GameStop: The Real Wolf of Wall Street's Advice

joining me live from beverly hills is the real wolf of wall street the author and former stock broker jordan belf and of course inspired the hollywood movie wolf of wall street very warm welcome to you and to the program what do you make of all of this it's amazing that the average person can now actually get a fair shake since against the hedge funds because the hedge funds have been beating up the little investor for since the beginning of time pretty much and while this will be short-lived everyone's got to be really really careful because it's going to be like catching a falling knife when it unravels it's shocking and really amazing and gratifying to see a little bit of this the pain going on the side of the hedge fund so that's my overall you know personal opinion as far as you know what's causing it and how it started well that's a much more complex issue and i could answer that if you'd like as well well let's just start with with your point about it being quite gratifying it's interesting you say that was there a part of you given your own background and your own success that kind of admires this well and believe it or not my firm was actually like reddit it's just that it was we were it's very similar what happened here is you have lots of people gathering up and buying one stock where there's a very heavy what's called a short interest meaning that there was these big hedge funds betting that the stock was going to go down and hopefully even go bankrupt now shorting is a normal healthy part of the stock market and it's important but there are certain types of short sales that go over the line and they over short they massively short they will start trying to create investigations for companies create bad press hoping to drive down the price of the stock that is what happened here so these these shorts ganged up on this company and then the little guy i can't believe that it actually worked they were able to muster enough collective buying power to create what's called a short squeeze because remember when you sell something without owning it which is what shorting is you got to buy it back so if you can get enough people to get the stock going up they have no choice but to buy it back because they start to lose so much money and then it becomes a self-fulfilling prophecy because when they start to buy it back it goes even higher and higher that's what you're seeing happening right now and so i detect from that then you do admire it just you know the intelligence behind it and i just wonder whether you think this phenomenon is something that we can expect to persist that it might continue we've seen haven't we as a result of lockdown this increase in in people kind of getting involved in day trading perhaps with no experience or background or really even the funds to to risk things but it's certainly on the increase isn't it i wish i would have thought of it myself no it's really no it's an amazing thing that you know anyone on wall street that really knows wall street is like i can't believe this was possible it would seem to defy logic at every level but it was really incredible it shows the power of social media it's a testament to also the convergence of technology allowing even the smallest investor to get real-time access to information and the stock market and it's leveled the field now the danger is that wall street and hedge funds especially are experts at identifying what we call basically inefficiencies in the market this is an inefficiency in the market right now and they will look to close that inefficiency very quickly long before the sec or any other regulatory body is able to pass laws to try to stop some of the stuff that wall street will close the inefficiencies and you'll notice that these opportunities become much rarer indeed but again i'm on the side of the little guy here because it's just awesome to see and i really hope i would just say please you know if you made money in this just take enough chips off the table so when it goes bad at least you didn't lose everything because it's gonna go bad at some point and i hate to be the ones who are holding the bag that's good advice it has to be said but i mean it's interesting you say that you think that you know you're amazed that this was even possible and you think that the loophole will be tightened up but too slowly for it to affect the guys here but essentially do you think that you know in terms of the authorities that you know the financial market authorities this is a loose crime that we're talking about okay so i hate to say but you're right um it's illegal what they're doing theoretically you can't collude together to buy stock right so that's really and that's by the way what i said it was like a bit like stratton my firm that's what i was alluding to that it's so much like what we were doing except instead of having one firm doing it it's all these individuals almost acting like a firm together so i really strongly doubt that any of them will get in trouble what they would get in trouble for one person was driving it on got long the stock early was buying lots of stock and then trying to create this frenzy that would be something that the government would certainly go after but in the other side there's also some really questionable behavior on the part of these trading platforms that are shutting down trading in this now i understand that they have massive risk as well so there is that side where robin hood you know tends to lose a stance lose a fortune if the stock collapses and there are losses in their clients accounts but the way they did it to restrict to shut trading down like that at a moment's notice they could have just as easily done what's called raising the margin requirement meaning they make it very expensive to buy stock and that could have accomplished pretty much the same thing so why did they suspend trading like that and i wonder there are these relationships between robin hood and the hedge funds who are losing money so that needs to be investigated as well and all i can tell you is this i'd hate to be the owner of robinhood because i can't see how they survive this because everybody and their grandma is gonna sue robinhood and another platform saying you shut down trading you artificially caused me to lose money whether they made money or lost money robin's going to be in robin who will be in so many lawsuits class action suits that i really does not bode well for their future i mean it's just impossible to overstate the significance of this just based on what you're telling me here and i just wonder you know whether you know on a broader scale if we're actually looking at you know almost on the edge of a sort of stock market bubble here that we we could be in a sort of difficult position in the months to come you're hitting all the right points here that's for sure so yes i mean this is 1999 all over again and that's why i said i'm begging everybody to please be careful here i had someone fixing a tv in my house yesterday and the guy says oh my mother called me she's 82 and she was asking me about game stuff i'm like there you go and and that's how it really gets bad because you know when when that last group of people start getting in typically that's they call it the odd lot theory that when the average person gets in that's the time it's going to actually crash but again you know you never know when that moment's going to come it's going to come of course because things will eventually seek their fundamental value but i would urge you again i just keep saying because that you know just it's a wonderful opportunity people to make money everyone's bored and locked up but just be careful and make sure that whatever you invest in these type of hot stocks make sure you invest only what you can afford to lose and if you happen to make money pull the original investment out and play with the house's money that's my advice to everybody and just lastly i'm assuming you didn't get involved in this yourself that you aren't kicking yourself but you're not gonna i'm kicking i'm kicking myself but i didn't because it was pretty obvious and i saw it like i you you really hit an important point like is there a crime going on theoretically you're not allowed to do this i figure if i did it i'd be the one they go after so i said i'm better off staying like everyone else will do it not get in trouble i'll get in trouble so i think it's probably best for me to avoid these type of situations but i would love i think it's really important that the people who are doing this at least learn about the actual stock market because it's really great they should be financially literate the info is out there be careful and make money and and whilst you're being so honest and urging us all to make money just finally because i can't let you go you're being such an interesting guest any tips on how we can do that as someone who is actually financially illiterate yes yes so number one there are a few things i could tell you without giving you any particular stocks number one at this point i would say gamestop is is over in other words the ride is gone so you're at that point now remember ultimately what's gonna happen is is that all of these stocks that are involved in short squeezes they'll eventually trade as a basket they'll go up and down together at any one time because there's only so much hot money that can flow into these stocks so they go up they go down almost in tandem after a while the key is number one is if you can try to if you really want to do this and you want to you know stay on these message boards you can try to really find out what the next one that they're talking about is and get in right early towards the beginning so there's an old saying on wall street bulls make money bears make money pigs get slaughtered you don't want to catch the bottom and you don't want to catch the top try to get it at the beginning of the end and the at the end of the beginning and get out at the beginning of the end don't try to top ticket don't try to bottom ticket try to get that little middle and don't be greedy it's it's it's it's i know even if you're not a greedy person it's this weird human nature that develops that we just we see this easy money and you know we all want to believe in santa claus so we stay in longer than we should versus saying you know what i did really well i should just be happy let me use this money and buy something for myself my family give something to a charity whatever don't just like try to keep making this you're still gonna have a real living and go to work and make money don't try to do this as something that's going to replace your job because it's not going to last forever but it's a wonderful way to keep busy now and make some good money as long as you're careful that's one way i would really do is just don't be greedy and try to get in at the beginning not at the end okay as soon as there's a bandwagon you're not onto a good thing really good advice i'm trying to write all of this down jordan belfort real pleasure to talk to you thanks so much the original wolf of wall street my pleasure take care

Channel: The Wolf of Wall Street

Views: 58,636

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Id: DO4fMijqb-c

Length: 10min 17sec (617 seconds)

Published: Sun Jan 31 2021