June 23, 2026 • 56 mins
How did a handful of otherwise unremarkable stocks become some of the most closely watched things on Wall Street? In today's episode, the guys explore the strange series of events that led to massive price fluctuations in GameStop and more. The media portrayed this as the 'little guys' -- amateur traders -- banding together to take revenge on heartless hedge funds. But how much of this is true? What's the real conspiracy, exactly? Tune in to learn more.
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Speaker 1 (00:00):
Fellow conspiracy realist. In Tonight's classic episode, we're exploring a
bit of an artifact something everybody but maybe Reddit forgot.
We called this one Reddit versus Wall Street Peasants invade
the casino question mark was this game stalks? This is
(00:20):
game stalk. Yeah, and bed Bath and Beyond gets looped
in with this. We are exploring a series of events
that led to these massive price fluctuations in game Stop specifically.
Speaker 2 (00:35):
Yeah, it was interesting too because it almost had this
sort of anarchist quality to it, like a bit of
a protest.
Speaker 3 (00:41):
But it was also, of course about making money and
embarrassing Wall Street.
Speaker 4 (00:44):
Yeah, quite a few people made a lot of money
if they sold at the right time, you know, watching
those market fluctuations that we're seeing a lot of manipulation
of right now, Oh my gosh.
Speaker 3 (00:56):
Yeah.
Speaker 2 (00:56):
But I think the thing that most interested me about
this was that it sort of eliminated this longstanding vision
of like the Wall Street types being the only ones
that could ever do anything like this.
Speaker 4 (01:09):
It is weird to see how many different companies have
gotten this game stock treatment since doing this episode. In
this evaluation of what was happening, where it does seem
like as you're saying, guys, maybe the individual human investor,
when working together, does have more power than we thought.
Speaker 1 (01:30):
There are more of you than them. Let's roll the
tape from UFOs to psychic powers and government conspiracies. History
is riddled with unexplained events. You can turn back now
or learn this stuff they don't want you to know.
A production of iHeartRadio.
Speaker 4 (02:00):
Hello, welcome back to the show. My name is Matt,
my name is Nolan.
Speaker 1 (02:04):
They call me Ben. We're joined as always with our
super producer Paul. We liked the stunks decond Most importantly,
you are you, You are here, and that makes this
stuff they don't want you to know. Gentlemen, twenty twenty.
Speaker 4 (02:18):
One, Yeah is the squeeze quos bro.
Speaker 1 (02:23):
What a ride? Yeah. So, in an earlier episode, we
referenced this episode fairly often. Actually, we explored the concept
of quote unquote economy, and in that episode we put
out a call to all our fellow listeners to tell
us the difference between the current ideology of the economy
(02:46):
and the tactics of religion. At the time of this recording,
so far, none of us have discovered a differentiating trait.
If an economy is a religion, and if that religion
has a god, then that god is the concept of
energy over time. We'll call it value. And exploiting that
value over time is a multi billion dollar business and
(03:08):
it gets surreal pretty quickly. Like, do you guys remember
game stop? When's the last time we were in a
game stop?
Speaker 3 (03:14):
You know?
Speaker 5 (03:14):
I actually I like to pop into a game stop
every time I go to a mall. And there's actually
there are some freestanding game stop. People always assume they're
only in malls, but there's one near me in the
local Target shopping center on Morland Avenue in Atlanta. I
don't know why the nostalgia thing.
Speaker 3 (03:32):
Did you guys?
Speaker 5 (03:32):
Remember the game stop used to be Babbage's talk about
remember a mall store?
Speaker 4 (03:37):
Yes, and I too have a local game stop, which
I still frequent because I'm a thirty something year old
man that still plays video games.
Speaker 1 (03:47):
I dig it, I dig it. I like I'm a
physical copy guy, you know what I mean, Whether books
or games, it's the only way to make sure that
you actually own the thing you buy.
Speaker 5 (03:57):
It's a good point because if you're getting it from
a server situation, who knows if the thing you get
when you stream it or whatever, or for all of
a sudden be bricked because he didn't do the latest update.
So well, I guess that could happen with discs too,
But it's a really good point you make.
Speaker 1 (04:10):
Ben shout out to Kendall for their infamous deletion of
George Orwell's nineteen eighty four after people bought it. Look
on Tuesday, the week we record this, we're recording January
twenty ninth. Game Stop, which is still around, saw its
fortunes turn in a very weird way. There's stock price
(04:34):
skyrocketed over the previous price, and this sent shock waves
through the stock market, through the world of finance overall.
And this is an ongoing event, meaning there's information on
the way that we don't have yet no one does,
and the story we're covering today continues. So by the
(04:54):
time this reaches the air, some of the information maybe outdated.
But as the Matt Hatter says, let's start at the beginning,
We'll go through the middle and do our best to
find the end. Game Stop Wall Street read it. Here
are the facts. What the hell just happened? How is
this brick and mortar business suddenly one of the hottest
(05:18):
stocks on the planet.
Speaker 4 (05:19):
Yeah, it feels very weird to even be talking about
game Stop in the news outside of something terrible happening
to yet another brick and mortar store.
Speaker 5 (05:29):
I don't know if any of you guys got like
messages from friends like what's going on with game Stop?
Because it was a little confusing. It was like GameStop
was trending, and we knew something weird was going on
with the stock market and game Stop. But because of
the kind of a little convoluted and mysterious nature of
the stock market, it's not something that everybody can immediately
wrap their head around. So it definitely does do a
(05:50):
little digging and requires some kind of basic knowledge of
some foundational, yet very odd concepts of the stock market.
Speaker 1 (05:58):
Yeah, I want to on that new I want to
thank everybody who reached out via Twitter or Instagram or
sent send text.
Speaker 2 (06:06):
Uh.
Speaker 1 (06:07):
This this story broke in the mainstream pretty much this week,
But there's there's a lot to it, and I think
you're right, we have to we have to first start
with the stock market, which is a ridiculous thing. We
all we all pretend it's not ridiculous, but it's it's
a ridiculous thing. So imagine you're a company. You have
two ways to raise money to cover your startup costs
(06:30):
or to grow your business. You can either borrow money
that's debt financing, or you can sell stock, sell shares
of your company. That's equity financing. And a share of
stock is literally a little piece of ownership of your company,
whether that's Applebee's, whether that's Game Stop, BlackBerry, AMC Theaters, Nokia,
(06:54):
all the rest, all the good.
Speaker 4 (06:55):
Ones, Discovery Communications, Classic Stock.
Speaker 5 (06:59):
Yeah, it's interesting too because even if you're not, like
say HD a lion to share stockholder you know, of
a company, you are still entitled to a lot of
the same information and privy to some of the same
kind of meetings that those people are. So even if
you're like just hold a little bit of stock, you
get prospectuses on what's going on with the company, and
(07:20):
you are able to sit in on these shareholder meetings
where like the CEO gives kind of the rundown of
what's going on with the company.
Speaker 1 (07:27):
And that's because you have bought a share of the stock.
So you are you are part of you are part
of the ownership or the owner class. That means you're
entitled to a proportional fraction of the assets and the
earnings of that company assets or everything a company owns
and earnings or all the money brings in from whatever
(07:48):
it's selling, whether it's a product or a service. And
this is what happens on the stock market. The stock
market kind of mimics two other concepts. Number one insurance,
somebody cover us, somebody have our back. Number two gambling. Vegas, baby,
it's Wall Street is in some ways Vegas with a tie,
(08:12):
you know. And an investor uses money to support this
given idea, this company, this endeavor, and if the endeavor succeeds,
the investor wins. If it fails, the investor loses their influence.
Ordinarily in a basic buying a stock kind of thing,
but there are multiple ways to participate to play in
(08:35):
this casino. For the vast majority of people, the vast
majority of individual investors what are called retail investors. This
means that you buy a certain stock at a certain price,
hopefully a low one, and then hopefully later on down
the line, you sell it at a higher price. So
you get your let's see, what's a good one. You
(08:58):
get your coffee, whatever you get your coffee stock at
ten dollars and next month you sell it for fifteen.
Good job. But as we said, that's just the beginning.
To understand what's happening, we have to understand the concept
of something called short selling.
Speaker 5 (09:16):
Yeah, which is essentially the reverse of that concept. Instead
of buying low and selling high, you're buying high and
selling low. Kind of that's a little, you know, oversimplification,
but the idea is that you borrow a stock that
you don't actually own, and then you sell it. You're
(09:38):
making a bet that the stocks price will go down,
and then you can sell it. You can return it
back to the person the broker I guess that you've
borrowed it from, and then you pocket the difference in
you know, in the stock price from when you borrowed
it to when the end of that contract expires.
Speaker 4 (09:57):
Yeah, it's a really weird concept and it's still difficult
for me to my head around it necessarily, and so
many different places have attempted to explain it. It still
doesn't make sense that there's money in it, except for
the fact that you're the borrowing is really important, borrowing
it and then selling it in hopes of I don't understand.
Speaker 1 (10:22):
God, it's the old line from Popeye's right, I'll gladly
pay you on Wednesday for a hamburger on Tuesday. Vulture
has a really good explanation of this that I hope
is helpful for a lot of us in the audience today.
Let's say, Matt, Let's say Paul has a book. That
(10:43):
book is worth ten bucks, and so you go to
Paul and you say, that's a kick ass book. Can
I borrow it. I'm going to give it back to
you in a couple of days. And then you take
that book, which you do not own, and you sell
that book to someone else for ten That's that's how
much the book is worth. But you're thinking this book
(11:04):
is gonna be less valuable before you have to give
the book back to Paul. And so the book, Let's
say the book drops to four dollars. Everybody said, this
is not a ten dollars book. This is a four
dollar book. There's so many of them. And so now
you can go and buy the actual book for four
(11:25):
dollars and you can give it back to Paul, and
now you have six dollars.
Speaker 4 (11:31):
That makes so much more sense. Thank you Vulture and
Ben so that makes so much more sense.
Speaker 1 (11:37):
Okay, So that's a very that's oversimplified. What you're doing
in that example is you're closing that short position, you're
buying those shares, You're getting that book from the market,
and you're getting it cheaper than it was when you
borrowed it and sold it.
Speaker 4 (11:56):
Well, And it makes so much more sense why you
would have you know, uh, firms that represent a bunch
of people buying a ton of stock in when they're
shorting it. That makes so much more sense.
Speaker 3 (12:08):
Okay.
Speaker 5 (12:08):
I would argue that the book example is almost like
you're you're doing this without the person's knowledge.
Speaker 3 (12:15):
You're you're you're.
Speaker 5 (12:16):
Essentially stealing their property, and then if it doesn't work out,
you're paying them back for it without having gotten permission
to sell it in the first place. I am assuming
that there is an understanding when you're shorting these stocks.
Speaker 3 (12:27):
That that's exactly what you're going to do.
Speaker 5 (12:29):
This is a contract that that sets some terms as
to what the parameters are around this relationship.
Speaker 1 (12:35):
Yeah, to make it to give people a better sense
of the stakes, let's let's get rid of the book
example and say that instead Matt has borrowed Paul's Lamborghini
and sold Paul's Lamborghini and now has ten days to
find a cheaper Lamborghini because he has to give the
car back. So Jeffrey A. Born, who is a professor
(12:58):
of finance and as dean of undergraduate programs in the
Demor McKim School of Business has has a great explanation,
and it's it's kind of what you were you were
saying earlier, Noel. We know the way to make money
on the stock market is to buy low sell high.
But you can do that in either order, and shorting
is the backwards order. That's where it gets risky. Okay,
(13:22):
because back to this vulture example with a book. Let's
say that Matt, the book you you got, you borrowed
ten dollars book, but now all of a sudden, a
few days later, it's a one thousand dollars book, and
you have to buy that book, and you can only
buy it for a thousand dollars because you have to
give it back to Paul. So if the price increases
(13:44):
instead of declining, then you as the investor, as the
book borrower, are on the hook and you just lost money.
In this example, you just lost a ton of money.
It's a bad day.
Speaker 5 (13:58):
So the person on the other end doesn't matter them
because they're going to get the book back either way.
They're going to get the stock back either way. They
don't care what's happened in the interim as far as
they're concerned. They just let you borrow the thing and
then they get it back no matter what. So it's
up to you to make sure that that thing is returned.
It's going to be returned one way or the other.
There's no like, oh sorry, I don't have it anymore.
(14:18):
That's not part of the arrangement. You absolutely have to
get it and pay whatever it takes to get it.
But if you get it back for cheaper, then you
pocket that difference.
Speaker 3 (14:28):
And that's how you make your money.
Speaker 5 (14:30):
And if you do this a bunch successfully, you can
make a lot of money. But if you're thinking at home,
this sounds really dodgy and kind of unethical and sort
of sleazy. I mean, there's an argument that that's the case,
and it's a very controversial practice even among high level
Wall Street types. Maybe it would be considered like the
ethical set of Wall Street.
Speaker 4 (14:51):
Yeah, just to jump back to that book example of
for a second, if that book was then worth a
thousand dollars, and then now I owe I have to
do like spend a grand to give the book back
to Paul. I'm definitely calling Congress or the SEC and
asking for a bailout immediately.
Speaker 1 (15:06):
Oh yeah, yeah, yeah yeah. And if you're the right
kind of entity, your chances of getting a bailout are
much higher than that. You know, if you were like
Matt's mutual funds, Matt's hedge funds, you probably have a
better chance candidly of getting some help from Uncle Sam
than you would if you were just Matt the person.
(15:28):
So this all brings us the Game Stop. This is
the environment in which game stops. Story is a curry. Yes,
that game Stop used to be Babbage's brick and mortar store.
They sell video games, new and used video game consoles, toys,
and movies. It turns out someone was attempting to short
sell game Stop, and that makes sense because game Stop
(15:52):
is in the mall, GameStop is a physical store. Those
those are two very difficult things to navigate nowadays. And
as these say Scooby Doo, the people attempting to short
cell game Stop would have gotten away with it too
if it wasn't for some sharp eyed nerds, and I
say this with great affection with their eyes on the market.
There's a guy who is known as Roaring Kitty or
(16:15):
Deep in Value, who actually got docksed recently. So we're
just going to keep with his internet handles. He's the
one who realized there was a hedge fund shorting Game
Stop stock. In July of twenty twenty, he made a
video that's about an hour long where he explained his
logic and why he was bullish on the stock. It
(16:38):
was about I think about four dollars per share when
he recorded it.
Speaker 4 (16:42):
And which means you should buy right right.
Speaker 1 (16:45):
And we were talking earlier with Paul and Paul what
was the stock at today?
Speaker 3 (16:54):
Did you check?
Speaker 1 (16:56):
Paul has just told us the stock is as we
record at three hundred and forty eight dollars a little
north of that per share, so from four dollars to
three hundred and forty eight dollars. This video came out
in twenty twenty, but he's been buying this stuff earlier.
Speaker 5 (17:11):
Yeah, since twenty nineteen, and as we record today, this
kind of packet of stocks, including you know again the
whole idea behind this practice is to target stocks that
will likely fail, to target companies that will likely fail.
It's not like doing this is going to make them
more likely to fail, because that would be extra crappy.
(17:31):
But it's just a practice of kind of making bets
that these stocks and these companies are not going to
do well. So a lot of companies that were affected
by the pandemic, like GameStop, like the movie theater chain
AMC are on the table for this type of practice.
So a lot of these stocks have been bundled up
in would have been widely reported as something called a
(17:54):
short squeeze, which is a combination of it's basically a
way to screw over these investors that make their money
shorting stocks.
Speaker 1 (18:05):
I want to step back real quick though, because there's
an important point and I think a lot of our
listeners are thinking this too, which is what you said
is absolutely correct in theory. It's absolutely correct. However, we
have to remember we're talking about influence on a macro scale.
If you have the juice for it, and if you
(18:25):
have the connections. Let's say you're MAT's mutual fund and
your short selling books, you can have Matt or one
of Matt's employees or someone who knows Matt from college
or something, go on CNN, go on Fox, go on
MSNBC and say something like, you know what sucks this book,
(18:46):
and then that can that can influence the price of
that book, and that does happen. There's not really I mean,
it's kind of you can see how it's tough to
regulate that.
Speaker 3 (18:58):
That's all.
Speaker 4 (18:58):
Yeah, yeah, there aren't a lot of regular folks showing
up on CNBC to tell you a viewer about their
special stocks that they like to to trade in.
Speaker 5 (19:08):
Elon Musk got in trouble quite a few times for
saying things on Twitter that affected his own stock price,
and then he got in trouble with his board, and
they basically said, yeah, you.
Speaker 3 (19:18):
Can't do that. Stop stop doing that.
Speaker 5 (19:20):
Whether he was knowingly doing it to game the system,
it's you know, he's a he's kind of an interesting
mavericky type fellow. It's hard to say I would lean
towards he knew exactly what he was doing. But you know,
Donald Trump, for example, and I can't think of any
direct examples of him using his presidential platform to directly
call out an individual stock, but he certainly did for
(19:42):
sectors and certainly indicated that, you know, certain investments were
going to be going into certain sectors and that would
absolutely affect stock prices, but it would be harder to
pin because again the language that he used was more
broad and vague.
Speaker 1 (19:55):
Yeah, it gets it gets sticky real quick.
Speaker 3 (19:57):
It does.
Speaker 4 (19:57):
By the way, have you guys, have you guys looked
what's been going on with Tesla stock?
Speaker 3 (20:02):
Dear God, it's out of control right, Like, it's just
it's nuts.
Speaker 4 (20:07):
I don't like. I don't like being a person that
thinks about stocks a lot. I don't like this feeling
that I've had over the past couple of days thinking
about money all the time.
Speaker 1 (20:17):
Yeah, I don't even I don't particularly care for casinos myself.
I just, you know, if you have fun with them,
have fun with them, and just do so responsibly. A
short squeeze is Another thing that's a little bit difficult
to regulate against is when a stock or other asset
has a huge jump in price, and this forces all
(20:42):
our book buyers in this example to buy up the
stock to try to stem the flow of financial blood,
and that scramble only drives the stock higher and higher,
and this is why At one point recently, the cost
of game stock stock, which is our tongue twister, for
(21:02):
the day, soared by like as much as seventeen hundred percent,
not one hundred and seventy percent, one thousand seven zero
zero percent. This can lead to insane losses for those
short sellars. These losses, by the way, a little bit
of foreshadowing could in theory be much much higher than
(21:24):
say an SEC fine for illegal market manipulation.
Speaker 4 (21:29):
Dude, dude, you know what we're going to do this Ben.
Throughout this episode, I'm just going to tell you what
game stop stock is. Okay, because we said three forty
eight before, it's now three sixty eight, so it's our
It's like you know, obviously stocks fluctuate a ton throughout
the day, up and down like that. But we're just
going to see we where we land. Okay, let's keep going.
Speaker 1 (21:53):
And what a good time to pause. We'll be back
after a word from our sponsor. Maybe Matt, maybe you
can kick us off by you know, if the price
is the same.
Speaker 4 (22:02):
Oh, it's back down now it's three fifty seven, three
fifty five, and we're back.
Speaker 1 (22:15):
How did this happen? Someone got caught with their hand
in the cookie jar. As we say, GameStop was ailing.
A lot of people thought its demise was on the
horizon very near. Sales were sluggish because for all the
reasons that we just named, you don't really have to
go to a physical store to buy a new game
(22:35):
nowadays you can download it. Malls are the native environment
of game Stop stores, and they were already in dire
straits way before a pandemic. And so traditional investors are
being rational about this, and they're saying, hey, there's a
chance to do our short selling thing.
Speaker 3 (22:52):
But they overdid it.
Speaker 1 (22:54):
In a worst case scenario, a lot of folks will
tell you that somewhere around five to ten percent of
a stock could be shorted. This was not the case
with game Stop.
Speaker 4 (23:04):
No, those investors shorted one hundred percent of game Stop stock.
Speaker 3 (23:09):
More than one hundred percent, right, and.
Speaker 4 (23:11):
Then and then it went to more. So you hit impossible,
you hit one hundred percent, and then you just kept going.
Speaker 3 (23:17):
Would that understand? How is there not a ceiling? How
can they not be?
Speaker 5 (23:20):
No, Sorry, the market's closed on game Stop. You can't
do anymore. It's like it's like over selling a concert.
I've never understood how you can overseell a.
Speaker 1 (23:29):
Concert or set's on an airline.
Speaker 5 (23:32):
Right, it just seems like the very basic level of greed,
kind of I don't know what it is.
Speaker 1 (23:38):
So they're borrowing these shares, right, so they're borrowing more
shares than actually exist. And people initially didn't really didn't
really heed what Roaring Kitty or DFV was saying. He
invested fifty three thousand dollars in the beginning, and people
were kind of mocking them. They were like, oh, wow,
(23:58):
you're crazy. I mean, you'll do you, bro, but don't
expect much. And then online forms specifically read It eventually
had his back and an online community of stunk Watchers
that's st Oenk saw an opportunity to do a couple
of things with GameStop picture and you can see the
(24:19):
memes picture the famous Heath Ledger take on the Joker
in the Nolan Dark Knights series, saying it's not about
the money, it's about sending a message.
Speaker 4 (24:32):
Yeah, or the other Joker from the Joker, there's a
fantastic video that you can find online or I guess
it's more of a gift with that's animated, but that
goes throughout the whole scene there at the end where
the joker does some the thing that he does on
that show. You know what I'm talking about. It's just
fantastic and it does speak to millennials and people who
(24:56):
are younger than us, and it really it's home and
it makes sense. Why why a group of folks who
are investing on their own and don't have a lot
of assets to their name, and don't feel like they
don't have a lot of opportunities because the situations have
changed since their previous generation, Why that group of people
(25:17):
would want to do this?
Speaker 3 (25:20):
Yeah.
Speaker 1 (25:20):
Yeah, they had a couple of reasons. Of course, there's
a there's a profit motive, right, we could make some
money off of this. There's also this ideological push that
has has some kind of like cognitive DNA in common
with Occupy Wall Street. If anybody remembers that from a
thousand years ago now, they wanted to damage these hedge
(25:44):
funds that make billions of dollars by betting on the
failures of these companies. They also wanted to troll this industry,
and frankly, if you talk to a lot of people involved,
they'll say they like GameStop. They have this stole for it,
just like many of us listening today. We liked the stock,
(26:05):
and they also wanted to show the collective power that
people without billions of dollars of capital could exert if
they worked together. And that's where that's where a subreddit
called Wall Street bets comes in. And you know, we've
all been having various conversations about this off air. Wall
(26:25):
Street Bets is getting portrayed in a weird way in
the mainstream media in some ways that are either intentionally
or accidentally misleading. But it's a lot of people who
are identifying themselves as day traders or retail investors, and
they were keeping an eye on these companies that had
(26:45):
a lot of stock shorted, and they coordinated their efforts
having dfvs back to buy tons and tons of game
Stop stock as much as they could, and they wanted
to drive up the price for this hedge fund and
make it very expensive for them to buy back these
(27:08):
stocks and make good on their short positions. That's the
short squeeze and it kind of, well, the story's not
over yet, but it kind of worked. Financial data companies
estimate short sellers lost upwards of seventy billion dollars so
far just because of this short squeeze on GameStop and
(27:29):
on other stocks. But this is not the crazy part.
Let's look at what happens at what Wall Street did,
how they reacted when peasants invaded the casino. Here's where
it gets crazy.
Speaker 5 (27:43):
Yes, enter Robinhood, an app that many of you may
have heard of from this very show, because we in
fact have done some advertising with robin Hood in the past.
Robin Hood is a investment tool app that folks are
able to use to kind of get dip their toe
(28:03):
into the stock market. Its sort of presented as like
for the people they very much align themselves with kind
of the aftermath and the fallout and public sentiment towards
Wall Street after the Occupy Wall Street movement, and very
much capitalized on that, you know, the idea of Robinhood
robbing from the rich and giving to the poor or
the people. It's anyone's market out there, right, But unfortunately,
(28:26):
this particular story put some cracks in that facade that
they've tried so desperately to cultivate. Many of the retail
investors that drove up the price of game Stop and
others in these bundles of short squeeze positions were using
robin Hood to do so. The retail investors noticed something
(28:48):
odd though, when this all started to hit the fan.
Robin Hood and other brokers like them were restricting these
stocks in kind of weird ways. And when we say
restricting we literally mean they were not allowing users to
buy them some us to some users right to buy
(29:08):
existing game stop stock. It would only allow them to
sell the positions that they already had.
Speaker 3 (29:16):
Why would they do this, you might ask, was.
Speaker 5 (29:19):
It out of like some sort of you know, sense
of justice for the financial markets that know this will
not stand, or is there something deeper at play, or
you know, why wouldn't they see this as a positive,
Because it really is an example of the poor rising
up and robbing from the rich is exactly.
Speaker 3 (29:39):
What Robinhood as an icon stands for.
Speaker 5 (29:42):
So by only allowing use some users to sell the
stock they already had, it allowed this hedge fund, Melvin,
which already in dire straits at this point, to buy
up the stock that they had shorted in the hopes.
Speaker 3 (29:57):
Of kind of reducing some of this damage.
Speaker 5 (30:00):
You know, both robin Hood and another company called Interactive
Brokers also raised margin requirements which means that the trader
needed to have more collateral in order.
Speaker 3 (30:13):
To maintain that position.
Speaker 5 (30:15):
If they didn't have what these outfits saw as the
necessary collateral, they would automatically have their positions closed out.
Speaker 3 (30:24):
That doesn't seem very Robin hoodie.
Speaker 2 (30:26):
Does it.
Speaker 4 (30:27):
Well, Yeah, it seems like you're pushing out people who
were jumping on in bandwagon, or at least that's it. It
seems like what they were attempting to.
Speaker 1 (30:34):
Do they cut a thumb on the scale essentially, So right,
the outcry begins. A lot of people who are you know,
falling victim to this are crying foul, and it's a
valid thing to have a problem with. For the past
few years, robinhood has spent a lot of time and energy.
(30:56):
Marketing itself is something born out of occupy. We're democratizing
finance for all. But it turns out a lot of
people are saying they feel this may not be as
impartial an institution as it appeared to be. There's a
very old cliche on the Internet, not a story the
(31:18):
Jedi would tell you if a service appears to be
free to a user. Facebook's a great example, then it
means that you're not the real customer, you're the product.
Robinhood is popular because it's commission free, meaning you can
make trades and you don't have to pay you don't
have to pay a little bit of a wig to
make those trades. So how did that make money? How
(31:39):
are they doing this for free? Well, they're taking these
trades that these users are making, and they're selling the
information about those trades to other firms, to large firms
before these orders are actually executed. And that means that
if you are positioned correctly as one of these firms,
you can see the trends, you can see the wind
(32:02):
moving through the financial forest, and then you, as this
large firm, can take that information and use it to
inform your own financial actions. It's it's pretty neat when
you think about the system, you get a window into
what's happening.
Speaker 4 (32:19):
It kind of reminds me of the AI things that
we've discussed in the past on this show of attempting
to find a way to tell the future by looking
at the past closely enough and like right up to
the moment and being able to simulate something right because
it's almost like you can you can see it that way. Strange,
(32:41):
strange that that's what it actually was, and that's all confirmed,
Like that's that's that's what they were doing.
Speaker 1 (32:47):
That's the Yeah, that's the business model.
Speaker 3 (32:49):
Cheeze.
Speaker 1 (32:50):
So Robinhood's largest customer is allegedly a firm known as
Citadel Securities. They apparently tried to bail out mel And Capital.
That's the hedge fund they got, you know, the one
that was popping up in the headlines for this shorting
of game Stop. So the big fish are buying info
from Robinhood and they're inserting themselves into this process, into
(33:14):
this kind of chain of events between when you as
a customer make a deal on Robinhood and when it
actually gets executed on Wall Street. This is something called
order flow, and and Vice has a pretty good explanation
of this.
Speaker 4 (33:31):
Weis says Citadel Securities pay tens of millions of dollars
for this order flow, but makes money by automatically taking
the other side of the order, then returning to the
market to flip the trade, and then it gets to
pocket the difference between the price to buy and the
price to sell, and that's known as the spread.
Speaker 5 (33:49):
Isn't that interesting that the term spread is another term
that you often hear and sports betting, horse racing, you know,
all of that kind of stuff. I mean, they really
are relying on a lot of the same concepts in terms.
Speaker 1 (34:03):
And there's a good case to be made that some
of this retail investment action may be happening because of
the decline in sports betting during the COVID pandemic, you know.
So there we are. Outfits like Citadel are supposed to
be honest dealers. They're supposed to look for the best
(34:25):
price for any particular order, whether and that's whether they
internalize the order themselves or whether they send it to
the market. Fortunately, this has not always been the case.
Back in twenty seventeen, they were fined twenty two million
dollars by the SEC because their algorithms were taking advantage
of retail investors when it was purchasing those order flows.
(34:50):
We're going to pause for a word from our sponsor,
and then we'll be back to explore more because the
tail continues to unfold. And we're back, which means it's
time for I don't know about you guys, but my
new favorite game. Matt Frederick, what is the stock price
(35:13):
of game Stop.
Speaker 4 (35:14):
Game stock at this moment? Is three forty seven going
up and down.
Speaker 3 (35:22):
Baby, you never know.
Speaker 4 (35:24):
Just to jump back really quickly to the Citadel thing,
it makes so much sense that it's exactly what we
were talking about. Citadel is getting all that information from
Robinhood right the order flow of what's coming through, and
they are they're literally going opposite to whatever all of
the retail peasants want, and so that way, it's almost
(35:44):
as if it's canceling out what retail stock buyers and
sellers are doing.
Speaker 1 (35:50):
It's interesting because now since we're talking about game stop,
let's introduce the next part. This way, a new player
has injured the game oh as a sound Q has
this cause been co opted? WECE has again done some
excellent reporting on this, and there's a narrative here that's
(36:11):
presented online. It's the idea of like the little guy, right,
the person who is not a Wall Street tycoon, banding
together with like minded people to get back to get
revenge of some sort on the big fish. But the
truth of the matter is probably more complicated. It's probably
(36:32):
not just like a kind of a Star Wars narrative
of the rebels versus the Empire.
Speaker 5 (36:38):
Yes, and that's because the financial system has a ton
of moving parts, and these day traders using Robin Hood,
who see themselves as you know, literal kind of Robin
Hood's freedom fighters, are really just just kind of blips
on the radar. They're just tiny cogs in a massive
(36:59):
mass have very very expensive machine. So it's worth you know,
mentioning that whatever profits some of these day traders end
up with on GameStop, it's really ultimately a drop in
the bucket. The huge firms that own the majority of
game stock stock will likely in the end still come
out on top, not to you know, rain on this
(37:20):
whole freedom fighting kind of stick it to Wall Street parade.
But these entities, these massive too big to fail type
firms are folks like Fidelity and Blackrock, and they all
own millions of game Stop shares each. For example, I
think Blackrock owned around nine point two million shares worth
(37:42):
about one hundred and seventy four million dollars. That was
at its original price back in December of twenty twenty,
and that's according to SEC filings that were published this week.
That stake now is worth about three point one billion dollars. God,
I hope they sold Yeah, this is it leads me
to ask something that I asked off off Mike, and
(38:04):
I think it's something that maybe there isn't really a
good answer to. But obviously we can see how this
faults inflation of the stock price can benefit these big fish,
But how does it actually benefit the company, you know,
because it's obviously like a an incorrect, you know, assessment
of how the company is actually doing. Because you think
(38:27):
a stock price would be reflective of how a company
is doing, what their you know, futures, are their perspective
of growth, et cetera, during their quarterly earnings reports and
all of that. It should be tied to some physical asset,
whether it be a brick and mortar store, you know, inventory.
Speaker 3 (38:43):
Or what have you.
Speaker 5 (38:44):
So how does this vastly overinflated stock price actually benefit
the folks that run the game stop company?
Speaker 1 (38:53):
Yeah, it's an interesting question, right, How how closely associated
are these stocks and the actual thing?
Speaker 5 (39:03):
Right?
Speaker 1 (39:05):
It's important to note that, you know, an economy alone
is not the health of a nation or a country,
and a stock price alone is not always indicative of
the actual value of the thing, right, Because what we're
talking about at this point is kind of an article
(39:25):
of faith. We're circulating ideas and beliefs and values. Right,
we're betting, we're believing in a thing, or we're attempting
to convince other people to believe in a thing. Right,
And you know, like the dollar is a coupon, you know,
we all just sort of believe that it'll work. It
(39:46):
represents energy and labor over time. That is the value
of the dollar. You're really trading time when you pay
someone a dollar, when someone gives you a dollar, and this,
I would argue this is kind of similar.
Speaker 4 (40:03):
And you know it is. It is amazing. We're we're
seeing story after story of you know, a kid just
out of college that invested a little bit of money
in Game Stop and then was able to pay off
you know, his or her student loans almost immediately over
the course of a year. Or you know, someone who
was able to buy their first home and it didn't
(40:23):
look like they were going to be able to because
they couldn't find steady income. But you know, it's just
it's incredible that that is true and exists and came
out of this whole deal. It is also weird to
think that black Rock or whatever, you know, went from
Scrooge McDuck level to buying a palace on the Black Sea.
Speaker 1 (40:45):
Right the Mansa Musa Putin level. Yeah, this, I think
that's a really good point that we shouldn't miss here.
Even if even if some of these individual investors are
at scale accurately described as a drop in the bucket,
that's a life changing drop. That's that's amazing for so
many people. And right now, as as we record, there
(41:08):
are many people on online forums who are urging one
another to hold as in, to not sell game Stop
and these other stocks because that would enable some of
these short sellers to get some stocks back, right, to
get those borrowed stocks back and close their position. And
then there are other things that are happening. They're really
(41:30):
weird things. I don't know about you guys, but I
didn't I didn't expect neo Nazis to show up. But
people are recognizing opportunities and things are getting even crazier.
You're going to see some circulation of anti Semitic conspiracy theories,
the old stuff you know that keeps coming back around
(41:50):
throughout history. And some people are just trolling, I guess,
you know, in like a four Chan level way. Other
people are spreading what I assume to be their sincere,
incredibly misguided ideologies. And then this is the thing we
have to remember. We're talking about the Internet. Anybody can
make a Reddit account, anybody can log into any number
(42:15):
of forums, and they can say they're whomever they want
to say they are, But that doesn't mean that's their
real identity. It's quite possible, I would say even likely,
that there are professional traders involved. We were talking about
this before we went on air, But if you go
into these forums, you will see a lot of a
(42:35):
lot of bots. You'll also see a lot of people
who are trying to push a certain stock, like saying, hey,
you know what the real big thing is? Silver? Right, Noel,
I think you and I maybe you, Matt, I don't know.
If we had talked about this, probably had some folks
talking about silver to us. Is that correct?
Speaker 3 (42:54):
Yeah?
Speaker 5 (42:55):
Yeah, I wanted to mention just a buddy of mine,
we were talking off air before we went on about
this concept of cryptocurrency and how it's reacting to all
of this hoopla, and a buddy of mine yesterday was
talking about how he just invested a little bit of
money in something called doge coin, which is just another
of these many different varieties of cryptocurrency, like what is
(43:16):
it ethereum that I make that one up?
Speaker 3 (43:18):
Something like that.
Speaker 5 (43:19):
Obviously obviously the big one Bitcoin, but Bitcoin is so
expensive that there's really hard to buy into now unless
you've been in it from the ground up. And this
is my buddy's rationale, and I think it really holds you,
and it kicks into the silver thing, which thinks is
a great place to go.
Speaker 3 (43:36):
He says.
Speaker 5 (43:37):
Platforms like Robinhood have restricted trades of stock like game
Stop and AMC and the real short cell extravaganza Silver.
The metal hasn't kicked off yet and may never, so
lots of fired up retail or day traders investors are
ready to trade something. Bitcoin is too intimidating because the
price in is now around thirty k. None of the
(43:57):
other coins have any sway with the general public except
doge coin, which opened yesterday as we record this, at
less than one cent per share. When I got locked
out of game Stop, I looked at the cryptos that
had the most activity. Doze was ahead by a country
mile and already up pass point oh two, which is.
Speaker 3 (44:14):
When I bought in.
Speaker 5 (44:15):
The creeps on Reddit are targeting a dollar which would
leave me more than debt free before student debt.
Speaker 3 (44:23):
Yeah, so it's it's it's an interesting, uh.
Speaker 5 (44:27):
The way the cryptocurrency market is reacting to this, because
it's just another market that can then be thrown into
the mix to kind of offlay some of these.
Speaker 3 (44:36):
Burdens, you know, for these traders.
Speaker 1 (44:38):
But it causes a lot of action, right, Yeah, that's
one of the big uh. That's one of the big
possibilities in the future. Is this going to lead to
even more mainstreaming of cryptocurrency? And there are tons of
cryptocurrencies out there, let us know which one is your
favorite and why short sellers. According to the Retail Investors,
(45:04):
short sellers were attempting to save themselves by engaging in
something called a short ladder attack. A short ladder attack
is just putting in lower and lower bid prices between yourselves.
So there's not really a lot of volume on this trade.
But it's a camouflage thing. It's an illusory move because
(45:27):
now it looks like the stock is plumbting because a
bunch of people appear to be trading at lower and
lower prices quite clever, quite clever, And so this means
that not everybody might be the retail investor they purport
to be. It's possible that other factions of Wall Street
are involved. Wall Street may be eating its own.
Speaker 4 (45:49):
Ooh, okay, okay, just full disclosure here. Ben gave me
a gift at some point in our past, and when
I remembered it, I was thinking about it when I
was watching all of this going down in the news,
and I just want to share with everybody in case
you may be interested. If you like graphic novels. We're
(46:12):
not sponsored by this this these writers or the artists
or image comics, but if you're interested in graphic novels,
there's a scene called the Black Monday Murders. Highly highly recommend.
This is volume two, by the way, but it's about
the stock market and the truth behind like Black Monday
(46:36):
in nineteen twenty nine and what happened you know, in
two thousand and eight. Anyway, it's really interesting stuff. I
highly recommend.
Speaker 1 (46:43):
And Noel, don't feel left out, man, because spoiler alert,
that's that's the gift I got you too, So I'm surprised.
Speaker 3 (46:49):
Oh what, oh my god, that's awesome.
Speaker 1 (46:53):
Always watching your expression. I didn't want you feel left out.
Speaker 5 (46:57):
Oh no, it was in an expression thank you very much,
as you said to the office.
Speaker 1 (47:03):
I think so it's either it's either at the office
of my car, you know what, you know what, I
feel like I'm almost a short sellar. It will be
there by Monday, my friends. Right, So yeah, Black Monday Murders.
It's it's a wild read.
Speaker 3 (47:17):
I love it.
Speaker 1 (47:18):
I do have to warn everybody that that, like this story,
Black Monday Murders, is not yet complete. So creators of that,
if you are.
Speaker 4 (47:26):
Listening, Jonathan Hickman, let's go yes please. Uh.
Speaker 1 (47:31):
And while we're waiting for that story to conclude, let's
look at some of the updates for this, uh, this
current saga. There is a way three eight Okay there, Wow, geez,
it's ping ponging.
Speaker 4 (47:46):
Uh.
Speaker 1 (47:46):
There is a class action lawsuit afoot.
Speaker 5 (47:49):
Yes, uh, and and it's it would seem there's a
pretty good case to be made because, as we mentioned earlier,
Robinhood has this business model where, like you said, Ben,
if you're getting something for look no further than yourself
to see where the where the product is coming from
and the way that Robinhood is situated where they're essentially
giving like a first look at these trades to a
(48:12):
third party that I'm sure somewhere in the terms is acknowledged,
but it does seem like a little bit sketchy. And
then this third party was directly affected by this this
run on you know, short selling or this short squeeze.
So the case to be made is that they misled investors,
(48:35):
they misled their user base, their customer base.
Speaker 4 (48:39):
Yeah, and there's also a question of whether or not
Citadel actually like pulled the trigger on those actions, right,
that's right.
Speaker 1 (48:45):
There's even a rumor that there was a call from
the White House and said, hey, stop letting people mess
with game. Stop stop letting people mess with the money.
You know, that's another unwritten American law. So so Citadel
comes out very recently and denies any involvement with this.
They say, quote, Citadel is not involved in responsible for
(49:09):
any retail broker's decision to stop trading in any way.
That's pretty explicit, right, there's a there's not much weasel
language in there. This lawsuit is directly in response to
the restrictions that were placed on GameStop. It was filed
in the Southern District of New York, claiming that Robin
(49:30):
Hood was rigging the market against its customers. You can
see the language of the lawsuit. You can see the
website of one law firm that's been engaged here, Chapman
Albin LLC out of Cleveland. They specialize in investments and
financial fraud. And if you go to their website today,
(49:52):
you'll see this message on the homepage that says, like,
who's got a good lawyer voice? You know, like a
good I want like a good ambulance chasy lawyer voice?
Like are you a Robin Wood user suffered losses? Dial
blah blah blah blah blah blah blah. You put in
your information on this website. And so far more than
(50:14):
six thousand people have signed.
Speaker 4 (50:17):
Up, Yes, six thousand people, and I'm sure that will
grow as well as others that are attempting to pile
on the On the subreddit Wall Street Bets, there are
numerous posts right at the top right now having to
do with exactly that, how to essentially jump onto a
class action lawsuit.
Speaker 1 (50:35):
And now we're getting close to the horizon, right we're
in the we're in the present moment on the precipice
of the future, and you're probably wondering some of the
same things we are, namely what happens next. It's tough
to say, because, as we've established earlier, in some cases,
(50:56):
there's a pretty good argument to be made that crime
and consequences can be seen as a cost of doing
business after a certain threshold of profit.
Speaker 4 (51:06):
Oh yeah, we've hit on that way too many times
over the years here where it's just way, way, way
way too profitable to make money in a slightly wrong
way if it's just a slap of the wrist for
like two percent of what you made. But here's the thing,
it could end up being a lot more expensive to
(51:26):
actually follow the law and pay for the short selling
when that bill comes due.
Speaker 1 (51:30):
Right, Think of it this way. Okay, Let's say you're
driving somewhere. Let's say, like Noel, you're driving. We're all
in the car. We're on a road trip, and if
we don't get to our destination by like five PM,
we have to pay one thousand dollars. And we know
that if we go the speed limit, there's no way
(51:52):
we're going to make our destination by five PM. Let's
say let's say we put the gas on, we break
the law, and we speed fast enough that we can
get there by four fifty seven. Even if we get
stopped and we get a ticket for speeding, our ticket
is one hundred dollars, but we got there before five,
(52:13):
so we really saved nine hundred dollars. And the best part,
no one goes to jail ever, sweets. That's where're at.
If there is one unwritten law that all Americans, at
least all the people in the US are expected to
know and follow, it's this don't mess with the money.
(52:35):
So what happens when people invade the casino.
Speaker 4 (52:39):
Messing with the money.
Speaker 5 (52:42):
There's actually a really good line from from this show
The Boys, I think you both have watched as well,
a great comic series from Garth Ennis, and it's don't
quit the money. You never quit the money exactly.
Speaker 1 (52:57):
And at this point we want to thank every everybody
who reached out to us as a group, as individuals.
As we said at the top, this there's still so
much in play right now. The situation is, what's the
diplomatic way to say it, fluid, right, And we're not
quite sure what will happen, but we've seen a nest
(53:20):
of conspiracies, and you know, there's there's also a pretty
good argument to be made that the stock market itself
is a series of conspiracies. You're conspiring to make money
selling and trading things. And to the earlier point made today,
how closely associated is this with actual assets actual value?
(53:45):
You know?
Speaker 4 (53:47):
And we really need to think about the apps that
we use to access things into, you know, make financial
transactions on, and even with the best of intentions or
the best slogans or the best ideological framing for an app,
we've learned now that it doesn't necessarily mean that's what's
actually represented. By the way, did we already mention that
(54:08):
site is the squeezeesquos dot com that Paul told us about.
Speaker 1 (54:14):
I think you said it at the very beginning, but what.
Speaker 4 (54:16):
Okay, well, I don't know exactly what the site is.
It's from in flamti inflammateo mia, inflammateomia. I don't know
what that is, but anyway, it's it's just a quick
little site here and it lets you know whether or
not the squeeze has been squos and currently it has
(54:38):
not been squos. And we have no idea who is
creating the site, whether or not it's accurate. It's just
very fun to go there.
Speaker 1 (54:46):
And to say that phrase, and I guess just to
be safe lest anybody assume otherwise. None of what we
have said is in any way financial advice. No, none
of it. But we do think it's fascinating. We hope
that you agree, and we'd love to hear your thoughts.
(55:07):
We try to make it easy to find us online.
Speaker 4 (55:09):
Yes, you can find us on Twitter and Facebook where
we are Conspiracy Stuff. On Instagram we are Conspiracy Stuff Show.
You can find us on the Facebook group Here's where
it gets crazy. You can meet up with all of
the conspiracy realists that are hearing this right now, as
well as us and some of the greatest mods in
history on the Yield Facebook groups. If you don't want
(55:33):
to do that stuff, we have a phone number where
you can reach us.
Speaker 3 (55:36):
It's right.
Speaker 5 (55:37):
You can call one eight three three STDWYTK. You will
have three minutes to leave a message, a story, a missive,
a transmission, what have you. Try to keep it within
those three minutes. We've been getting slammed lately with messages,
and the closer you keep to that three, the more
likely you are to get on one of our weekly
listener mail episodes.
Speaker 1 (55:57):
You can also find us on YouTube dot com slash conspiracy.
Should you feel so moved, you can drop by your
pod scraper of choice and leave us a review. It
makes difference. We greatly appreciate it. And if none of
that quite shorts your stock, there's one way you can
always contact us. It's our good o fashion email address where.
Speaker 4 (56:17):
We are conspiracy at iHeartRadio dot com. Stuff they Don't
(56:40):
want you to Know is a production of iHeartRadio. For
more podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts,
or wherever you listen to your favorite shows.
Fellow conspiracy realist. In Tonight's classic episode, we're exploring a
bit of an artifact something everybody but maybe Reddit forgot.
We called this one Reddit versus Wall Street Peasants invade
the casino question mark was this game stalks? This is
(00:20):
game stalk. Yeah, and bed Bath and Beyond gets looped
in with this. We are exploring a series of events
that led to these massive price fluctuations in game Stop specifically.
Speaker 2 (00:35):
Yeah, it was interesting too because it almost had this
sort of anarchist quality to it, like a bit of
a protest.
Speaker 3 (00:41):
But it was also, of course about making money and
embarrassing Wall Street.
Speaker 4 (00:44):
Yeah, quite a few people made a lot of money
if they sold at the right time, you know, watching
those market fluctuations that we're seeing a lot of manipulation
of right now, Oh my gosh.
Speaker 3 (00:56):
Yeah.
Speaker 2 (00:56):
But I think the thing that most interested me about
this was that it sort of eliminated this longstanding vision
of like the Wall Street types being the only ones
that could ever do anything like this.
Speaker 4 (01:09):
It is weird to see how many different companies have
gotten this game stock treatment since doing this episode. In
this evaluation of what was happening, where it does seem
like as you're saying, guys, maybe the individual human investor,
when working together, does have more power than we thought.
Speaker 1 (01:30):
There are more of you than them. Let's roll the
tape from UFOs to psychic powers and government conspiracies. History
is riddled with unexplained events. You can turn back now
or learn this stuff they don't want you to know.
A production of iHeartRadio.
Speaker 4 (02:00):
Hello, welcome back to the show. My name is Matt,
my name is Nolan.
Speaker 1 (02:04):
They call me Ben. We're joined as always with our
super producer Paul. We liked the stunks decond Most importantly,
you are you, You are here, and that makes this
stuff they don't want you to know. Gentlemen, twenty twenty.
Speaker 4 (02:18):
One, Yeah is the squeeze quos bro.
Speaker 1 (02:23):
What a ride? Yeah. So, in an earlier episode, we
referenced this episode fairly often. Actually, we explored the concept
of quote unquote economy, and in that episode we put
out a call to all our fellow listeners to tell
us the difference between the current ideology of the economy
(02:46):
and the tactics of religion. At the time of this recording,
so far, none of us have discovered a differentiating trait.
If an economy is a religion, and if that religion
has a god, then that god is the concept of
energy over time. We'll call it value. And exploiting that
value over time is a multi billion dollar business and
(03:08):
it gets surreal pretty quickly. Like, do you guys remember
game stop? When's the last time we were in a
game stop?
Speaker 3 (03:14):
You know?
Speaker 5 (03:14):
I actually I like to pop into a game stop
every time I go to a mall. And there's actually
there are some freestanding game stop. People always assume they're
only in malls, but there's one near me in the
local Target shopping center on Morland Avenue in Atlanta. I
don't know why the nostalgia thing.
Speaker 3 (03:32):
Did you guys?
Speaker 5 (03:32):
Remember the game stop used to be Babbage's talk about
remember a mall store?
Speaker 4 (03:37):
Yes, and I too have a local game stop, which
I still frequent because I'm a thirty something year old
man that still plays video games.
Speaker 1 (03:47):
I dig it, I dig it. I like I'm a
physical copy guy, you know what I mean, Whether books
or games, it's the only way to make sure that
you actually own the thing you buy.
Speaker 5 (03:57):
It's a good point because if you're getting it from
a server situation, who knows if the thing you get
when you stream it or whatever, or for all of
a sudden be bricked because he didn't do the latest update.
So well, I guess that could happen with discs too,
But it's a really good point you make.
Speaker 1 (04:10):
Ben shout out to Kendall for their infamous deletion of
George Orwell's nineteen eighty four after people bought it. Look
on Tuesday, the week we record this, we're recording January
twenty ninth. Game Stop, which is still around, saw its
fortunes turn in a very weird way. There's stock price
(04:34):
skyrocketed over the previous price, and this sent shock waves
through the stock market, through the world of finance overall.
And this is an ongoing event, meaning there's information on
the way that we don't have yet no one does,
and the story we're covering today continues. So by the
(04:54):
time this reaches the air, some of the information maybe outdated.
But as the Matt Hatter says, let's start at the beginning,
We'll go through the middle and do our best to
find the end. Game Stop Wall Street read it. Here
are the facts. What the hell just happened? How is
this brick and mortar business suddenly one of the hottest
(05:18):
stocks on the planet.
Speaker 4 (05:19):
Yeah, it feels very weird to even be talking about
game Stop in the news outside of something terrible happening
to yet another brick and mortar store.
Speaker 5 (05:29):
I don't know if any of you guys got like
messages from friends like what's going on with game Stop?
Because it was a little confusing. It was like GameStop
was trending, and we knew something weird was going on
with the stock market and game Stop. But because of
the kind of a little convoluted and mysterious nature of
the stock market, it's not something that everybody can immediately
wrap their head around. So it definitely does do a
(05:50):
little digging and requires some kind of basic knowledge of
some foundational, yet very odd concepts of the stock market.
Speaker 1 (05:58):
Yeah, I want to on that new I want to
thank everybody who reached out via Twitter or Instagram or
sent send text.
Speaker 2 (06:06):
Uh.
Speaker 1 (06:07):
This this story broke in the mainstream pretty much this week,
But there's there's a lot to it, and I think
you're right, we have to we have to first start
with the stock market, which is a ridiculous thing. We
all we all pretend it's not ridiculous, but it's it's
a ridiculous thing. So imagine you're a company. You have
two ways to raise money to cover your startup costs
(06:30):
or to grow your business. You can either borrow money
that's debt financing, or you can sell stock, sell shares
of your company. That's equity financing. And a share of
stock is literally a little piece of ownership of your company,
whether that's Applebee's, whether that's Game Stop, BlackBerry, AMC Theaters, Nokia,
(06:54):
all the rest, all the good.
Speaker 4 (06:55):
Ones, Discovery Communications, Classic Stock.
Speaker 5 (06:59):
Yeah, it's interesting too because even if you're not, like
say HD a lion to share stockholder you know, of
a company, you are still entitled to a lot of
the same information and privy to some of the same
kind of meetings that those people are. So even if
you're like just hold a little bit of stock, you
get prospectuses on what's going on with the company, and
(07:20):
you are able to sit in on these shareholder meetings
where like the CEO gives kind of the rundown of
what's going on with the company.
Speaker 1 (07:27):
And that's because you have bought a share of the stock.
So you are you are part of you are part
of the ownership or the owner class. That means you're
entitled to a proportional fraction of the assets and the
earnings of that company assets or everything a company owns
and earnings or all the money brings in from whatever
(07:48):
it's selling, whether it's a product or a service. And
this is what happens on the stock market. The stock
market kind of mimics two other concepts. Number one insurance,
somebody cover us, somebody have our back. Number two gambling. Vegas, baby,
it's Wall Street is in some ways Vegas with a tie,
(08:12):
you know. And an investor uses money to support this
given idea, this company, this endeavor, and if the endeavor succeeds,
the investor wins. If it fails, the investor loses their influence.
Ordinarily in a basic buying a stock kind of thing,
but there are multiple ways to participate to play in
(08:35):
this casino. For the vast majority of people, the vast
majority of individual investors what are called retail investors. This
means that you buy a certain stock at a certain price,
hopefully a low one, and then hopefully later on down
the line, you sell it at a higher price. So
you get your let's see, what's a good one. You
(08:58):
get your coffee, whatever you get your coffee stock at
ten dollars and next month you sell it for fifteen.
Good job. But as we said, that's just the beginning.
To understand what's happening, we have to understand the concept
of something called short selling.
Speaker 5 (09:16):
Yeah, which is essentially the reverse of that concept. Instead
of buying low and selling high, you're buying high and
selling low. Kind of that's a little, you know, oversimplification,
but the idea is that you borrow a stock that
you don't actually own, and then you sell it. You're
(09:38):
making a bet that the stocks price will go down,
and then you can sell it. You can return it
back to the person the broker I guess that you've
borrowed it from, and then you pocket the difference in
you know, in the stock price from when you borrowed
it to when the end of that contract expires.
Speaker 4 (09:57):
Yeah, it's a really weird concept and it's still difficult
for me to my head around it necessarily, and so
many different places have attempted to explain it. It still
doesn't make sense that there's money in it, except for
the fact that you're the borrowing is really important, borrowing
it and then selling it in hopes of I don't understand.
Speaker 1 (10:22):
God, it's the old line from Popeye's right, I'll gladly
pay you on Wednesday for a hamburger on Tuesday. Vulture
has a really good explanation of this that I hope
is helpful for a lot of us in the audience today.
Let's say, Matt, Let's say Paul has a book. That
(10:43):
book is worth ten bucks, and so you go to
Paul and you say, that's a kick ass book. Can
I borrow it. I'm going to give it back to
you in a couple of days. And then you take
that book, which you do not own, and you sell
that book to someone else for ten That's that's how
much the book is worth. But you're thinking this book
(11:04):
is gonna be less valuable before you have to give
the book back to Paul. And so the book, Let's
say the book drops to four dollars. Everybody said, this
is not a ten dollars book. This is a four
dollar book. There's so many of them. And so now
you can go and buy the actual book for four
(11:25):
dollars and you can give it back to Paul, and
now you have six dollars.
Speaker 4 (11:31):
That makes so much more sense. Thank you Vulture and
Ben so that makes so much more sense.
Speaker 1 (11:37):
Okay, So that's a very that's oversimplified. What you're doing
in that example is you're closing that short position, you're
buying those shares, You're getting that book from the market,
and you're getting it cheaper than it was when you
borrowed it and sold it.
Speaker 4 (11:56):
Well, And it makes so much more sense why you
would have you know, uh, firms that represent a bunch
of people buying a ton of stock in when they're
shorting it. That makes so much more sense.
Speaker 3 (12:08):
Okay.
Speaker 5 (12:08):
I would argue that the book example is almost like
you're you're doing this without the person's knowledge.
Speaker 3 (12:15):
You're you're you're.
Speaker 5 (12:16):
Essentially stealing their property, and then if it doesn't work out,
you're paying them back for it without having gotten permission
to sell it in the first place. I am assuming
that there is an understanding when you're shorting these stocks.
Speaker 3 (12:27):
That that's exactly what you're going to do.
Speaker 5 (12:29):
This is a contract that that sets some terms as
to what the parameters are around this relationship.
Speaker 1 (12:35):
Yeah, to make it to give people a better sense
of the stakes, let's let's get rid of the book
example and say that instead Matt has borrowed Paul's Lamborghini
and sold Paul's Lamborghini and now has ten days to
find a cheaper Lamborghini because he has to give the
car back. So Jeffrey A. Born, who is a professor
(12:58):
of finance and as dean of undergraduate programs in the
Demor McKim School of Business has has a great explanation,
and it's it's kind of what you were you were
saying earlier, Noel. We know the way to make money
on the stock market is to buy low sell high.
But you can do that in either order, and shorting
is the backwards order. That's where it gets risky. Okay,
(13:22):
because back to this vulture example with a book. Let's
say that Matt, the book you you got, you borrowed
ten dollars book, but now all of a sudden, a
few days later, it's a one thousand dollars book, and
you have to buy that book, and you can only
buy it for a thousand dollars because you have to
give it back to Paul. So if the price increases
(13:44):
instead of declining, then you as the investor, as the
book borrower, are on the hook and you just lost money.
In this example, you just lost a ton of money.
It's a bad day.
Speaker 5 (13:58):
So the person on the other end doesn't matter them
because they're going to get the book back either way.
They're going to get the stock back either way. They
don't care what's happened in the interim as far as
they're concerned. They just let you borrow the thing and
then they get it back no matter what. So it's
up to you to make sure that that thing is returned.
It's going to be returned one way or the other.
There's no like, oh sorry, I don't have it anymore.
(14:18):
That's not part of the arrangement. You absolutely have to
get it and pay whatever it takes to get it.
But if you get it back for cheaper, then you
pocket that difference.
Speaker 3 (14:28):
And that's how you make your money.
Speaker 5 (14:30):
And if you do this a bunch successfully, you can
make a lot of money. But if you're thinking at home,
this sounds really dodgy and kind of unethical and sort
of sleazy. I mean, there's an argument that that's the case,
and it's a very controversial practice even among high level
Wall Street types. Maybe it would be considered like the
ethical set of Wall Street.
Speaker 4 (14:51):
Yeah, just to jump back to that book example of
for a second, if that book was then worth a
thousand dollars, and then now I owe I have to
do like spend a grand to give the book back
to Paul. I'm definitely calling Congress or the SEC and
asking for a bailout immediately.
Speaker 1 (15:06):
Oh yeah, yeah, yeah yeah. And if you're the right
kind of entity, your chances of getting a bailout are
much higher than that. You know, if you were like
Matt's mutual funds, Matt's hedge funds, you probably have a
better chance candidly of getting some help from Uncle Sam
than you would if you were just Matt the person.
(15:28):
So this all brings us the Game Stop. This is
the environment in which game stops. Story is a curry. Yes,
that game Stop used to be Babbage's brick and mortar store.
They sell video games, new and used video game consoles, toys,
and movies. It turns out someone was attempting to short
sell game Stop, and that makes sense because game Stop
(15:52):
is in the mall, GameStop is a physical store. Those
those are two very difficult things to navigate nowadays. And
as these say Scooby Doo, the people attempting to short
cell game Stop would have gotten away with it too
if it wasn't for some sharp eyed nerds, and I
say this with great affection with their eyes on the market.
There's a guy who is known as Roaring Kitty or
(16:15):
Deep in Value, who actually got docksed recently. So we're
just going to keep with his internet handles. He's the
one who realized there was a hedge fund shorting Game
Stop stock. In July of twenty twenty, he made a
video that's about an hour long where he explained his
logic and why he was bullish on the stock. It
(16:38):
was about I think about four dollars per share when
he recorded it.
Speaker 4 (16:42):
And which means you should buy right right.
Speaker 1 (16:45):
And we were talking earlier with Paul and Paul what
was the stock at today?
Speaker 3 (16:54):
Did you check?
Speaker 1 (16:56):
Paul has just told us the stock is as we
record at three hundred and forty eight dollars a little
north of that per share, so from four dollars to
three hundred and forty eight dollars. This video came out
in twenty twenty, but he's been buying this stuff earlier.
Speaker 5 (17:11):
Yeah, since twenty nineteen, and as we record today, this
kind of packet of stocks, including you know again the
whole idea behind this practice is to target stocks that
will likely fail, to target companies that will likely fail.
It's not like doing this is going to make them
more likely to fail, because that would be extra crappy.
(17:31):
But it's just a practice of kind of making bets
that these stocks and these companies are not going to
do well. So a lot of companies that were affected
by the pandemic, like GameStop, like the movie theater chain
AMC are on the table for this type of practice.
So a lot of these stocks have been bundled up
in would have been widely reported as something called a
(17:54):
short squeeze, which is a combination of it's basically a
way to screw over these investors that make their money
shorting stocks.
Speaker 1 (18:05):
I want to step back real quick though, because there's
an important point and I think a lot of our
listeners are thinking this too, which is what you said
is absolutely correct in theory. It's absolutely correct. However, we
have to remember we're talking about influence on a macro scale.
If you have the juice for it, and if you
(18:25):
have the connections. Let's say you're MAT's mutual fund and
your short selling books, you can have Matt or one
of Matt's employees or someone who knows Matt from college
or something, go on CNN, go on Fox, go on
MSNBC and say something like, you know what sucks this book,
(18:46):
and then that can that can influence the price of
that book, and that does happen. There's not really I mean,
it's kind of you can see how it's tough to
regulate that.
Speaker 3 (18:58):
That's all.
Speaker 4 (18:58):
Yeah, yeah, there aren't a lot of regular folks showing
up on CNBC to tell you a viewer about their
special stocks that they like to to trade in.
Speaker 5 (19:08):
Elon Musk got in trouble quite a few times for
saying things on Twitter that affected his own stock price,
and then he got in trouble with his board, and
they basically said, yeah, you.
Speaker 3 (19:18):
Can't do that. Stop stop doing that.
Speaker 5 (19:20):
Whether he was knowingly doing it to game the system,
it's you know, he's a he's kind of an interesting
mavericky type fellow. It's hard to say I would lean
towards he knew exactly what he was doing. But you know,
Donald Trump, for example, and I can't think of any
direct examples of him using his presidential platform to directly
call out an individual stock, but he certainly did for
(19:42):
sectors and certainly indicated that, you know, certain investments were
going to be going into certain sectors and that would
absolutely affect stock prices, but it would be harder to
pin because again the language that he used was more
broad and vague.
Speaker 1 (19:55):
Yeah, it gets it gets sticky real quick.
Speaker 3 (19:57):
It does.
Speaker 4 (19:57):
By the way, have you guys, have you guys looked
what's been going on with Tesla stock?
Speaker 3 (20:02):
Dear God, it's out of control right, Like, it's just
it's nuts.
Speaker 4 (20:07):
I don't like. I don't like being a person that
thinks about stocks a lot. I don't like this feeling
that I've had over the past couple of days thinking
about money all the time.
Speaker 1 (20:17):
Yeah, I don't even I don't particularly care for casinos myself.
I just, you know, if you have fun with them,
have fun with them, and just do so responsibly. A
short squeeze is Another thing that's a little bit difficult
to regulate against is when a stock or other asset
has a huge jump in price, and this forces all
(20:42):
our book buyers in this example to buy up the
stock to try to stem the flow of financial blood,
and that scramble only drives the stock higher and higher,
and this is why At one point recently, the cost
of game stock stock, which is our tongue twister, for
(21:02):
the day, soared by like as much as seventeen hundred percent,
not one hundred and seventy percent, one thousand seven zero
zero percent. This can lead to insane losses for those
short sellars. These losses, by the way, a little bit
of foreshadowing could in theory be much much higher than
(21:24):
say an SEC fine for illegal market manipulation.
Speaker 4 (21:29):
Dude, dude, you know what we're going to do this Ben.
Throughout this episode, I'm just going to tell you what
game stop stock is. Okay, because we said three forty
eight before, it's now three sixty eight, so it's our
It's like you know, obviously stocks fluctuate a ton throughout
the day, up and down like that. But we're just
going to see we where we land. Okay, let's keep going.
Speaker 1 (21:53):
And what a good time to pause. We'll be back
after a word from our sponsor. Maybe Matt, maybe you
can kick us off by you know, if the price
is the same.
Speaker 4 (22:02):
Oh, it's back down now it's three fifty seven, three
fifty five, and we're back.
Speaker 1 (22:15):
How did this happen? Someone got caught with their hand
in the cookie jar. As we say, GameStop was ailing.
A lot of people thought its demise was on the
horizon very near. Sales were sluggish because for all the
reasons that we just named, you don't really have to
go to a physical store to buy a new game
(22:35):
nowadays you can download it. Malls are the native environment
of game Stop stores, and they were already in dire
straits way before a pandemic. And so traditional investors are
being rational about this, and they're saying, hey, there's a
chance to do our short selling thing.
Speaker 3 (22:52):
But they overdid it.
Speaker 1 (22:54):
In a worst case scenario, a lot of folks will
tell you that somewhere around five to ten percent of
a stock could be shorted. This was not the case
with game Stop.
Speaker 4 (23:04):
No, those investors shorted one hundred percent of game Stop stock.
Speaker 3 (23:09):
More than one hundred percent, right, and.
Speaker 4 (23:11):
Then and then it went to more. So you hit impossible,
you hit one hundred percent, and then you just kept going.
Speaker 3 (23:17):
Would that understand? How is there not a ceiling? How
can they not be?
Speaker 5 (23:20):
No, Sorry, the market's closed on game Stop. You can't
do anymore. It's like it's like over selling a concert.
I've never understood how you can overseell a.
Speaker 1 (23:29):
Concert or set's on an airline.
Speaker 5 (23:32):
Right, it just seems like the very basic level of greed,
kind of I don't know what it is.
Speaker 1 (23:38):
So they're borrowing these shares, right, so they're borrowing more
shares than actually exist. And people initially didn't really didn't
really heed what Roaring Kitty or DFV was saying. He
invested fifty three thousand dollars in the beginning, and people
were kind of mocking them. They were like, oh, wow,
(23:58):
you're crazy. I mean, you'll do you, bro, but don't
expect much. And then online forms specifically read It eventually
had his back and an online community of stunk Watchers
that's st Oenk saw an opportunity to do a couple
of things with GameStop picture and you can see the
(24:19):
memes picture the famous Heath Ledger take on the Joker
in the Nolan Dark Knights series, saying it's not about
the money, it's about sending a message.
Speaker 4 (24:32):
Yeah, or the other Joker from the Joker, there's a
fantastic video that you can find online or I guess
it's more of a gift with that's animated, but that
goes throughout the whole scene there at the end where
the joker does some the thing that he does on
that show. You know what I'm talking about. It's just
fantastic and it does speak to millennials and people who
(24:56):
are younger than us, and it really it's home and
it makes sense. Why why a group of folks who
are investing on their own and don't have a lot
of assets to their name, and don't feel like they
don't have a lot of opportunities because the situations have
changed since their previous generation, Why that group of people
(25:17):
would want to do this?
Speaker 3 (25:20):
Yeah.
Speaker 1 (25:20):
Yeah, they had a couple of reasons. Of course, there's
a there's a profit motive, right, we could make some
money off of this. There's also this ideological push that
has has some kind of like cognitive DNA in common
with Occupy Wall Street. If anybody remembers that from a
thousand years ago now, they wanted to damage these hedge
(25:44):
funds that make billions of dollars by betting on the
failures of these companies. They also wanted to troll this industry,
and frankly, if you talk to a lot of people involved,
they'll say they like GameStop. They have this stole for it,
just like many of us listening today. We liked the stock,
(26:05):
and they also wanted to show the collective power that
people without billions of dollars of capital could exert if
they worked together. And that's where that's where a subreddit
called Wall Street bets comes in. And you know, we've
all been having various conversations about this off air. Wall
(26:25):
Street Bets is getting portrayed in a weird way in
the mainstream media in some ways that are either intentionally
or accidentally misleading. But it's a lot of people who
are identifying themselves as day traders or retail investors, and
they were keeping an eye on these companies that had
(26:45):
a lot of stock shorted, and they coordinated their efforts
having dfvs back to buy tons and tons of game
Stop stock as much as they could, and they wanted
to drive up the price for this hedge fund and
make it very expensive for them to buy back these
(27:08):
stocks and make good on their short positions. That's the
short squeeze and it kind of, well, the story's not
over yet, but it kind of worked. Financial data companies
estimate short sellers lost upwards of seventy billion dollars so
far just because of this short squeeze on GameStop and
(27:29):
on other stocks. But this is not the crazy part.
Let's look at what happens at what Wall Street did,
how they reacted when peasants invaded the casino. Here's where
it gets crazy.
Speaker 5 (27:43):
Yes, enter Robinhood, an app that many of you may
have heard of from this very show, because we in
fact have done some advertising with robin Hood in the past.
Robin Hood is a investment tool app that folks are
able to use to kind of get dip their toe
(28:03):
into the stock market. Its sort of presented as like
for the people they very much align themselves with kind
of the aftermath and the fallout and public sentiment towards
Wall Street after the Occupy Wall Street movement, and very
much capitalized on that, you know, the idea of Robinhood
robbing from the rich and giving to the poor or
the people. It's anyone's market out there, right, But unfortunately,
(28:26):
this particular story put some cracks in that facade that
they've tried so desperately to cultivate. Many of the retail
investors that drove up the price of game Stop and
others in these bundles of short squeeze positions were using
robin Hood to do so. The retail investors noticed something
(28:48):
odd though, when this all started to hit the fan.
Robin Hood and other brokers like them were restricting these
stocks in kind of weird ways. And when we say
restricting we literally mean they were not allowing users to
buy them some us to some users right to buy
(29:08):
existing game stop stock. It would only allow them to
sell the positions that they already had.
Speaker 3 (29:16):
Why would they do this, you might ask, was.
Speaker 5 (29:19):
It out of like some sort of you know, sense
of justice for the financial markets that know this will
not stand, or is there something deeper at play, or
you know, why wouldn't they see this as a positive,
Because it really is an example of the poor rising
up and robbing from the rich is exactly.
Speaker 3 (29:39):
What Robinhood as an icon stands for.
Speaker 5 (29:42):
So by only allowing use some users to sell the
stock they already had, it allowed this hedge fund, Melvin,
which already in dire straits at this point, to buy
up the stock that they had shorted in the hopes.
Speaker 3 (29:57):
Of kind of reducing some of this damage.
Speaker 5 (30:00):
You know, both robin Hood and another company called Interactive
Brokers also raised margin requirements which means that the trader
needed to have more collateral in order.
Speaker 3 (30:13):
To maintain that position.
Speaker 5 (30:15):
If they didn't have what these outfits saw as the
necessary collateral, they would automatically have their positions closed out.
Speaker 3 (30:24):
That doesn't seem very Robin hoodie.
Speaker 2 (30:26):
Does it.
Speaker 4 (30:27):
Well, Yeah, it seems like you're pushing out people who
were jumping on in bandwagon, or at least that's it. It
seems like what they were attempting to.
Speaker 1 (30:34):
Do they cut a thumb on the scale essentially, So right,
the outcry begins. A lot of people who are you know,
falling victim to this are crying foul, and it's a
valid thing to have a problem with. For the past
few years, robinhood has spent a lot of time and energy.
(30:56):
Marketing itself is something born out of occupy. We're democratizing
finance for all. But it turns out a lot of
people are saying they feel this may not be as
impartial an institution as it appeared to be. There's a
very old cliche on the Internet, not a story the
(31:18):
Jedi would tell you if a service appears to be
free to a user. Facebook's a great example, then it
means that you're not the real customer, you're the product.
Robinhood is popular because it's commission free, meaning you can
make trades and you don't have to pay you don't
have to pay a little bit of a wig to
make those trades. So how did that make money? How
(31:39):
are they doing this for free? Well, they're taking these
trades that these users are making, and they're selling the
information about those trades to other firms, to large firms
before these orders are actually executed. And that means that
if you are positioned correctly as one of these firms,
you can see the trends, you can see the wind
(32:02):
moving through the financial forest, and then you, as this
large firm, can take that information and use it to
inform your own financial actions. It's it's pretty neat when
you think about the system, you get a window into
what's happening.
Speaker 4 (32:19):
It kind of reminds me of the AI things that
we've discussed in the past on this show of attempting
to find a way to tell the future by looking
at the past closely enough and like right up to
the moment and being able to simulate something right because
it's almost like you can you can see it that way. Strange,
(32:41):
strange that that's what it actually was, and that's all confirmed,
Like that's that's that's what they were doing.
Speaker 1 (32:47):
That's the Yeah, that's the business model.
Speaker 3 (32:49):
Cheeze.
Speaker 1 (32:50):
So Robinhood's largest customer is allegedly a firm known as
Citadel Securities. They apparently tried to bail out mel And Capital.
That's the hedge fund they got, you know, the one
that was popping up in the headlines for this shorting
of game Stop. So the big fish are buying info
from Robinhood and they're inserting themselves into this process, into
(33:14):
this kind of chain of events between when you as
a customer make a deal on Robinhood and when it
actually gets executed on Wall Street. This is something called
order flow, and and Vice has a pretty good explanation
of this.
Speaker 4 (33:31):
Weis says Citadel Securities pay tens of millions of dollars
for this order flow, but makes money by automatically taking
the other side of the order, then returning to the
market to flip the trade, and then it gets to
pocket the difference between the price to buy and the
price to sell, and that's known as the spread.
Speaker 5 (33:49):
Isn't that interesting that the term spread is another term
that you often hear and sports betting, horse racing, you know,
all of that kind of stuff. I mean, they really
are relying on a lot of the same concepts in terms.
Speaker 1 (34:03):
And there's a good case to be made that some
of this retail investment action may be happening because of
the decline in sports betting during the COVID pandemic, you know.
So there we are. Outfits like Citadel are supposed to
be honest dealers. They're supposed to look for the best
(34:25):
price for any particular order, whether and that's whether they
internalize the order themselves or whether they send it to
the market. Fortunately, this has not always been the case.
Back in twenty seventeen, they were fined twenty two million
dollars by the SEC because their algorithms were taking advantage
of retail investors when it was purchasing those order flows.
(34:50):
We're going to pause for a word from our sponsor,
and then we'll be back to explore more because the
tail continues to unfold. And we're back, which means it's
time for I don't know about you guys, but my
new favorite game. Matt Frederick, what is the stock price
(35:13):
of game Stop.
Speaker 4 (35:14):
Game stock at this moment? Is three forty seven going
up and down.
Speaker 3 (35:22):
Baby, you never know.
Speaker 4 (35:24):
Just to jump back really quickly to the Citadel thing,
it makes so much sense that it's exactly what we
were talking about. Citadel is getting all that information from
Robinhood right the order flow of what's coming through, and
they are they're literally going opposite to whatever all of
the retail peasants want, and so that way, it's almost
(35:44):
as if it's canceling out what retail stock buyers and
sellers are doing.
Speaker 1 (35:50):
It's interesting because now since we're talking about game stop,
let's introduce the next part. This way, a new player
has injured the game oh as a sound Q has
this cause been co opted? WECE has again done some
excellent reporting on this, and there's a narrative here that's
(36:11):
presented online. It's the idea of like the little guy, right,
the person who is not a Wall Street tycoon, banding
together with like minded people to get back to get
revenge of some sort on the big fish. But the
truth of the matter is probably more complicated. It's probably
(36:32):
not just like a kind of a Star Wars narrative
of the rebels versus the Empire.
Speaker 5 (36:38):
Yes, and that's because the financial system has a ton
of moving parts, and these day traders using Robin Hood,
who see themselves as you know, literal kind of Robin
Hood's freedom fighters, are really just just kind of blips
on the radar. They're just tiny cogs in a massive
(36:59):
mass have very very expensive machine. So it's worth you know,
mentioning that whatever profits some of these day traders end
up with on GameStop, it's really ultimately a drop in
the bucket. The huge firms that own the majority of
game stock stock will likely in the end still come
out on top, not to you know, rain on this
(37:20):
whole freedom fighting kind of stick it to Wall Street parade.
But these entities, these massive too big to fail type
firms are folks like Fidelity and Blackrock, and they all
own millions of game Stop shares each. For example, I
think Blackrock owned around nine point two million shares worth
(37:42):
about one hundred and seventy four million dollars. That was
at its original price back in December of twenty twenty,
and that's according to SEC filings that were published this week.
That stake now is worth about three point one billion dollars. God,
I hope they sold Yeah, this is it leads me
to ask something that I asked off off Mike, and
(38:04):
I think it's something that maybe there isn't really a
good answer to. But obviously we can see how this
faults inflation of the stock price can benefit these big fish,
But how does it actually benefit the company, you know,
because it's obviously like a an incorrect, you know, assessment
of how the company is actually doing. Because you think
(38:27):
a stock price would be reflective of how a company
is doing, what their you know, futures, are their perspective
of growth, et cetera, during their quarterly earnings reports and
all of that. It should be tied to some physical asset,
whether it be a brick and mortar store, you know, inventory.
Speaker 3 (38:43):
Or what have you.
Speaker 5 (38:44):
So how does this vastly overinflated stock price actually benefit
the folks that run the game stop company?
Speaker 1 (38:53):
Yeah, it's an interesting question, right, How how closely associated
are these stocks and the actual thing?
Speaker 5 (39:03):
Right?
Speaker 1 (39:05):
It's important to note that, you know, an economy alone
is not the health of a nation or a country,
and a stock price alone is not always indicative of
the actual value of the thing, right, Because what we're
talking about at this point is kind of an article
(39:25):
of faith. We're circulating ideas and beliefs and values. Right,
we're betting, we're believing in a thing, or we're attempting
to convince other people to believe in a thing. Right,
And you know, like the dollar is a coupon, you know,
we all just sort of believe that it'll work. It
(39:46):
represents energy and labor over time. That is the value
of the dollar. You're really trading time when you pay
someone a dollar, when someone gives you a dollar, and this,
I would argue this is kind of similar.
Speaker 4 (40:03):
And you know it is. It is amazing. We're we're
seeing story after story of you know, a kid just
out of college that invested a little bit of money
in Game Stop and then was able to pay off
you know, his or her student loans almost immediately over
the course of a year. Or you know, someone who
was able to buy their first home and it didn't
(40:23):
look like they were going to be able to because
they couldn't find steady income. But you know, it's just
it's incredible that that is true and exists and came
out of this whole deal. It is also weird to
think that black Rock or whatever, you know, went from
Scrooge McDuck level to buying a palace on the Black Sea.
Speaker 1 (40:45):
Right the Mansa Musa Putin level. Yeah, this, I think
that's a really good point that we shouldn't miss here.
Even if even if some of these individual investors are
at scale accurately described as a drop in the bucket,
that's a life changing drop. That's that's amazing for so
many people. And right now, as as we record, there
(41:08):
are many people on online forums who are urging one
another to hold as in, to not sell game Stop
and these other stocks because that would enable some of
these short sellers to get some stocks back, right, to
get those borrowed stocks back and close their position. And
then there are other things that are happening. They're really
(41:30):
weird things. I don't know about you guys, but I
didn't I didn't expect neo Nazis to show up. But
people are recognizing opportunities and things are getting even crazier.
You're going to see some circulation of anti Semitic conspiracy theories,
the old stuff you know that keeps coming back around
(41:50):
throughout history. And some people are just trolling, I guess,
you know, in like a four Chan level way. Other
people are spreading what I assume to be their sincere,
incredibly misguided ideologies. And then this is the thing we
have to remember. We're talking about the Internet. Anybody can
make a Reddit account, anybody can log into any number
(42:15):
of forums, and they can say they're whomever they want
to say they are, But that doesn't mean that's their
real identity. It's quite possible, I would say even likely,
that there are professional traders involved. We were talking about
this before we went on air, But if you go
into these forums, you will see a lot of a
(42:35):
lot of bots. You'll also see a lot of people
who are trying to push a certain stock, like saying, hey,
you know what the real big thing is? Silver? Right, Noel,
I think you and I maybe you, Matt, I don't know.
If we had talked about this, probably had some folks
talking about silver to us. Is that correct?
Speaker 3 (42:54):
Yeah?
Speaker 5 (42:55):
Yeah, I wanted to mention just a buddy of mine,
we were talking off air before we went on about
this concept of cryptocurrency and how it's reacting to all
of this hoopla, and a buddy of mine yesterday was
talking about how he just invested a little bit of
money in something called doge coin, which is just another
of these many different varieties of cryptocurrency, like what is
(43:16):
it ethereum that I make that one up?
Speaker 3 (43:18):
Something like that.
Speaker 5 (43:19):
Obviously obviously the big one Bitcoin, but Bitcoin is so
expensive that there's really hard to buy into now unless
you've been in it from the ground up. And this
is my buddy's rationale, and I think it really holds you,
and it kicks into the silver thing, which thinks is
a great place to go.
Speaker 3 (43:36):
He says.
Speaker 5 (43:37):
Platforms like Robinhood have restricted trades of stock like game
Stop and AMC and the real short cell extravaganza Silver.
The metal hasn't kicked off yet and may never, so
lots of fired up retail or day traders investors are
ready to trade something. Bitcoin is too intimidating because the
price in is now around thirty k. None of the
(43:57):
other coins have any sway with the general public except
doge coin, which opened yesterday as we record this, at
less than one cent per share. When I got locked
out of game Stop, I looked at the cryptos that
had the most activity. Doze was ahead by a country
mile and already up pass point oh two, which is.
Speaker 3 (44:14):
When I bought in.
Speaker 5 (44:15):
The creeps on Reddit are targeting a dollar which would
leave me more than debt free before student debt.
Speaker 3 (44:23):
Yeah, so it's it's it's an interesting, uh.
Speaker 5 (44:27):
The way the cryptocurrency market is reacting to this, because
it's just another market that can then be thrown into
the mix to kind of offlay some of these.
Speaker 3 (44:36):
Burdens, you know, for these traders.
Speaker 1 (44:38):
But it causes a lot of action, right, Yeah, that's
one of the big uh. That's one of the big
possibilities in the future. Is this going to lead to
even more mainstreaming of cryptocurrency? And there are tons of
cryptocurrencies out there, let us know which one is your
favorite and why short sellers. According to the Retail Investors,
(45:04):
short sellers were attempting to save themselves by engaging in
something called a short ladder attack. A short ladder attack
is just putting in lower and lower bid prices between yourselves.
So there's not really a lot of volume on this trade.
But it's a camouflage thing. It's an illusory move because
(45:27):
now it looks like the stock is plumbting because a
bunch of people appear to be trading at lower and
lower prices quite clever, quite clever, And so this means
that not everybody might be the retail investor they purport
to be. It's possible that other factions of Wall Street
are involved. Wall Street may be eating its own.
Speaker 4 (45:49):
Ooh, okay, okay, just full disclosure here. Ben gave me
a gift at some point in our past, and when
I remembered it, I was thinking about it when I
was watching all of this going down in the news,
and I just want to share with everybody in case
you may be interested. If you like graphic novels. We're
(46:12):
not sponsored by this this these writers or the artists
or image comics, but if you're interested in graphic novels,
there's a scene called the Black Monday Murders. Highly highly recommend.
This is volume two, by the way, but it's about
the stock market and the truth behind like Black Monday
(46:36):
in nineteen twenty nine and what happened you know, in
two thousand and eight. Anyway, it's really interesting stuff. I
highly recommend.
Speaker 1 (46:43):
And Noel, don't feel left out, man, because spoiler alert,
that's that's the gift I got you too, So I'm surprised.
Speaker 3 (46:49):
Oh what, oh my god, that's awesome.
Speaker 1 (46:53):
Always watching your expression. I didn't want you feel left out.
Speaker 5 (46:57):
Oh no, it was in an expression thank you very much,
as you said to the office.
Speaker 1 (47:03):
I think so it's either it's either at the office
of my car, you know what, you know what, I
feel like I'm almost a short sellar. It will be
there by Monday, my friends. Right, So yeah, Black Monday Murders.
It's it's a wild read.
Speaker 3 (47:17):
I love it.
Speaker 1 (47:18):
I do have to warn everybody that that, like this story,
Black Monday Murders, is not yet complete. So creators of that,
if you are.
Speaker 4 (47:26):
Listening, Jonathan Hickman, let's go yes please. Uh.
Speaker 1 (47:31):
And while we're waiting for that story to conclude, let's
look at some of the updates for this, uh, this
current saga. There is a way three eight Okay there, Wow, geez,
it's ping ponging.
Speaker 4 (47:46):
Uh.
Speaker 1 (47:46):
There is a class action lawsuit afoot.
Speaker 5 (47:49):
Yes, uh, and and it's it would seem there's a
pretty good case to be made because, as we mentioned earlier,
Robinhood has this business model where, like you said, Ben,
if you're getting something for look no further than yourself
to see where the where the product is coming from
and the way that Robinhood is situated where they're essentially
giving like a first look at these trades to a
(48:12):
third party that I'm sure somewhere in the terms is acknowledged,
but it does seem like a little bit sketchy. And
then this third party was directly affected by this this
run on you know, short selling or this short squeeze.
So the case to be made is that they misled investors,
(48:35):
they misled their user base, their customer base.
Speaker 4 (48:39):
Yeah, and there's also a question of whether or not
Citadel actually like pulled the trigger on those actions, right,
that's right.
Speaker 1 (48:45):
There's even a rumor that there was a call from
the White House and said, hey, stop letting people mess
with game. Stop stop letting people mess with the money.
You know, that's another unwritten American law. So so Citadel
comes out very recently and denies any involvement with this.
They say, quote, Citadel is not involved in responsible for
(49:09):
any retail broker's decision to stop trading in any way.
That's pretty explicit, right, there's a there's not much weasel
language in there. This lawsuit is directly in response to
the restrictions that were placed on GameStop. It was filed
in the Southern District of New York, claiming that Robin
(49:30):
Hood was rigging the market against its customers. You can
see the language of the lawsuit. You can see the
website of one law firm that's been engaged here, Chapman
Albin LLC out of Cleveland. They specialize in investments and
financial fraud. And if you go to their website today,
(49:52):
you'll see this message on the homepage that says, like,
who's got a good lawyer voice? You know, like a
good I want like a good ambulance chasy lawyer voice?
Like are you a Robin Wood user suffered losses? Dial
blah blah blah blah blah blah blah. You put in
your information on this website. And so far more than
(50:14):
six thousand people have signed.
Speaker 4 (50:17):
Up, Yes, six thousand people, and I'm sure that will
grow as well as others that are attempting to pile
on the On the subreddit Wall Street Bets, there are
numerous posts right at the top right now having to
do with exactly that, how to essentially jump onto a
class action lawsuit.
Speaker 1 (50:35):
And now we're getting close to the horizon, right we're
in the we're in the present moment on the precipice
of the future, and you're probably wondering some of the
same things we are, namely what happens next. It's tough
to say, because, as we've established earlier, in some cases,
(50:56):
there's a pretty good argument to be made that crime
and consequences can be seen as a cost of doing
business after a certain threshold of profit.
Speaker 4 (51:06):
Oh yeah, we've hit on that way too many times
over the years here where it's just way, way, way
way too profitable to make money in a slightly wrong
way if it's just a slap of the wrist for
like two percent of what you made. But here's the thing,
it could end up being a lot more expensive to
(51:26):
actually follow the law and pay for the short selling
when that bill comes due.
Speaker 1 (51:30):
Right, Think of it this way. Okay, Let's say you're
driving somewhere. Let's say, like Noel, you're driving. We're all
in the car. We're on a road trip, and if
we don't get to our destination by like five PM,
we have to pay one thousand dollars. And we know
that if we go the speed limit, there's no way
(51:52):
we're going to make our destination by five PM. Let's
say let's say we put the gas on, we break
the law, and we speed fast enough that we can
get there by four fifty seven. Even if we get
stopped and we get a ticket for speeding, our ticket
is one hundred dollars, but we got there before five,
(52:13):
so we really saved nine hundred dollars. And the best part,
no one goes to jail ever, sweets. That's where're at.
If there is one unwritten law that all Americans, at
least all the people in the US are expected to
know and follow, it's this don't mess with the money.
(52:35):
So what happens when people invade the casino.
Speaker 4 (52:39):
Messing with the money.
Speaker 5 (52:42):
There's actually a really good line from from this show
The Boys, I think you both have watched as well,
a great comic series from Garth Ennis, and it's don't
quit the money. You never quit the money exactly.
Speaker 1 (52:57):
And at this point we want to thank every everybody
who reached out to us as a group, as individuals.
As we said at the top, this there's still so
much in play right now. The situation is, what's the
diplomatic way to say it, fluid, right, And we're not
quite sure what will happen, but we've seen a nest
(53:20):
of conspiracies, and you know, there's there's also a pretty
good argument to be made that the stock market itself
is a series of conspiracies. You're conspiring to make money
selling and trading things. And to the earlier point made today,
how closely associated is this with actual assets actual value?
(53:45):
You know?
Speaker 4 (53:47):
And we really need to think about the apps that
we use to access things into, you know, make financial
transactions on, and even with the best of intentions or
the best slogans or the best ideological framing for an app,
we've learned now that it doesn't necessarily mean that's what's
actually represented. By the way, did we already mention that
(54:08):
site is the squeezeesquos dot com that Paul told us about.
Speaker 1 (54:14):
I think you said it at the very beginning, but what.
Speaker 4 (54:16):
Okay, well, I don't know exactly what the site is.
It's from in flamti inflammateo mia, inflammateomia. I don't know
what that is, but anyway, it's it's just a quick
little site here and it lets you know whether or
not the squeeze has been squos and currently it has
(54:38):
not been squos. And we have no idea who is
creating the site, whether or not it's accurate. It's just
very fun to go there.
Speaker 1 (54:46):
And to say that phrase, and I guess just to
be safe lest anybody assume otherwise. None of what we
have said is in any way financial advice. No, none
of it. But we do think it's fascinating. We hope
that you agree, and we'd love to hear your thoughts.
(55:07):
We try to make it easy to find us online.
Speaker 4 (55:09):
Yes, you can find us on Twitter and Facebook where
we are Conspiracy Stuff. On Instagram we are Conspiracy Stuff Show.
You can find us on the Facebook group Here's where
it gets crazy. You can meet up with all of
the conspiracy realists that are hearing this right now, as
well as us and some of the greatest mods in
history on the Yield Facebook groups. If you don't want
(55:33):
to do that stuff, we have a phone number where
you can reach us.
Speaker 3 (55:36):
It's right.
Speaker 5 (55:37):
You can call one eight three three STDWYTK. You will
have three minutes to leave a message, a story, a missive,
a transmission, what have you. Try to keep it within
those three minutes. We've been getting slammed lately with messages,
and the closer you keep to that three, the more
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listener mail episodes.
Speaker 1 (55:57):
You can also find us on YouTube dot com slash conspiracy.
Should you feel so moved, you can drop by your
pod scraper of choice and leave us a review. It
makes difference. We greatly appreciate it. And if none of
that quite shorts your stock, there's one way you can
always contact us. It's our good o fashion email address where.
Speaker 4 (56:17):
We are conspiracy at iHeartRadio dot com. Stuff they Don't
(56:40):
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