Tonight, we’re going
to be talking about the stock market... [AUDIENCE MEMBER WOOS] ...really? [LAUGHTER] A “woo” for the stock market. Millions of Americans talk about the
stock market every day from the ballrooms of the richest
Connecticut country clubs to the ballrooms of some of the poorer
Connecticut country clubs. [LAUGHTER] No matter
what's happening in the world, all eyes are always on
the market. We stock watch, while waiting to find out
who's gonna be president. We stock watch, while globally warming. And neither Santa nor a global pandemic can distract us from our minute to minute check in. All happening just below Larry
Kudlow's nipples. Oh look at ‘em! [LAUGHTER] But our national obsession came from quite humble roots. The stock market began with a very simple premise. Let's have people invest their money in companies that they believe in. If the company does well, the people will do well. But you couldn’t
just drive to the company, give them your money. That’d be super weird. You needed a place, a building made of, let's say, marble. [LAUGHTER] But you couldn't
just go into that building made of marble and buy your stock That'd be too much like a store! [LAUGHTER] You'd need a broker. Someone... ...better than you. [LAUGHTER] So from the beginning, it was elitist. To buy a stock, you had to pay
a heavy commission to whichever... college lacrosse benchwarmer
turned broker you could find. [LAUGHTER] [LAUGHTER] And the only folks more elite than the brokers were those who vouched for the brokers on television. My name is J. Paul Getty. The brokerage house of
EF Hutton Company is a firm with which I've had close and pleasant relationships for four decades. They have been helpful and their service has been good. [LAUGHTER] [LAUGHTER] “It's too late for me now.” [LAUGHTER] “For I am... ...more couch than man.” [LAUGHTER] “More pillow than human.” [LAUGHTER] Given that the investor class was made up of literal
Monopoly men, the stock market was wildly unequal when the Federal Reserve
started analyzing stock ownership in 1989. It found that the top 10% of households owned 78% of the stock market. But the revolution was coming. Hark! Sorry. [LAUGHTER] That "hark" even scared me! Hark! Its clarion call is upon us! The e-brokers have arrived! -$8, my man!
-$8? My broker charges me $200
for this trade -You're riding the wave of the
future, my man. -Ameritrade. Believe in yourself. But is a meth head and his father in the market... [LAUGHTER] ...still too high a bar? -You know,
I conceal this bad boy underneath my blanket
just so I can get on E-Trade. -Click. I just bought stock. If I can do it. You can do it. [LAUGHTER] Whoa. A fucking baby! If you want to get in the market, you just need to be a fucking
baby with $6! A six-dollar fucking baby! By the way, someone needs to do a “Where are they now?" on that baby. [LAUGHTER] I'm pretty sure he's hosting a podcast where he's just, "asking questions
about ivermectin!” “I'm just asking questions!" [LAUGHTER] and calling women "females." "They're females!" [LAUGHTER] Discount e-brokers democratized the stock market, and inequality went... Up?! Fuck! Are you serious?! They democratized the stock market and inequality went up! Are you kidding me? Turns out to really democratize
this market, we were going to need something that completely breaks down all barriers. Someone had to take away fees completely. We'd need a hero or... ...not a hero more like... ...an app. We need some kind of an app. There we go. [LAUGHTER] Robinhood! The OG sexy socialist. The bow-and-arrow
Bernie Sanders. Leveling the playing field! Stealing from the rich... ...and giving- Who is he giving it to? Robinhood’s made it
extremely easy for me to take the
income I make from my commission paintings
and invest it into stocks. Robinhood showed me
that my money can work for me. My name's Azim and I'm a Robinhood user. I'm an investor. -I'm an investor. We are Robinhooders. Cozy-sweatered lesbians?! [LAUGHTER] [LAUGHTER] In the stock market?! Well I never! [LAUGHTER] By the way, in the nineties, they were referred to as, "just friends." [LAUGHTER] Pray tell! How has Robinhood managed to breach the palace walls and throw down the drawbridge
for these sweatered Lilith Fair maidens? Robinhood CEO, tell us. I think the combination of zero commissions, no account minimums, fractional shares... Helped level the playing field for people to participate in the markets. Thank you, haunted Victorian boy. [LAUGHTER] [LAUGHTER] Zero commissions! And the markets were flooded with new customers. And not only that, on top of this no-commission model, the Federal Reserve's new
low interest rates made savings accounts
pretty much worthless. So even more stock buyers and money flowed
into the stock market. In 2021, more money flowed into the stock market than in the previous 20 years combined. It was a golden age of wealth generation. The unwashed masses finally have their moment to get into the stock
market, and... IT WENT UP?! Inequality went up?! Are you fucking kidding me?! [LAUGHTER] And thus, The Problem
with the Stock Market. The Grand Poobahs of the
stock market keep creating easier access to this wealth machine. Yet, somehow always
still manage to be the greatest beneficiaries of that wealth. Perhaps if we examine exactly
what happens when you buy a stock
through Robinhood, we can understand the system a bit better. I pick up my phone and I'd hit the old Robinhood
"Buy" button and boom! My order... doesn't
go to the stock exchange, because of something called “payment for order flow.” My order somehow goes to this other company no one’s
heard of called “Citadel.” They're a middleman known
as a market maker. They match buyers to sellers. And they have paid Robinhood hundreds of millions of dollars for the privilege of processing the order. And then Citadel, or any market maker, still doesn't have to take that order to the stock exchange. They just match it
to other orders they've also already paid for. Or they slip the order into what are called "dark pools." And dark pools are private exchanges where the big boys trade stocks in the dark. Yes. The actual name of that is "dark pools." [LAUGHTER] They named it "dark pools". [LAUGHTER] How fucking invincible do you have to feel to name the place where you conduct your least transparent business dealings, "dark pools?" [LAUGHTER] "Thank you for your order! I'll just take it down to my Chamber of Schemes." [LAUGHTER] So now we know why Robinhood is free to use. They're being paid hundreds of millions of dollars
by middlemen for the privilege of processing stock orders So we know who their real boss is. But why the fuck with these guys pay hundreds of millions of dollars for that privilege? Let's ask Citadel CEO, Ken Griffin. -Payment for order flow is a cost to me. Oh, well yes! It costs you hundreds of millions of dollars. [LAUGHTER] Why would you do it? -We want to hold on to this democratization of finance that's taken place. If payment for order flow helps to maintain that as a reality, I think that's good for everybody You're a really good person! [LAUGHTER] See Ken Griffin, he’s just a nice guy! He's going broke to create
this democratization of markets! Obviously, not that broke. He does live in literally the most expensive house in the history of the United States of America. And also spends time at his other house here and this other one here and then this one here. And of course, any of these here... any of these here,
you know what? Fuck this guy. [LAUGHTER] So what's really going on here? How do these particular
middlemen even make money? Say, Jason, you want to buy a stock for $10 and Caroline, you're selling it for $9.99. Well, they'll internalize that trade and they'll make a cent per share. It doesn't sound like a lot, but if you do it enough. Over and over again. Those pennies add up. Huh... So for every trade, they're skimming
pennies off the top. How many fucking pennies puts you in all those houses? Well, let's break this down. first of all,
the hundreds of millions that Citadel kicks back to Robinhood, should be going to the retail investors, or at least a cut of it, and the pennies they're scooping on price differential should also be going to the retail investors. I mean, who came up with payment
for order flow? Bernie Madoff? Yes, it
was actually Bernie Madoff. [LAUGHTER] It was literally Bernie Madoff who came up with payment
for order flow. It was... It was Bernie Madoff. [LAUGHTER] Bernie Madoff came up with payment
for order flow... [LAUGHTER] Let me... do you know the name “Bernie Madoff?” [LAUGHTER] Bernie Madoff came up with payment
for order flow. That's the business model that
all these guys are working on. Bernie Madoff. BERNIE MADOFF! [LAUGHTER] This should be illegal! Which, by the way, it is in many other countries. Somebody should really tell
the Securities and Exchange Commission about this, and it turns out somebody did. In 2004, a whistleblower wrote a letter to the SEC, saying payment for order flow, “lacks transparency...” “...is anti-competitive...” and “...creates an obvious and substantial conflict of interest
between brokers and their customers...” and should be banned ”...altogether.” Pray tell... unmask the hero of our tale, the brave whistleblower
from the year 2004. It is... Citadel Investment Group! [LAUGHTER] It appears that these companies don't so much want to democratize the stock market, as bring in chump money for their penny game. So what might happen, though, if these new chumps, bringing in all this new money, got wise? -Small investors banding together to take on big firms by running up the stock price of video game seller, GameStop. -It’s a stock worth
just a few bucks a year ago and closed at $347. If you invested $5,000 in the GameStop
just two weeks ago, you would have made more than 86,000 bucks. The hedge funds that bet against it have lost billions. A bunch of Reddit users harnessed years of advanced meme training... [LAUGHTER] to realize that the company, GameStop, was being massively shorted by hedge funds. Basically, hedge funds placed giant bets that GameStop's price would go down. The Reddit users thought, "Well, geez, why don't
we all just get together and short-squeeze them? Drive the price up, hold the stock, make a little money and as a consequence, force
those hedge funds into massive losses." And it worked. Really well. [LAUGHTER] Discount online brokerage, Robinhood barred users, without warning, from buying new shares of GameStop. I opened up the app. I saw that you could no longer press the "Buy" button in Robinhood, and I said, "Holy *bleep*." [LAUGHTER] Don't be coy! Holy what?! [LAUGHTER] Holy what? Did you.. What'd you say? "Cock?!" [LAUGHTER] Did you say, "cock?” [LAUGHTER] Why would Robinhood halt buying GameStop but not selling it? They said it was because they received a call from their clearing house. But let's... from their bookie. Who said, "They're
on the way to the house! Get the fuck out of the house! They're in a black
Lincoln Continental!" [LAUGHTER] But other people were suspicious
for a couple of reasons. One being, a hedge fund called Melvin Capital, which racked up billions of dollars of losses in the GameStop frenzy, received a bailout from none other than Citadel Hedge Fund. The utterly unrelated hedge fund, owned by the same people who own Citadel Securities, which is the payment
for order flow company that handles Robinhood orders. And if this sounds insane, it's because it's insane! Which really has to make you wonder, how dark
are these fucking pools? [LAUGHTER] And here's the kicker. This payment for order flow situation and GameStop mess are the part of the American stock market that is the most transparent, well-regulated and straight forward part of our entire market system. There's a whole other back room of derivatives and swaps and less transparent
transactions, with even more fuckery! Subsidized by public union pension funds. It's unsustainable. One could compare it to the subprime mortgage market that has capacity to blow up the world economy. We will never understand
all of it, and we're not supposed to. It took a bunch of Redditors to figure out the GameStop shorting thing. What the hell was CNBC doing? -Show me the money! -Look at all that green baby! -Wealth creation
right in front of our eyes! -Cha-ching! ♩HALLELUJAH♩ ♩HALLELUJAH♩ -Watch your money grow! ♩HALLELUJAH♩ -You're gonna make a lot of money! ♩HALLELUJAH♩ -Thank the market gods. -Because baby, this stock is born to run! [LAUGHTER] Someone should question him publicly. [LAUGHTER] I'm sure that would have tremendous ramifications.
If you really want to boost the algo. -Watch it or let it play all the way through. -leave a like and comment. -Share
Im doing my part. Would you like to know more?
Can’t believe not more people are consumed by this. I believe people that care about trading are in the minority.
Starting Views: Pre-post. Pre-Superstonk boost.
And girls! Especially on International Women's Day.
I didn't realize how much I've missed this man.
Love Jon and so missed him from my life after he left the Daily Show. Once again he is on point and letting everyone know the nonsense around them.
He needs to do a dumb face thumbnail like all the crypto youtubers.
Just a thought...
Because superstonk is so diverse in its members the algorithm would send our views to like minded folks. So we would transcend all sociological cliques if enough of us watched it. It would be like our own ad to all of YouTube.