January 29, 2021 • 24 mins
The drama has left Hollywood and it has taken center stage on Wall Street. Ben and David take their act to the scene of the crime with The Street's Katherine Ross. A running mate of CNBC's Jim Cramer, Katherine gives the guys all the latest intel on what is going on with the stock market thanks to a slugfest between hedge fund managers and Reddit users.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Be sure to catch live editions of The Ben Maller
Show weekdays at two a m. Eastern eleven p m Pacific.
If you thought more hours a day, minutes a week
was enough, I think again. He's the last remnants of
the old republic, a sole fashion of fairness. He treats
crackheads in the ghetto cutter the same as the rich
(00:21):
pill poppers in the penthouse, to clearinghouse of hot takes,
break free for something special. Fifth Hour with Ben Maller
starts right now in the a everywhares we kick off
the weekend and have some fun here on the podcast.
He spin off. You know that by now he spin off.
(00:42):
If you're new to the podcast, welcome of the Overnight show.
Four hours a night clearly not enough. On the Overnight.
We do some different things on the podcast. We don't
stick to sports because we don't stick to sports on
the podcast. Uh and hey, we do this eight days
a week. So this is our Friday podcast. Saturday got
a brand new Pipe and Hot podcast. It will come
(01:03):
your way. And then the mail bag. The staple of Sundays.
You know, people think on Sundays a day of leisure,
day of rest. You might go to church or something
like that. But the mail bag a large part of
the conscience of America. But it is the fifth hour
in UH. It's a spind the wheel of podcast sidekicks
(01:25):
here and see round and round and round and round.
Oh look at it. Look who's decided to leave west
of the four oh five and come in here this week?
David gascon joining us here? How excited? Is that? Unbelievable?
I I thought it was a fitting occasion to come
back this week after what went down earlier in the week,
dude to UH due to the dark alleys of Reddit
(01:47):
and also the white collar sycophants in Wall Street. So
it's well, you are referring to these So this is
going to be a podcast related to Wall Street, but
in s Polton terms, in Layman terms, is what it's
gonna be. Yeah, it is a wild story. It does
have a sports angle to it because a lot of
(02:09):
the owners in professional sports, many of the new owners
are hedge fund people, and this involves the attempt to
take down some of the hedge funds. And just to
give you the thumbnail version, that's kind of set this
up because we are going to be joined. This is
an interview podcast by a financial guru, well media guru
(02:32):
who covers finances and all that and has inside inside
informational throw but it's plugged. Being plugged in would be
the way to describe it. So if you haven't been
paying attention and you're completely in the dark on this
on Wall Street a subreddit, Wall Street bets they started
this movement investing on game Stop, which is a struggling
(02:57):
video game retailer, and they roll the price of stock up.
But that's screwed over the people that were investing in,
betting it was going to go the other way. It's
called shorting a stock, is what it's called. And we're
gonna get into that here. And I think we should
welcome in now from the Street Live with Jim Kramer.
(03:18):
You can see her with the Jim Kramer, that crazy
guy from CNBC. They do a show every morning on
the Street welcoming Katherine Ross, who joins us here on
the fifth hour with Ben Maller and guesscon So, Catherine, welcome.
I think we should start with the term shorting a stock.
(03:40):
What exactly does that even mean? So to break it down,
short telling is basically saying that you're looking at a
company stock, and you're looking at the company, you're saying,
this company cannot survive. So for fun, let's let's pretend
that we're trying to invest in sears and we're looking
at those stock and we're saying, you know, this is
(04:01):
just gonna they're gonna declare bankruptcy sooner or later. So
I'm gonna buy x amount of fear shares for five
dollars from somebody who has um who owns shares, So
I'm borrowing them and then because I'm betting that it's
that it's going to fail when that when that share
goes down, I'm selling it. I'm giving it back to
(04:24):
the person who owns those shares at a profit. So,
for example, if I borrowed at five dollars and it
went down to one dollar, then I get to pocket
the four dollars. Yeah, yeah, yeah, I know, I know absolutely.
So you're you're betting on failure, right, That's that's how
(04:44):
that would work. You're betting on failure. And so this
this reddit community Wall Street Beats has has gotten or
bets rather, has gotten a lot of attention here and
have they essentially at least for a couple of days
beaten the hedge fund guys at their own at their
own game. Yeah they did. Um, they were basically able
(05:08):
to say that we believe in this company. We actually
think they's a turnaround story. And for full context, this
comes after one of the cheery co founders not only
invested heavily in game Stop a while ago, but then
ended up joining the board and said the heat plans
to help turn around game Stop. So these guys are
basically saying, I see this as a turnaround story. The
hedge funds shorting this stock are wrong, and therefore they
(05:31):
were able to drive it up because they came and
drove and when they drove it up, then they forced
the hedge funds to cover their short positions, which means
that they have to spend money instead of get money. Yeah,
and it wasn't just the Reddit, So it was all
I saw. Elon Musk was in on there, and there's
some other people, not just some people of high profile.
(05:53):
Uh So I know Elon Musk is a pretty good
imprint on social media and all that, So that played
in He's hasn't he had an issue over the years
here Catherine with the hedge fund community in general, right
with Tesla and all that. I remember reading something about
that a while ago there, So this is a bit personal,
I would think, yes, perhaps, Yeah, I think what you're
(06:15):
referring to is maybe a couple of years ago when
he tweeted out that he wanted to take Tesla private
at four twenties share. Is that what you're referring to? Yeah,
And then there was that uproar and then so but
that aside, though, you know, how what if you were
to break up the percentage pie Katherine, like, how much
of what happened the last week on Wall Street was
(06:37):
the subreddit and how much of it was influenced by
Elon Musk and a few other people of prominence that were,
I guess adding fuel to the fire. I'm not even
a lot of the credit to Wall Street bets Um,
and I think that when Elon Musk, Canton Winklevoss, and
(06:58):
Champa Uh joined the prey, they kind of added to it.
And we definitely saw stock the stock spikes on all
three occasions. But I definitely think that this really started
with WSB and their drive to say that a lot
of them really believe that that there's a turnaround story.
It wasn't just it became overheated really quickly. But the
core of it really was that they believe in the stock. Yeah,
(07:22):
and and reading some of the stories that have come out,
and you deal in this world all the time, but uh,
the people say this, this is a revolution, this is
a revel we've seen this week is not just kind
of a one off situation against the people on Wall Street.
Does it rise to that level or is this a
story that's just a couple of days and then things
(07:42):
will start to get back to normal, you know, next week.
So I've been in contact with a lot of the
community over on WSB and they have assured me that
this is as you just said, this is a movement
for them. This is more than just making some money
off of the trade. And especially now on Thursday we
saw a bunch of brokerages m restrict buying of these stocks.
(08:04):
That that message has kind of been reaffirmed that they
want to really, in their words, take it to Wall Street.
They think that Wall Street doesn't in their in their eyes,
that they that Wall Street doesn't seem to care about
the retail invector. Whether that's right or wrong, that's up
for debate, but that is their view. Yeah, and you
brought up the I'm on I'm on robin Hood. Uh,
(08:27):
you know, I play around there a little bit. But
for them to take and I guess some of the
other day trading apps took uh the stocks that they
were betting on on the on the subreddit, they took
them off. So how much damage do you think that's
gonna do it to robin Hood, which is thriving right now,
that when things get a little crazy, they's gonna not
(08:48):
allow you to purchase the stock. I would think that's
that's gonna do some damage to their business model. How
do you think that plays out? Oh, it's gonna It's
definitely gonna do damage. I mean, I've been assured by
many that they're leaving robin Hood as soon as they can. Um.
The other interesting thing actually is that robin Hood plans
to go public, and so this is I'm sure that
(09:10):
right now they're very happy they're a private company, but
going forward, this has really hurt consumer trust in robin Hood,
and therefore I could see them having some trouble with
the I p O. Catherine. When you when you look
at this, and I know you you're talking about the
community with Wall Street bets and you've been in contact
with those people throughout the week. What about on the
(09:31):
opposing side. I mean, don't some of these people, the
people that are up and above us, like, don't they
understand the gravity of this situation given the fact that
one we're in a pandemic and two there's all kinds
of people in this country that are at home and
have nothing else to do, and then just got six
dollars from the government. I think that's definitely part of it.
(09:54):
I think that they're Wall Street that's really struggled at
the beginning to makes this known as being seen as
a serious thing. And then when it when they were
able to drive the stock price up so much, suddenly
there was like a panic and there is a lot
of worry on Wall Street of the traditional power structure
(10:14):
being upset. And I think that that's kind of why
you're seeing what could be construed as a class back right.
And I was gonna say with regards to that too,
because now you're trying to pick up the pieces of
where this shutdown was coming from. Who called it? Is
it Robin Hood or is it someone else? But on
Thursday there were reports that Treasury Secretary Jett Yelling had
(10:38):
received over eight hundred thousand dollars in speaking fees, and
that came from Citadel, which is a hedge fund company
founded by Ken Griffin. So like that influence is there
from somebody deep down? Like where does this come from?
Because we've seen the class action lawsuits on Thursday? Like,
how does this? How does this play out? How do
you see it? I think that there's going to be
(11:02):
a lot of back and forth and pointing fingers. I
saw an interview with Andrew rost or Kin of CNBCS
who basically said that this he worries that when this,
when the dust settles here, we're going to see everyone
pointing fingers at one another. And I believe that to
be the case. I think that no one trust each
other right now, and it's very divided. What I think
(11:23):
will happen now because of the action that we've seen
on Thursday, is that we're going to see more regulation
of these online brokerages, because the question now is being
raised by both Democrats and Republicans. Is it okay for
them to be able to restrict buying of stocks? You
know that? Is that fair to the to a free market? Yeah?
I mean because we've gone through, We've gone through days,
(11:44):
weeks and months now about what you can and what
you can't tweet, what you can you can't post on
social media, whether it's YouTube, Facebook, whatever it is. And now,
if you're gonna have these restrictions on how you can trade,
whether it's shorting or buying these options, what's next? Yeah,
I mean that's the ultimate question, is it there? The
The argument for the online brokerages does make sense, and
(12:07):
it's when you just look at it and it's black
and white. These brokerages are trying to protect themselves. They're
worried that and they're trying to protect the consumer. They
seeing this volatility, and they're worried that people who are
not they they're all well enough known around won't they
don't know enough that they could really hurt themselves if
they continue to trade such volatile stocks. That makes sense.
(12:28):
They also don't want to get sued. That also makes sense.
The issue then is do you have a right to
tell someone that they can't trade that stock or do
you try to educate them better? You know, instead of allowing,
for example, Margin calls it out of highood alatail stock,
do you force them do you somehow educate them before
they make these decisions. And I would be the question,
(12:50):
and I have a tough time with that because the
instant pushback for me, and you heard it throughout the week,
is that you have people they're treating the stock market
like a casino. Well, when you go into a casino,
you have no parachute. I mean, you go in there,
there's there's some disclosures, there's some things that you warn
you about for you know, gambling for gamblers, anonymous and whatnot,
if you have a gambling problem. But once you go in,
(13:12):
you lay down the money. It's it's there, it's there
for the taking. So like I don't I don't fully
comprehend that nature of saying, well, we need to regulate,
we need to inform and educate. I mean, that's that's
part of who you are. It's part of who we
are as as adults. We have free random use our
money as we choose. No, I mean I would personally,
(13:33):
as a journalist agree with you. I would say that
there should be tools in place that if you, for example,
if you're going to allow people to um buy margins,
then what you should be doing is for some take
an education course or something of the sword before you
really allow them to dive deep into the technical part
of that. But if they're looking to buy a stock,
(13:55):
what what better way to get people into the market.
And I think that this overall based on the conversation
as I've had with the younger investors who have recently
gotten in via Robin Hood, Um, they really feel like
there's no trust anymore. Yeah, it is interesting. I mean,
you brought the average investor the person used like Robin
Hood and things like that. But back a few years ago,
(14:16):
I remember when these things, these apps came around and
they were like talking about how excited everyone was on
Wall Street because they were gonna draw in the average investor,
I guess, to get their money. But is this a
cautionary tale? This this subreddit where the savvy veterans got
played here at their You know, they thought they were
going to get all this extra money, and maybe they
(14:38):
still will in the end, but you know, right now,
they're not looking so good right now, I think so.
I think that this is definitely kind of a wake
up call that there are retail investors who are really
interested in the market, and they're not only interested in
investing in companies that they believe in. They also feel
that they need to for right or for better or worse,
(15:02):
they feel like they need to target these hedge funds
who are heavily shorting these companies. How long have you
been in the game, Katherine? Has it been been a while?
It's been about three years. I got to imagine this
time and everything going on in the world, but with
the president and President Trump and twenty six and now
this this has got to be discovered some of the
stuff that that journalists like yourself dream about, right, I
(15:27):
completely agree there. I mean, yes, it's it's been quite
a ride. I'm really proud to be a journalist in
this moment of history. I know that you know, mainstream
media gets a lot of um negative attention, But I
think that what I try to bring and as a
journalist is just to try to get everyone a voice.
(15:48):
And I think that's being able to quick cover stories
that we've been covering in the past couple of years.
As you said, the President Trump now President by now
Will Street bets. I really hope that I can bring
a voice to everyone. So being in the industry, now,
what's it like because you work you work with Jim
Kramer on the regular. Right. Yeah, we host the daily
show UM the Street LIVEE with Jim Cramer and Kathin
(16:09):
Ross at time three am every day. So what's it
like working for Jim. Jim is awesome. He is very
I didn't know what to expect when I first started
working at the Street UM and he had one day
just come up to me and I was just a
breaking news reporter at the time, and he said, I
walked you on camera and I was like, Okay, I
think that you've got the wrong person, but he was like, no,
(16:30):
you're really talented. And so we started doing videos together
and he is exactly how he is on camera. Very excitable, UM,
incredibly smart, great to work with and he just genuinely cares.
Like We'll be walking down the street in the normal
times and we're together and fans will come up and
he will stop and take selfies with every single one
of them. He is that like the guy interesting. Hey.
(16:54):
As far as back to the story with game Stop
and all this, like we've seen, I think it was
a the subredd it's as we're doing this in real time,
is still up. But uh, there are some other things
that have been taken down on the Internet related to this, So, uh,
how long does this subred at last? Are they Are
(17:14):
they going to be shut down or the people from
Wall street and what's your your guestimate on how how
much life this subreddit has because we do live in
the age of cancel culture, So are they going to
be canceled wall Street Bets That's a great question. I
actually think that even if, as we saw Wednesday night,
(17:35):
even if people try to shut them down, they're going
to come back. So immediately after um they were kicked
off Wall Street Bets was kicked off of Discord, I
believe I started getting d ms on Twitter from Wall
Street bets um members who were sending me their Discord
links and saying like, we're now on this channel. So
I think that they're really focused on coming back. They're
(17:56):
very united um and more more than just you know,
trying to put together a short squeeze on game stop.
The one thing that people don't really see about Wall
Street Facts is that it's actually like an investing community
where they really build each other up. I've ben't said
so many posts about like people learning how to invest
and other members will walk them through it, or they'll
(18:18):
say you know, like I just made X amount of
money on this investment and now I can pay off
my parents mortgage. Like it's it's actually a really really
nice community when you just get past kind of like
the craft words that they tend to use. Yeah, And
I was also I was reading a story somewhere about
the reason they targeted game Stop and a couple of
(18:39):
these other companies is because was it the hedge fund? Actually,
most of these hedge funds, from what I was reading,
do not announce their intentions, meaning that you know, there
are ways to avoid getting the information out on who
you're in, which stocks you're shorting. And for some reason,
I guess because of transparity, which is transparity which is good,
(18:59):
they actually let it out that they were shorting this
stock and that's why the game Stop was target Is
that Is that? Am I reading that right? Is that?
Does that mean it's going to continue the one the
way it's been going here or just have a little
bit dip your toe in the water, but don't jump in. Okay, Okay,
(19:19):
I think that bitcoin is here to say so I
think that what's going to happen is that we periodically
see these dips in it and I think right now
a lot of the momentum that it had for going
down actually was kind of put off by this all
this game stock as games top sorry, game stop news. Um.
(19:40):
So I I could see the argument that it's not
only here to say, but it will come back to
maybe close to the levels that it's that. I think
the selloff that we saw, what was that like a
month ago? I'm beginning to lose track of time here. Um,
I believe it off that we saw like a month
ago or so was you just for the fact that
it was hitting all time his and and it's normal
(20:01):
for investors to take profit, you have to think about
a little bit like a sock. Yeah. As far as
what's what's next, we'll we'll try to become the great
Nostrodamis and predict what's gonna happen. So my gut tells
me that we're going to see Congress get involved, like
they'll be hearings on Capitol Hill over what has happened. Uh, Ultimately,
(20:25):
what do you think is gonna you know, I know
you you touched on it earlier, But what do you
think comes out of this? I would imagine more regulations
and more more red tape. But how far does this
thing go? You definitely see more regulations or red tape,
as you just mentioned. I think that there's gonna be
a lot of questions brought up. I mean what you
mentioned at the beginning of us talking with with the
(20:49):
questions around canter silence people? You know that that is
to a certain extent applicable in this sense of can
investors have their investments, how are taken away from them
at a certain regard um. So there's gonna be a
lot of back and forth. But I think that this
might be the one time that we really see Democrats
(21:09):
and Republicans united, at least that we've seen so far
this year, and that there needs to be more regulation
on a very heavily regulated space, just because online broker
does have opened up so many doors, especially now that
there's commission free. When that kind of came into play
two a year ago, two years ago, there there were
(21:31):
a whole there was a lot of speculation that this
is going to change the way that we invest forever,
but there wasn't necessarily a task to show how. And
I think that this incident shows that this will change
the way that retail investors are approaching the market. So Katherine,
this is we've always heard of insider trading and that's
your taboo and you get in trouble for that. But
this is the reddit. This like I was on there
(21:53):
on the Wall Street bet subreddit and it's just like
seems like regular people. I don't know, you never know.
It's the internet. You could at least people could have
been information. But it seems like it's this would be
outsider trading, right, It's not insider trade. These are people
on the outside that are that that that have figured
out the cheat code here. That's my read on it too.
When this first started happening, one of the questions that
(22:14):
I kept asking, I know a lot of finance journalists
kept asking, was is this market manipulation? And the short
answer is, if you want to look at just what
the definition of market manipulation is technically, if that would
be a yes. But they're not, from my viewpoint, doing
anything illegal. So what's wrong with having a bunch of
people decide we want to go in on this stock?
(22:34):
Is there is there any different than what we see
from hedge funds and other institutional investors. I mean, that's
that's a question that have to be asked, Catherine, what's
the uh? I guess what's next on the horizon for
for you guys, And obviously I don't know how long
this thing will be, But like, what else are you
guys monitoring at the moment right now? Or has it
just been the frenzy on on Reddit? I've been kind
(22:55):
of side tracked with the frenzy on Reddit. But next
is definitely what's going to happen with the stimulus package
because those stimulus checks, if we do get those checks,
what are these redd inventors going to be doing? Or
if I could say whether or not it's first or not?
And in doing this every day, what's the what's the
(23:17):
read you get from the people you talk to? And
obviously uh Cramer and whatnot about the Joe Biden presidency.
I know there were people concerned when the election was
going on. With Trump wins, it will be better for
the stock market if Biden wins, not so much. Does
it really matter though who the president is? I mean,
I feel like the stock markets is such a big monster,
(23:37):
it's almost beyond that. But but what are you hearing
on the changes coming with the new president? So honestly,
the Stoctwak has kind of shown us so far that
it doesn't care. The tradition there is that Wall Street
loves gridlock. They want to see political gridlocks. But when
we saw the runoffs in Georgia back in UM early January,
(23:59):
Well Street loved it. Well Street took it in stride.
The two Democrats had taken those seats and therefore had
a majority. And I think that we're just going to
continue to see investors put money into the market because
they like the fact that a tweet can't send the
downs down UM and that is really going to change
the kind of name of the game that we've seen
(24:21):
for the past four years. Awesome. And so Kavin, how
can people find you on Twitter? And we'll put this
all on the podcast, the page and whatnot. But you're
on the Street Live with Jim Kramer every day right
Monday through Friday. There every day, all right. You can
find us over on the Street dot Com. My Twitter
handle is at by Katherine Ross with a K and
(24:44):
I'm the same thing on Instagram. Awesome. Thank you so
much for your appreciate it. Thank you guys for having me.
Be sure to catch live editions of the Ben Maller
Show weekdays at two am Eastern eleven p m. Pacific,
Be sure to catch live editions of The Ben Maller
Show weekdays at two a m. Eastern eleven p m Pacific.
If you thought more hours a day, minutes a week
was enough, I think again. He's the last remnants of
the old republic, a sole fashion of fairness. He treats
crackheads in the ghetto cutter the same as the rich
(00:21):
pill poppers in the penthouse, to clearinghouse of hot takes,
break free for something special. Fifth Hour with Ben Maller
starts right now in the a everywhares we kick off
the weekend and have some fun here on the podcast.
He spin off. You know that by now he spin off.
(00:42):
If you're new to the podcast, welcome of the Overnight show.
Four hours a night clearly not enough. On the Overnight.
We do some different things on the podcast. We don't
stick to sports because we don't stick to sports on
the podcast. Uh and hey, we do this eight days
a week. So this is our Friday podcast. Saturday got
a brand new Pipe and Hot podcast. It will come
(01:03):
your way. And then the mail bag. The staple of Sundays.
You know, people think on Sundays a day of leisure,
day of rest. You might go to church or something
like that. But the mail bag a large part of
the conscience of America. But it is the fifth hour
in UH. It's a spind the wheel of podcast sidekicks
(01:25):
here and see round and round and round and round.
Oh look at it. Look who's decided to leave west
of the four oh five and come in here this week?
David gascon joining us here? How excited? Is that? Unbelievable?
I I thought it was a fitting occasion to come
back this week after what went down earlier in the week,
dude to UH due to the dark alleys of Reddit
(01:47):
and also the white collar sycophants in Wall Street. So
it's well, you are referring to these So this is
going to be a podcast related to Wall Street, but
in s Polton terms, in Layman terms, is what it's
gonna be. Yeah, it is a wild story. It does
have a sports angle to it because a lot of
(02:09):
the owners in professional sports, many of the new owners
are hedge fund people, and this involves the attempt to
take down some of the hedge funds. And just to
give you the thumbnail version, that's kind of set this
up because we are going to be joined. This is
an interview podcast by a financial guru, well media guru
(02:32):
who covers finances and all that and has inside inside
informational throw but it's plugged. Being plugged in would be
the way to describe it. So if you haven't been
paying attention and you're completely in the dark on this
on Wall Street a subreddit, Wall Street bets they started
this movement investing on game Stop, which is a struggling
(02:57):
video game retailer, and they roll the price of stock up.
But that's screwed over the people that were investing in,
betting it was going to go the other way. It's
called shorting a stock, is what it's called. And we're
gonna get into that here. And I think we should
welcome in now from the Street Live with Jim Kramer.
(03:18):
You can see her with the Jim Kramer, that crazy
guy from CNBC. They do a show every morning on
the Street welcoming Katherine Ross, who joins us here on
the fifth hour with Ben Maller and guesscon So, Catherine, welcome.
I think we should start with the term shorting a stock.
(03:40):
What exactly does that even mean? So to break it down,
short telling is basically saying that you're looking at a
company stock, and you're looking at the company, you're saying,
this company cannot survive. So for fun, let's let's pretend
that we're trying to invest in sears and we're looking
at those stock and we're saying, you know, this is
(04:01):
just gonna they're gonna declare bankruptcy sooner or later. So
I'm gonna buy x amount of fear shares for five
dollars from somebody who has um who owns shares, So
I'm borrowing them and then because I'm betting that it's
that it's going to fail when that when that share
goes down, I'm selling it. I'm giving it back to
(04:24):
the person who owns those shares at a profit. So,
for example, if I borrowed at five dollars and it
went down to one dollar, then I get to pocket
the four dollars. Yeah, yeah, yeah, I know, I know absolutely.
So you're you're betting on failure, right, That's that's how
(04:44):
that would work. You're betting on failure. And so this
this reddit community Wall Street Beats has has gotten or
bets rather, has gotten a lot of attention here and
have they essentially at least for a couple of days
beaten the hedge fund guys at their own at their
own game. Yeah they did. Um, they were basically able
(05:08):
to say that we believe in this company. We actually
think they's a turnaround story. And for full context, this
comes after one of the cheery co founders not only
invested heavily in game Stop a while ago, but then
ended up joining the board and said the heat plans
to help turn around game Stop. So these guys are
basically saying, I see this as a turnaround story. The
hedge funds shorting this stock are wrong, and therefore they
(05:31):
were able to drive it up because they came and
drove and when they drove it up, then they forced
the hedge funds to cover their short positions, which means
that they have to spend money instead of get money. Yeah,
and it wasn't just the Reddit, So it was all
I saw. Elon Musk was in on there, and there's
some other people, not just some people of high profile.
(05:53):
Uh So I know Elon Musk is a pretty good
imprint on social media and all that, So that played
in He's hasn't he had an issue over the years
here Catherine with the hedge fund community in general, right
with Tesla and all that. I remember reading something about
that a while ago there, So this is a bit personal,
I would think, yes, perhaps, Yeah, I think what you're
(06:15):
referring to is maybe a couple of years ago when
he tweeted out that he wanted to take Tesla private
at four twenties share. Is that what you're referring to? Yeah,
And then there was that uproar and then so but
that aside, though, you know, how what if you were
to break up the percentage pie Katherine, like, how much
of what happened the last week on Wall Street was
(06:37):
the subreddit and how much of it was influenced by
Elon Musk and a few other people of prominence that were,
I guess adding fuel to the fire. I'm not even
a lot of the credit to Wall Street bets Um,
and I think that when Elon Musk, Canton Winklevoss, and
(06:58):
Champa Uh joined the prey, they kind of added to it.
And we definitely saw stock the stock spikes on all
three occasions. But I definitely think that this really started
with WSB and their drive to say that a lot
of them really believe that that there's a turnaround story.
It wasn't just it became overheated really quickly. But the
core of it really was that they believe in the stock. Yeah,
(07:22):
and and reading some of the stories that have come out,
and you deal in this world all the time, but uh,
the people say this, this is a revolution, this is
a revel we've seen this week is not just kind
of a one off situation against the people on Wall Street.
Does it rise to that level or is this a
story that's just a couple of days and then things
(07:42):
will start to get back to normal, you know, next week.
So I've been in contact with a lot of the
community over on WSB and they have assured me that
this is as you just said, this is a movement
for them. This is more than just making some money
off of the trade. And especially now on Thursday we
saw a bunch of brokerages m restrict buying of these stocks.
(08:04):
That that message has kind of been reaffirmed that they
want to really, in their words, take it to Wall Street.
They think that Wall Street doesn't in their in their eyes,
that they that Wall Street doesn't seem to care about
the retail invector. Whether that's right or wrong, that's up
for debate, but that is their view. Yeah, and you
brought up the I'm on I'm on robin Hood. Uh,
(08:27):
you know, I play around there a little bit. But
for them to take and I guess some of the
other day trading apps took uh the stocks that they
were betting on on the on the subreddit, they took
them off. So how much damage do you think that's
gonna do it to robin Hood, which is thriving right now,
that when things get a little crazy, they's gonna not
(08:48):
allow you to purchase the stock. I would think that's
that's gonna do some damage to their business model. How
do you think that plays out? Oh, it's gonna It's
definitely gonna do damage. I mean, I've been assured by
many that they're leaving robin Hood as soon as they can. Um.
The other interesting thing actually is that robin Hood plans
to go public, and so this is I'm sure that
(09:10):
right now they're very happy they're a private company, but
going forward, this has really hurt consumer trust in robin Hood,
and therefore I could see them having some trouble with
the I p O. Catherine. When you when you look
at this, and I know you you're talking about the
community with Wall Street bets and you've been in contact
with those people throughout the week. What about on the
(09:31):
opposing side. I mean, don't some of these people, the
people that are up and above us, like, don't they
understand the gravity of this situation given the fact that
one we're in a pandemic and two there's all kinds
of people in this country that are at home and
have nothing else to do, and then just got six
dollars from the government. I think that's definitely part of it.
(09:54):
I think that they're Wall Street that's really struggled at
the beginning to makes this known as being seen as
a serious thing. And then when it when they were
able to drive the stock price up so much, suddenly
there was like a panic and there is a lot
of worry on Wall Street of the traditional power structure
(10:14):
being upset. And I think that that's kind of why
you're seeing what could be construed as a class back right.
And I was gonna say with regards to that too,
because now you're trying to pick up the pieces of
where this shutdown was coming from. Who called it? Is
it Robin Hood or is it someone else? But on
Thursday there were reports that Treasury Secretary Jett Yelling had
(10:38):
received over eight hundred thousand dollars in speaking fees, and
that came from Citadel, which is a hedge fund company
founded by Ken Griffin. So like that influence is there
from somebody deep down? Like where does this come from?
Because we've seen the class action lawsuits on Thursday? Like,
how does this? How does this play out? How do
you see it? I think that there's going to be
(11:02):
a lot of back and forth and pointing fingers. I
saw an interview with Andrew rost or Kin of CNBCS
who basically said that this he worries that when this,
when the dust settles here, we're going to see everyone
pointing fingers at one another. And I believe that to
be the case. I think that no one trust each
other right now, and it's very divided. What I think
(11:23):
will happen now because of the action that we've seen
on Thursday, is that we're going to see more regulation
of these online brokerages, because the question now is being
raised by both Democrats and Republicans. Is it okay for
them to be able to restrict buying of stocks? You
know that? Is that fair to the to a free market? Yeah?
I mean because we've gone through, We've gone through days,
(11:44):
weeks and months now about what you can and what
you can't tweet, what you can you can't post on
social media, whether it's YouTube, Facebook, whatever it is. And now,
if you're gonna have these restrictions on how you can trade,
whether it's shorting or buying these options, what's next? Yeah,
I mean that's the ultimate question, is it there? The
The argument for the online brokerages does make sense, and
(12:07):
it's when you just look at it and it's black
and white. These brokerages are trying to protect themselves. They're
worried that and they're trying to protect the consumer. They
seeing this volatility, and they're worried that people who are
not they they're all well enough known around won't they
don't know enough that they could really hurt themselves if
they continue to trade such volatile stocks. That makes sense.
(12:28):
They also don't want to get sued. That also makes sense.
The issue then is do you have a right to
tell someone that they can't trade that stock or do
you try to educate them better? You know, instead of allowing,
for example, Margin calls it out of highood alatail stock,
do you force them do you somehow educate them before
they make these decisions. And I would be the question,
(12:50):
and I have a tough time with that because the
instant pushback for me, and you heard it throughout the week,
is that you have people they're treating the stock market
like a casino. Well, when you go into a casino,
you have no parachute. I mean, you go in there,
there's there's some disclosures, there's some things that you warn
you about for you know, gambling for gamblers, anonymous and whatnot,
if you have a gambling problem. But once you go in,
(13:12):
you lay down the money. It's it's there, it's there
for the taking. So like I don't I don't fully
comprehend that nature of saying, well, we need to regulate,
we need to inform and educate. I mean, that's that's
part of who you are. It's part of who we
are as as adults. We have free random use our
money as we choose. No, I mean I would personally,
(13:33):
as a journalist agree with you. I would say that
there should be tools in place that if you, for example,
if you're going to allow people to um buy margins,
then what you should be doing is for some take
an education course or something of the sword before you
really allow them to dive deep into the technical part
of that. But if they're looking to buy a stock,
(13:55):
what what better way to get people into the market.
And I think that this overall based on the conversation
as I've had with the younger investors who have recently
gotten in via Robin Hood, Um, they really feel like
there's no trust anymore. Yeah, it is interesting. I mean,
you brought the average investor the person used like Robin
Hood and things like that. But back a few years ago,
(14:16):
I remember when these things, these apps came around and
they were like talking about how excited everyone was on
Wall Street because they were gonna draw in the average investor,
I guess, to get their money. But is this a
cautionary tale? This this subreddit where the savvy veterans got
played here at their You know, they thought they were
going to get all this extra money, and maybe they
(14:38):
still will in the end, but you know, right now,
they're not looking so good right now, I think so.
I think that this is definitely kind of a wake
up call that there are retail investors who are really
interested in the market, and they're not only interested in
investing in companies that they believe in. They also feel
that they need to for right or for better or worse,
(15:02):
they feel like they need to target these hedge funds
who are heavily shorting these companies. How long have you
been in the game, Katherine? Has it been been a while?
It's been about three years. I got to imagine this
time and everything going on in the world, but with
the president and President Trump and twenty six and now
this this has got to be discovered some of the
stuff that that journalists like yourself dream about, right, I
(15:27):
completely agree there. I mean, yes, it's it's been quite
a ride. I'm really proud to be a journalist in
this moment of history. I know that you know, mainstream
media gets a lot of um negative attention, But I
think that what I try to bring and as a
journalist is just to try to get everyone a voice.
(15:48):
And I think that's being able to quick cover stories
that we've been covering in the past couple of years.
As you said, the President Trump now President by now
Will Street bets. I really hope that I can bring
a voice to everyone. So being in the industry, now,
what's it like because you work you work with Jim
Kramer on the regular. Right. Yeah, we host the daily
show UM the Street LIVEE with Jim Cramer and Kathin
(16:09):
Ross at time three am every day. So what's it
like working for Jim. Jim is awesome. He is very
I didn't know what to expect when I first started
working at the Street UM and he had one day
just come up to me and I was just a
breaking news reporter at the time, and he said, I
walked you on camera and I was like, Okay, I
think that you've got the wrong person, but he was like, no,
(16:30):
you're really talented. And so we started doing videos together
and he is exactly how he is on camera. Very excitable, UM,
incredibly smart, great to work with and he just genuinely cares.
Like We'll be walking down the street in the normal
times and we're together and fans will come up and
he will stop and take selfies with every single one
of them. He is that like the guy interesting. Hey.
(16:54):
As far as back to the story with game Stop
and all this, like we've seen, I think it was
a the subredd it's as we're doing this in real time,
is still up. But uh, there are some other things
that have been taken down on the Internet related to this, So, uh,
how long does this subred at last? Are they Are
(17:14):
they going to be shut down or the people from
Wall street and what's your your guestimate on how how
much life this subreddit has because we do live in
the age of cancel culture, So are they going to
be canceled wall Street Bets That's a great question. I
actually think that even if, as we saw Wednesday night,
(17:35):
even if people try to shut them down, they're going
to come back. So immediately after um they were kicked
off Wall Street Bets was kicked off of Discord, I
believe I started getting d ms on Twitter from Wall
Street bets um members who were sending me their Discord
links and saying like, we're now on this channel. So
I think that they're really focused on coming back. They're
(17:56):
very united um and more more than just you know,
trying to put together a short squeeze on game stop.
The one thing that people don't really see about Wall
Street Facts is that it's actually like an investing community
where they really build each other up. I've ben't said
so many posts about like people learning how to invest
and other members will walk them through it, or they'll
(18:18):
say you know, like I just made X amount of
money on this investment and now I can pay off
my parents mortgage. Like it's it's actually a really really
nice community when you just get past kind of like
the craft words that they tend to use. Yeah, And
I was also I was reading a story somewhere about
the reason they targeted game Stop and a couple of
(18:39):
these other companies is because was it the hedge fund? Actually,
most of these hedge funds, from what I was reading,
do not announce their intentions, meaning that you know, there
are ways to avoid getting the information out on who
you're in, which stocks you're shorting. And for some reason,
I guess because of transparity, which is transparity which is good,
(18:59):
they actually let it out that they were shorting this
stock and that's why the game Stop was target Is
that Is that? Am I reading that right? Is that?
Does that mean it's going to continue the one the
way it's been going here or just have a little
bit dip your toe in the water, but don't jump in. Okay, Okay,
(19:19):
I think that bitcoin is here to say so I
think that what's going to happen is that we periodically
see these dips in it and I think right now
a lot of the momentum that it had for going
down actually was kind of put off by this all
this game stock as games top sorry, game stop news. Um.
(19:40):
So I I could see the argument that it's not
only here to say, but it will come back to
maybe close to the levels that it's that. I think
the selloff that we saw, what was that like a
month ago? I'm beginning to lose track of time here. Um,
I believe it off that we saw like a month
ago or so was you just for the fact that
it was hitting all time his and and it's normal
(20:01):
for investors to take profit, you have to think about
a little bit like a sock. Yeah. As far as
what's what's next, we'll we'll try to become the great
Nostrodamis and predict what's gonna happen. So my gut tells
me that we're going to see Congress get involved, like
they'll be hearings on Capitol Hill over what has happened. Uh, Ultimately,
(20:25):
what do you think is gonna you know, I know
you you touched on it earlier, But what do you
think comes out of this? I would imagine more regulations
and more more red tape. But how far does this
thing go? You definitely see more regulations or red tape,
as you just mentioned. I think that there's gonna be
a lot of questions brought up. I mean what you
mentioned at the beginning of us talking with with the
(20:49):
questions around canter silence people? You know that that is
to a certain extent applicable in this sense of can
investors have their investments, how are taken away from them
at a certain regard um. So there's gonna be a
lot of back and forth. But I think that this
might be the one time that we really see Democrats
(21:09):
and Republicans united, at least that we've seen so far
this year, and that there needs to be more regulation
on a very heavily regulated space, just because online broker
does have opened up so many doors, especially now that
there's commission free. When that kind of came into play
two a year ago, two years ago, there there were
(21:31):
a whole there was a lot of speculation that this
is going to change the way that we invest forever,
but there wasn't necessarily a task to show how. And
I think that this incident shows that this will change
the way that retail investors are approaching the market. So Katherine,
this is we've always heard of insider trading and that's
your taboo and you get in trouble for that. But
this is the reddit. This like I was on there
(21:53):
on the Wall Street bet subreddit and it's just like
seems like regular people. I don't know, you never know.
It's the internet. You could at least people could have
been information. But it seems like it's this would be
outsider trading, right, It's not insider trade. These are people
on the outside that are that that that have figured
out the cheat code here. That's my read on it too.
When this first started happening, one of the questions that
(22:14):
I kept asking, I know a lot of finance journalists
kept asking, was is this market manipulation? And the short
answer is, if you want to look at just what
the definition of market manipulation is technically, if that would
be a yes. But they're not, from my viewpoint, doing
anything illegal. So what's wrong with having a bunch of
people decide we want to go in on this stock?
(22:34):
Is there is there any different than what we see
from hedge funds and other institutional investors. I mean, that's
that's a question that have to be asked, Catherine, what's
the uh? I guess what's next on the horizon for
for you guys, And obviously I don't know how long
this thing will be, But like, what else are you
guys monitoring at the moment right now? Or has it
just been the frenzy on on Reddit? I've been kind
(22:55):
of side tracked with the frenzy on Reddit. But next
is definitely what's going to happen with the stimulus package
because those stimulus checks, if we do get those checks,
what are these redd inventors going to be doing? Or
if I could say whether or not it's first or not?
And in doing this every day, what's the what's the
(23:17):
read you get from the people you talk to? And
obviously uh Cramer and whatnot about the Joe Biden presidency.
I know there were people concerned when the election was
going on. With Trump wins, it will be better for
the stock market if Biden wins, not so much. Does
it really matter though who the president is? I mean,
I feel like the stock markets is such a big monster,
(23:37):
it's almost beyond that. But but what are you hearing
on the changes coming with the new president? So honestly,
the Stoctwak has kind of shown us so far that
it doesn't care. The tradition there is that Wall Street
loves gridlock. They want to see political gridlocks. But when
we saw the runoffs in Georgia back in UM early January,
(23:59):
Well Street loved it. Well Street took it in stride.
The two Democrats had taken those seats and therefore had
a majority. And I think that we're just going to
continue to see investors put money into the market because
they like the fact that a tweet can't send the
downs down UM and that is really going to change
the kind of name of the game that we've seen
(24:21):
for the past four years. Awesome. And so Kavin, how
can people find you on Twitter? And we'll put this
all on the podcast, the page and whatnot. But you're
on the Street Live with Jim Kramer every day right
Monday through Friday. There every day, all right. You can
find us over on the Street dot Com. My Twitter
handle is at by Katherine Ross with a K and
(24:44):
I'm the same thing on Instagram. Awesome. Thank you so
much for your appreciate it. Thank you guys for having me.
Be sure to catch live editions of the Ben Maller
Show weekdays at two am Eastern eleven p m. Pacific,
Host
Ben Maller
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