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Tracy, do you think the memestock thing is like already over already? I'm serious.
Well, you know what, I'm looking at the chart of game Stop and it went up a lot and now it's coming down a lot. The thing I think is kind of funny is if you view the entire memes stock phenomenon from an efficient markets hypothesis, you get really interesting questions like why didn't the market already price in the risk or the possibility of Roaring Kitty coming back on Twitter and tweeting a picture of a guy sitting up in a chair that should have been priced in.
Yeah, I totally agree. As you know, I am the world's biggest believer in the efficient market hypothesis. It's always priced in all the time. And for the first time in my life, at age forty three, something has come along to shake my faith. And it is the no. It is the fact that the market did not pricing apparently the possibility that after like three years of radio silent, we would get a tweet of a guy leaning forward from the Roaring Kitty sending the stock high.
Then I've done.
RFK Junior tweeting that he was investing in game stock.
I have to I have to completely rethink my fundamental assumptions about how all markets work. Based on the game Stop chart of the last ten or so days, I'm completely revisiting all my core assumption.
It's good that the apes have you thinking.
I did a deadlift one two, Jimmy, Okay, up barges. This isn't after school Special, except.
I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.
Where's the best with imposta?
These are the important question? Is it robots taking over the world?
No?
I think that like in a couple of years, the AI will do a really good job of making the app podcast and people say, I don't really need to listen to Joe and Tracy anymore.
We do have.
The perfect You're listening to lots More where we catch up with friends about what's going on right now, because.
Even when Odd Lots is over, there's always lots More.
And we really do have the perfect guest.
Luke, what do you think? Why wasn't it priced in already?
Yess? My My favorite way is to you know, answer a question with a question, And I think the bigger one is, why the heck if you're management of GM and you've seen your stock get memed before, how the hell do you not have like a shelf oh ready to go. That's as we can sell shares into this any time. But you know, as for why, you know, folks were expecting this, I would say, look at what
you have. Slash haven't gotten from you know, the the Roaring Kitty Twitter account or anything from Keith gill sense you know, let's call it mid twenty twenty one, didn't participate in the book or the movie effectively made about him. It just seemed like, no, I don't know if the you know, the Roaring Kitty just kind of went into to pseudo hibernation. It seemed like, you know, nine Lives
over and was gone from the scene. So not something that was on anyone's radars, certainly of all the you know, crazy things in markets that happened, this was not one when I was, you know, coming back into journalism that I was expecting to get hit over the head with.
We're speaking with Luke Kawa, our former colleague at Bloomberg. We worked together with him for many years, and then he left us to join ubs and do serious financial jobs. And now he's back in journalism. He's a markets editor over at Robin Hood's Sherwood Media. So a very triumphant return to financial journalism.
Well timed. I guess, it's like great, It's like we're going to go to Robin Hood's media arm and immediately the game stop thing happens. It's like fate, right, That's right.
And the other reason we wanted to talk to Luke, other than the fact that he's fun to talk to, is he was one of the first people at Bloomberg who took what was happening on Wall Street Bets fairly seriously. And I think was one of the first writers of our big cover story on Wall Street Bets when it actually started to take off. And this was way back in let's see early twenty twenty, Is that right.
Luke, Yeah, Yeah, that's the I'd say, you know, late twenty nineteen, early twenty twenty. It was when we got the you know, the prelude or the proof of concept to a lot of things that we would see in later years. And I love the transition from I want to go do serious work and now he's back covering the Memes ducks.
So yeah. Well, one of the things that I really liked about the way you wrote about the Memes talk phenomenon and Wall Street bets at the time was like, Okay, yes, there was this whole cultural phenomenon attached to it where we get to throw around words like uh, autists and apes and lots of profanity, which I'm not going to say on the show because then We'll just have to bleep everything out. But you kind of approached it from a market's angle, which I think tends to get very
forgotten nowadays. Everyone's just like, haha, game stop, isn't the silly But when all of this first started happening, it was kind of an experiment in market structure, and I
think people forget that. So the idea was that basically, if you bought a bunch of options on a particular stock, then market makers would have to go out and hedge their own risk, and they might do that by buying the stock, and so you get this sort of like perpetual motion machine that effectively forces the stock to go up.
Yeah, that's a great explanation. I think, like, what where I had my kind of eureka moment, so to speak, was there's obviously Wall Street Betch was a place where people were pitching they're crazy option bets, they're large positions, they're yolo's what have you, Although like with some of the stocks getting memed several times. Now I don't know if like yolo is the way to describe it. You get two or three opportunities seemingly on a lot of these.
Things, but if but if you miss it, you get to live a second time exactly.
But one of the things that really struck a chord with me was you saw like a lot of you know, intrigue on maybe like smaller names or story stocks. Tessel was obviously an early favorite of the Wall Street Bets community, but there was one user who one time made the argument. And this was after that, you know, I did a little publishing on the Perpetual Motion Machine as you have it. You know, the quote unquote forced Gamma squeeze if we're
getting into the Greeks. But one person said we should try to do this with Microsoft tomorrow in the pre market, and I saw this, but I go like, okay, like let's let's relax, You're going to meme Microsoft now like this is going to be like a thing you're going to try to do. Why not like come on, like stick to your own knitting kind of stuff.
Uh.
Then there was the next morning a crazy amount of call activity in Microsoft and buying in the pre market and Microsoft up like it was something like two and a half to three percent for no reason. And that's when I started to take it more seriously as a okay, well coordinated buying power at certain times through certain vehicles can even leave an imprint on you know what was then the and probably still is now the largest US
doc by market cap. So that's something that you know, really blew my mind then and was something worth following up on as it became kind of even more coordinated, even more revolving around kind of you know, certain stories. And then the success the proof of concept grew to a point where you you know, you get more and more power because if nothing else, this is a momentum play that just got you know, more momentum as it got more attention.
It's so crazy, by the way, I know, this is not the point. It's so wild to me that Microsoft is still the biggest company in the entire world, given it was the biggest company in the entire world or more or less decades ago, and so many different things that ostensibly would have disrupted it, from the Internet to whatever, Apple, et cetera. And yet still I did. But I know that that's a divergence.
No one wants to talk about it.
I know, I know, I know. I just that's just one of those facts that still blows my mind. That big said. So you mentioned, you know, GMME management should have had that shelf registration ready to go. AMC, which always seemed like, I guess I would say, played a little bit more cynically into the memestock crowd than the GMC management. They did have that plan ready to go. They did do something because they broke.
The emergency Memestock glass, Yeah, took their plan off the shelf.
Yeah, so the yes, But what happened with AMC during this round was they had a they had a shelf offering that they had pretty much sold out of, so to speak, by by the end of so just as it was starting, they had an opportunity to sell a little more into it. And I remember, you know, on the on the Monday or something going like GEZ AMC
really really blew this one really blew this opportunity. And it's weird because as you know, you know, the CEO there, Aaron has done a i would say, a fantastic job and recognizing that to a certain extent, the shareholder base is a lot of the product, both in terms of you know, integration into you know, rewards that you get to go to the theater, and also in terms of some of the more shrewd let's call them financing angles that have been litigated back and forth through the courts
but seem to have mainly served the purpose of raising more capital from AMC, from people that just wanted to see the stock go up and the company succeed. And then of course AMC, right after you think that even they kind of missed the window here, the next day they you know, effectively I've called you know, they turned memes into a debt jubilee and able to issue bors stairs trade trade shairs for for debt retire effectively the debt.
And it's that's one of my favorite parts about this is just watching the the memes make things happen in real life for companies that is going to have a meaningful impact on their on their ability as a as a going forward concern in the months, quarters, possibly years to come. What was a little different about GME was that as this was happening, as this was starting, GM
was already in its earnings blackout period. So, you know, typically that is that is something that is going to preclude you from coming forward if you don't already have you know, an existing shelf open to to be able to sell sharers at market, that's going to preclude you from bringing one to the market at that point, unless you're also willing to come forward with your you know,
kind of preliminary earnings results. So it's probably more likely that the you know, effectively the choke point on GM being able to cash in more on this from the management perspective was just the you know, I think it was five days it probably took for them to get those numbers together, so they were able to say like, hey, here's our numbers. Also, yes, we want to sell another forty five million and shairs if you'll have them at
a price. But you know, by that time, we had already seen a lot of deflation in the in the stock price by then.
Yeah I've said this before, but I think one of the nicer interpretations of the memes stock phenomenon is people basically treating the stock market buying shares of a company that is very much struggling to maintain or achieve profitability as a giant GoFundMe for businesses that they kind of like or feel some sense of nostalgia for, which, again in twenty twenty one, when no one was able to go to the movie theater, that did actually make a big difference for amc Luke, I have a really important
question for you, as a fellow redditor. Is it true that you may be a mod on Wall Street Bets and how did that rumor get started?
Wow?
I can, I can say confidently so I am not a cat and I am not a r All Street Bets subreddit monitor. I am. I'm a mod on nowhere on Reddit. I have no clue where it all of this got started. I think it may come from the era where I was back in twenty two twenty, where I was more kind of fervently having back and forth with folks there. And I know the thing I remember most vividly about that is I was probably, I think the only one posting Bloomberg charts on Wall Street Bets
because everyone was like, what what is this chart? Background a lot of a lot of e trades and stuff of that nature. So I think that's maybe why I stood out to some folks back then.
You would be a really good Wall Street bed mod. So I'm just saying I would probably be even more inclined to pay attention to it if you were. But I will trust your denial. I don't think you would be dishonest with us that you're not one of the pupil secretly running that page. Here's the other thing I'm thinking about, Like, with this sort of seemingly brief round of game memestock menia over like, it alsol like I don't know, people are saying, like, what a stuck culture
we have? We're doing this again. It's like we know how the story begins, we know how the story ends, and so why not just like fast forward the tape and get through the entire process quickly, like all of the ups and downs with this without the sort of awe and mysticism around it this time.
Yeah, I would say this was a lot more of a of a cynical episode. And I think if you just compare and contrast the previous rounds we've had. You can a see it in the you can see it kind of in the raw numbers. Whether we want to talk about like how much total call volumes rose, how much volumes rose, turnover value traded, YadA, YadA, YadA, all
of that is very different from now to then. But it's almost kind of like a chicken and egg question there, because is is there something about the story that was different? Is there something about the market structure that was different this time round? I would say yes on both sides. I'll start with the story first. Heading up to twenty twenty one, there had already been you know, the a small crowd including Roaring Kitty, including Rod Allsman, I think
you've had on in the past. Who are who are really making the vigorous, you know, value case for GameStop that you know, you had this one big last puff, so to speak, of the legacy business that was being price Azz was going to imminently go out of business, but it probably had a lot more runway in terms of another full cycle of generating some some free cash flow.
And then maybe you also have this you know, big effective option on you know, the the loyal GameStop subscribers that you know you can maybe turn into and monetize a little bit better than you are. Couple that with
also the high amount of short interests. So that was a story that started good got even better when you know the stock four x effectively over the final four or so months of twenty twenty, and then you had Ryan Cohen coming in in early January, so there was actually like a lot of potential catalysts that were happening at that time. I think you also got another another round of Stimmi checks, and on the entertainment side, I don't know how much pro sports we really had back
on then. So all the stars really aligned for the story to be a lot better and that to be able to command a lot more mind share compared to now, nothing's been happening in game SOT. There's been really no change in the fundamental story. All that really happened is, you know, right before this shares got back to where they were in January twenty twenty one, right before they went parabolic. So that's really all that changed this time.
I would also say potentially something to highlight on the on the market structure side that may have changed a little bit. It's it's it's tough to quantify, and this is still somewhat of a more embryonic hypothesis on my end. But if you just want to compare the you know, let's look at the peak in call volumes traded on GME at different times. At this the call volume peak was about six hundred and fifty thousand and today. Back in January twenty twenty one, that peaked at over four million.
So one of the factors that goes into two options pricing is effectively, the more an option is in demand, the higher the implied volatility for that option, i e. It's its cost should be. What happened this time was we did see in my eyes, for a lower amount of volume and for a lower move in the in the stock some of those options, those lottery ticket options, you start to see the implied volatility jack up a
lot faster than they had in the past. So that's a bit of a sign that, you know, maybe if GME didn't have the shelf ready to go, market makers had their playbook ready to go on, how more or less they were going to respond to something like this happening again and build themselves a little in a little
better margin of safety. I would say, so just worse story and you know, better market mechanics probably are are things that help this thiszle out a lot lot quicker and just be a lot more about making a quick buck than any kind of you know, grand story you can wrap around about you know, sticking it to the man or you know, sticking it to a particular hedge fund. Yeah.
I think that's right, especially about the market makers being more prepared for this, and also maybe even the hedge funds. And you see this discourse on Wall Street Bets itself where people talk about how like Wall Street couldn't beat them, and so they decided to join them instead. And now you have a lot of hedge funds that are actively monitoring all sorts of social media, but Wall Street Bets is certainly one of them, or plugging into discord servers
and things like that to try to track sentiment. So in some ways, the big irony here is that I guess Wall Street Bets has kind of become more intertwined with Wall Street itself.
I think if you if you know that momentum is a factor, if you have seen this story play out before, I think there's a reason why a lot of the socks with the kind of similar characteristics or have had these the similar history during previous rounds of retail media. I don't think it's a surprise that, you know, to some extent they traded like a bit of a basket.
That is, that's something that suggests a you know, a lot more professional piggybacking at play here rather than just a more grassroots move in all of these names.
At the same time, I find that at this point I hadn't I, unlike Tracy, I don't troll troll Wall Street bets. I try to control to U troll and your trol, but I don't troll. I don't troll either, but I don't troll. I did not realize this phenomenon, that the inherent richness of the options as measured by their the volatility, had gone up so much faster in this whole phenomenon with the market makers just getting better.
It's like, oh, we've seen this before. We're going to price them more when we sell these call options to end retail that we're going to like make them pay more right off the bat, because we've seen that playbook before. I find that really interesting.
Well, the other thing that I noticed looking at Wall Street Bets recently, is that like roaring Kitty has basically been excommunicated from that subreddit. So when he tweeted, you know, someone made a post about it, but then the moderators came in and said, you can't really talk about roaring Kitty and if you want to talk about GameStop then go over to a super stunk or there's a dedicated
GME subreddit as well. When did that happen and why, like, why is rooring Kitty basically not part of Wall Street Bets anymore?
At least I can say that in terms of the the archived post like they're they'll still there, so the record of you know, all of roing Kitty's position updates,
all of that still there. In terms of the the lack of GME AMC, I think that is more a legal liability thing brought on by you know, that particular subreddit mod's opinions on what is taller rble, what is not in in the wake of you know a lot of people based SEC investigations after twenty twenty one, and you know, had demanded all their sec demanded like all their messages on Reddit to this this and that any other message boards, any discords, uh scrubbing for that and
you know, at pretty amazing legal expense. So I think that's certainly an angle here in terms of you know,
those folks trying to cover some legal liability. Also, you know, around the same time, I think there's been more of a divide or divorce among that that Moud's community, of which I was never a part that, including one that you know, saw the effect of the first founder, Jamie Rugazinski, exit around during these times and you know, in the wake of publishing his book and you know, some question
over trademarks, some questions over self promotion. I believe still in legal battles with with Reddit over that to this day. So I think just with all the attention that came on this because of gm AMC and Roaring Kitty, you know, they say there's no such thing as as good press, but I guess when good press can lead to potentially high legal bills, then maybe that's that's the way where it can.
I think you meant to say there's no such thing as bad press, but I actually think there's no such thing as good press. Is actually yeah, yeah, no, I think that's probably true. Never talk to the media. I kind of believe that. Don't ever, no one everyone ignored that, especially future all.
You do realize what we're doing here right well, we're media talking to media right now, But on other days, people outside of the media do talk to us.
Why though, who talks to media? I wouldn't ever talk to media. Don't, but don't no one pay attention.
Please for the sake of this podcast. Everyone who's listening, don't don't take that to heart. Ignore Joe.
Okay. You know the other thing. When the first round of memestock Mania happened, there was all of this sort of I would call it like amateur anthropology, or maybe amateur sociology is like men and they're gambling and blah blah blah, and you know that faded. But now we have sports betting, which people talk about. The explosion of crypto has been doing very well. Is there is that
a thing? Did it like spread out, did it metastasized to other areas or was there really sort of this fever pitch in twenty twenty one with that stuff that we haven't really come back to.
I'd see a little bit from Colin a, a little bit from Calm b here, I think if you see, you know a lot of the accounts that are you know, willing to you know, post their you know, sell the gam into the moon, I bought even you know, one hundred percent into the move, bought more options type of folks. So those are also the same kind of people who their next you know, tweet'll be a coin I've never heard of, or a like, yeah, a lot of a lot of all coins that I've never heard of effectively
that are also you know, preferred vehicles of there. So I think like having it be more dispersed, more outlets effectively for you to speculated, I wouldn't be surprised if that's something that helped kind of cool this round a lot more. But I really don't think it can be emphasized as much the complete lack of a story, like at least last time. My personal view is that nobody
ever really cared about Roaring Kitty's story. If you look back at you know, the streams he used to do, the last one he did, and he talked about this in front of Congress, the last dream he did in December twenty twenty. Stock's already up three hundred percent by this time in a matter of months had ninety six
concurrent viewers. It isn't until the stock starts to move more in January and people, you know, Roaring Kitty effectively connects the dots that yes, I'm also a deep fing value that you start to see all of the interest in him pick up. It picked up because he was winning. People weren't interested in fundamentals. They turned the fundamental guy
into their momentum catalyst. So that's all it was. And this time we started from that standpoint with nothing on the fundamental And you know that to me is another just huge reason why this is just a really really faint echo of what we've seen before. We can't even pretend there's a story.
Crazy. Like I said, I haven't been following Wall Street bets as much. Do people still sort of post their negative screenshots just as just as enthusiastic. Yeah, the lost part. You know, I read this biography once of a professional poker player and he said he had a friend trying to think how he can say who would get into a state of arousal upon losing a big hand in poker? And I'm just sort of curious if that's still a thing there where people seem to just get just excited
about losing money as they make money. Ew, I'll find that book, Luke.
One thing I was wondering is so Roaring Kitty on Twitter. I think he follows like ninety people just about. I know he follows you, and he follows me. He does not follow you.
I checked he does follow me a screenshot. Right now?
All right, we can argue about.
Have you had to argue I have a right here. Look, I'm wait, I'm gonna walk over to Tracy one second.
I can't believe we're arguing over who Rowing Kitty follows. That's weird. Okay, fine, fine, Joe wins that round. But have you had people reaching out to you asking, like for you to get in touch with Rooring Kitty for them, because this has happened to be to both me and Sid recently, which is kind of nuts, Like this idea that there's there's one guy on Twitter who is tweeting out at the moment memes and like clips from movies
and not actually saying anything about specific stocks. But you have a bunch of people who are like, oh, please please put me in touch with Roaring Kitty.
Yes, I will say a big deluge a lot of it from just general can you get me in touch? Egg adjacent type accounts, but also I would say a lot of interest from people who operate in the in the social V and DA sphere, wanting to be able to contact to effectively say like, hey, will you do you know sponsored or integrated sponsored content. I'd be, you know, interested in letting you do that. And uh, you know, I my you know, kind of personal view on that is,
you know, certainly not passing any of them along. I would love to get in contact first, though I don't think that's necessarily a very high probability.
And tried, He've all tried, and I assume he's responded to none of us.
Yes, I made an excellent meme. I made a meme of the the guys sitting up and I put on the screen odd lots hoping and I sent it to him, hoping that that would entice him. But I'm afraid to say it hasn't worked yet yet.
Yeah, no, exactly. So a lot of that and the I mean the I think the social media angle is very interesting because again there was at the beginning a lot of confusion, misinformation. Is this actually Keith Gill, Is this you know, a you know, performance art scene. Was his account sold to someone the you know, no reports I've seen that you know suggested it isn't him, and the reports that suggested it's sold have been debunked. But I you know, I think that's where you have to
really think hard. In contrast the like, the reason why this had the power to move the you know, move certain stocks this time around was because of the decentralized nature of the trust. I would say that Keith gil built up as a person. He was, you know, one man doing fundamental research, betting big, doubling down, doubling down and winning consistently and never selling as far as as far as anyone knew. So you know, comparing contrast that
to even Elon Musk. Now, if you look at the look you look at the action that happened in like any Argentinian a d RS or just ETFs that US investors can access. What happened after Elon Musk said, you know invest in Argentina. I love Argentina. You know how they are is is great. Really didn't see a pickup in anything there. So it really just goes to show the kind of I think newfound focus on who we select to trust to tell us about whether things will
go up or not. Elon Musk has obviously spent a lot of currency on different vehicles effectively in terms of things that might degrade his trust by talking about different things that you have gone up and then down a lot, Keith Gill hadn't. So you know, that's what kind of makes the That's what kind of adds a certain cachet to the comments coming out of this account, and certainly why people would want to use this account if they could,
to be able to promote to their own ventures. That's why there's seemingly a lot of interest in that.
You know what else is funny? On that note, no one refers to Keith Gill as anything other than Keith Gill or Roaring Kitty anymore. And of course, originally on Reddit he was known as deep Thing Value. I think I can say that, but no one says that anymore.
Value is dead, Tracy. The only person in the meme arena that I trust is not Keith or Elon is luke Kawa.
That's fair.
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