Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy. Tracy. You know, it
Speaker 1: was really fun last year was Game to Stop? That
Speaker 1: was a really good time, wasn't it. Yeah, plus a
Speaker 1: land war in Europe that we haven't seen for many,
Speaker 1: many decades. But yeah, retail mania was this big thing
Speaker 1: that happened in early one And I'm just looking at
Speaker 1: the chart of Game Stop that was sort of the
Speaker 1: flagship stock for mean stock Madia Mania, and it looks
Speaker 1: like if you zoom out now, it kind of looks
Speaker 1: like an earthquake, which in some sense it kind of was,
Speaker 1: Like it was this thing that just shook up the
Speaker 1: entire market and people at the time we're saying that
Speaker 1: this was like the end of capitalism as we know it.
Speaker 1: It does. It definitely feels like so much has happened
Speaker 1: over the last year. I mean, we've had a pretty
Speaker 1: big sell off in areas of the market that are
Speaker 1: really hot. It's been a long year. So many different
Speaker 1: things have happened over that time, so many new narratives,
Speaker 1: obviously tons of focus these days on inflation and so forth.
Speaker 1: That whole period, it really seems like ancient history, but honestly,
Speaker 1: it was really not that long ago. I think Matt
Speaker 1: Levine has had some columns saying things that like, oh,
Speaker 1: of game Stop is still trading above a hundred and
Speaker 1: three months, I have to retire because all of markets
Speaker 1: are broken. And I think it was still there or
Speaker 1: definitely lasted a long time. And that's kind of the
Speaker 1: other weird thing about these sort of these manias, which
Speaker 1: is that you can identify them as a mania sometimes
Speaker 1: in real time, or say this is ridiculous, this is
Speaker 1: over overvalued, but it's really hard to call them at
Speaker 1: the time. It's really hard to time the trades. Yeah,
Speaker 1: I think that's right. But there was also this aspect
Speaker 1: of game Stop where people were treating it, you know,
Speaker 1: not necessarily as there were plenty of people treating it
Speaker 1: as a speculative bubble, but there were some people who
Speaker 1: just said I like the company, or I like whatever
Speaker 1: this stock represents to me, and I'm going to buy it,
Speaker 1: almost using it as a sort of like go fund
Speaker 1: me for the business. And I honestly, one of the
Speaker 1: things that I think is really important in all this,
Speaker 1: which is that you know, at the peak, you know
Speaker 1: it got started in the spring of like that's really
Speaker 1: when it kicked off. That's when we had the explosion
Speaker 1: of new people trading. A lot of people who are
Speaker 1: staying home, either they were working from home, people have
Speaker 1: lost their jobs, and so you had this explosion of
Speaker 1: people who are getting into retail trading options, trading, opening
Speaker 1: up a robin Hood account, and for the first time,
Speaker 1: like I guess really since the late nineties into the
Speaker 1: dot com bubble, it was the first time and basically
Speaker 1: twenty years in which it felt like stock trading was
Speaker 1: like part of the environment, part of the culture, and
Speaker 1: something that people are just talking about their individual stockholdings
Speaker 1: in a way that really, yeah, I don't think had
Speaker 1: been the case for at least twenty years, right, I mean,
Speaker 1: I remember there's a there's a dorman who works at
Speaker 1: a hotel in New York who I know who was
Speaker 1: asking me about Tesla options around that time, and that,
Speaker 1: you know, like it's verging on the famous JP Morgan
Speaker 1: shoeshine boy kind of thing when the doorman starts asking
Speaker 1: you about what options you should be buying for tesla um.
Speaker 1: But yeah, it definitely was a cultural event, right, it
Speaker 1: was really it was really a cultural moment, and so
Speaker 1: I'm really interested in like what became of that. And
Speaker 1: I have my suspicions, you know, my guests would be
Speaker 1: that a lot of people have now lost their money,
Speaker 1: they lost their gains that they experienced during the pandemic,
Speaker 1: maybe their disillusion. We know that trading volume is down,
Speaker 1: but I also have to imagine there's at least some
Speaker 1: people that have done well, you know, they've used this
Speaker 1: moment perhaps to learn more, wanted to further their own education,
Speaker 1: become deeply interested in how the markets work, options are prized,
Speaker 1: how trading works, how to evaluate an investment, And so
Speaker 1: I suspected at least some decent percentage of people got
Speaker 1: excited about the market from Spring twenty one one have
Speaker 1: stuck around and really further their knowledge to quite a degree. Yeah. Absolutely,
Speaker 1: And this is something that you see on you know,
Speaker 1: the classic message board for a lot of the retail training,
Speaker 1: which is Wall Street bets. A lot of the posts
Speaker 1: that go up on there are incredibly sophisticated in trading strategies,
Speaker 1: and a lot of them aren't, I have to admit,
Speaker 1: but you can learn a lot by by reading some
Speaker 1: of that. Now, I think you make a really important
Speaker 1: point like some are, they're not great, some are extremely great.
Speaker 1: Some people have learned quite a bit, some got really smart.
Speaker 1: Some are much smarter than anything I know about, much
Speaker 1: more knowledge of market mechanics, how to price volatility. So
Speaker 1: I think we don't know yet the final chapter of
Speaker 1: this story and what this new cohort of traders that
Speaker 1: uh and what became of them that really started at
Speaker 1: the beginning of the pandemic. I'm really excited. We have
Speaker 1: two guests to great commenters who've followed for a long time,
Speaker 1: get to give us different perspectives on the world. What
Speaker 1: happened all those memes dogs, what's going on with retail trading.
Speaker 1: We're gonna be speaking with Lily Francis. She's the director
Speaker 1: of quant research at Moody's Analytics. And we're also going
Speaker 1: to be speaking with Kyla Scanlon, fantastic content creator, founder
Speaker 1: of a new finance education startup, awesome on Twitter and Instagram, TikTok,
Speaker 1: her newsletter all great stuff. So Lily and Kyla, thank
Speaker 1: you so much to both of you for coming on. Yeah,
Speaker 1: thanks stoving us. So what do we kick it off?
Speaker 1: You know, let's say both of you be such great
Speaker 1: commenters over the last year, of the last couple of years,
Speaker 1: building up significant audiences, great insights into the world of memestocks,
Speaker 1: retail trading, the sort of new cohort of investors. But
Speaker 1: why don't you just give us your perspective, Like, how
Speaker 1: does right now in Spring two feel different than a
Speaker 1: year ago? Yeah? Sure, So I'll take you first and
Speaker 1: then lily up stuff to you. F for for me. So,
Speaker 1: I wasn't really in the still working at an institution
Speaker 1: back when game stock kicked off in February. Orry, but
Speaker 1: I think you have noticed a little bit of a downturn,
Speaker 1: whether that be from people you know participating in discussions
Speaker 1: on Twitter or on Reddit. But I think the people
Speaker 1: that you see who have stuck around, they're even more
Speaker 1: impassioned than they were back in February April twenty April,
Speaker 1: um February. So I think that you're seeing a decline
Speaker 1: in the number of people who might be participating, But
Speaker 1: the people who are still around are incredibly into a
Speaker 1: m C G M ME And you still do see
Speaker 1: these stocks continue to tick back up. And I also
Speaker 1: see think that you're starting to see people get a
Speaker 1: little bit more interested in monetary policy. Jerome Powell has
Speaker 1: become a household name, and I don't think that was
Speaker 1: the case maybe you know two or three years ago
Speaker 1: where people knew the Federal Reserve president name. So I
Speaker 1: think that's a big one as well. Yeah, really, what
Speaker 1: do you think? Yeah, so I want to echo callus
Speaker 1: sent men here essentially, And you can see this pretty saliently,
Speaker 1: and you know Google trends or app any if you've
Speaker 1: looked at those about the rise and fall of Robin Hood.
Speaker 1: I mean fundamentally, you can't talk about the meme stock
Speaker 1: episode without thinking about Robin has impact on the options
Speaker 1: market in particular. I mean, in my own data you
Speaker 1: can see fundamental differences over time and the growth of
Speaker 1: options with a pretty dramatic change in their volumes, as
Speaker 1: well as impact the paddle the markets when Robin Hood
Speaker 1: essentially announced the trading of zero costs their transaction options.
Speaker 1: So I think that you know, you can see now
Speaker 1: that there's definitely a decline in retail participation, especially in
Speaker 1: the options market. I think, as you know, I discussed
Speaker 1: this with something I speculated back in January that when
Speaker 1: you look at these meme stocks based on the fact
Speaker 1: that fundamentally, they're trading well disconnected from stuff like fundamentals
Speaker 1: or even you know, kind of an understanding your future
Speaker 1: value of the company itself. Then what you're seeing really
Speaker 1: is the evolution of something that kind of looks for
Speaker 1: the cults. And I don't even mean this in a
Speaker 1: bad way or a good way, but I have these
Speaker 1: this passionate core of people who believe fundamentally in this
Speaker 1: truth that is extremely heada head. I can never get
Speaker 1: that word right, head heterodox, heterodox. So what happens is
Speaker 1: that no matter what you throw at them, whether it
Speaker 1: was Robin Hood, you know, turning off the buy button,
Speaker 1: or whether it was new earnings reports and game stop,
Speaker 1: or whether it is the macro environment where now you're
Speaker 1: still going to have these people who have faith in
Speaker 1: this narrative that over time becomes a pretty dominant force.
Speaker 1: I when you see this in cryptocurrencies, you saw this
Speaker 1: ten years ago on Apple, and you're salt with Tesla
Speaker 1: that fundamentally, this group of people is a capital base
Speaker 1: that the company, if they do play their cards right,
Speaker 1: can draw on to actually hopefully create value for their investors.
Speaker 1: So this is something that I've thought a little bit
Speaker 1: about but it's almost like, you know, you talk about
Speaker 1: the disconnect between the fundamentals and the share price, and
Speaker 1: it's almost like the price becomes a token that is
Speaker 1: representative of an idea or people's idea of what that
Speaker 1: company or that business or that cryptocurrency or whatever actually
Speaker 1: stands for. And I wonder what does that kind of
Speaker 1: meme trading or stalks, like, what does that actually mean?
Speaker 1: What does that mean to you? Like, how would you
Speaker 1: define it? Is it that idea of you know, a
Speaker 1: sort of a belief system getting wrapped up in a
Speaker 1: tradeable token that people are willing to throw their support behind,
Speaker 1: or how would you define it? Roughly, everything that trades,
Speaker 1: fundamentally is an agreement for someone that this is the
Speaker 1: value and I will be willing to buy it from you.
Speaker 1: That is the only arbiter price of any asset is
Speaker 1: that someone is willing to buy it from you at
Speaker 1: that price in the future or now, you know, I mean,
Speaker 1: if we're talking about marketing spot prices, so there are
Speaker 1: institutional memes. I mean, when you think about fundamental analysis,
Speaker 1: there is no law of the universe, like a law
Speaker 1: of gravity that says stocks should trade at twenty times Pde. Obviously,
Speaker 1: we have models which kind of give us mathematical certainty
Speaker 1: that allows us to look at how the market is
Speaker 1: reacting and say we disagree with it. That's where you
Speaker 1: get the idea of theoretical versus market pricing. But at
Speaker 1: the end of the day, you know, even those models,
Speaker 1: the models of the mental analysis, they largely depend on
Speaker 1: either are assumptions being correct or the adoption of the
Speaker 1: model itself. And this is something that Emmanuel Derman, for example,
Speaker 1: the famous options plant, has talked about as well. With
Speaker 1: the advent of black shuals in option pricing, you see
Speaker 1: that the assumptions of black shoals start dictating market structure.
Speaker 1: And you know, fundamentals is obviously probably the most cohesive
Speaker 1: and long lasting meme of the markets in the sense
Speaker 1: that we all agree that a company should be trading
Speaker 1: at a certain discounted cash flow evaluation. But it doesn't
Speaker 1: mean it has to because at the end of the day,
Speaker 1: if I go to you and I'm saying, look, I
Speaker 1: will buy this from you at a value wildly inflated,
Speaker 1: you know that is my prerogative. You know that is
Speaker 1: the market price at that juncture. And you see this
Speaker 1: with a higher susceptibility, especially for these smaller companies like
Speaker 1: a game Stop, because realistically, with a game Stop or
Speaker 1: an AMC retail, especially if they're highly dedicated as well
Speaker 1: as newly enriched by you know, the recent bubble and
Speaker 1: what we call the stock market, they have enough force
Speaker 1: that they could own a significant fraction of the float.
Speaker 1: And when that happened, you know, obviously you can have
Speaker 1: short sellers who can interact with the markets and try
Speaker 1: to restore what we call efficiency. But at the end
Speaker 1: of the day, there's a reason why game Stop is
Speaker 1: still trading in a hundred fifty dollars to share. We're
Speaker 1: talking now a year and a half later, and you
Speaker 1: see these companies that I wrote it off, everybody else
Speaker 1: wrote it off. We were wrong. You know. It doesn't
Speaker 1: mean that the market and fundamentals are dead in any way,
Speaker 1: but at the end of the day, everything that trades
Speaker 1: trades on someone's belief. Yeah, I see, that's a core
Speaker 1: driver of what's going on. Like I think G and
Speaker 1: A m C all of that it was. It's really
Speaker 1: emblematic of like a bigger thing in my opinion, Like
Speaker 1: it's not just about obviously a video game company or
Speaker 1: a movie company. It's you know, dissatisfaction with the institution
Speaker 1: or being upset about how things are playing out. And
Speaker 1: we were in the middle of a pandemic during that time,
Speaker 1: and I guess I don't know if we're out of
Speaker 1: it yet, who knows, But I think there's this big
Speaker 1: loss of trust in traditional institutions and g M E
Speaker 1: and a MC somehow we're able to capture that, and
Speaker 1: they were able to. That's like the premium that they
Speaker 1: sort of end up reflecting is like people being like, well, actually,
Speaker 1: I'm pretty mad, and I'm going to buy this company
Speaker 1: to try and prove to you how mad I am.
Speaker 1: And that's why it's still going up is because I
Speaker 1: think that narrative of this loss of trust in institutions
Speaker 1: or in like traditional structures is continuing to play out,
Speaker 1: and somehow AMC and g M E and other beam
Speaker 1: stomps have sort of captured that narrative. And I also
Speaker 1: think that we are in the era of themification of everything,
Speaker 1: where um, you know, Elon Musk buying Twitter for example,
Speaker 1: or even that like the idea of coming through where
Speaker 1: everything is sort of meant to be laughed at, like
Speaker 1: nothing is real like there's a lot of financial nihilism,
Speaker 1: and so I think G M, E, A, M C, etcetera,
Speaker 1: like this is you can't really quantify that, right, like
Speaker 1: this is all just speculation. But I think that that
Speaker 1: is also an element of what we're seeing where people
Speaker 1: are just like, Okay, what's going on? I don't know,
Speaker 1: so let me buy the stock because nothing makes sense anymore.
Speaker 1: What's interesting is it kind of harkens back to date
Speaker 1: of credit. You know, when we look at firms that
Speaker 1: are very close to let's say a default point, then fundamentally,
Speaker 1: you know, the basic model that we all kind of
Speaker 1: understand is the Merrigin model, where we treat the equity
Speaker 1: value as an option on the firm's continued survival and
Speaker 1: a lot of ways. You know, that is the basis
Speaker 1: of how I viewed the moon stock trade, where you
Speaker 1: have these stocks which you know fundamentally maybe worthless or
Speaker 1: close worthless, or as I joke last year, I think
Speaker 1: at one point AMC had negative shareholders equity. But at
Speaker 1: the end of the day, you know, you treated the
Speaker 1: core reason that one buyas stock is a belief that
Speaker 1: they will make money from doing so. It isn't based
Speaker 1: on some ethics, it isn't based on true financial calculations.
Speaker 1: And as you see these squeeze more and more, you
Speaker 1: know you could almost treat these as an option on
Speaker 1: the continued mean value of this equity or of this asset.
Speaker 1: And I think, you know, one of my practical realizations
Speaker 1: from that is that there are disruptions to this meaning,
Speaker 1: which you could say are stuff like earnings, where you
Speaker 1: kind of get this pressure to go back to reality.
Speaker 1: But then you see an asset like a bitcoin, which
Speaker 1: has no fundamental value. It doesn't there is no equivalent
Speaker 1: of a bitcoin earnings. There is an equivalent of something
Speaker 1: that will directly imply a market price that can be
Speaker 1: arbitraged downwards. And that's when you see like the longevity
Speaker 1: of these memes. How means die, I don't know how
Speaker 1: beams die, Like I think that you see market cycles
Speaker 1: and it becomes really hard for memes to hang on
Speaker 1: during that time. Where As Lily just pointed out, like
Speaker 1: you have earning supports, and if all of a sudden,
Speaker 1: the company that you're putting all your networth into, it's like, oh,
Speaker 1: maybe it's not a company, it's actually just like a
Speaker 1: you know, a holding company, per se it doesn't really
Speaker 1: have any underlying value like that can be really difficult.
Speaker 1: So I think like everything sort of boils down to
Speaker 1: this idea of collective belief. And so if all of
Speaker 1: a sudden, the collective belief behind whatever the asset is
Speaker 1: goes away, if people stop saying, if they just stop
Speaker 1: believing and whatever, that ends up looking like like you're
Speaker 1: going to see the stock price end up going down,
Speaker 1: Like I don't know if robin hood is not really
Speaker 1: a meme stock, right, but like you're starting to see
Speaker 1: people sort of rotate away from that because collective belief
Speaker 1: and whatever they were meant to do sort of rotutes
Speaker 1: away too. So I think that's what I would say
Speaker 1: is collective belief begins to die out, um, but humans naturally,
Speaker 1: like we'll just go meme and other things. So it's
Speaker 1: like as long as the meme cycle continues, they're just
Speaker 1: going to move on to something else. I think there's
Speaker 1: a joke on Twitter especially that I treat everything kind
Speaker 1: of in the lens of option theory, because once you
Speaker 1: once you have a hammer, everything looks like a nail.
Speaker 1: But you know you're looking at the attention economy, where
Speaker 1: fundamentally you know, all of these stocks, especially once they
Speaker 1: don't have a fundamental basis on what to trade on,
Speaker 1: are really based on this idea of future liquidity, or
Speaker 1: you can say it's a greater full theory, or you know,
Speaker 1: whatever kind of derogatory term a pond Zi scheme. Those
Speaker 1: are all kind of analogous to each other, these zero
Speaker 1: sum games where you you assume that at the end
Speaker 1: of the day someone is going to be holding it back.
Speaker 1: I've argued, you know, previously last year looking at credit analysis,
Speaker 1: that it's a bit more muddied in the sense that
Speaker 1: you know, once you have these stocks, that mean, if
Speaker 1: they have a base that's essentially rabid enough, they can
Speaker 1: actually conduct at the money offerings which will turn into
Speaker 1: capital for the firm, which, assuming a good management and
Speaker 1: not management that's actually aligned with the vision, you could
Speaker 1: maybe see a pivot. You could actually rescue a firm
Speaker 1: that way, fundamentally, just because they have this new capital
Speaker 1: injection when they wouldn't have been even in the market
Speaker 1: for refinancing their debt before. But memes inherently are time limited,
Speaker 1: and since that attention is fleeting, obviously, you have individuals
Speaker 1: like Elon Musk who are very, very talented at staying
Speaker 1: in this in basically the news cycle, and I do
Speaker 1: think fundamentally that a significant fraction of tests Let's value
Speaker 1: it is due to the fact that Ellen can command
Speaker 1: this attention continuously. I think you're seeing that when people
Speaker 1: we thumb our noses that individuals like Elan and be like,
Speaker 1: why is he doing these crazy stuff? I sec should
Speaker 1: come get him, etcetera. But you're seeing that the Overton
Speaker 1: window of how CEOs interact with the environment has shifted
Speaker 1: toward him, not away from him. You could argue this
Speaker 1: kind of started with basically the Tea Party and Trump
Speaker 1: as well, but at the end of the day, it's
Speaker 1: become a powerful force in the capital markets, even with
Speaker 1: this macro environment that's become more unfavorable. So I actually
Speaker 1: want to ask more about the politics. So I remember,
Speaker 1: you know, thinking a year ago and when all of
Speaker 1: this was reaching a feed for pitch, and I'm totally
Speaker 1: cool with it. I have no problem with people trading
Speaker 1: or speculating or gambling with their own money. I'm pretty
Speaker 1: Lizzie Fair. It's cool to do what you want. If
Speaker 1: you want to have fun trading, go for it. I
Speaker 1: don't have any issues with it. If you want to
Speaker 1: be part of a club that looks fun, it looks
Speaker 1: fun to be part of the Game Stop club or
Speaker 1: the Apes. All that honestly looks really fun to me.
Speaker 1: I think, you know, and you know you mentioned this
Speaker 1: sort of financial nihilism aspect. I totally get that. The
Speaker 1: only part that kind of offended me, and maybe there's
Speaker 1: just being made old fashioned or what. The only part
Speaker 1: that sort of like bothered me was the wealthy, successful
Speaker 1: influencers telling their followers on Twitter and elsewhere, and I
Speaker 1: won't name any names, but telling their followers on Twitter
Speaker 1: and elsewhere that buying AMC or buying game stuff is
Speaker 1: itself a political act. Like if you want to stick
Speaker 1: it to the man, buy shares of AMC. Everyone buy
Speaker 1: shares of AMC, and as you say, you sort of
Speaker 1: breathe the life back into this company. And like, okay,
Speaker 1: that's great for AMC. Maybe some traders made money, but
Speaker 1: it's not obviously other than you know, some great strike
Speaker 1: against elite institutions other than maybe one or two hedge
Speaker 1: funds that lost a lot of money. And so it
Speaker 1: kind of bothered me at the time, these big time
Speaker 1: influencers telling their listeners that buying these stocks was a
Speaker 1: powerful political act. But I'm curious both of your perspectives
Speaker 1: about the political logic behind it. Yeah, I can, I
Speaker 1: can go first and then really passive to you, But
Speaker 1: I mean it's it's super difficult, right to like figure
Speaker 1: out what exactly it was or what sort of um
Speaker 1: people were thinking. I think there was a lot of
Speaker 1: a rug pulling to use that term, people saying Okay,
Speaker 1: everybody goes and buy this, I can sell some of
Speaker 1: my shares. I think that to the point of, like, Okay,
Speaker 1: this is going to be a way to stick it
Speaker 1: to the band, This is a way of representing politics,
Speaker 1: This is a way of conveying your beliefs to the
Speaker 1: broader world. I think that that like this gets into
Speaker 1: the idea of crypto sort of being religion, right, Like
Speaker 1: a lot of people treat bitcoin and kind of as
Speaker 1: a religion. And I think that you sort of saw
Speaker 1: that with a m C and gm ME and you
Speaker 1: still sort of do to at least point around not
Speaker 1: a cult like a cult essentially, right, Not that the
Speaker 1: religion is always a cult, but there's threads between all
Speaker 1: of that stuff. And so I think to your point
Speaker 1: around like, why would wealthy influencers say like, hey, you know,
Speaker 1: go and by this. I do think there's this this
Speaker 1: horrible trend that's always existed where people are like, oh,
Speaker 1: you go and buy this thing. It's like essentially a
Speaker 1: pyramid scheme, like you go by this thing and then
Speaker 1: I'm going to sell it once you buy more, and
Speaker 1: then I'll make money off of you. Um. But I
Speaker 1: also think that it was this thing where people thought
Speaker 1: that they could sort of make a difference, and so
Speaker 1: I think a lot of people probably got wrapped up
Speaker 1: in that. In terms of like what it represents from
Speaker 1: a political perspective, I don't know. I think it was
Speaker 1: mostly a money grab, though, yeah, I mean i'd add
Speaker 1: to that. I mean, look, there probably is a contingent
Speaker 1: which and you know, excuse my language, I mean to
Speaker 1: give an example, you know, the Soviets used to call
Speaker 1: them useful idiots, where there are some people who probably
Speaker 1: did believe that it was this true battle. And I'm
Speaker 1: not trying to, you know, just count what they viewed
Speaker 1: it as. But fundamentally, I've talked to institutions, I've talked
Speaker 1: to traders and prop traders that they they made a
Speaker 1: lot of money off of people. Like realistically speaking, I
Speaker 1: think maybe you could argue Melvin Capital had a really
Speaker 1: bad order on it. But at the end of the day,
Speaker 1: most hedge funds as well as prop firms jumped into
Speaker 1: the mess made a lot of money off of retail backs,
Speaker 1: primarily I mean pain spread. I remember in January the
Speaker 1: spreads were abysmal when you know, treating Jamie, especially on
Speaker 1: the option side, and it was kind of co opted
Speaker 1: by this contingent of grifters. I mean, we know some
Speaker 1: pretty famous ones who basically took this you know, retail
Speaker 1: cause celebrate and made it about them. They basically encouraged
Speaker 1: what was essentially a manic frenzy without regard for you know,
Speaker 1: consumer protection, without regard for thinking of people who could
Speaker 1: lose money off of this. And I do not wish
Speaker 1: those people well. I think that, you know, that is
Speaker 1: kind of one of the lowest forms of operation. You know.
Speaker 1: It isn't to say that there weren't true issues that
Speaker 1: were in masked by the GMME to boggle. I think,
Speaker 1: you know, I was one of the first people, to
Speaker 1: my knowledge, on Twitter to break the news that Robin
Speaker 1: had turned off the by button because I was actually
Speaker 1: informed by someone in one of the trading groups that
Speaker 1: I was part of, and I said, this is really bad.
Speaker 1: I do not understand why they did that, And you know,
Speaker 1: that is a true issue. But at the end of
Speaker 1: the day, I don't think that the individuals involved in
Speaker 1: those decisions were punished in any way. In fact, you
Speaker 1: could argue that Robin Hood had a fantastic order due
Speaker 1: to the game Stop and Jamie Friends Frenzy and made
Speaker 1: quite a bit of money off of again normal people. So,
Speaker 1: speaking of people taking advantage of retail traders, how do
Speaker 1: we feel about CEOs and companies themselves tapping into the
Speaker 1: meme phenomenon? And Kyli you already mentioned um elon Musk,
Speaker 1: but you know, a MC for instance, has done phenomenally
Speaker 1: well by playing to a certain base and really like
Speaker 1: leaning into memes and stunks and crypto and all of that.
Speaker 1: Is that the smart thing to do in a market
Speaker 1: where memes can lead to actual inflows of real money
Speaker 1: or is that taking advantage of, you know, a certain
Speaker 1: fandom or base. Yeah, I think it's sort of a
Speaker 1: tough one because theoretically it's just free marketing, right, Like,
Speaker 1: if you try to memify your stock, you're just doing marketing.
Speaker 1: But I think the difficult part becomes when you sort
Speaker 1: of encourage behavior that might not be very good for
Speaker 1: the people who own your stock, like, oh, whole no
Speaker 1: matter what, um, even if like the company isn't doing
Speaker 1: very well. And I think that kind of gets into
Speaker 1: this whole thing where the stock is sort of separate
Speaker 1: than the actual company itself. Like there's AMC the company
Speaker 1: and then there's AMC the stock, and they don't seem
Speaker 1: to be the same thing. And so I think that,
Speaker 1: you know, people can do whatever they want with their money,
Speaker 1: but there is this aspect where you have to be
Speaker 1: an informed consumer. And I think that CEOs have a
Speaker 1: responsibility to tell people the information would be both good
Speaker 1: and bad um. And you know, they can lean into
Speaker 1: the memification of things because that's just how life is.
Speaker 1: And Elon Musk doesn't have a PR team for a
Speaker 1: reason because he theoretically does all his own PR on
Speaker 1: Twitter dot com and it seems to work okay, like
Speaker 1: Tesla's the o G memes doonk um. But I do
Speaker 1: think that there is a level of responsibility that I
Speaker 1: wish was, you know, underscored a little bit more. Sometimes
Speaker 1: from leaders of companies when they try to become meme stonks. Again,
Speaker 1: I'm going to be a bit more I guess sharp
Speaker 1: with my criticism here right before begin You know, this
Speaker 1: is my own personal views. I'm not speaking on behalf
Speaker 1: of you know, either my employer or anybody else here.
Speaker 1: But I'm just good like how we have a long
Speaker 1: history of laws on concern protection, we have an accredited
Speaker 1: investor laws, and it's just mind boggling to me that
Speaker 1: because the trades on the secondary markets that the CEOs
Speaker 1: can get away with us. You know, I think realistically
Speaker 1: there's a line between informing the public and presenting unbiased
Speaker 1: facts and you know, doing something like you know, basically
Speaker 1: making memes about you know, I forgot. I think one
Speaker 1: that remember in was the short shorts that Tesla started
Speaker 1: selling stock as well, And it's just like, you know, look,
Speaker 1: I'm a twenty six year old I I am aware
Speaker 1: that there's been periods of froth in the markets, but
Speaker 1: what are the regulators doing here? You do see basically
Speaker 1: that small fishes are being prosecuted for pumping dumps because
Speaker 1: that's pretty much well established to be on the side
Speaker 1: of not okay in the markets. But you know, it's
Speaker 1: just it's it's impressive to me that you have et
Speaker 1: F providers and funds that are more regulated on what
Speaker 1: they can say to the general public then the CEO
Speaker 1: of some of the largest companies on Earth. So I
Speaker 1: actually want to pivot just a little bit and talk
Speaker 1: about the cohort of people who are trading, who started
Speaker 1: trading maybe a year or two years ago, um, and
Speaker 1: what they're doing now. And of course, Kylie, you're launching
Speaker 1: a new education founding information company. Literally for a while
Speaker 1: you ran just like really great discord were extremely sophisticated
Speaker 1: conversations about trading. I used to lurk of their super impressed.
Speaker 1: But I'm curious, like, where do you see the people now,
Speaker 1: Like where where did they go? And what's changed? And
Speaker 1: I've been I've been out of the woods on the
Speaker 1: retail side for a couple of months, So I couldn't
Speaker 1: say specifically, um, what's captivated the retail mindset. I would
Speaker 1: say that, you know, I do have on good knowledge
Speaker 1: from individuals still in the space that there is still
Speaker 1: a pretty dedicated cohort of traders. I think that everybody
Speaker 1: just assumed that, you know, when the tide washed out
Speaker 1: with liquidity from bond yields going up, that a retail
Speaker 1: would be destroyed instantly. You know, I'm sure a lot
Speaker 1: of people lost money. I mean, realistically, I've seen portfolios,
Speaker 1: I've seen the carnage and grows stocks. But I do
Speaker 1: think that a lot. You know, what makes it different,
Speaker 1: and that's always saying this time it's different is the perennial.
Speaker 1: You know, usually the top of the market in a
Speaker 1: lot of cases. I mean, look, you're still seeing crypto,
Speaker 1: especially in the private markets, command and saying valuations. You're
Speaker 1: also seeing that we have a new generation of traders
Speaker 1: who are natives to the Internet. They're experts at getting
Speaker 1: new information and news, and you're seeing the advent of
Speaker 1: tooling that previously we're talking ten fifteen years ago, wasn't
Speaker 1: really available nor financially, you know, within reach of all
Speaker 1: but the richest retail investors. So you're seeing that with
Speaker 1: this democratization of information. It isn't to say that retail
Speaker 1: isn't playing with negative edge still, but you are seeing
Speaker 1: that it is becoming more and more possible to be
Speaker 1: competitive in the markets. And you know, there was a
Speaker 1: recent paper that actually Matt Leevin mentioned where you know,
Speaker 1: you could see that there was a correlation between retail
Speaker 1: interests and stock performance. So fundamentally, it's hard to argue
Speaker 1: that retail investors didn't see success in the period. I
Speaker 1: think a lot of the will assume the tide would
Speaker 1: wash out, just like two thousand. From my own perspective,
Speaker 1: I am seeing people hanging on to money. I am
Speaker 1: seeing a lot of people who became new vote rish
Speaker 1: and you know, they are getting more and more sophisticated.
Speaker 1: You know, my conversations and even my background started in
Speaker 1: these trading discords very much similar to the old days
Speaker 1: of let's say like a nuclear finance, where you see
Speaker 1: these dedicated quantitative people start taking their talents from you know, cs,
Speaker 1: from mathematics, from other fields that demand pretty similar skill sets,
Speaker 1: and start looking at the markets and saying, hey, why
Speaker 1: don't I try this? And I think that a lot
Speaker 1: of them will give up eventually. I think the turn
Speaker 1: rate is extremely high, and I've observed that myself. But
Speaker 1: I do think that this is the market that is
Speaker 1: going to birth the new generation of traders and a
Speaker 1: new generation of funds that will look pretty different than
Speaker 1: the previous generation. From yeah, I totally agree, and anecdotally
Speaker 1: I post on TikTok every single day, So go into
Speaker 1: the throws of the devil, right, and the questions that
Speaker 1: I get asked and the comments that are left are
Speaker 1: completely different than they were about a year ago. Um,
Speaker 1: people are a little bit more attuned into like monetary policy,
Speaker 1: as I mentioned a little bit earlier, and they're just
Speaker 1: sort of thinking about the broader financial universe. So like
Speaker 1: I don't have as much insight on what treaders are doing,
Speaker 1: but it just seems and totally that people have become
Speaker 1: really interested in which they have the right to be, Like,
Speaker 1: we're all economic entities, and like we should all kind
Speaker 1: of be interested in what's going on economically and in
Speaker 1: the markets because it doesn't impact us. And so I
Speaker 1: have seen people like really become interested. I get a
Speaker 1: lot of like really really good questions. And to Lily's
Speaker 1: point about the paper that Matt Levine mentioned, like there's
Speaker 1: over twenty one thousand discord investing servers, and so I
Speaker 1: yea that you know twenty one tho servers you're just
Speaker 1: going to shut down because all of a sudden, you know,
Speaker 1: the Fed's gonna rease rate. It's inflation is like all
Speaker 1: that stuff. I don't think that's necessarily going to happen.
Speaker 1: I do think there's an element of stickiness to this,
Speaker 1: and people are just genuinely interested in sort of this
Speaker 1: like big being that that is the financial markets. And
Speaker 1: I think, you know, um, the way that it sort
Speaker 1: of entered into because I like the cusp of gen Z,
Speaker 1: so I'm a z a lineal. I guess the older
Speaker 1: edge of gen Z and gen Z is like the
Speaker 1: way that they learn is sort of through watching TikTok videos,
Speaker 1: are doing different things like that, and I think that
Speaker 1: we've had sort of the gamification of finance and that
Speaker 1: really allows people to become a little bit immersed as well.
Speaker 1: So I don't think that you see sort of like
Speaker 1: the same level of frothiness, but I do think that
Speaker 1: you see people who are sticking around and are just
Speaker 1: genuinely interested in what the markets are doing. I was gonna,
Speaker 1: you know, because I've I've been more cleared into the
Speaker 1: crypto landscape, especially over the past six seven months, and
Speaker 1: you know, there it's interesting because it's almost native for
Speaker 1: the trading mindset to be clued into retail chatter. You know,
Speaker 1: I think fundamentally, if you look at a crypto trading role,
Speaker 1: obviously there's systematic strategies, but when I talked to trader,
Speaker 1: especially for smaller funds, there's a role now for individuals
Speaker 1: to essentially just sit on discord and telegram all days
Speaker 1: they're involved in the n f T space. You know,
Speaker 1: part of me is wondering, I'm like, when you tell
Speaker 1: me that, I'm like, well, this is kind of an
Speaker 1: anomaly in time, and I don't know how transferable those
Speaker 1: skills will be later. But the other part of me
Speaker 1: is like, is this kind of just a paradigm shift
Speaker 1: where you see that historically retail has been trying to
Speaker 1: get the crumbs of what the institutionals are giving off,
Speaker 1: and now you're seeing the converse where you're seeing institutions
Speaker 1: go on these niche trading discords just to get some
Speaker 1: insider information before that you know, token goes on hundred cks. Yeah,
Speaker 1: I mean I've actually written this or about this before,
Speaker 1: but like, if you think about something like crypto, if
Speaker 1: it's driven purely by sentiment, which it is, and by flows,
Speaker 1: then actually you know the person who's sitting in the
Speaker 1: discord chat or the guy who's like sitting in his
Speaker 1: mother's basement spending all his time on the internet is
Speaker 1: probably going to have a better handle on where that's
Speaker 1: going than an institutional investor in you know, a white
Speaker 1: tower bank or something like that. But that said, one
Speaker 1: thing that's interesting to me is that, you know, at
Speaker 1: the height of the meme investing phenomenon, people were getting
Speaker 1: really really upset. And we mentioned this in the intro,
Speaker 1: but people were like, oh, this is the end of capitalism.
Speaker 1: All our markets are going to stop working. They're making
Speaker 1: fun of fundamentals and the financial industry and all of that.
Speaker 1: But actually it seems like the two groups of financial
Speaker 1: you know, traditional fine an aunts and the retail investor
Speaker 1: slash crypto, it feels like they're sort of coming together,
Speaker 1: or at least taking bits of each other and incorporating
Speaker 1: them into their behavior. Because the other thing that's happened
Speaker 1: this year is you see a lot more crypto people
Speaker 1: talking about the FED and what new bond yields mean
Speaker 1: for bitcoin, and you know, this is sort of all well,
Speaker 1: and on Wall Street bets you see lots of people
Speaker 1: talking about the FED and what's going to happen with
Speaker 1: interest rates and things like that. So it kind of
Speaker 1: feels like that body, that group has moved more in
Speaker 1: the direction of Wall Street. Yeah, I would agree that they.
Speaker 1: I think there's a knowledge that you kind of have
Speaker 1: to have a broad understanding of, or it's at least
Speaker 1: good to have a broad understanding of everything that's going on,
Speaker 1: and I think to at least point earlier about like
Speaker 1: all these different tools that are being developed, you can
Speaker 1: kind of get a lot of information that was previously
Speaker 1: only allowed to Wall Street. Like there's it's like Quiver Quantitative,
Speaker 1: which are really a valuable um. You can get different
Speaker 1: substitutions to different news outlets or different data aggregators, and
Speaker 1: so I think that maybe maybe the two are starting
Speaker 1: to converge. But I also think the resources and the
Speaker 1: tool links that they use are starting to converge, and
Speaker 1: that's sort of reducing the information asymmetry that used to exist. Yeah,
Speaker 1: I mean I think that, like I said, it's it's
Speaker 1: really hard to wear the crystal walls see what the
Speaker 1: longer term impact will be here. I do think that
Speaker 1: there is culturally, and this could be tied almost to
Speaker 1: this idea of a failure of capitalism, although this is
Speaker 1: probably ironically the most capitalist thing that could happen is
Speaker 1: that more people have been you know, included in especially
Speaker 1: with inflation and the growth wages to income inequality in
Speaker 1: the country. And you know, I've kind of I touched
Speaker 1: on this briefly last year, but it's kind of worth
Speaker 1: re stating that what you're seeing is it's almost nihil
Speaker 1: a sick tendency, especially among those who are younger, who
Speaker 1: are you know, less enriched by the traditional system, where
Speaker 1: they're kind of like effort. You know, I am going
Speaker 1: to gible my money here because it is my way
Speaker 1: to cross the chasm from you know, a diminishing middle
Speaker 1: class to the land of the rich. You know, you
Speaker 1: kind of see this. I think someone brought up that
Speaker 1: this happened in Iran as well, where you saw that
Speaker 1: a lot of the population started day treating. And I
Speaker 1: do think, you know, on one respect, people are getting
Speaker 1: more informed about the financial markets and economics on average,
Speaker 1: which could only be beneficial for us as a society.
Speaker 1: I think that obviously the world at large is dictated
Speaker 1: by the flow of capital, despite how people want to believe,
Speaker 1: you know, it's different, it's never different. And being more
Speaker 1: informed about how the markets were and how markets interact
Speaker 1: with governmental policy. International policy is fundamentally important to being
Speaker 1: successful in life, so I do think that is a benefit.
Speaker 1: The downside, of course, is you're seeing this occur because
Speaker 1: of an erosion of trust and traditional you know, intermediaries
Speaker 1: like the news, like thanks like these basically cornerstone what
Speaker 1: we considered a functional society. So I don't know how
Speaker 1: basically it ends, but you know, it is kind of
Speaker 1: concerning and sad in the way that this is kind
Speaker 1: of the ethos that has been adopted, especially by my generation.
Speaker 1: I guess I don't know if Kyla technically different generations
Speaker 1: people kind of kind of treating stocks and crypto like
Speaker 1: lottery tickets. Right, if you don't if you don't think
Speaker 1: you have that future income growth, well why not just
Speaker 1: spend your money on on a chance to get it?
Speaker 1: You know something and Tracy that something you've talked a
Speaker 1: lot about is like China and this gigantic ball of money,
Speaker 1: like the trading speculation in trying in China, and you
Speaker 1: know you have day traders and housewives buying iron or
Speaker 1: futures and stuff like that. There's basically nobody retail in
Speaker 1: the US trades. But I guess you know, I'm interested
Speaker 1: in this idea that if there's the perception that the
Speaker 1: economy is rigged, that you're never gonna be able to
Speaker 1: buy a home, that income is never going to be
Speaker 1: able to outpace inflation, they're gonna have this huge dead
Speaker 1: burden that basically markets are the only game in town,
Speaker 1: the only way to get ahead. And of course, if
Speaker 1: your perception that stocks are rigged, that perhaps crypto is
Speaker 1: like the ultimate way, Like this is your one shot
Speaker 1: to get ahead. I just want to add here and
Speaker 1: then I'll pass it over as well to Kyla and Tracy.
Speaker 1: You know, I recently saw a friend of mine who
Speaker 1: is also of our generation. She's a four year old,
Speaker 1: just got her first job as the designer, and you know,
Speaker 1: she was telling me when I talked to her, She's like,
Speaker 1: my dream was really tone to how and it's really
Speaker 1: sad in a way that you know, this dream of
Speaker 1: homeownership has become so much insurmountable to the average American
Speaker 1: where something you know, old adage is what basically a
Speaker 1: home with a white picket fence and a dog and
Speaker 1: two kids. It's like, how do you even afford that?
Speaker 1: At this point? You know, America may be better off
Speaker 1: even still than other nations which have seen the explosion
Speaker 1: of real estate prices even more than what we saw
Speaker 1: over the past two years. And I think that, you know,
Speaker 1: this may be the fundamental check and the fundamental cost
Speaker 1: of you know, quantitative easing that started in the global
Speaker 1: financial crisis basically fifteen years ago. At the end of
Speaker 1: the day, people are looking at the markets right now
Speaker 1: as a way to, like I said, skip the chasm
Speaker 1: where it's like this is your shot. And you're kind
Speaker 1: of seeing this even in the discord, especially of crypto
Speaker 1: or just course of crypto Twitter, where you can see
Speaker 1: this compression of time. Basically Buffett or the tradition of
Speaker 1: value investor, the way that you look at investing is
Speaker 1: at a long time horizon. You are less susceptible to
Speaker 1: the fluctuations and follies of the market if you are
Speaker 1: investing for thirty years versus for thirty seconds. And I
Speaker 1: think that because there's this general nihilism and honey ease,
Speaker 1: and we've seen this solatively the past year, people are
Speaker 1: thinking hand to mouth here with the markets. It's basically
Speaker 1: I have this one shot I need to invest. Now.
Speaker 1: You're seeing the deterioration of even doing due diligence not
Speaker 1: only at the retail level, but also at the venture
Speaker 1: level when you're seeing the innovation of stuff now like
Speaker 1: pre idea investing. So everybody has kind of adopted this ethos,
Speaker 1: so that time itself has compressed down two years, months, days,
Speaker 1: and nothing good to come out of that. Yeah, I
Speaker 1: think we also have this um broad problem of economic fragmentation.
Speaker 1: So I think the leader of the I M F.
Speaker 1: I don't remember the exact title, came out and was like, Yeah,
Speaker 1: the world is increasingly economically fragmented. And I know re
Speaker 1: Sulton has spoken a lot about that, where you know, sanctions,
Speaker 1: whether that impacts the reserve currency and how the dollar
Speaker 1: is going to respond to all that. But I think
Speaker 1: on an individual level, like we sort of experienced that fragmentation,
Speaker 1: and I think a lot of people are trying to
Speaker 1: sort of get some sort of grip on reality because
Speaker 1: we keep on having things that it sort of exists
Speaker 1: in the tail end of the distribution happening, like a pandemic, war,
Speaker 1: like a lot of things have happened, and I think
Speaker 1: a lot of people are like, wow, like life is
Speaker 1: kind of crazy. I better go and figure this stuff out,
Speaker 1: and the stock market and this like get rich quick
Speaker 1: narrative some in some essences, the gambling aspect of it,
Speaker 1: I think, are people just trying to like figure that
Speaker 1: stuff out because there isn't that promise of you know,
Speaker 1: work forty years and have a home and to have
Speaker 1: two and a half kids or whatever. That's just not
Speaker 1: something that is feasible anymore for the average person, and
Speaker 1: so you almost have to, like to Tracy's point, lean
Speaker 1: into that lottery ticket of the stock market, because otherwise
Speaker 1: there's not a lot of other options. What do you
Speaker 1: think is gonna happen to retail trading over This is
Speaker 1: such a broad category, but where do you see retail
Speaker 1: investing going over the next year or so, Because in
Speaker 1: some respects it feels like the easy gains are gone.
Speaker 1: In crypto, you know, the idea that you're going to
Speaker 1: put like a thousand bucks into bitcoin and become a
Speaker 1: millionaire a few years later seems far fetch nowadays, although
Speaker 1: maybe you could do it with another coin, who knows.
Speaker 1: And then and then you have the pressure of liquidity tightening,
Speaker 1: interest rates going up. A lot of the growth stocks
Speaker 1: seem to have gotten the air kicked out of their tires.
Speaker 1: We're recording this the day after Netflix earnings and that
Speaker 1: is down massively and that was a big sort of
Speaker 1: pandemic stay at home play. It just feels like there
Speaker 1: are all these pressures building on typical on the kind
Speaker 1: of things that are typically popular with retail investors. How
Speaker 1: do you think that will end up playing out? I
Speaker 1: think that we're going to see people still be involved
Speaker 1: in the market, Like I think the meme I guess
Speaker 1: of long termism, like to stay in the market and
Speaker 1: you'll be fine for a couple of years, is going
Speaker 1: to stick around. But I think, like so we are
Speaker 1: recordings today after Netflix. I do think that Netflix sort
Speaker 1: of falling is really interesting because that could be a
Speaker 1: sign of regime change where one of the things is
Speaker 1: going down, right, Like the tech era is potentially sort
Speaker 1: of deteriorating, and a lot of people are just throwing
Speaker 1: money at tech and that's kind of like, you know,
Speaker 1: crypto has essentially become the nest tech it to a
Speaker 1: certain extent as well, So you're starting to see all
Speaker 1: these correlations pop up. Um. So I do think that
Speaker 1: we're going to see people invest still, but like what
Speaker 1: they're investing in I think will be an interesting question
Speaker 1: and sort of how that pm L plays out over
Speaker 1: the next two years, Like will the stack market continue
Speaker 1: it's march upwards. I'm not sure, um, but that that
Speaker 1: it could be interesting. Yeah, I think I'm reminded here
Speaker 1: of you know, the sort of Mark Cuban basically sold
Speaker 1: Broadcast dot Com to Yahoo in the late nineties and
Speaker 1: he was actually paiding out his stock and the reason
Speaker 1: he was still a billion after the tech bubble crashed
Speaker 1: was here was strategic. He bought puts basically and he
Speaker 1: made out and now he's still quite a billionaire. You know,
Speaker 1: he invested in the next generation at tech and I
Speaker 1: think you're going to kind of see that basically from
Speaker 1: whatever the remains of this bubble period is as well,
Speaker 1: You're going to see that despite the vitriol of many
Speaker 1: who have been much longer in the markets, I think
Speaker 1: a substantial fraction of the new beaux reach will hold
Speaker 1: their net worth from you know, this current period. I
Speaker 1: think they will be the new billionaires that fund the
Speaker 1: innovations of tomorrow. I think from what you've seen in
Speaker 1: the tech bubble and what happened later, Yes, there was
Speaker 1: a lot of froth. There was pets dot Com famously
Speaker 1: in their ipo, it crashed. A lot of people lost money,
Speaker 1: but those people who made money and held on funded
Speaker 1: the next generation of tech companies, which turned into the Googles,
Speaker 1: the Facebook's, the Netflix is the I guess Apple, Microsoft
Speaker 1: already still there, but you're not going to see this
Speaker 1: money go away. I think there's going to be a
Speaker 1: demand for retail investor, especially those who didn't make it,
Speaker 1: for more sophistication, as well as portfolio managers and wealth
Speaker 1: management solutions which are really tailored towards what they're interested
Speaker 1: in and what they believe in. I think that you know,
Speaker 1: and I've talked about this even on Twitter. I think
Speaker 1: there's a lot of people who are gonna have a
Speaker 1: lot of net worth locked up in something pretty much
Speaker 1: a liquid who are looking for these strategic solutions to
Speaker 1: protect their their wealth to make it last for a
Speaker 1: long time. I think there are a lot more savvy
Speaker 1: on how the market works and how cycles work then
Speaker 1: a lot of people give credit to and I think
Speaker 1: that this market, if there's savvy individuals, especially in those spaces,
Speaker 1: can really be capitalized on. Tracy, I think there's a
Speaker 1: pretty good place to leave. Yeah, I agree, Well, Kyla
Speaker 1: and Lily, that was a great spot to leave it.
Speaker 1: That was absolutely fantastic and I appreciate both of your perspectives.
Speaker 1: Is a great conversation. Thanks to both of you for
Speaker 1: coming out on Thank you guys. That was for fun.
Speaker 1: Thank you. Yeah, that was great, It was really good.
Speaker 1: Thank you, Tracy. I thought that was great. It was
Speaker 1: sort of like unexpectedly poignant in a way, like I
Speaker 1: didn't anticipate how that was going to go, but I
Speaker 1: actually thought that was like incredibly compelling. Yeah, I was
Speaker 1: ready for lots of meme jokes, but it got kind
Speaker 1: of dark. I mean, so this is also something I've
Speaker 1: been thinking about. So I feel like the lightest way
Speaker 1: or the most optimistic way to view the retail trading phenomenon,
Speaker 1: or you know, the meme investing slash stunk thing is
Speaker 1: as a sort of go fund me for companies. So
Speaker 1: for whatever reason you like this company, you don't really
Speaker 1: care about the share price versus the fundamentals. You want
Speaker 1: to show your support for whatever you think it represents,
Speaker 1: so you buy into it at its darkest. I think
Speaker 1: it's a prone to manipulation, but be also goes to
Speaker 1: this idea of the economic disparity that both Lily and
Speaker 1: Kyla were talking about, and this idea that people see
Speaker 1: stocks basically as an escape plan from, you know, a
Speaker 1: life of of economic dreariness, which is incredibly depressing. You know,
Speaker 1: it's interesting. So, like, obviously the origin of this moment
Speaker 1: we identify as being March. That was a time when
Speaker 1: people are stuck at home, maybe they're laid off. The
Speaker 1: other overriding thing was like a period of like exit
Speaker 1: mar It was a period of existential dread. People were
Speaker 1: really worried, and people worried about death and sickness in
Speaker 1: the way that at that time, in a way that
Speaker 1: nobody was expecting, like really you know, like a deep depression,
Speaker 1: great depression levels of anxiety. Stock marketed crash. People were
Speaker 1: worried about their unemployment prospects. So it's notable that this
Speaker 1: enthusiastic financial nihilism came out of a period of extreme
Speaker 1: economic uncertainty totally and lots of people just rethinking their
Speaker 1: lives versus the kind of life that they would like
Speaker 1: to have. Um this one to a really depressing place.
Speaker 1: Shall we leave it there? Yeah, let's leave it there. No,
Speaker 1: I just thought, you know, the other thing and obviously
Speaker 1: is negative, but there are some really interesting positive idea
Speaker 1: positives about this idea of equalization. You know, there's the
Speaker 1: proliferation of newsletters, the proliferation of quantum computing power that
Speaker 1: used to be something that only people who had access
Speaker 1: to a main frame at a major bank would have.
Speaker 1: So it's not all bad, and there are some really
Speaker 1: interesting development is Kyla pointed out, people are like getting
Speaker 1: deeper and they're like deepening their understanding of financial instruments,
Speaker 1: and they want to learn how monetary policy work and
Speaker 1: the fundamentals of analysis, So it's not all negative. Sign
Speaker 1: democratization of finance is a terribly overused um and misused term,
Speaker 1: but I think it might actually apply in this case.
Speaker 1: The idea that you're getting more people into this realm
Speaker 1: who are learning about it is somewhat heartening. Um, I
Speaker 1: guess as long as they're able to sort of And
Speaker 1: I guess the other thing I'll just add it was interesting.
Speaker 1: I think Lily made this point about crypto specifically, which
Speaker 1: is that in crypto, the chat is the signal, so
Speaker 1: it's not even a matter of can you get the
Speaker 1: same information as the pros. It's like, if you're there chatting,
Speaker 1: you have the signals, you have what the pro wants,
Speaker 1: and so there is sort of like this inversion of
Speaker 1: the typical relationship of who has the value. Well, this
Speaker 1: is the old flows versus pros argument, which is that
Speaker 1: if you have an asset that is driven purely by flows,
Speaker 1: like a meme stock or a cryptocurrency or a token
Speaker 1: of some sort, then really the guy who's spending all
Speaker 1: his time on the Internet, who's you know, eyeball deep
Speaker 1: in meme and on the discord chats, is going to
Speaker 1: have a much better handle on that sort of sentiment
Speaker 1: than someone who's not spending all that time. So yeah,
Speaker 1: in that respect, it is sort of a reversion of
Speaker 1: power from Wall Street to Main Street. So it's not
Speaker 1: all bad. There's some exciting things happening in the aftermath
Speaker 1: of the memes dog Mania. Let's leave it there. This
Speaker 1: has been another episode of the All Thoughts podcast. I'm
Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway.
Speaker 1: I'm Joe wi Isn't Though. You can follow me on
Speaker 1: Twitter and follow our guests on Twitter. Lily Franka, She's
Speaker 1: at Nope It's Lily and Kyla Scanlon on Twitter at
Speaker 1: Kyla scan Follow our producer Kermen Rodriguez at Kerman Arman.
Speaker 1: Follow the Bloomberg head of podcast, Francesca Levi at Francesca Today,
Speaker 1: and check out all of our podcasts Bloomberg under the
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