AND WITH US ANDREW ROSS SORKIN,
CO-ANCHOR OF CNBC’S "SQUAWK
BOX."
ANDREW, CEOs ACROSS THE WORLD
HAVE BEEN IN VIRTUAL BOARD ROOMS
OVER THE WEEKEND FREAKING OUT.
THEY HAVE LEARNED THERE’S POWER
IN NUMBERS.
EVEN OF INDIVIDUAL INVESTORS
CAN’T SHORT STOCKS.
THEY CAN GET TOGETHER AND THEY
CAN COME FOR YOU.
DOES THIS CHANGE THE WAY THEY DO
BUSINESS?
>> I DON’T THINK SO MUCH THAT
THE FREAKOUT IS HAPPENING AT THE
COMPANY LEVEL SO MUCH AS IT’S
HAPPENING WITHIN THE INVESTOR --
THE PROFESSIONAL INVESTOR
COMMUNITY CLASS LEVEL WHO ARE
SAYING CAN WE SHORT COMPANIES
ANYMORE?
DOES THAT EVEN WORK?
THERE’S NOW A NEW RISK OUT THERE
THAT WAS NEVER PART OF THE
ANALYSIS.
IF WE CAN’T SHORT, WHAT DOES
THAT MEAN?
HOW DOES THAT CHANGE THE
ECONOMICS OF THE BUSINESS?
CAN YOU HEDGE ANYMORE?
SO I THINK THERE -- THIS IS A
TOTAL RETHINK.
IT’S ALSO A RETHINK ABOUT
VALUATIONS, HOW PEOPLE VALUE
THINGS AT ALL.
IS THIS A SHORT-TERM ISSUE?
ARE WE GOING TO BE SEEING THIS
OVER AND OVER AND OVER AGAIN?
CAN IT CONTINUE OVER AND OVER
AGAIN?
ARE THERE ENOUGH PEOPLE OUT
THERE?
DOES THE SOCIAL MEDIA ARMY
ENABLED BY SOCIAL MEDIA, CAN
THEY CONTINUE THIS?
I THINK THERE’S SO MANY
QUESTIONS, SO FEW ANSWERS AND
THAT’S WHY IT HAS SO MANY PEOPLE
SCRATCHING THEIR HEADS.
IN SOME CASES ROOTING FOR THE
LITTLE GUY, BUT ALSO, I THINK,
AS YOU’VE POINTED OUT, WORRIED
ABOUT THE LITTLE GUY AS WELL
BECAUSE IN EVERY GOOD PROTEST IT
ALWAYS GETS CO-OPTED BY THE
LOOTERS AND THE OPPORTUNISTS.
>> SCOTT, DO YOU SEE THIS AS A
MOMENT IN TIME OR A TRUE
DISRUPTION TO THE INDUSTRY LIKE
THE WAY WE SAW THE MEDIA
INDUSTRY GET DISRUPTED OVER THE
LAST TEN YEARS?
IS THAT HAPPENING TO FINANCE OR
IS THAT NOT POSSIBLE GIVEN HOW
FINANCE IS?
>> I THINK THE METHODS AND THE
MEDIUMS ARE DIFFERENT HERE.
I THINK WE’RE PLAYING OUT AN AGE
OLD CONSTRUCT OF OLD MEN USING A
CAUSE, WHETHER IT’S GOD OR GET
THESE WEAPONS OF MASS
DESTRUCTION OUT OF HERE, OR
STICK IT TO THE MAN AND HAVING
YOUNG PEOPLE ATTACK THE CASTLE
SO THEY CAN GET WEALTHIER.
YOU KNOW WHO’S GOING TO
CREATE -- YOU KNOW WHOSE WEALTH
HAS INCREASED THE MOST OVER THE
LAST WEEK?
THE NOW HOUSE FAMILY, THE PEOPLE
WHO OWN REDDIT, TIGER, GLOBAL,
RIBBIT AND SEQUOIA CAPITAL, THE
PEOPLE THAT OWN ROBINHOOD,
GOLDMAN SACHS WHO’S TAKING IT
PUBLIC.
A COUPLE BILLIONAIRES WHO RODE
CREW AT HARVARD ARE SUPPOSEDLY
INCITING A RIOT.
STICK IT TO THE MAN, BUT I THINK
PEOPLE IN THIS HAVE TO BE
CAREFUL ARE YOU REALLY STICKING
IT TO THE MAN OR IS THE MAN
USING YOU AS THEIR STICK?
I THINK THIS WILL UPDATE
PEOPLE’S ATTEMPT TO CREATE A
NARRATIVE, THE REDDITERS HAVEN’T
DONE ANYTHING THAT WERE A HEDGE
FUND IN THE PAST.
INVESTOR RELATIONS CONFERENCES.
BUT I SEE THIS AS WE’RE PLAYING
OUT THE SAME OLD MODEL, A BUNCH
OF PEOPLE WHO ALREADY HAVE A
POSITION SAYING TAKE THE CASTLE
AND WHAT I WOULD SAY TO YOUR
FELLOW BROTHERS NEXT TO YOU IN
THE CASTLE, NOW WHAT?
AND BE CLEAR, MOVEMENTS COST
MONEY.
GIVE $100 TO BLACK LIVES MATTER
OR GIVE $100 TO BERNIE SANDERS,
FINE, YOU’RE GOING TO LOSE IT.
DOPE -- GAMBLING COSTS MONEY.
IF YOU THINK THIS IS INVESTING,
YOU MIGHT BE THE STICK.
YOU’RE NOT STICKING IT TO THE
MAN.
>> ANDREW, WHAT DO YOU THINK
ABOUT THAT?
RIGHT NOW WE’RE HEARING FROM A
LOT OF INDIVIDUAL INVESTORS
SAYING DON’T TELL MOW HOW TO
LIVE, DON’T TELL ME WHAT TO DO,
IT’S MY MONEY AND I’M PREPARED
TO LOSE IT.
I THINK BACK TO 2008 WHEN SO
MANY UNSUSPECTING PEOPLE GOT
THEMSELVES INVOLVED IN SUBPRIME
MORTGAGES AND THEY SIGNED ON FOR
IT.
THAT WAS THAT HOME THAT THEY
BOUGHT, THEY SIGNED FOR THAT
MORTGAGE BUT THEN THEY LOST
THEIR HOMES BUZZ THEY REALLY
DIDN’T UNDERSTAND HOW COMPLEX
THINGS WERE.
COULD WE FACE THAT AGAIN AND IF
WE DO, HAVE A LOT OF PEOPLE IN
PAIN AND BLAMING OTHERS?
>> WELL, THIS IS TURNING THE
WHOLE IDEA OF INVESTOR
PROTECTION ON ITS HEAD IN MANY
WAYS, I THINK YOU SAID IT
EXACTLY RIGHT, STEPH, AND THE
QUESTION IS, WHO’S PROTECTING
WHO?
ARE YOU PROTECTING THE SMALL
INVESTOR OR PROTECTING THE HEDGE
FUND AND THE BIG ESTABLISHMENT?
>> AND BY THE WAY, WE DON’T KNOW
WHO’S ON WHAT SIDE, RIGHT, WE
HAVE TO KEEP REMINDING EVERYONE,
IT WASN’T THE LITTLE GUYS GOING
AGAINST THE HEDGE FUND.
SCOTT JUST LAID IT OUT.
>> WELL, THAT’S THE THING, AND
THIS IS -- THE THING THAT
CONCERNS ME ABOUT THIS WHOLE
THING IS THERE’S SOME VERY
SOPHISTICATED RETAIL INVESTORS
OUT THERE THAT HAVE PULLED THIS
OFF.
THEY HAVE TO INDUCE OTHERS WHO
MAY BE LESS SOPHISTICATED BY
DEFAULT GIVEN THE NUMBERS YOU’RE
SEEING.
SOME SAYING I DON’T CARE IF I
LOSE MONEY, I’M TRYING TO MAKE A
POINT HERE, THERE ARE A LOT OF
PEOPLE WHO HAVE BEEN TOLD THIS
IS GOING TO BE A $500 STOCK, A
THOUSAND DOLLAR STOCK, THIS IS
GOING TO THE MOON AND THE
QUESTION IS WHETHER THEY FULLY
UNDERSTAND THAT AT SOME POINT
THE STOCK IS GOING TO GO BACK
DOWN.
EVERYBODY CAN’T SELL ALL AT ONE
TIME.
IT DOESN’T WORK THAT WAY.
IT’S IMPOSSIBLE.
AND SO BY -- IT’S ALMOST
INEVITABLE, AND THAT, I THINK,
IS GOING TO BE THE CONCERNING
PART AND THEN THE QUESTION IS,
DOES THE SPECULATOR BLAME
THEMSELVES?
AND I WOULD SAY THAT THAT NEVER
HAPPENS.
>> SCOTT, THIS IS MY WORRY, OVER
THE WEEKEND I HAVE ALL SORTS OF
INDIVIDUAL INVESTORS SAYING TO
ME DON’T RAIN ON MY PARADE, AMC
MOVIES, IT IS GOING TO THE MOON,
WE’RE GOING TO GO BACK TO THE
MOVIES.
I GET IT.
I UNDERSTAND THE NOSTALGIA OF
WANTING BUTTERED POPCORN.
WHEN IT COMES TO INVESTING
STOCKS, IT’S ABOUT CAPITAL
STRUCTURE AND CASH FLOWS.
BEFORE AMC GOES TO THE MOON
THEY’VE GOT $6 BILLION WORTH OF
DEBT OUTSTANDING, AND THAT’S
GOING UP AND THESE INDIVIDUALS
DON’T UNDERSTAND THAT.
NECESSARILY.
NOT ALL OF THEM.
ARE YOU WORRIED ABOUT ALL OF
THESE LET’S SAY YOUNG GUYS WHO
OVER THE LAST YEAR WERE HOME,
UNINSPIRED, IN FRONT OF SCREENS,
MAYBE NOT BEING ABLE TO GO TO
WORK, GO OUT, HAVE THEIR NORMAL
SOCIAL LIVES AND THIS WAS THEIR
CONNECTION, WHAT HAPPENS WHEN
THAT CONNECTION’S LOST?
I’M TALKING ABOUT MENTAL HEALTH
HERE.
>> STEPHANIE, YOU AND ANDREW
HAVE BEEN AROUND THE MARKETS FOR
TWO DECADES, MYSELF FOR THREE
DECADES.
THE ARC OF THE MARKET IS JAGGED
AND IRRATIONAL, BUT IT TYPICALLY
BENDS TOWARDS REATTACHING TO THE
FUNDAMENTALS.
AT SOME POINT THIS STOCK WILL
REATTACH TO THE FUNDAMENTALS AND
THE FUNDAMENTALS PUT THIS MUCH
LOWER AND I THINK -- I COACH A
LOT OF YOUNG MEN, AND I ASK THEM
TO DO -- WE GO THROUGH AN
EXERCISE, WHEN I MEET WITH THEM,
I LOOK AT THEIR PHONE TRACKER,
AND I FIND OUT WHERE THEY’RE
SPENDING TIME AND I WOULD ASK
EVERY YOUNG MAN TO DECIDE, MAYBE
YOU’RE LEARNING HERE, MAYBE IT’S
FUN, FINE, MAYBE IT’S A
MOVEMENT, BUT BE PREPARED TO
LOSE 80% TO 90% OF IT AND IF
IT’S STILL WORTH IT, HAVE AT IT
BUT THE BIGGEST LOSS OF CAPITAL
HERE WILL BE THE HUMAN CAPITAL
OF YOUNG MEN SITTING AND STARING
AT THEIR PHONE AND WATCHING THE
PRICE OF BITCOIN, OR THE PRICE
OF AMC.
AND ASK YOURSELF, WOULD YOU BE
BETTER OFF TAKING THAT ONE, TWO
OR THREE HOURS A DAY AND WORKING
OUT, TRYING TO FORM
RELATIONSHIPS WITH MENTORS, WITH
ROMANTIC RELATIONSHIPS, WITH
PEOPLE AT WORK, GETTING GREAT AT
SOMETHING SO YOU CAN BE THE
PERSON ON THE OTHER SIDE OF THE
TRADE?
THE GREATEST LOSS IN CAPITAL
HERE IS FROM YOUNG MEN WHO ARE
MORE PRONE TO GAMBLING
ADDICTION, WHO DON’T UNDERSTAND
THE MARKETS.
I THINK WE ARE SETTING OURSELVES
UP SIMILAR TO HOW THERE’S A TON
OF YOUNG WOMEN OUT THERE WHO
BECAME VERY DEPRESSED BY SITTING
THIS THEIR ROOMS LOOKING AT
INSTAGRAM, SELF-CUTTING AND
SELF-HARM SKYROCKET.
I THINK YOUR GOING TO SEE AN
EXPLOSION IN YOUNG MALE
DEPRESSION, AND I THINK A LOT OF
IT IS GOING TO BE REVERSE
ENGINEERED TO APPS THAT CONVINCE
YOU YOU’RE PART OF A MOVEMENT OR
PHYSICALLY ADDICT YOU TO YOUR
PHONE.
ASK YOURSELF, WOULD YOUR TIME