Chamath Palihapitiya on GameStop Stock (GME), AMC Stock... Reddit WallStreetBets is Retail Revenge.

what's up guys i hope you guys are having a great day so what you're about to see from chamath pala hapatia and his appearance on cnbc regarding the gamestop controversy is pretty much one of the most important interviews i believe of the year and going forward into the future pretty much he explains exactly what's happening between the retail investor and the institutional investor analysts on cnbc essentially don't give enough credit to the retail investors they think that retail investors are all just people who jump on opportunities on momentum stocks and who don't do fundamental analysis and what chamath is basically saying is that that's not true and you better look at that differently otherwise institutional investors are going to keep getting screwed in that same manner so let's listen to chamath and hear what he has to say i have a hard time believing i mean you suggested that there's you know a good amount of fundamental research going on underneath the gamestop reddit situation do you truly believe that that there's actual environmental research not to disparage in any way that the people who are actually making these trades but this seems to be momentum rather than a deep fundamental analysis scott there's momentum in traditional hedge funds and how they move stocks as well but it's really disparaging if you the starting position is these guys can't do the same quality of research as an analyst in a fund that's just not true i didn't say that i didn't say they can't do that kind of research i'm questioning whether they're actually doing the research when it comes to things like gamestop and amc and some of these other things there's a distribution and obviously at one end there are fundamental analysts but on the other end there are momentum traders that follow trends but by the way the dirty little secret of wall street is that exists in hedge fund land the reason why this gamestop trade has caused so much pain is because at the top of the pecking order was melvin capital those guys were incredible stock pickers they are incredible fundamental modelers of companies okay gabe plotkin is one of the sort of giants of our era of my era right but at the end of the day what happens is irrespective of what he puts on his trades are mimicked and copied by umpteen other hedge funds that follow along for every lp that can't get into melbourne they get into a copycat fund that works basically like melbourne and so when the trade goes against them then it goes against all these people all at the same time so the reality is there are fundamental momentum investors in the market that are organized capital i.e hedge funds and disorganized loosely affiliated capital i.e wall street bets and i think what you're seeing is the push and pull of that and the realization should be that if every person was forced to publish their fundamental research it would be hard to distinguish the best version of research from wall street best bets and the best version of research from a hedge fund they don't have an edge and this is what you're exposing is that that edge is gone and now all of a sudden you know retail can be on the same footing and they don't have to be the bag holder to wall street you know it's not my job to go and defend a bunch of you know highly compensated hedge fund managers against losses and just the fact that for one time those folks lost we can bellyache and cry on national television to me is a joke well i mean there's a lot of kids hold on a second there's a lot of kids and a lot of people on wall street vets who have made money to pay off their mortgage i read about a post yesterday of a kid that was able to pay off his entire student loans and posted it that's amazing progress i don't even i'm not i'm not suggesting and and i'm not trying to come off that way that i'm suggesting what what what's happened on wall street bets or or or what these this cohort of traders is doing is is wrong it's not i don't think that there's much of a difference from and i know it's been mentioned on this network already today but the first thing i thought of in this situation was back to the herbalife episode where you had a fairly sizable group of well-known hedge fund managers decide to take the other side of bill ackman's trade he was of course short they all went long they sure they made a fundamental case in their own mind and whatever worked for them to have the conviction that they did to take that trade um part of it was undoubtedly trying to hurt the short who was bill ackman at that time maybe some of them did it through uh going to an idea dinner or whatever other forum through personal phone calls or emails and there was a large group of people on one side i don't think it's any different i don't think it's not different you're right idea dinners idea dinners that concept has existed for decades on wall street where people get together in closed rooms behind closed doors and usher around names of companies and they coalesce and decide to cooperate together the guys on wall street bets just do it in the public completely transparently in my opinion that takes a lot more courage because you could actually be wrong somebody can actually say hey listen what you said made completely no sense whatsoever and so what is the difference in my opinion this is the modern day instantiation of that dynamic just writ large in that scale the only thing i'm concerned about is that there are inevitably going to be people who get hurt not i'm not talking about hedge fund managers i'm not talking about them i'm talking about the people who follow people into the trade who think that this stock is going to continue to go up because that's what they've been conditioned to think in the pandemic because what should we do not allow folks here's what will happen if you basically if you follow your logic then you'll say you know what retail doesn't know what they're doing i think you're wrong then then the thing will be retail shouldn't be allowed to participate in the stock market i think you're wrong and then you know what'll happen scott the inequality gra gap will grow and grow and grow because then if you what are they supposed to do then buy an etf a passive fund they can't buy into hedge funds because the rules don't allow them to so now systematically what you've done is you entrench poverty no i've been coming back that's taking it too far this is just accentuating those thoughts that that wall street's a casino and nothing more that that's what this is perpetuating so i don't think so i think this is an example of if you are going to so massively oversell a company to the extent that you're selling 40 more shares of that company that don't exist and all of a sudden other folks are like hey wait a minute this is going to get squeezed and they buy it that's just a smart trade retail saw it wall street missed it and they paid the price so maybe to your point scott what regulators should do is say hey wait a minute how can we allow companies to be 140 short that doesn't make any sense maybe that's what should happen you you think this this this overall situation is is is fine for for the market point is just because you're wrong doesn't mean you get to change the rules especially when when you were wrong you got billed out the last time that's not fair if it doesn't mean that that these these investors who were short the stock were necessarily wrong i mean i still haven't heard i still haven't heard you tell me what the fundamental case is for gamestop at 350 or amc theaters which are have been closed for months and months and months is is worth what the stocks trading at now or any number of these things the way that they're trading there there's no fundamental reason why they're there they're trading because there's this momentum cohort behind it whether it's on reddit or robinhood wherever else but why but scott why why is that all of a sudden so wrong to you this kind of momentum trading because for example if you look under the hood on every quant strategy organize quantitative strategic hedge funds on wall street those things are all momentum shops they trade day over day massively levered small swings so basically what you're saying is hey if retail runs a momentum play to squeeze a short that's wrong but hey if renaissance technologies and somebody else does it that's okay that's what you're saying you may not know that that's what you're saying but that's what you're saying and to me that feels very unknown no no what i'm saying is someone's going to get screwed okay someone's going to get screwed and it's going to be the one of the retail it's going to be a retail investor who gets screwed because they think that this is the way the game works that this is the new wall street they're new to this game maybe they haven't been in the game that long not everybody not trying to say that in any way shape or form but somebody's going to get hurt i'm not talking about the billionaire with the big house in the hamptons i'm talking about the person who thinks this is cool fun and an exciting way to spend their time i'm not i'm not i'm not taking away that there's an element of that but you're really discounting how smart so many of these people are okay and all i would encourage you to do is spend a little time in these forums go into the discord server and you're not going to hear a bunch of bros just squashing around you're going to hear a bunch of really really smart people talking about things in fundamental ways don't tell me that yesterday amc entertainment was was uh you know five dollar stock and today it's up 170 and that's justified don't tell me that some of these names are justified to be where they are it's one company in one moment of time what i'm saying is you're there's like 10 companies 15 companies 20 companies you're broadly sweeping with a broad brush that says these guys don't know what they're doing and they don't deserve to do what they are doing and what i'm telling you is there is a small part of momentum there is a part that's fundamental analysis and then there's a part that's just taking it to the man i'm not taking you away from that but the reality is it's all allowed in a free market and all of a sudden if you start the gate decisions by individual people all you're going to do is systematically lock in institutional ways of making money for institutional clients and i don't think that's the solution if you want to go and address the solution fix how risk-taking happens at the institutional level fix the precondition fix the ability for these stocks to be so massively shorted in the first place change the business model of funds so that they're not forced to be these small net highly levered funds change the leverage ratios those are all institutional decisions but don't all of a sudden look at a short squeeze where money is being made by retail and all of a sudden say hey they could and may be the bag holder in the future so let's make sure that they can never participate in the future that's crazy yeah i mean i didn't say that i didn't say they shouldn't you're saying that i'm not saying they shouldn't be able to participate i'm not saying they shouldn't be able to participate you want to say you're saying they should participate on your terms no on wall street's terms no in a way where they get the when when wall street can have the best of it they can maybe participate on the side but then when wall street gets the worst of it they their parents their relatives will just come and bail them out not what i said i'm glad they're participating i'm glad they're making a lot of money i just think it needs to come with a warning sign there needs to be a hazard sign right there needs to be a hazard sign the hazard should be hey fyi for example why isn't there more transparency in the reporting that hedge funds have to make every long position every short position and all the leverage they're taking every day why don't we do that then you would have a warning sign you know why because people in retail would analyze that stuff so intricately and we would know where the tripwires were and i'm not lambasting anybody okay i'm glad these people are making money that's that's the way that's the way it should be that's the way i should be let's face it no no you're not okay and you know the person that was on before you know she's not and that's the issue it's like because the rules are changing under foot people don't like that now i'm not saying that there can't be better regulation okay and there can't be tighter rules i get all of that but what i am saying is that you have to be cognizant that we are moving to a world moving to a world where normal ordinary folks have now access to all the same information as institutional organized capital and they will come to many of the same conclusions sometimes at the same time oftentimes faster and sometimes to the opposite conclusions and sometimes at the same time sometimes faster you will see more volatility like this in the future i want to see solution hold on a second the solution to this is more transparency on the institutional side not less access and ability for retail i want to see the white papers on on all of these companies that are that are flying and all of the deep fundamental research that suggests that all of these stocks and there are way more than one this is not one stock one story okay there are a lot that fundamentally challenged in this environment wow so if you guys didn't think that that was an incredible interview i don't know i mean i thought that was amazing i think chamath really lays it out and he says what are you talking about like either you think that these institutional investors are dumb which they're not and they're going to jump on trains and they're going to figure it out and chamath says that he spent many hours on wall street bets and read many of these analyses and many of these people are extremely intelligent they're very smart a lot of them are upset at the institutions which by the way they should be upset at the institution specifically because the institutions have screwed the retail investors for so long and he's saying or you're basically suggesting that they shouldn't be allowed to trade that these retail investors shouldn't be allowed to trade that what they're doing is fundamentally wrong and that's not fair he says that these idea dinners they're called where wall street investors basically come together for dinners and they uh talk about different stocks and then they all get together and they basically pump up a stock or they short a stock together this is the exact same thing he says that wall street investors he says that the retail investor in fact just has courage to come out and to actually you know say exactly what they're doing and he said you know this there's just way more transparency ultimately explains how the the way to combat this is more transparency he thinks that the retail investor got screwed for so long he thinks that what cnbc report what the cnbc reporter is basically suggesting is exactly the problem because it's not giving an opportunity for retail investors to do exactly what institutional investors were doing to the american public and to retail investors for so long for so many years all of a sudden now retail investors have zero commissions they have uh opportunity to buy and sell stock and buy options and and sell options on robinhood and different different uh ways and so now the institutional investor is crying in the corner but who is crying in the corner before that and that's chamath's point and i think he's right about that i think he brings a lot of points i think it's very interesting i would love to understand exactly what you guys think about this interview in the comments below thank you so much hope you guys have a great day please like please subscribe and we'll see you next time you

Channel: The Cole Standard

Views: 788,352

Rating: 4.9117231 out of 5

Keywords: #GameStop, #GameStopStock, #GME, #AMC, #AMCStock, #ChamathPalihapitiya

Id: hu-zGfi45RI

Length: 15min 39sec (939 seconds)

Published: Wed Jan 27 2021

Reddit Comments

[u/IETheDeadlyNinja]

Fuck chamath. He’s a paper hand. He bought gme and cashed out. He bought virgin galactic and sold out. He just wants popular sentiment. Another billionaire. With his sights on becoming a politician. You really think this fucker isn’t self serving? He serves people a stock they all buy and it he dips out. Snake.

[u/MilkBoyGoku]

"Somebody is going to get hurt" as if he cares about retail investors. who gives a shit about fundamentals. These Mother fuckers (Hedge Funds) make businesses go bankrupt, tons of people lose their jobs, homes, food, lives. And they just get to keep billions tax free for doing so. Fuck them and fuck all of these pricks always trying to shit on the Ape master race.

Imma go eat some crayons with my Gf's Bf.

[u/Shamicrogandgrog1973]

Regardless of whether you like Chamath or not...he is dead on in this piece.

[u/holdmykink]

This needs to be watch, and watched again, by everyone.

[u/hackrat-ds]

Fuckin awesome

[u/Flexorsize]

Damn ZADDY!

[u/yesdaone23]

That was awesome!

[u/phisbot]

Aren't we all just fucking paper hands at some point

[u/usriusclark]

Well I’m just gonna save this little gem for when people try to shame me for my tendies.