Don’t miss out.
>>> WHETHER YOU ARE IN THE STOCK
MARKET OR NOT YOU’VE PROBABLY
HEARD IN THE LAST 24 HOURS ABOUT
GAMESTOP, WHOSE STOCK HAS GONE
TO THE MOON IN THE LAST FEW
WEEKS FOR NO APPARENT REASON.
BUT WHAT’S HAPPENING WITH
GAMESTOCK ISN’T JUST ABOUT THIS
COMPANY, AND IT’S NOT JUST ABOUT
THE STOCK MARKET.
IT’S A MUCH BIGGER REACTION TO
WHAT IS HAPPENING IN OUR SOCIETY
AS A WHOLE.
THINK POPULISM COMES TO WALL
STREET.
LET’S BRAKE IT DOWN.
THERE’S A TYPE OF INVESTMENT
CALLED A SHORT.
THAT’S WHAT HAPPENS WHEN A
TRADER BETS THAT A STOCK PRICE
WILL GO DOWN AND WHEN IT DOES
THEY MAKE MONEY.
IF IT GOES UP THEY LOSE A LOT OF
MONEY, ESPECIALLY IF IT GOES UP
A TON AND USUALLY WHEN BIG, BIG
HEDGE FUNDS PUT ON A SHORT, MOST
PEOPLE DON’T GET IN THEIR WAY.
MOST PEOPLE JUST STEP ASIDE,
MAYBE GO BEHIND THEM BUT THIS
TIME IT’S DIFFERENT.
THIS TIME FOR THE FIRST TIME WE
SAW AN ARMY OF DAY TRADERS,
INDIVIDUALS, THAT SAW A FEW OF
THESE BIG HEDGE FUNDS MANAGERS
WERE BETTING GAMESTOP WOULD GO
DOWN SO THEY BANDED TOGETHER IN
FORCE AND BOUGHT IT AND BOUGHT
IT AND BOUGHT IT AND IT RAISED
THE PRICE, FORCING THESE MAJOR
HEDGE FUNDS TO LOSE A TON OF
DOUGH BECAUSE THEY HAD TO COVER
THESE SHORTS.
I’VE GOT TO DISCUSS THIS.
THIS STORY ISN’T OVER.
I WANT TO BRING IN ANDREW ROSS
SORKIN, FOUNDER OF DEAL BOOK AND
COHOST OF SQUAWK BOX, AND MY OLD
FRIEND NOAH NAVAGRATZ, CEO OF
GALAXY DIGITAL.
BIG PICTURE, MICHAEL, FROM A
CULTURAL PERSPECTIVE, THESE
REPUBLIC
ROBIN HOOD TRADERS THIS IS THE
SAME SPIRIT OF THOSE $10 DO NORS
WHO THRUST BERNIE SANDERS INTO
THE CENTER OF THE POLITICAL
ESTABLISHMENT.
NOW IT’S THAT EXACT SAME SPIRIT
BUT THEY’RE TRADING GAMESTOP ON
THEIR PHONES, CAN YOU CONNECT
THE DOTS?
>> LISTEN, THERE IS AN ANGER OUT
THERE, IF YOU GO ON THE REDDIT
CHAT ROOMS, YOU’RE SHOCKED AT
HOW MUCH ANGER, ALMOST A
NIHILISM OF LET’S TEAR DOWN THE
SYSTEM.
IT’S MILLENNIALS LOOKING AT BABY
BOOMERS SAYING YOU SCREWED OUR
PLANET UP, YOU SCREWED OUR
ECONOMY UP, YOU SCREWED OUR
FUTURE UP, WE’RE SICK OF YOU AND
WE’RE COMING AFTER YOU.
PART OF THIS IS A CLASSIC SHORT
SQUEEZE BUT PART OF THIS IS MUCH
BIGGER, IT’S THAT SAME, AS YOU
WERE SAYING, THAT SAME NIHILISM
WE SAW WITH PEOPLE TRYING TO
TEAR DOWN THE CAPITOL.
YOU KNOW, IT’S THAT SAME ANGER
YOU SAW IN THE BLACK LIVES
MATTER PROTESTS.
YOU KNOW, I REMEMBER THE L.A.
PROTESTS, THERE WAS EAT THE RICH
WAS WRITTEN ALL OVER L.A.
PART OF THIS IS THE RICH/POOR
GAP, THE INEQUALITY GAP
CONTINUES TO GET WIDER.
PART OF THIS IS PEOPLE ARE SICK
OF THE INSIDERS ALWAYS SEEMING
TO WIN, THE REAL ESTATE GUIDES
GET TO DEPRECIATE TAXES.
IT’S HARD TO BE ABLE TO
PARTICIPATE IN AN IPO UNLESS
YOU’RE RICH.
THE PRIVATE DEALS GO TO THE
WEALTHY GUYS AND THEY SEEM TO
CHANGE THE RULES.
THE LITTLE GUY IS SICK OF IT AND
YOU’RE SEEING THAT IN MULTIPLE
PLACES IN AMERICA SO IT’S TIME
FOR CHANGE, YOU KNOW, WE NEED
SYSTEMS CHANGE.
AND I THINK THAT’S WHAT THIS IS
CALLING OUT FOR.
NOW, I WOULDN’T WANT TO SAY TO
THE LISTENER THINGS HAVE GOTTEN
CRAZY AND I THINK ANYONE WHO
BUYS THESE STOCKS AT THESE
LEVELS IS GOING TO LOSE ALL
THEIR MONEY.
I WOULD ADVOCATE IF YOU’RE ON
THESE STOCKS TO SELL THEM AND
NOT TO PARTICIPATE IF YOU’RE
NOT.
>> THAT’S WHERE I WANT TO GO
WITH THIS, ANDREW, ALL THE
POINTS MICHAEL IS MAKING ABOUT
THE SYSTEM BEING RIGGED FOR THE
BIG GUY FOR THE RICH, I MEAN, I
CAN’T WALK IN AND BUY THE AIRBNB
IPO AT NEW ISSUE AT A TIME, BY
THE TIME I GET TO BUY IT IT’S
WHEN ALL THE RICH PEOPLE ARE
SELLING IT.
THIS STRATEGY TO STEP IN BUY UP
THESE STOCKS OF FAILING
COMPANIES, AMC MOVIE THEATERS,
BUILD A BEAR, GAMESTOP, THE
FUNDAMENTALS OF THESE COMPANIES
ARE LIGHT YEARS AWAY FROM WHERE
THE STOCK IS PERFORMING, THIS
THING WILL COLLAPSE LIKE WHAT WE
SAW IN 1999 WITH THE INTERNET
BUBBLE.
WE WERE ALL EXCITED ABOUT
ANYTHING THAT ENDED WITH DOTCOM
AND THEN IT ENDED IN DISASTER.
>> LOOK, WHAT I’M CONCERNED
ABOUT IS THAT THIS IS A PUMP AND
DUMP SCHEME THAT EFFECTIVELY IS
BEING CLOAKED AS MOTHER TERESA
HAS ARRIVED ON THE SCENE.
THERE ARE REAL UNDERLIEYING ISSU
WITH THE SYSTEM THAT NEED TO BE
DISSOLVED.
I DO NOT WANT TO PROTECT THE
SYSTEM.
I LOVE WATCHING THE LITTLE GUY
BEAT THE BIG GUY AS MUCH AS
ANYBODY.
BUT WHAT I WONDER IS WHETHER
THESE FOLKS TRYING TO
QUOTE/UNQUOTE STICK IT TO THE
MAN ULTIMATELY ARE GOING TO BE
STICKING IT TO THEMSELVES IN
TRUTH.
BECAUSE AS YOU SAID THE
FUNDAMENTALS OF THIS ARE SO OUT
OF WHACK AND THERE ARE PEOPLE
LOSING MONEY WHO CAN’T AFFORD TO
LOSE THE MONEY.
THE HEDGE FUND MANAGER WHO’S
LOST THE MONEY, FINE, BUT GUESS
WHAT, IF HE’S GOT A MORTGAGE ON
THE SECOND OR THIRD PROPERTY
HE’S GOT HE CAN PAY IT.
WE HAVE PEOPLE PUTTING MONEY
INTO THE MARKET RIGHT NOW,
EITHER BECAUSE THEY WANT TO MAKE
MONEY OR BECAUSE THEY ARE TRYING
TO PURSUE THIS TRUTH THAT COULD
VERY WELL LOSE THEIR RENT.
>> MICHAEL, THIS IS MY CONCERN
WITH THAT VERY THING, AT THE
MOMENT DAVID IS BEATING GOLIATH.
THEY’RE WINNING, BUT LOOK AT
HISTORY, RIGHT, LOOK AT THE ’08
SUBPRIME HOUSING CRISIS.
>> THEIR NUMBERS --
>> LISTEN --
>> PEOPLE HAVE APPLIED FOR LOANS
THEY SHOULDN’T HAVE AND THEY
LOST THEIR HOUSES, THEY LOST
EVERYTHING AND THOSE SHADY
BANKERS AND THOSE MORTGAGE
BROKERS, MAYBE THEY LOST THEIR
JOBS BUT THEY WERE A-OKAY, BUT
THOSE WHO LOST THEIR HOMES, THEY
STILL LOST THEIR HOMES.
THAT COULD HAPPEN AGAIN.
THE BIG GUY GETS BAILED OUT THE
BEFORE THE LITTLE GUY DOES.
>> CHRIS SAKA, A FRIEND, TWEETED
THIS MORNING THAT IN 1999 HE
USED HIS STUDENT LOAN MONEY TO
BET ON THE INTERNET BUBBLE AND
HE WAS THINKING HE WAS SO SMART
AND LAST A LOT OF MONEY AND BY
THE END OF IT HE WAS DOWN
$1.5 MILLION IN DEBT AND IT TOOK
HIM YEARS TO DIG OUT.
SO HE PUT HIS WARNING SIGN ON.
LISTEN, YOU’RE 100% RIGHT.
LISTEN, THE GUYS WHO GOT IN THIS
EARLY, THEY MADE MONEY.
THERE’S 100% CERTAINTY OF IT AND
THEY MADE A LOT OF MONEY BUT
WHAT’S HAPPENING NOW, GAMESTOP
TRADED $23 BILLION YESTERDAY.
THAT MEANS THERE WERE $23
BILLION OF NEW BUYERS AND
SELLERS.
YOU’RE TURNING OVER TO NEW
PEOPLE THINKING, HEY, I’VE GOT
TO GET IN ON THIS THING AND IT’S
REALLY DANGEROUS.
I HAD A FRIEND CALL ME AND HE
SAID I JUST BOUGHT AMC, ANOTHER
STOCK LIKE GAMESTOP, AND I’M
LIKE, HANG UP THE PHONE AND SELL
IT IMMEDIATELY, AND IT’S ALREADY
$5 LOWER THAN IT WAS.
IT’S VERY DANGEROUS FOR PEOPLE
AND IT’S GOING TO END POORLY,
THEN THERE’S GOING TO BE
LAWSUITS AND THERE’S GOING TO BE
FINGER POINTING AND REGULATION
THAT HAS TO FIGURE OUT HOW DO WE
STOP THIS STUFF?
>> BUT LET’S TALK ABOUT THE
POSITIVE HERE, BECAUSE THERE IS
SOMETHING BEAUTIFUL ABOUT THE
DEMOCRATIZATION OF FINANCE AND
WALL STREET.
THE FACT PEOPLE CAN USE THE
ROBIN HOOD APP, MAYBE IT LOOKS
LIKE A MOBILE APP AND THEY
SHOULD BE CAREFUL, THE FACT THAT
IT IS USER FRIENDLY.
UNLESS YOU HAVE A BACKGROUND IN
INVESTING, UNLESS YOU’RE PART OF
THAT UNIVERSE, IT’S DIFFICULT TO
BREAK IN AND PEOPLE SHOULD BE
ABLE TO.
THERE ARE LOTS OF PEOPLE THAT
HAVE DISPOSABLE INCOME IF THEY
WANT TO PLAY IN THE MARKETS
SHOULD BE WELCOME TO AND
SHOULDN’T HAVE TO PAY UP TO BE A
CLIENT OF SOME FANCY FIRM OR
RESEARCH ORGANIZATION.
>> LOOK, I’M THE FIRST TO SAY
THE MARKET SHOULD NOT JUST BE
FOR THE WEALTHY, THEY SHOULD NOT
BE FOR PROFESSIONALS, WE TRY TO
DO EVERY DAY IS DEMOCRATISE THE
PROCESS AND GET INFORMATION TO
THE PUBLIC.
IN THE AFTERMATH OF THE
FINANCIAL CRISIS, THE PUBLIC
LOOKED AT THE MEDIA, AND SAID
WHY DIDN’T YOU BLOW THE WHISTLE?
WHY DIDN’T YOU BLOW THE WHISTLE
LOUD ENOUGH?
AND NOW FOLKS LIKE MYSELF,
YOURSELF AND OTHERS ARE SAYING,
WE’RE TRYING TO BLOW THE WHISTLE
AND SAYING, LOOK, THIS COULD BE
A PROBLEM.
BUT INTERESTINGLY, AND WHAT’S SO
UNIQUE ABOUT IT IS IS THAT SO
MANY OF THE REDDIT TRADERS OUT
THERE SAYING WE DON’T NEED
PROTECTION, YOU’RE PROTECTING
THE HEDGE FUND GUYS, YOU’RE NOT
PROTECTING US.
IT’S A VERY UNIQUE MOMENT IN
TERMS OF TRYING TO THINK ABOUT
WHAT THE DYNAMICS ARE THAT ARE
AT PLAY.
>> BUT ANDREW, NO ONE’S
PROTECTING THE HEDGE FUND GUYS.
WITH A WE’RE SAYING IS, BEFORE
YOU DANCE ON THEIR GRAVES,
BETTER CHECK THEIR PULSE AND
LOOK FOR THE EXIT DOOR BECAUSE
THERE’S A GOOD CHANCE THEY’RE
NOT DEAD AND THEY’RE COMING FOR
YOU, AND WE KNOW THIS, MICHAEL,
BECAUSE YOU’VE BEEN ONE OF THOSE
GUYS FOREVER.
>> YEAH, LISTEN, YOU KNOW, I NOW
RUN A BIG CRYPTOCURRENCY
BUSINESS.
IT WAS STARTED BY PEOPLE THAT
DIDN’T TRUST THE CENTER, IT
CONTINUES TO BE FUELED BY THIS
IDEA THAT WE CAN RECREATE A NEW
WAY OF LOOKING AT THINGS, RIGHT,
A NEW FINANCIAL SYSTEM, A NEW
CONSUMER SYSTEM.
I WOULD SEPARATE IT, THOUGH,
FROM GAMESTOP, RIGHT, BITCOIN
REALLY DOES SERVE A PURPOSE,
SPECIFICALLY DESIGNED TO BE A
STORE VALUE WHERE GAMESTOP
ISN’T.
WHILE IT’S GOT THE SAME ENERGY
CRYPTO REALLY HAS A PURPOSE,
CENTRALIZED FINANCE IS PEER TO
PEER, HOW CAN WE CUT OUT THE
RENT TAKERS, THE GOLDMAN SACHS
AND JP MORGANS FROM THE SYSTEM
SO THE LITTLE GUY GETS A FAIR
CHANCE?
THERE’S A REVOLUTION HAPPENING
BEFORE OUR EYES AND I THINK IN
FIVE OR SIX YEARS IS REALLY
GOING TO CHANGE THE WAY BUSINESS
IS DONE.
THAT’S FUELED BY THE SAME ENERGY
THAT YOU’RE SEEING IN GAMESTOP
BUT THEY’RE COMPLETELY DIFFERENT
THINGS.
I WANT TO MAKE THAT POINT.
YOU KNOW, THIS GAMESTOP THING
FEELS NIHILISTIC AT THIS POINT.
>> THEN I JUST WANT TO GET TO
ONE FINAL THING, YOU KNOW
ANDREW, MICHAEL WAS ABLE TO GET
INVOLVED IN CRYPTO BUT HE WAS
ALREADY A REALLY RICH GUY.
WHY NOT TRY THAT VENTURE.
WHEN YOU THINK ABOUT SORT OF THE
LEADER OF THIS REVOLUTION, MANY
OF THESE SMALL GUYS ARE POINTING
TO ELON MUSK, ONE OF THE RICHEST
GUYS IN THE WORLD WHO DOES HATE
SHORT SELLERS, WHICH IS FINE,
YOU’VE GOT A PROBLEM WITH SHORT
SELLERS, WHO DOES HAVE A PROBLEM
WITH REGULATORS, I GET THAT, BUT
HE’S CHEERING ON THESE YOUNG
GUYS AND WE DON’T EVEN KNOW WHAT
HIS INVESTMENTS ARE.
AT THE END OF THE DAY IF THIS
ALL TURNS OUT BADLY HE CAN PUT
THAT BABY OF HIS WHOSE NAME
SOUNDS SHOCKINGLY LIKE R 2 D 2,
GET IN HIS ROCKET SHIP AND GO TO
MARS AND PEOPLE WOULD HAVE BEEN
SPENT THEIR STIMULUS CHECKS
BETTING ON GAMESTOCK.
>> I THINK YOU’RE POINTING UP AN
ISSUE, WHICH IS -- AGAIN I’LL
SAY IT, THOUGH I’LL GET ATTACKED
ON LINE AND TWITTER AND
ELSEWHERE, THOSE OF US WHO HAVE
SEEN THIS MOVIE BEFORE HAVE A
RESPONSIBILITY TO TELL FOLKS HOW
IT ENDS.
UNFORTUNATELY IT TYPICALLY ENDS
BADLY.
I RECOGNIZE IT’S ENDED WELL FOR
SOME PEOPLE BUT WHEN YOU TALK