I have these 0:08:15.280 --> 0:08:20.760 this passionate core of people who believe fundamentally in this 0:08:20.960 --> 0:08:26.280 truth that is extremely heada head. I can never get 0:08:26.280 --> 0:08:34.240 that word right, head heterodox, heterodox. So what happens is 0:08:34.440 --> 0:08:38.160 that no matter what you throw at them, whether it 0:08:38.280 --> 0:08:41.240 was Robin Hood, you know, turning off the buy button, 0:08:41.600 --> 0:08:45.360 or whether it was new earnings reports and game stop, 0:08:45.559 --> 0:08:48.920 or whether it is the macro environment where now you're 0:08:48.920 --> 0:08:51.520 still going to have these people who have faith in 0:08:51.559 --> 0:08:55.839 this narrative that over time becomes a pretty dominant force. 0:08:55.880 --> 0:08:59.240 I when you see this in cryptocurrencies, you saw this 0:08:59.520 --> 0:09:01.880 ten years ago on Apple, and you're salt with Tesla 0:09:02.679 --> 0:09:06.319 that fundamentally, this group of people is a capital base 0:09:06.520 --> 0:09:08.880 that the company, if they do play their cards right, 0:09:09.559 --> 0:09:14.640 can draw on to actually hopefully create value for their investors. 0:09:14.679 --> 0:09:17.520 So this is something that I've thought a little bit 0:09:17.559 --> 0:09:20.880 about but it's almost like, you know, you talk about 0:09:20.920 --> 0:09:25.680 the disconnect between the fundamentals and the share price, and 0:09:25.720 --> 0:09:29.760 it's almost like the price becomes a token that is 0:09:30.120 --> 0:09:34.200 representative of an idea or people's idea of what that 0:09:34.240 --> 0:09:38.319 company or that business or that cryptocurrency or whatever actually 0:09:38.400 --> 0:09:44.240 stands for. And I wonder what does that kind of 0:09:44.440 --> 0:09:49.240 meme trading or stalks, like, what does that actually mean? 0:09:50.080 --> 0:09:51.840 What does that mean to you? Like, how would you 0:09:51.960 --> 0:09:56.160 define it? Is it that idea of you know, a 0:09:56.280 --> 0:10:00.200 sort of a belief system getting wrapped up in a 0:10:00.320 --> 0:10:04.800 tradeable token that people are willing to throw their support behind, 0:10:05.080 --> 0:10:09.239 or how would you define it? Roughly, everything that trades, 0:10:09.440 --> 0:10:13.480 fundamentally is an agreement for someone that this is the 0:10:13.600 --> 0:10:15.800 value and I will be willing to buy it from you. 0:10:16.040 --> 0:10:20.360 That is the only arbiter price of any asset is 0:10:20.400 --> 0:10:23.240 that someone is willing to buy it from you at 0:10:23.280 --> 0:10:26.760 that price in the future or now, you know, I mean, 0:10:26.800 --> 0:10:30.439 if we're talking about marketing spot prices, so there are 0:10:30.480 --> 0:10:34.200 institutional memes. I mean, when you think about fundamental analysis, 0:10:34.679 --> 0:10:37.839 there is no law of the universe, like a law 0:10:37.880 --> 0:10:42.480 of gravity that says stocks should trade at twenty times Pde. Obviously, 0:10:42.520 --> 0:10:46.760 we have models which kind of give us mathematical certainty 0:10:46.800 --> 0:10:50.560 that allows us to look at how the market is 0:10:50.559 --> 0:10:53.000 reacting and say we disagree with it. That's where you 0:10:53.000 --> 0:10:56.400 get the idea of theoretical versus market pricing. But at 0:10:56.440 --> 0:10:59.200 the end of the day, you know, even those models, 0:10:59.280 --> 0:11:04.520 the models of the mental analysis, they largely depend on 0:11:04.880 --> 0:11:08.800 either are assumptions being correct or the adoption of the 0:11:08.800 --> 0:11:12.200 model itself. And this is something that Emmanuel Derman, for example, 0:11:12.559 --> 0:11:15.880 the famous options plant, has talked about as well. With 0:11:16.040 --> 0:11:19.480 the advent of black shuals in option pricing, you see 0:11:19.559 --> 0:11:24.440 that the assumptions of black shoals start dictating market structure. 0:11:25.280 --> 0:11:29.880 And you know, fundamentals is obviously probably the most cohesive 0:11:29.960 --> 0:11:32.439 and long lasting meme of the markets in the sense 0:11:32.520 --> 0:11:35.920 that we all agree that a company should be trading 0:11:35.960 --> 0:11:40.040 at a certain discounted cash flow evaluation. But it doesn't 0:11:40.080 --> 0:11:42.120 mean it has to because at the end of the day, 0:11:42.679 --> 0:11:44.600 if I go to you and I'm saying, look, I 0:11:44.640 --> 0:11:47.720 will buy this from you at a value wildly inflated, 0:11:48.400 --> 0:11:52.400 you know that is my prerogative. You know that is 0:11:52.480 --> 0:11:55.720 the market price at that juncture. And you see this 0:11:56.080 --> 0:11:59.559 with a higher susceptibility, especially for these smaller companies like 0:11:59.640 --> 0:12:03.679 a game Stop, because realistically, with a game Stop or 0:12:03.679 --> 0:12:08.560 an AMC retail, especially if they're highly dedicated as well 0:12:08.600 --> 0:12:11.840 as newly enriched by you know, the recent bubble and 0:12:13.480 --> 0:12:18.079 what we call the stock market, they have enough force 0:12:18.240 --> 0:12:21.000 that they could own a significant fraction of the float. 0:12:21.559 --> 0:12:24.320 And when that happened, you know, obviously you can have 0:12:24.360 --> 0:12:27.079 short sellers who can interact with the markets and try 0:12:27.120 --> 0:12:30.160 to restore what we call efficiency. But at the end 0:12:30.160 --> 0:12:31.959 of the day, there's a reason why game Stop is 0:12:32.000 --> 0:12:34.720 still trading in a hundred fifty dollars to share. We're 0:12:34.760 --> 0:12:37.560 talking now a year and a half later, and you 0:12:37.640 --> 0:12:41.760 see these companies that I wrote it off, everybody else 0:12:41.800 --> 0:12:45.679 wrote it off. We were wrong. You know. It doesn't 0:12:45.760 --> 0:12:48.559 mean that the market and fundamentals are dead in any way, 0:12:48.640 --> 0:12:53.160 but at the end of the day, everything that trades 0:12:53.760 --> 0:12:57.560 trades on someone's belief. Yeah, I see, that's a core 0:12:57.720 --> 0:12:59.800 driver of what's going on. Like I think G and 0:13:00.559 --> 0:13:02.800 A m C all of that it was. It's really 0:13:02.800 --> 0:13:05.680 emblematic of like a bigger thing in my opinion, Like 0:13:05.720 --> 0:13:08.480 it's not just about obviously a video game company or 0:13:08.520 --> 0:13:12.000 a movie company. It's you know, dissatisfaction with the institution 0:13:12.160 --> 0:13:14.920 or being upset about how things are playing out. And 0:13:15.000 --> 0:13:17.079 we were in the middle of a pandemic during that time, 0:13:17.120 --> 0:13:18.800 and I guess I don't know if we're out of 0:13:18.840 --> 0:13:21.800 it yet, who knows, But I think there's this big 0:13:21.840 --> 0:13:24.800 loss of trust in traditional institutions and g M E 0:13:24.920 --> 0:13:28.120 and a MC somehow we're able to capture that, and 0:13:28.160 --> 0:13:30.120 they were able to. That's like the premium that they 0:13:30.160 --> 0:13:33.040 sort of end up reflecting is like people being like, well, actually, 0:13:33.120 --> 0:13:35.360 I'm pretty mad, and I'm going to buy this company 0:13:35.400 --> 0:13:37.520 to try and prove to you how mad I am. 0:13:37.600 --> 0:13:39.880 And that's why it's still going up is because I 0:13:39.880 --> 0:13:43.600 think that narrative of this loss of trust in institutions 0:13:43.760 --> 0:13:47.160 or in like traditional structures is continuing to play out, 0:13:47.320 --> 0:13:50.840 and somehow AMC and g M E and other beam 0:13:50.920 --> 0:13:53.360 stomps have sort of captured that narrative. And I also 0:13:53.400 --> 0:13:56.360 think that we are in the era of themification of everything, 0:13:56.800 --> 0:14:00.680 where um, you know, Elon Musk buying Twitter for example, 0:14:00.800 --> 0:14:03.560 or even that like the idea of coming through where 0:14:03.600 --> 0:14:06.040 everything is sort of meant to be laughed at, like 0:14:06.120 --> 0:14:09.120 nothing is real like there's a lot of financial nihilism, 0:14:09.160 --> 0:14:11.400 and so I think G M, E, A, M C, etcetera, 0:14:11.440 --> 0:14:13.120 like this is you can't really quantify that, right, like 0:14:13.120 --> 0:14:15.360 this is all just speculation. But I think that that 0:14:15.520 --> 0:14:17.560 is also an element of what we're seeing where people 0:14:17.559 --> 0:14:20.120 are just like, Okay, what's going on? I don't know, 0:14:20.200 --> 0:14:23.000 so let me buy the stock because nothing makes sense anymore. 0:14:23.480 --> 0:14:26.360 What's interesting is it kind of harkens back to date 0:14:26.480 --> 0:14:28.920 of credit. You know, when we look at firms that 0:14:28.960 --> 0:14:33.400 are very close to let's say a default point, then fundamentally, 0:14:33.520 --> 0:14:35.600 you know, the basic model that we all kind of 0:14:35.680 --> 0:14:38.120 understand is the Merrigin model, where we treat the equity 0:14:38.200 --> 0:14:41.480 value as an option on the firm's continued survival and 0:14:41.600 --> 0:14:44.040 a lot of ways. You know, that is the basis 0:14:44.080 --> 0:14:46.480 of how I viewed the moon stock trade, where you 0:14:46.560 --> 0:14:50.600 have these stocks which you know fundamentally maybe worthless or 0:14:50.640 --> 0:14:53.640 close worthless, or as I joke last year, I think 0:14:53.680 --> 0:14:57.440 at one point AMC had negative shareholders equity. But at 0:14:57.480 --> 0:15:01.280 the end of the day, you know, you treated the 0:15:02.000 --> 0:15:05.480 core reason that one buyas stock is a belief that 0:15:05.520 --> 0:15:09.520 they will make money from doing so. It isn't based 0:15:09.560 --> 0:15:13.160 on some ethics, it isn't based on true financial calculations. 0:15:13.760 --> 0:15:17.320 And as you see these squeeze more and more, you 0:15:17.360 --> 0:15:19.880 know you could almost treat these as an option on 0:15:20.000 --> 0:15:24.440 the continued mean value of this equity or of this asset. 0:15:24.640 --> 0:15:28.080 And I think, you know, one of my practical realizations 0:15:28.080 --> 0:15:32.040 from that is that there are disruptions to this meaning, 0:15:32.240 --> 0:15:35.520 which you could say are stuff like earnings, where you 0:15:35.600 --> 0:15:38.320 kind of get this pressure to go back to reality. 0:15:38.360 --> 0:15:40.680 But then you see an asset like a bitcoin, which 0:15:40.720 --> 0:15:44.360 has no fundamental value. It doesn't there is no equivalent 0:15:44.360 --> 0:15:47.920 of a bitcoin earnings. There is an equivalent of something 0:15:48.000 --> 0:15:52.240 that will directly imply a market price that can be 0:15:52.360 --> 0:15:56.240 arbitraged downwards. And that's when you see like the longevity 0:15:56.280 --> 0:16:00.400 of these memes. How means die, I don't know how 0:16:00.480 --> 0:16:03.000 beams die, Like I think that you see market cycles 0:16:03.040 --> 0:16:05.520 and it becomes really hard for memes to hang on 0:16:05.680 --> 0:16:08.200 during that time. Where As Lily just pointed out, like 0:16:08.200 --> 0:16:09.880 you have earning supports, and if all of a sudden, 0:16:09.920 --> 0:16:12.760 the company that you're putting all your networth into, it's like, oh, 0:16:12.800 --> 0:16:14.920 maybe it's not a company, it's actually just like a 0:16:15.320 --> 0:16:17.760 you know, a holding company, per se it doesn't really 0:16:17.760 --> 0:16:20.520 have any underlying value like that can be really difficult. 0:16:20.560 --> 0:16:23.360 So I think like everything sort of boils down to 0:16:23.400 --> 0:16:25.600 this idea of collective belief. And so if all of 0:16:25.640 --> 0:16:29.000 a sudden, the collective belief behind whatever the asset is 0:16:29.120 --> 0:16:31.760 goes away, if people stop saying, if they just stop 0:16:31.800 --> 0:16:34.280 believing and whatever, that ends up looking like like you're 0:16:34.280 --> 0:16:36.240 going to see the stock price end up going down, 0:16:36.560 --> 0:16:38.360 Like I don't know if robin hood is not really 0:16:38.400 --> 0:16:41.080 a meme stock, right, but like you're starting to see 0:16:41.120 --> 0:16:43.600 people sort of rotate away from that because collective belief 0:16:43.600 --> 0:16:45.720 and whatever they were meant to do sort of rotutes 0:16:45.760 --> 0:16:48.160 away too. So I think that's what I would say 0:16:48.280 --> 0:16:52.520 is collective belief begins to die out, um, but humans naturally, 0:16:52.560 --> 0:16:54.480 like we'll just go meme and other things. So it's 0:16:54.520 --> 0:16:57.280 like as long as the meme cycle continues, they're just 0:16:57.280 --> 0:17:00.240 going to move on to something else. I think there's 0:17:00.560 --> 0:17:03.520 a joke on Twitter especially that I treat everything kind 0:17:03.520 --> 0:17:05.879 of in the lens of option theory, because once you 0:17:06.520 --> 0:17:08.560 once you have a hammer, everything looks like a nail. 0:17:09.400 --> 0:17:12.800 But you know you're looking at the attention economy, where 0:17:12.840 --> 0:17:17.880 fundamentally you know, all of these stocks, especially once they 0:17:17.920 --> 0:17:20.360 don't have a fundamental basis on what to trade on, 0:17:20.800 --> 0:17:23.879 are really based on this idea of future liquidity, or 0:17:23.960 --> 0:17:27.159 you can say it's a greater full theory, or you know, 0:17:27.320 --> 0:17:30.120 whatever kind of derogatory term a pond Zi scheme. Those 0:17:30.119 --> 0:17:33.240 are all kind of analogous to each other, these zero 0:17:33.320 --> 0:17:35.960 sum games where you you assume that at the end 0:17:35.960 --> 0:17:37.760 of the day someone is going to be holding it back. 0:17:38.680 --> 0:17:42.320 I've argued, you know, previously last year looking at credit analysis, 0:17:42.359 --> 0:17:45.040 that it's a bit more muddied in the sense that 0:17:45.800 --> 0:17:48.960 you know, once you have these stocks, that mean, if 0:17:49.000 --> 0:17:52.760 they have a base that's essentially rabid enough, they can 0:17:52.760 --> 0:17:55.680 actually conduct at the money offerings which will turn into 0:17:55.720 --> 0:17:59.760 capital for the firm, which, assuming a good management and 0:18:00.000 --> 0:18:03.120 not management that's actually aligned with the vision, you could 0:18:03.200 --> 0:18:05.640 maybe see a pivot. You could actually rescue a firm 0:18:05.680 --> 0:18:09.040 that way, fundamentally, just because they have this new capital 0:18:09.080 --> 0:18:12.119 injection when they wouldn't have been even in the market 0:18:12.200 --> 0:18:19.440 for refinancing their debt before. But memes inherently are time limited, 0:18:19.480 --> 0:18:23.840 and since that attention is fleeting, obviously, you have individuals 0:18:23.880 --> 0:18:28.640 like Elon Musk who are very, very talented at staying 0:18:28.960 --> 0:18:31.959 in this in basically the news cycle, and I do 0:18:32.080 --> 0:18:37.040 think fundamentally that a significant fraction of tests Let's value 0:18:37.840 --> 0:18:40.640 it is due to the fact that Ellen can command 0:18:40.680 --> 0:18:44.840 this attention continuously. I think you're seeing that when people 0:18:45.080 --> 0:18:48.119 we thumb our noses that individuals like Elan and be like, 0:18:48.200 --> 0:18:51.560 why is he doing these crazy stuff? I sec should 0:18:51.560 --> 0:18:54.960 come get him, etcetera. But you're seeing that the Overton 0:18:55.080 --> 0:18:59.960 window of how CEOs interact with the environment has shifted 0:19:00.080 --> 0:19:02.919 toward him, not away from him. You could argue this 0:19:03.000 --> 0:19:06.640 kind of started with basically the Tea Party and Trump 0:19:06.680 --> 0:19:09.040 as well, but at the end of the day, it's 0:19:09.040 --> 0:19:11.800 become a powerful force in the capital markets, even with 0:19:11.920 --> 0:19:16.040 this macro environment that's become more unfavorable. So I actually 0:19:16.040 --> 0:19:19.040 want to ask more about the politics. So I remember, 0:19:19.119 --> 0:19:21.480 you know, thinking a year ago and when all of 0:19:21.520 --> 0:19:24.240 this was reaching a feed for pitch, and I'm totally 0:19:24.280 --> 0:19:26.600 cool with it. I have no problem with people trading 0:19:26.680 --> 0:19:30.080 or speculating or gambling with their own money. I'm pretty 0:19:30.160 --> 0:19:32.479 Lizzie Fair. It's cool to do what you want. If 0:19:32.480 --> 0:19:34.919 you want to have fun trading, go for it. I 0:19:34.920 --> 0:19:36.919 don't have any issues with it. If you want to 0:19:36.920 --> 0:19:39.960 be part of a club that looks fun, it looks 0:19:40.000 --> 0:19:41.840 fun to be part of the Game Stop club or 0:19:41.840 --> 0:19:45.359 the Apes. All that honestly looks really fun to me. 0:19:46.040 --> 0:19:48.320 I think, you know, and you know you mentioned this 0:19:48.359 --> 0:19:52.000 sort of financial nihilism aspect. I totally get that. The 0:19:52.040 --> 0:19:54.400 only part that kind of offended me, and maybe there's 0:19:54.400 --> 0:19:56.800 just being made old fashioned or what. The only part 0:19:56.840 --> 0:20:00.760 that sort of like bothered me was the wealthy, successful 0:20:00.960 --> 0:20:04.440 influencers telling their followers on Twitter and elsewhere, and I 0:20:04.480 --> 0:20:06.920 won't name any names, but telling their followers on Twitter 0:20:06.960 --> 0:20:10.000 and elsewhere that buying AMC or buying game stuff is 0:20:10.040 --> 0:20:12.360 itself a political act. Like if you want to stick 0:20:12.400 --> 0:20:15.840 it to the man, buy shares of AMC. Everyone buy 0:20:15.920 --> 0:20:19.240 shares of AMC, and as you say, you sort of 0:20:19.320 --> 0:20:22.119 breathe the life back into this company. And like, okay, 0:20:22.160 --> 0:20:26.159 that's great for AMC. Maybe some traders made money, but 0:20:26.200 --> 0:20:29.960 it's not obviously other than you know, some great strike 0:20:30.040 --> 0:20:33.400 against elite institutions other than maybe one or two hedge 0:20:33.440 --> 0:20:35.680 funds that lost a lot of money. And so it 0:20:35.760 --> 0:20:37.760 kind of bothered me at the time, these big time 0:20:37.920 --> 0:20:41.520 influencers telling their listeners that buying these stocks was a 0:20:41.560 --> 0:20:46.120 powerful political act. But I'm curious both of your perspectives 0:20:46.160 --> 0:20:49.960 about the political logic behind it. Yeah, I can, I 0:20:50.000 --> 0:20:52.240 can go first and then really passive to you, But 0:20:53.640 --> 0:20:56.080 I mean it's it's super difficult, right to like figure 0:20:56.080 --> 0:21:00.000 out what exactly it was or what sort of um 0:21:00.160 --> 0:21:02.720 people were thinking. I think there was a lot of 0:21:03.200 --> 0:21:06.399 a rug pulling to use that term, people saying Okay, 0:21:06.440 --> 0:21:08.359 everybody goes and buy this, I can sell some of 0:21:08.400 --> 0:21:12.359 my shares. I think that to the point of, like, Okay, 0:21:12.400 --> 0:21:13.840 this is going to be a way to stick it 0:21:13.920 --> 0:21:16.200 to the band, This is a way of representing politics, 0:21:16.200 --> 0:21:18.359 This is a way of conveying your beliefs to the 0:21:18.400 --> 0:21:21.840 broader world. I think that that like this gets into 0:21:21.880 --> 0:21:24.040 the idea of crypto sort of being religion, right, Like 0:21:24.040 --> 0:21:25.879 a lot of people treat bitcoin and kind of as 0:21:25.920 --> 0:21:28.240 a religion. And I think that you sort of saw 0:21:28.280 --> 0:21:30.359 that with a m C and gm ME and you 0:21:30.359 --> 0:21:32.399 still sort of do to at least point around not 0:21:32.480 --> 0:21:34.879 a cult like a cult essentially, right, Not that the 0:21:34.880 --> 0:21:37.480 religion is always a cult, but there's threads between all 0:21:37.560 --> 0:21:40.040 of that stuff. And so I think to your point 0:21:40.119 --> 0:21:43.639 around like, why would wealthy influencers say like, hey, you know, 0:21:43.760 --> 0:21:45.760 go and by this. I do think there's this this 0:21:45.880 --> 0:21:50.000 horrible trend that's always existed where people are like, oh, 0:21:50.119 --> 0:21:51.760 you go and buy this thing. It's like essentially a 0:21:51.760 --> 0:21:53.439 pyramid scheme, like you go by this thing and then 0:21:53.480 --> 0:21:55.480 I'm going to sell it once you buy more, and 0:21:55.520 --> 0:21:57.879 then I'll make money off of you. Um. But I 0:21:57.920 --> 0:22:01.720