Is The GameStop Trade Really A Political Rebellion?

the recent US market action that we've seen. Yeah, no, I do feel bad for you. I mean it is really fun, Like I've definitely never before had a whole like Bloomberg monitor just devoted to the real time price of game Stop. So that's pretty cool. On the other hand, you are missing out blessedly just truly awful takes about all this, and every cable news channel and pundit and everything is like pontificating about what all this means. And

I'm not um, I don't feel bad that you're missing that. Okay, So it's true. I haven't seen a lot of what the US television channels are saying I will I will say though, I'm on Twitter basically at nighttime in the US, and so I get a lot of cranks and crazy e's around, you know, the hours of like midnight to four am, So I do see some of the conspiracy theories stuff. I get enough of that, Yeah, exactly, But um, I get the sense that I'm missing something in the

whole Game Stop commentary that that has been annoying you. Yes, So, I mean, look, I love this story and I don't really want it to end any time soon. Let's get that out. And I've learned. I've already like learned a bunch just like over the last week about how the markets were, Like it's been very educational. But I do think there is this proclivity of everyone who has an agenda to find a way to like work it in.

And you have like Donald Trump Jr. Talking about it, and Ted Cruise and AOC and Dave Portnoy and the winkle Foss brothers and like Glenn Greenwald and Mad Stoler and like literally anyone who has an opinion on anything, the Game Stop trade bolsters their view. So I totally agree with that agenda point. There's something for everyone in

the game Stop story, whether it's true or not. But but I do think the fact that it's this sort of raw, sharsh test for a bunch of people talking about it, like, I think that is part of the game Stop phenomenon, and so I think you have to

talk about it and you have to recognize its importance. Yeah, And a big question too, is like is there some thing like political, like because they're a big class warfare element of this, and like, obviously the enter is kind of yes, and people like on the Wall Street bets love the idea that they're like sticking it to the bankers. On the other hand, you know, you have these people like this is finally the mission of Occupy Wall Street

is now but fulfilled. And like, my eyes just roll out the side of my head when I see stuff like that. So we're gonna try to figure out, like what does this mean? Is there a political message? Is this Occupy Wall Street two point oh? Or is this just something fun? Is it just a trade? Like what does this all mean? All right, Um, this is gonna be an interesting episode. Let's let's do it. And we should note we have we have not one, but two

guests because it's such a such a polarizing topic, I suppose. Yeah, we're gonna have a debate, although I'm worried that our guests are going to be too friendly and then it's just gonna be me and you fighting against each other. That's okay. But I'm very excited about our two guests today, two of our absolute favorite uh people here to the sharpest people who understand markets and market structure and finance

and even politics. Very excited. Um, We're gonna be speaking with George Perks, he is a macro strategist at Bespoke Investment Group. And Jill Carlson, she is a partner at Slow Ventures and does a lot. We've talked to her in the past about bitcoin and blockchain stuff and money, and they've also they've both written, um, I guess you could say takes for the last week. George has a great piece up on Business Insider that you should check out, and Jill has a great piece on Coin Desk that

you should check out. Um. And so we're gonna we're gonna hopefully get the full range of perspective here. So George and Jill, thank you very much for joining us. Yeah, thank you. And and I will know the irony that both George and I have now contributed to the sea of bad takes and are continuing to do so. No, both of you are, both of your takes, both you,

both of your takes are the only good takes. Sometimes the best take is that the takes are bad, and you know, we we can't have when having someone saying that. And I think both joll and I tried to do a little bit of that this past week. The ultimate meta take, the Meda take. That's what, that's what. That's

my role, the Meda take. Okay, um, let's start and maybe we'll get on some opening statements for me west Aret with George, George, what you're you're more on the view, it's like this is a trade to an interesting trade. It probably does not fit into anyone's political narrative to well,

what's your what's your take? So the sort of way that this has been described by a lot of people is that these are sort of neck beardy editors who are all in their basements and spending their stimulus checks their last few dollars on out of the money calls and uh margin bets on Jimmy, and that's you know, somehow a revenge against the big bad hedge funds and one percenters and billionaires that have been stepping on the necks of this class of people for a long time.

And it's just really hard to take that with a straight face. Um, the single biggest holder of game Stop is the guy that pioneered sub prime model finance. He's a billionaire named Donald Fossive of the company. Um, Like, I'm sorry, Just that fact alone, forget anything else. Just that fact alone suggests that, oh, this is a proletarian

revolution of the day traders. Is the wrong take straight up? Um, If you look at the composition of the sort of folks that are that are in game Stop, I mean, the the guy that has benefited the most in terms of um percentage return is this, as far as anyone can tell, as this guy, um who goes by Roaring Kitty on Twitter, who's who had a position that was worth upwards a fifty million at various points over the past week. Thanks, you know million by the time people

are right, who knows where it's at? But he put up fifty k and it's it's you know, so Um. You know this is a guy who's a financial advisor for financial advisor for a Massachusetts insurance company. UM. You know, and I'm not trying to come out and bash this guy, but UM, I'm sorry that that's that's not you know, the masses in the United States. Fifty dollars that he you know, you'll owd into the stock is half of US media net worth, um, and most of that net

worth isn't liquid assets. It's tied up in real estate. So you know, really, anyone that can come up with fift k to put into the stock market on this kind of bet is doing substantially better than the typical person. UM. I think it's it's fair to say, so, you know, I just my basic take is just this is not some working class revolution against capital as represented by hedge funds.

So I I understand the point about deep effing value as he's known around here, and the fact that a lot of the people on Reddit are quite sophisticated in the way they talk about options, and the fact that they're targeting Agama squeezes is a very you know, non retail activity. But your point about one of the biggest holders in gm E being the subprime auto finance guy like you can have a bad populist movement or a

bad coordinated or effective populist movement. I mean, we arguably just saw one of those in the US at the beginning of the year with the storming of the capital. Could it not just be that these people are trying to make a political statement, but they're just not doing a very good job. I mean, I think if you ask the people on Wall Street bets like, why are

you in this? I mean, you know, if the tendees didn't exist, they wouldn't be in it, right, This is not a political project as a you know, as a first order um, you know, goal there's definitely some political um spin on it, but that's always true. I Mean. One of my favorite memories from my career in markets is watching Bill Ackman and um, uh what's his name? Icon? Do get out with Scott Wapner on SNBC. Um, Scott

Watner moderating on SNBC. And I think it was over herbal Life, which was this similar situation where there was a large short interest and Icon was long and um, you know, it turned into a political question, right, like herbal Life is extracting rents from these these poor folks, and you know it's a pyramid scheme and that's evil

and we need to stop that. And you know, whereas something oside saying, actually, people get a lot of value out of this, and you know, I don't particularly find a compelling but hey, they like it and it seems to work for them. So with the issue here, you know, everything gets politicized. Um and um. You know, I think with Game Stop, we've seen that to a degree that's

just so over the top. So you know that the takes that have emerged out of it are so beyond the pale that you've got avowed communists saying that this is like the best thing that's ever happened to workers, and you know, at the start of the giant Revolution, and it's like, what are you people talking about? Right? Like, um,

so yeah, I just think it's it's hyperbolate. That's the I want to Yeah, I want to hop in there because George, I actually remember watching that acmen Icon debate as well, and I'm pretty sure that you and I were probably texting each other at the time or bantering about it, because that was around the time we got

to know each other. But what I think is so beautif full about the last couple of weeks and about what this sort of Reddit revolution has shown is that now anyone can be Akmin or icon, anyone can get up on their soapbox and make a case for how the market should be playing out, for what should be

happening in a given single name stock. And yes, of course that's going to be politicized, and I think to a degree it should be because to your point about the fact that some of these redditors are quite sophisticated, that's actually part of the point that just goes to show how high the bar to entry is and how big you can still be in the sense of education or even net worth and still be a little guy

compared to one of these big institutions. You know, formerly you had to be akmin to be Akman, you had to have raised hundreds of millions, if not billions, from LPs, you had to have your own fund, and you had to be candidly, probably a white guy in a suit getting on CNBC to have that kind of a soap box. And that's not the case anymore. And I think that that's a really important part of the paradigm shift here that says to me that this is not actually just

about the tendees. You know, these are not just purely kind of rational economic actors here, because if you look at the discourse at least around who's taking money off the table, who's taking profit on these trades, there are a lot of people with irrational money still in the game who are holding the line, as they like to say, just to stick it to the suits. And that sounds pretty political to me, George, can ever, can anyone be an acment now? I wasn't around during the Internet stock

bubble of the late and early two thousand's. I was still in grad school back then. But I know, Joe, you've told anecdotes about reading message boards back then, about people hyping stocks and about stocks doing the kind of thing that stocks you today, and maybe not through a short squeeze in a gamma squeeze, by through you know, mass participation in markets. UM, you know, the democratization as

it were. I think that's the wrong word for it, But I think what people will identify of of going to decimalization of um having expanded access to brokerage accounts that happened in the es like that all happened before, right um people signed up for e trade accounts to ride the Internet stock bubble higher in the late nineteen nineties. Um, and you know, we're able to participate, We're able to coordinate in just the same way that we're seeing now.

I think you could make the case that the specific strategy is a little bit more complex now. Um. But I don't think it's actually something new. Um. And I don't think it's actually something that's changed significantly. I will admit that there it's easier to get into the market and speculate today with an app like robin Hood than

it would have been twenty years ago. And it probably is a little bit easier to coordinate via some of these large scale network effect online communities like Reddit, Wall Street bets or like Twitter or whatever. Um, But I don't think that's an phenomenon at his core. It's maybe

a more intense version of something we've seen previously. But um, I think there has been ample precedent in relatively recent history for this exact same pattern of behavior, and so we're not seeing some new emergent um factor, but just standard rehash of what's happened before. Maybe Joe knows the answer to this, But I wasn't trading in the late early two thousand's. But I don't remember anyone talking about specific options contracts that they could gang up on to

create a gamma squeeze. Like that feels relatively new to me. Yeah, I mean, you know, I just um, you know, my twenty second take is like, yeah, there were message boards. Yeah, the message boards moving market there a. I do think George is right, the coordination is sort of more intense these days, and I think the sophistication is just um way more intense these days. I mean, the level of intelligent at would agree at least on some say like

Wall Street beds posters, is extremely high. They're under some of them at least have very good understanding of how the derivatives markets work and where the pressure points are emerging, and they know how to communicate as such. And also in the case of DFV the Roaring Kitty like also very high level understanding of business. I mean, Joel, I guess I would ask you though, like, yes, the markets are changing and that is new and anyone can sort of like tell a story in a way that maybe

previously would be reserved for a hedge fund manager. But is that like, is that political or is that just changing market? Well, part of what I love about all of the commentary that has occurred around this is that for the first time, people are paying attention to market structure and paying attention to all of the implications that come along with market structure in a way that frankly,

even Wall Street didn't um. You know, Church and I will both remember when we're working on banks, right at working at banks, excuse me, right out of college, you know, the least loved task was interfacing with middle and back office, was waiting through all of the new regulations that were

coming out post two thousand eight. It turns out, you know, now looking back ten years later, for me, that was some of the most important work that I did, because it gave me this understanding of how the market is structured, why it's structured this way, and all of the knock on effects and implications that that has on who can access the market, who can access the market in what ways, who can access information and data flow, who can access leverage,

who can access various financial products? And again, I think that that should be political. And I think that we've seen over the last year people waking up to the system around them, the fish waking up to the water. And I think that this is yet another example of that. Whether you know, we look at the storming of the Capitol Building or even the election of Donald Rump. You know, that was a subset of the American people waking up and say, you know what, the current system it's not

working for me. It doesn't serve me. Even the BLM protests last spring. Of course, that was a very different sort of belief system and ideology that was driving that, but still it was people waking up and saying this system doesn't serve me. And I think that this fits somehow with all of those other examples of this sort of zeitgeist in context of the time that we're in, of people waking up this time to market structure and saying the market structure is broken. I like that idea

that market structure market access should be political. I think that's a good way of framing it. Um So I just want to go back to, you know, the notion of what is actually motivating Wall Street bets on aggregate. So if you spend time on the message board, it's pretty clear to me that there is a wrong sense of community. Although I guess you could argue over the past week that might be changing, since they've gone up to seven million followers or something crazy like that, and

it's starting to change the makeup of the form. But if you go back to like a few months, like Wall Street Bets had a very defined identity, It had its own language, its own culture, And it feels to me like when you have that commonality, when you have that much in common, you have that unity. And part of that unity is developed by having a common identifiable enemy. And it feels like Wall Street Bets settled on Wall Street or parts of Wall Street and the financial industry

as their common enemy. So I don't really get how

how we can ignore that side of things. Well, I mean, if you're someone who is well off, who's done well in society, who has five figures to risk on relatively high, relatively low expected return trades which is what deep out of the money call options and highly concentrated positions and margin all you know imply, Um, if you're if you're resentful towards someone who's you know, got a nice suit on, that works at a business that ends in the word capital, Um,

I mean that that that's all well and good. I mean I don't deny that there's a certain group of people on you know, the Wall Street bets or however you want to frame this community is is resentful of the classic hedge fund crowd. But I would also say that that's very different from something like the Occupy Wall Street movement in the post crisis period, right where you know that that was not upper middle class people getting

super mad about UM. You know, the fact that they didn't get enough respect in markets, or that they you know, that that hedge funds got all the attention and their ideas were overlooked like that was. That was a rejection of the larger distribution of wealth, the distribution of resources this country, so on and so forth. It did end up being, you know, something that UM metastasized into the broader politics of of the United States, but at least not long term. But I do think you can make

that that case. Whereas the you know, I'm glad Jill brought up the US capital sacking. I mean that group of people was by any measure a diverse group of people in terms of the amount of UM social resources they controlled, around the types of work they do, around you know, their status as labor capital. Right. You have people flying to that event on private planes, and you also have people who were solid by any definition, working class and not doing as well as other folks in society.

You know. So to me, both the US capital and the Wall Street pets phenomenon and game stop whatever um are really good examples of trying to paint over, you know, a people group of people with diverse and you know, unified interests, but unified interests that don't really break down

along the lines of UM broader political economy. Right, it's it's, it's and and that's really what I object to most about some of the takes is that you're trying to fit um, interesting shaped pegs into holes that are just a different shape. And so, yeah, haven't you just painted over this group as a bunch of people who have the five figures to throw away, as a bunch of

people who are jealous of the students? Want to absolutely people, Yeah, there are absolutely people in this in this diverse range of folks that use walls bats, who are not super high income, who may be spending their last couple hundred dollars on gm E calls or whatever the trade is, right, I totally acknowledge there are people like that in there.

My point is, my point is not is that if you're just going to ignore those people, you shouldn't ignore those people anymore than you should ignore the people that are also benefiting at benefiting who don't fit into that category. Right. You can't. You can't decide that this, you know, this is not a universal group of little guys. There's certainly some little guys in there, and there's some big fish

in there too. That's that's my point. I think it's I think that it's super worth acknowledging that so many of the people on the Wall Street Beds forum and participating in discourse and in the ways that they are here, whether that's on the discord or wherever wherever you want to point to, they're doing an under anonymous accounts or pseudonyms, right, And I think that that, to me just drives home this point that in a way, it doesn't matter who

they are, it doesn't matter what their associated economic background is, what their motivations are, but they're all participating in this kind of stick it to the man, stick it to the suits narrative. And sure, I'm sure that you can break down from each individual the nuanced differences of how they see the world and why they're doing this, you know why they've put money into game Stop. I'm sure that there are some who are more rational economic actors

than others. But at the end of the day, you have this population of folks who are again populating this this message board that is driving home this narrative that is fundamentally political, and I think that that's that's a huge paradigm shift from what Wall Street has been to date, where again you had to be a known name and have a track record in order to have power. Now you have people who are you know, going under inappropriate names uh and and going by cat avatars having the

same level of influence and voice. So, George, I mean, you're a finance professional and you've written on Business Insider about game Stop. I'm curious how much vitriol have you encountered on social media, because I'm sure between Joe and myself we've gotten quite a lot of abuse over the past week just by working at Bloomberg and therefore being considered part of the financial establishment. People must be responding to you, right, not really, I mean like I anytime

I say something that's like at all just us. Anytime I say something that's at all like outside of consensus opinion on Twitter, I'm going to have people in my mentions being annoyed, but like it hasn't been anything unreasonable in my opinion, I haven't had people Maybe I don't know, maybe Twitter's quality filter is doing a good job or something. But I haven't been harassed or anything like that. I'm sorry y'all have and um, you know, I don't say

that to say that you'll have it. You know, it's awful. The other night I made a chicken tenders and I tweeted about it and someone said, I work at Bloomberg, so I could never really appreciate tenders someone uh, they said someone, Yeah, I can't eat tends the way the

common men, so that, yeah, I do. It is just so interesting that back to what Jill said, like I just should we I mean, maybe we should care if the petite bougeois is really mad at you know, capitalists, Um, but to me, like they're bigger, more pressing political narratives here, that that ascribing these groups is like they're the underdog, when like socio economically, they're definitely not the clear underdog, right, um, compared to like the worst of people in this country

or in any other country around the world right now, Like, is that the people we should be holding up as like the the underdogs who are fighting against injustice and being shut out of the system. Like I'm a lot more worried about my friends who you know, have been formally incarcerated and therefore can't rent rent an apartment Like that to me is like the people we should be worried about underdogs, not people who are mad that they

can't get as many tendees as they want. On robin Hood, everyone will have their own fight to fight, and I don't I don't think it's for me to uh to dismiss this fight over another fight, although even if personally I I don't disagree. And again, you know, we covered this earlier, but in the macro sense of what defines the haves versus the haves have not in the United States, You're absolutely right, Torch, anyone with fifty k to throw into a high risk trade goes into the category of

the haves. Under that, under that more macro framing, but again it just goes to highlight how unequal access is markets today. Let me ask a question, and I'm I'm glad you ended on that note because there's been part of the narrative that's been bugging me a little bit, but maybe others have different views. And the story that I hear a lot of people saying is why are people um complaining about people on Reddit manipulating the price

of stocks? The market has been manipulated forever. People on Wall Street are manipulating the stock market all the time, and my I do not I know this is going to be very Actually, the thing that I said that got the most abuse so far in the last week was when I tweeted that prior to this, I do not think that US capital markets are actually particularly manipulated.

I think they're pretty transparent by and large. I think that access has been pretty level for a while thanks to Index CTF, people of low cost ways of investing that are are probably better than they've ever been, and then the old days it was much worse. But other people think like, oh, it's like Riven with manipulation. I'd love to hear both of your takes. Like was prior to the Wall Street bets emerging, were big players on Wall Street constantly manipulating US capital I'm gonna let the

former m bond trader go first. I was gonna say, Joe, I mean, I think it's all relative, right, Certainly US markets relative to some of the emerging markets, uh that I dealt with in my former life once upon a time. Sure, very transparent, very fair and equal market access. Um. But you know, I think that that doesn't mean that it's good enough. And I think that that's the distinction that

I would draw. But you know it is it is very easy to uh, to make that argument and to to have that come back of well, look at how lucky we are here relative to most of the world. Yeah, I agree with that. I mean it's so if you look at a market like Hong Kong, um, like the sort of capital structure manipulation that goes on with property developers over there. UM. I mean, Tracy, I'm sure you can speak to ever Grand and some of these companies, right, I mean, we would not fly in the US, UM.

You know, um yeah, just not gonna happen. Um. So comparing a relatively developed emerging market, UM, infrastructure, financial markets, infrastructure like Hong Kong's UM. And I'm sure you could pick out other examples. Um. You know, look at Japan and how companies over there are able to avoid acting and shareholder interests, you know, in favor of UM long term holders or UM even some of the stuff that

goes on in Europe sometimes. I mean, the US markets are are accessible and you know, cheap and generally fair also compared to history of the US markets, UM. Right, Uh, we've come a long way, and honestly, a lot of the part of the reason for that is this sort of market mechanics that drove Robin to stop people from trading. Right.

We that ultimately they were following a course prescribed by regulation. Right, and that regulation in the long run does a really a much better job than it could protecting UM individual investors and making sure things are equitable. UM. But you know, that doesn't mean we can't go further. And I definitely agree with the idea that things could be more equitable, things could be more fair, and that there are instances of manipulation where um, you know, they need to be enforced.

And maybe I'm not a lawyer, but maybe the Wall Street bet stuff falls into that category. It's possible we're going to find out that the SEC has evidence that people were posting from multiple accounts and people were misleading

people in a public forum. And you know, YadA YadA, YadA, UM not to say that everything that was going on was manipulation or anything like that, UM, but you know, I do think we could see a lot more enforcement of um, you know, general anti manipulate of law and securities law in this country, and it would only do

good things for individual investors. I have been down this whole kind of rabbit hole about what market manipulation actually means over the last week, and it's it's actually a very weird kind of question if you remove it from obviously the legal parameters and definitions of just can you be a market participant without in some way manipulating the market, because people now take market manipulation just to mean influence

or outside influence on the market. And I think that the problem that people are appointing to when they talk about market manipulation in this context is just that a few big market players have become or can be in the market as it stands, kingmakers or world destroyers. And the question is, should a few hedge funds get to decide that game Stop is a bad company and should

go under? Equally, should retail investors get to decide that AMC lives and should get this big cash infusion, and I don't really know what to make of that, but I think that that is more what we're getting at when we talk about market manipulation. Now, I definitely agree that there's a technical issue where there's what the actual definition is and versus the popular perception are way on

different planets. Yeah, I think Jill's point about this idea that eventually what's going on in markets might have an impact on an actual company. So AMC averted bankruptcy recently because it's stock had been squeezed up so high, and we even saw its bond prices start to go up, so you know, the influence of Wall Street Bets was really felt across the capital structure of am C. GameStop hasn't really done much with its searching stock price, but

who knows, maybe that will change. I think that idea is really really interesting. I also think on the manipulation point, it's going to be We've seen talk about maybe prosecuting Wall Street Bets people for some sort of coordinated manipulation, but I think it's going to be really hard to to accuse someone of you know, buying game Stop shares because they like them and then planning to hold them for a long time Like that doesn't really seem like

a coordinated pump and dump effort. But anyway, sorry, I'm getting slightly off, I respond to the really quick Yeah, of course. It just begs the question to me of why is it okay when hedge fund managers get together at Lebernadine, you know, the smokey back room of the restaurant in New York, and they share their trade positions with each other. Why is it okay that even sell side research is still totally restricted to the clients of

that of that given firm. You know, why why are we okay with these elements of the way that the markets are structured? And we're talking about prosecuting people who are posting openly on a Reddit forum. That to me is just a big part of what is so insane here and what the rebellion is against. The last thing, I'll say, the one thing you definitely can't fault Street Bets for his transparency, right, Like everything is in the open, and it is, in one way, like one of the

most level playing fields out there. Um. I wanted to go back to robin Hood though, because when we're talking about populist outrage. I feel like a lot of that has been directed at robin Hood in recent days, ever since they decided to shut down availability of trading on game Stop and some other companies. People are really really upset about that decision. And then there are people on the other side, uh, maybe like George, who are describing this as a pretty rational stance by robin Hood. It

wants to preserve its business. But how should we be thinking about that? So it's really important to understand why robin Hood restricts of trading. Right. They didn't do it because Ken Griffin called them up and said you're not allowed to trade in these stocks anymore. That's not what happened. Right.

They had a mechanical margin call from the Depository Trust and Clearing Corporation that was due to huge new exposure in robin Hood accounts that operate under reg T their margin accounts Type two accounts, call them a bunch of different things that created a need for robin Hood to post large amounts of cash to ensure that they performed on their end of trades during the T plus two settlement cycle UM and the amount of cash they had to post went up in part because these stocks are

so volatile, and in part because they just had so many people in their platform opening exposure to them. All of that, the increase in margin related to volatility, the fact that robin Hood had to come up with the cash itself, all of that is designed to protect the people that own stocks via robin Hood. It's designed to make sure that robin Hood is able to perform on

their behalf from a financial perspective, and they did. Robin Hood did have to go out and raise cash through bank loans and through credit lines and through a new capital raise. And that is how the system is supposed

to work. And the reason it's supposed to work that way is so that robin Hood doesn't end up blowing up because they can't perform on their obligations to this the clearing house and end up having all of their customer accounts liquidated through what amounts to a bankruptcy process. And so, you know, Jill and I early in our careers, we we hit the street right after something related happened

at MF Global. Right, John Corzine was being too aggressive with UM customer collateral and it ended up going the wrong way on him. His trades actually ended up being correct.

It's just he got margin squeeze in the in the interim and it it created a big blow up related to collateral, and so you know, I just I really it's really frustrating to see regulation that is definitely in customers interests, that is definitely you know, especially over the long term UM, and that is being rationally managed by um the broker Robin Hood um be sort of ascribed to some shadowy back room plot involving Citadel and some other people. And I don't really understand, you know, because

people just don't understand how the plumbing works. And it's okay, pole don't understand bunny works. But that's another thing that's frustrating about these takes is that they were also unaware of the mechanics of the market. UM. So that yeah, this is why I like, so Tracy got mad at maybe this morning over Ivy and she's like, why are you anti takes? And it was actually mostly this because it's not that I really, you know, everyone is an

opinion that's fine. Is that I actually think like some of the misunderstandings about this stuff was like worsening the public's understanding of this to very negative to a negative degree.

I mean some of it. I don't like the whole, like you know, Occupy Wall Street stuff, but also like people miss explaining why you know, the margin call aspect of everything and plotting what is a sort of system rules designed to keep the system from blowing up, as rules designed to punish the little guy or prevent the little guy from doing the same trades as hedge funds do. That was like the part where I think, like, Okay,

some of these takes are like actually corrosive. Um, so that's that's why, Tracy, But Jill, where you gonna I mean here? So wait I have to respond to that.

Wait wait, wait, wait wait, I think look, I think you need to be more specific when you do your own takes on how there are too many takes because you just go out and say, oh, all these takes suck, But you need to be much much more specific about which ones you're talking about, because otherwise it just sounds like you don't want anyone to have an opinion on

same goes to you. No, I mean, I think, look, I as someone who has worked for a long time in the cryptocurrency and blockchain space, I can absolutely sympathize with the feeling that there are too many takes and that those takes are actually educating people in the wrong

direction um and and leaving them with misconceptions. I think there's no doubt that we're going to come out the other side of this whole game stop thing and the whole Robin Hood halting trading fiasco with a whole bunch of conspiracy theories, as George points to around Ken Griffin. But my perspective is that if even one percent of the people who were affected by this learned something about the dt c C and settlement cycles in the United States and have an opinion on that, I'll call that

a win. That's my own hot take there. I agree that's a win, and it's awesome that I mean, first off, it's really harmful that Robin Hood signed up everybody by default for a margin account for a reg TEA marginalis, in my opinion, not something that no one is talking about, and we should absolutely hold their feet to the fire for that, because I think that's that that harmed a lot of people, because, by the way, if they hadn't been signed up for margin accounts, if they had been

signed up in regular cash accounts, the margining works different. They wouldn't have had to shut down trading if everyone had been trading in cash accounts as opposed to margin accounts. They did the margin account stuff for other reasons. They want to get people trading quickly. They want to get people doing stuff that's volatile, so you know, you get

the gambling aspect that growth exactly exactly. And so yeah, I think I think that I'm totally I'm thrilled that people are talking about collateral settlement and you know how T plus two works, and you know how we just went from T plus three a few years ago to T plus two and what the DTCC is. That's great, awesome, Um, but you've got people with huge platforms, with millions of people able to see what they're saying, who are trying to hold themselves forward as experts, and are saying stuff

that has nothing to do with all that. And so I agree that there's a benefit to this that more knowledge and market infrastructure for everyone involved is good. We should that's great, we should celebrate that. But if the cost to that is ten times as many people having the complete opposite level of information, I'm not I don't

think that's worth the cost at all. I'm sorry, but I think it's really harmful for venture capitalists to go out and say, well, you know, my company that is a competitor of robin Hood offer, you know you should be using them instead because they won't do with these people Robin Hood guys are doing, which is listening to Riffin when their company that they're referring to does the same did the exact same thing for the exact same reasons.

That's really harmful, right, and we need to say that. So, um, you know, I'm with you. Joe say his name, George say his name. I've actually never a massive sub tweet. I've never heard Jonath's last name pronounced, so I'm not going to be able to pronouce the last time. I'm really sorry about that. I don't want to guest. M Poliopatia is who you're referring to called out Robin Hood and who is as part of a spack taking so

far public and SOFI is stock trading operations. People come on the episode again at some point have a similar business model to Robin and did put put restrictions on trading and had the same kind of margin calls at the d triple D D t CC Like, I'm sorry, what what well, Joe, I want to go to you because, um, we're going to get to the blockchain discussion in a second.

We're going to leave that to the very end. But where we get there was sort of the transition she used to be a trader and now you're on the West Coast. You're surrounded by fintech people, in VC people and so like on this whole like growth hack conversation

and the game of gamification of trading and stuff like that. Like, is this sort of, in your view, like a sort of pivotal moment where perhaps there's like a limit to the degree to which sort of like the West Coast mindset when brought to bear on something like finance and

trading like kind of reaches its limit. And maybe it's sort of like a wake up moment for a lot of the people on your half, on your side of the your side of the country, when you think about disrupting Wall Street and stuff like that, and the sort of the limits there. Oh, Joe, I wish that I could say that that that was at all part of

the narrative here. I mean, I I have long been a proponent of the narrative that you can't move fast and break things when you're building something in finance, when you're building something that actually touches people money, people's money. But that is not really the narrative that is playing out on the back of this. If anything, I think that the narrative is, how do we speed up the ability of people to get involved and play the markets.

How do we build infrastructure, forums, social apps, you name it that will continue to reduce the frictions at play without any regard really to the fact that those frictions, as George very well pointed out earlier, we're built in for the integrity of the system and also to some degree at least to protect the little guy. Um. But no, it's all been emphasis on apps like common Stock and public and Adam, there's a new one that I've heard of coming out called Tendees Tendees dot af Yes, I

am serious. Um, that's where all of the hype and it excitement around innovation is. There has not been a whole lot of self reflection or self awareness. It's too bad we're not saving the video for this because we you know, we're looking at each other on video and George's face right now with his hands and his face is just like capturing at all is ten days that you know, I just the year is. I think it's awesome.

I think it's awesome that people are getting exposed to the stock market, you know, like financial markets are fascinating, fascinating things to you know, be involved with from almost any perspective. You know, I just really hope that this whether there are people that have come to the stock market in the past week because of all the headlines, are come to the past, to the stock market in the past couple of years, because of the advances apps

like robin Hood, etcetera. I just really hope that they understand that they're taking big risk by just piling in and you know whatever. I had a conversation with someone last night who said, yeah, I own um G m E, and I own AMC, and I own a couple other you know, I think Nokia and maybe BlackBerry, like all the meme socks like I put but if they all go to zero, it's fine, Like I'm comfortable with that outcome. It's not so much money that it'll it'll ruin me.

And I said, great, that's awesome. Good for you like, you're getting involved with the market, but you're doing it in a way that isn't betting your entire existence on it.

And I think that's awesome. And I just really hope that as these you know, as the successibility, whether it's to the stock market, crypto, whatever thing right as it continues to expand, that we also try and do the best we can educating people around the rest are taking I think that tone does have a lot to do with it, George, and I think that the tone in

which the education is happening really matters. And I think that, you know, if I look back at sort of the history of fintech innovation, none of this is really that new. I think certainly the degree to which it's taking off right now is that new. But something that a lot of people don't realize about Wealth Front is that it actually started as basically a social app geared towards getting

people involved in the markets. I think it was called catching UM, which you can even take the name of the company and ask questions about sort of the motivations, probably that that it was imbuing in its customer base UM. But I think that it's notable that that then ended up as Wealth Front, which I think arguably has done a lot to democratize finance in a very responsible way. So we'll see where all of the the tech innovation that's happening around the markets right now ends up this

time around. But I do agree George, it's about sort of responsibility. Can we go back to the settlement issue, because I unfortunately am old enough to remember not just when T plus three changed into T plus two, but when the dtc C actually started talking about it and looking into this, and that was I think back in two thousand twelve, and so it was a multi year process to get down from T plus three to T

plus two. So to eliminate one day in the clearing time, what are the chances that this actually sparks some sort of improvement in the clearing system, because I gotta say, like it would be quite unexpected and ironic if you know, a sub bredit basically lead to a more efficient US back office clearing system. But I'm curious what you think, Well, I mean, everything's going to settle it a a leg no

matter what. There is no way to um have instant you know, settlement UM in a in an exchange environment, It's not possible. If you look at other markets as an example, whether it's for an exchange, treasuries, futures, whatever, there's always a settlement leg and it has to be that way. Um, and there are ways to you know, shorten it. Um. So I don't know, does T plus two versus T plus one actually M mean that this

situation wouldn't have played out the way it does. It's a technical question that I don't think we can know, um from where we all sit. But um, you know, I do think lower settlement cycles or shorter settlement cycles reduced risk, but you're always going to have some kind of settlement cycles, so you know, trying to avoid it entirely. I've seen takes where people are like, we need to have stock settling in microseconds, and it's like, no, that's not gonna work. Um, like we're just not going to

get there. Um, you know. I I don't think it's realistic. If Jill might have a different perspective on that with her rooting and blockchain, but yeah, I mean, if if you wade deep enough into the sea of bad takes on all of this, many of those takes that have been coming out of the corner of the Internet that I frequent anyway have been around the fact that blockchain would have prevented this, or blockchains would save us from

let's let's hear it. And look, I I don't want to say that that is hard and fast, not true, but I think at a minute, mom, you don't need a blockchain to reduce settlement times right like you can do that with a centralized database. If you look at certificates of deposits and other short term paper, they already

settle on a T plus zero basis um. And I think that there's this kind of techno utopian angle that people want to impose upon this situation and say, oh, you know, we can fix this with technology and wave this magic wand blockchain is going to be a panacea. No, no, no, It is much more about getting alignment within the current actors of the financial system to want to change things, to want to change processes in particular. And look, do I think that it is insane the amount of power

that the dt c C wields over market structure. Yes, I do think that they are effectively a monopoly and as long as they don't want something to change, probably won't. So I'm hopeful that Joe, to your point this whole conversation that this this subreddit may in fact start to change the tide of where that power lies. That would be great, but it is going to be much more about getting them on board and getting other market participants

on board. And I think it will be much easier to do that using existing technology than it will be to get the whole system to rip and replace and uh and put in a blockchain. Well, on that note, Um, that was a fantastic discussion. Love talking to both of you. I think we struck the right tone of politeness without being too friendly. So Joe Carlson and George Parks, thanks for coming on, Navot, thanks for having me. Yeah, thanks so much. This is fun. Uh, Tragy, George and Jill

are great to talk to you. I actually I definitely have probably moved off. I actually, I mean I haven't like changing my overall views too much. But I think um, Jill's argument, which is that although we have seen versions of this kind of class conflict and political conflict in the past, then it's kind of like a new thing when applied to the stock market. The idea of like sticking it to the man, going after the suits but within the context of trading is kind of new and interesting.

It's like, maybe it's like I give the political story a little bit more credit than I previously did, Like maybe I'm like somewhere in the middle. Now, I'm gonna chalk that up as a win. I will note that in an episode in which, uh, you know, two of the four people on it were complaining about how many takes there were, I am the only one who did not deliver a take in that, So I'm going to

do it right now too. But okay, so to me, So to me, my take is that it's impossible to separate the takes, both good and bad, from the success of Game Stop. So the whole thing depends on creating a short squeeze or a Gama squeeze, forcing the share price up. And in order to do that, you have to get as many people as possible actually coming into

the trade. And in order to get as many people as possible, you have to serve up these different narratives, these different motivations, and you have to have things that appealed to as wide range of people as possible. And to me, that's why the takes, even if they're terrible, are very, very important because there are things that get people involved in it, you know that, And you know, like I don't think it's occupy Wall Street or like

the Proletary Revolution or whatever. But I do think that the idea that I can download an app and be on the other side of a trade from like Steve Cohen or Melvin Capital or whatever is really irresistible. And I can see why that narrative is a big part

of what drove the trade. Now, what I object to are the people who are like saying it's too real, Like I don't really think, Like I guess that's where I like like a lot where I sort of like draw or like where I start to make the distinction, Like that narrative is so good, it's fantastic, it's it's it's absolutely irresistible. I can see why people are doing it.

On the other hand, sort of like people who know better, who are like feeding into this idea that you're like helping overthrow capitalism or overthrowing the one percent by trading on this VC funded app on your iPhone with your spare cash, Like I don't buy that, and I think that's been way over sold and way over agged. But you're a percent right like that, without that, if it's just a mechanical trade, if it's just a short squeeze, like if we're like like, people wouldn't have gotten excited

about this. It was like that, like the Porsche v W short squeeze's from a few years ago. Like that class angle is a big part of like what I think made the trade work. So agree with you there, Okay, another win. Um, I think that's right. But it also begs the question. I mean, the thing that we're getting at with the bad takes is that at some point it becomes really difficult to counter them because they just kind of get out there and take a life on

their own. So so for instance, if you tweet anything in defense of Robin Hood at the moment, you're going to get a bunch of people um talking about Citadel and and all of that, and it just it becomes

really hard to change the narrative. And I mean, I can tell you from personal experience that of course, I've spoken to my dad about this, who is a noted conspiracy theorist and fairly right wing, and you know, he thinks it's all market manipulation, it's the hedge funds, getting up with Robin Hood all of that, and even though I'm a financial journalist, his daughter, who presumably he has a reasonable amount of confidence in, I cannot change his

mind about how all of this is working. It's just impossible. Well, this is like the thing which is that there's no way to actually like disprove it, and that like if you if you try to like say, well, this actually is not that exciting that you know, this is the DCCC. These are capital requirements that actually protect the unbroken and users of Robin Hood. You're just like a hedge fund shill. And if you sort of like make up a story

this is it's it's very difficult. This is I actually feel like you're coming around to my view a little bit that like a lot of these takes need to be brained in. No, I told I, I agree, there are terrible takes, but they're sort of part they're part of the success because you can have you can have an alluring yet factually incorrect story around something that brings a lot of people in and it's probably going to be more interesting and probably more simple um than the

explanation of what's actually happening. We talked about this with bitcoin and inflation. Remember, like, it's much easier to talk, you know what. Yeah, we could just go on and on about this, so I'm gonna say, uh yeah, let's um all right, let's leave it there. Let's leave it there. Okay. This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Wisn't You can follow me

on Twitter at the Stalwark. Definitely follow our great guests on Twitter. George Parks. His handle is at Parks. Jill Carlson. She's at Jill Ruth Carlson. Follow our producers. Thank you to our substitute producer Today Till for for his He's for his tea. Thank you to our follow our producer Rack Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francisco Levi at Francisco Today, and check out all of our podcasts in Bloomberg onto the handle

at podcasts. Thanks for listening.