Animal Spirits Podcast - The Big Squeeze (EP.189)

Episode Date: February 3, 2021

On this week's show we talk about all things GameStop, Robinhood, short-sellers, when markets become a pop culture phenomenon, why people are so angry with Wall Street and much more.   Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by our friends at Y Charts. Wanted to mention YCharts is hiring. I talked to CEO, Sean Brown, the other day, and he mentioned that they are hiring on a hiring spree this year, going like crazy. The company is doing well. They are hiring in product, marketing, sales, development, support. And the cool thing about the pandemic is, if there is a silver lining, it's that people from all over the country are now able to work and maybe all over the world for a company

like this. So Whitecharts is hiring people in all types of remote positions. Go to whycharts.com backslash careers to apply for a job at a fast-growing research company. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Batnick and Ben Carlson work for Ritt Holtz Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritthold's wealth management.

This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. All right. Welcome to Animal Spirits with Michael and Ben. Ben, this has to be a record for us. Our Google Doc is 39 pages long.

No shortage of stuff to talk about. How many hours do you think you put into this last week? Into paying attention to Gamestock? Game stock. Sorry. Nice Freudian slip. Well, just GameStop and also organizing this doc was a bear. I mean...

There's a lot to talk about. We could probably go for three hours. We'll try not to keep it that long, but we've got a lot to get into. So let's get into it. Before we do, I just have to... I think this might be my first correction. I got to set the record straight. Last week...

I don't know. If you didn't make a correction on telling people they should go see Crawl, then when are you going to make it a correction? I never said anybody should go see Crawl. Okay. All right, make your correction. Last week, I mentioned... I think I said that AII was...

shutting down. I think I did mention that I was sort of thrown off by some confusing language in the article from Jason's wife. So anyway, I heard from them, and I'm happy to report that what I said was untrue. They're not shutting down. The communication that Jason mentioned referred to our local chapters, which are run by volunteers, not the national organization, which has employed staff. AAI is continuing. Our local chapters are continuing to hold webinars while we look at the best way to facilitate interaction among members, both during and after the pandemic. So they're not going away. That made sense because I did a speech for one of the organizations three or four weeks ago. Okay. They were still alive and well. I think maybe a good

place to begin. And it looks like we're nearing the end of this. It's Tuesday morning. GameStop is down 66% today. I think it fell 30 something percent yesterday. It's what 75% off the highs probably. This happened pretty quickly. All right. And we're going to get into everything. But I think a good place to start is the socioeconomic angle of all of this. And I tweeted out a chart for from the New York Times last week. When the stock market rises, so does inequality. It's basically showing what Ben and I have been talking about for, I guess, years now on this podcast. The bottom 50% of America owns 1% in the stock market. The top 1% on the other hand control 38% of the value of financial accounts holding stock. The top 10% on 84% of Wall Street

portfolio's values. Here's some other figures. 14% of individual income flow to the 1%. The 1% controls 18% of equity in residential real estate, 24% of cash held in bank accounts. As much as anything, this is an inequality story. It's not how it started, but it's certainly where it came to. It was a coiled spring, and that's why the outrage was so vast, and this story spread like wildfire because of that. GameStop was just what it came in. This was just the container for it.

And it honestly makes sense to me. We talked at the beginning of the pandemic, how we thought this was going to exacerbate income inequality and it's made it worse. And I mean, I think you could trace this back to the financial crisis in many ways. Absolutely. People are still angry about that. I still, to this day, it shocks me that no one from layman or AIG or some of those places went to jail. I still have no idea how some of those crooks walked away with hundreds of millions of dollars in bonuses and not even a slap on the wrist. And I think people are still anger about that and inequality has only gotten worse since then. So the fact that you see that happen. And I,

I want to do some myth busting here and talk about the fact that markets aren't really rigged and broken. But for a lot of people, when they see that stuff, I get why they say that. So do I. That's why you have to tread lightly because on the one hand, there's a lot of misinformation, but it's almost sort of besides the point. The idea that people are upset that there could be more shares sold short than are outstanding. And people like us that are busting those myths, it almost doesn't matter. That's like besides the point. So for example, Ben, somebody on Wall Street Betts, wrote a little post that said, this is for you, Dad. That was the title. And this person said, I remember when the housing collapsed a torpedo through my family. My father's concrete company

collapsed almost overnight. My father lost his home. My uncle lost his home. I remember my brother helping my father count pocket change on our kitchen table. This was all the money he had left in the world. While this was happening in my home, I saw hedge funders literally drinking champagne as they looked down on the Occupy Wall Street protesters. I will never forget that. My father never recovered from that blow. He fell deeper and deeper into alcoholism. And existed. now is a shell of his former self waiting for death. This is all the money I have, and I'd rather lose it all than give them what they need to destroy me. Taking money from you won't hurt me because I don't value it at all. I'll just burn it all down just despite them. This is for you,

Dad. It's fucking heartbreaking. So you read that, we're talking about shares outstanding as if that's the issue. You people really need to understand the underlying structure of the market. If you only understood that, then you have these rich people saying, we need to give access to people to startups and hedge funds. No, that is not like people need basic financial literacy. This is the tweet that kind of, this one went crazy. I had like 300,000 likes. This woman wrote, I don't ever want to hear poor people need to learn financial literacy, learn how to save and invest again in my life. These past 48 hours has proven that's a lie. The market is fake. The game is rigged. And again, I understand why a lot of people think that, but I just don't want

that to be the takeaway here. It hurts to think about this because, you have all these really wealthy people who have a social presence who were gaslighting the markets last week talking about this. And they know better because they're the ones who have money. involved in the stock market. They're the ones who own these financial assets, and they're trying to gasolate people about how unfair stuff is. And there are certain areas of life that are unfair, but trying to tell people that the stock market is rigged against them, that's not the message here. Right. Right. And unfortunately, that's a big takeaway from a lot of people. This was the big concern for me. You and I and Josh were talking about this, and this is my big fear

that when this thing collapses and it's collapsing right now, maybe a generation of people that already feel left behind, are going to say, F you, I knew it. I am out of here forever. And then later that night, we got an email from somebody who confirmed our worst fears, basically. You could read the email on my blog. But the upshot is, the last sentence is, sadly, we are thinking about taking her money out of the market altogether and putting it into an investment that is less manipulated and less volatile. My heart was warmed when this person responded to me. He said, awesome blog. I read it to my wife, and we're going to stick it out. Needless to say, as a first time series investor, we were a bit shaken up by the timing of last week's development. Thank you

for helping us work through this existential crisis. It felt like the stock market was dunking on us last week. And I totally get it. And unfortunately, the good financial advice from people like us that try to provide context and nuance, it's like, well, think long term and not short term. I know. You were beating over the face every five minutes with GameStop stuff. How could you ever ignore the noise in something like this and think, okay, I'll just think an act for the long term. Some people just, they don't have that ability or the information behind it enough to think about it. And when you're hearing, I think the craziest thing about this to me is this became just a pop culture phenomenon. My wife is asking me about it.

My mom is asking me about it. It's on the Today Show getting text messages about it from everyone. And all the news outlets I hear and they're saying this stuff and they're stoking the flames too. And when it gets to that point where it's a pop culture phenomenon, everyone feels like they have to have a take about it, that it's impossible for misinformation not to spread. And then you have all these promoters and grifters and charlatans that just dive in head first. If we're going to point fingers at anybody, those are the people that should be ashamed of themselves. Yes, I think it's such bad form to say, I told you so.

I knew these people were going to end up holding the bag. Bad luck. That's a bad look because these individuals were led astray by people who know better and were giving dangerous advice and saying, yes, stick it to the – like, these people who went to Harvard and people who are like in the venture capital community are saying stick to the suits. It's like, shut up. You're a suit. What are you talking about? Like, this is not the way.

If you're not going to put your own money up with it, then just shut up. And these are the people that I thought were so dangerous. For the record, I'm a V-neck t-shirt. I don't want to be lumped in. That's true. Speaking about pop culture, John Stewart created a Twitter account for this. He said this is bullshit. The Redditors aren't cheating.

They're joining a party, Wall Street insiders have been enjoying for years. Don't shut them down. Maybe see them for copyright infringement instead. We've learned nothing in 2008. And this was part of it. You had people, Andrew Ross Sorkin was on Bill Simmons. I mean, this was everywhere. And you have people saying, are you.

You kidding me? We're doing this out in the open. Hedge funds have been having idea dinners behind closed doors for years. And now they want to point the fingers at us. So I get it. I totally get it. You still have to give so much credit to the Wall Street bets people, even if they've held on and they're losing money now. They're still up. Oh, like Roaring Kitty, which we'll get to. Yeah, absolutely. I still give them so much credit. It's just the people who jumped in after the fact. Those are the ones getting hurt now and those are the ones who are going to. The Reddit people who understood this trade and the structure of the market, I'm sure they more than anyone understand like this thing was going to unwind at some point. They'll be fine and they'll move on to another

trade. It's the people who jumped in at the end who are going to be totally disheartened by the market and think, why ever do this again? Last week was sort of your reverse 1987 moment. It wasn't in the overall market, but you had stocks crashing vertical. You're right. Yeah. Again, we mentioned this last week, but companies that you wouldn't have ever expected this to happen to. A few people were actually in us because apparently BlackBerry is now doing enterprise software with legit stuff, whatever, whatever, besides a point. But the antisocial network, apparently that's in the works at MGM. And then there's another one at Netflix and...

We're living it. Do we need to watch this movie? What do you think of the best angle here? Because they're looking at it from the social media aspect of it. I think the inequality angle to me is so much more important, I think, because I think that's what got people so... Well, from an entertainment point of view, I want to see Warren Kitty. I want him to be the focal point here.

Right. Do you think that they end the movie last week, though, instead of today now that it's crashing? They're going to have to fictionalize a lot. And the guy who was writing at this Ben Messert guy who wrote the... accidental billionaires, which is the social network was based on, he writes nonfiction, but he fictionalizes it. I bet 30% of this stuff he writes never actually happened. It's that kind of thing. So I think they're going to have to fictionalize a lot of this. But some of the story, you just can't really make up. All right, so let's move on to the short sellers.

Short sellers are pointing out as being the bad guys, the manipulators. Medfavor tweeted, have any of you guys actually seen hedge fund and shortseller returns the past 10 years? If they're manipulating the system, wow, do they ever stink at it? Bloomberg tweeted an index of short selling hedge funds. And yeah, in a bull market, they're getting crushed. They're getting annihilated. But maybe this is part of the point is that not only does their performance suck, they're still freaking rich, mega, mega, rich.

And their poor performance is not costing them anything. Right. Hedge funds have been awful since 2008. They've been unbelievably bad. Their returns are horrible compared to whatever you want, a 60, 40, 20, 80, but whatever. And then the Melvin Capital guy, they lost 53% in January. and he's worth $300 billion still. Guess what? They don't claw back those fees. He's going to be just fine. That's part of the point. Is that we can't speak the language. You have to protect us from

ourselves. Who are you to point fingers? Look at your performance. The only difference is you're making billions at fees and we're trying to put food on the table. And guess what? Maybe since they got that infusion of cash from Citadel and Steve Cohen, they'll stick around, but they're never going to hit their high watermark again for years, potentially. So isn't he just going to shut this down and open up another one in 18 months. If you fall 53%, here's a little arithmetic for you. You got to make 113 to break even. How is that going to happen? I just don't know how the smart money ends up being so dumb so often. What type of risk controls did they have in place that they wouldn't get out of a trade like this that starts going against them? I guess they're not prepared for a 19 Sigma

event or whatever the amount of Sigma was were. But to your point, risk management that just doesn't exist. There were some winners, Silver Lake Private Equity Company, this is in Bloomberg. They They were holders of $600 million of AMC convertible bonds. They converted them into stock. They basically top-tick this thing perfectly. This is amazing. $600 million of debt vaporized by Reddit enthusiasm. Here's a quote,

In the absence of significant increases in attendance from current levels, there's substantial doubt about our ability to continue as a go-in-concern for a reasonable period of time. That was on Monday. The message board bailed out the hedge fund. Right. So I guess they ruined my Disney idea, too. Disney can't buy AMC anymore, I guess, because they got out of the name.

And they raised capital, too, and they're going to be, Reddit basically made AMC a going concern again. They were going to go out of business, more or less. That's a silver lining here. So we were talking about this last week, that short sellers were getting crushed. Andrew Left. By the way, Andrew Left was an outsider. Remember when he took on Valiant and Ackman?

He was the outsider. Now, well, think about it. The shorts were the heroes in the big short, the movie, the story, everything, hedge funds were the heroes. And now they're the villains again. Michael Burry, right? Yeah. So Andrew Left is basically saying he's not publishing short selling reports anymore. probably a good idea. And they've been doing it for 20 years, they said. I heard of them on

periphery. I didn't really know them that well. Santoli had a great piece that we're going to spend a little bit of time talking about. He said annual returns for long, short hedge funds have ranged from negative 3% to 9% over the last five years. Not exactly lighting the world on fire, but again, a lot of money and fees, a lot of money and fees. So I always come back to who to blame on this. And people always say hedge funds, it's not an investment strategy. It's a compensation scheme. Obviously, there are some good hedge funds out there, but I just don't know, this is the thing that always irked me in the institutional money management space. How can these stupid endowments and pensions keep giving these people money and paying those fees? I just will never understand that

for the life of me, how 11,000 hedge funds can still be in business, just sucking fees from these places. Well, you know how it happens. The stories and the pedigree. I would have assumed in 2013, they would have all said, all right, I'm throwing my hands up. at least in like private equity and venture capital, you have the ability to maybe like hit a home run and something good could happen. It seems like with these hedge funds, you have a greater chance of seeing a huge loss like this than you do have seen a huge gain. It just doesn't make sense to me how they still stick with them. Yeah, the risks certainly seem asymmetric. All right. So let's just spend one second on how could 140% of the float be short?

Because we're getting asked this by a lot of people. So here's what Santoli wrote. This is pretty good play in English for explaining this. The GameStop short position has routinely been described as far exceeding the entire share float. This is never true. When a share is sold short, a new long position is created and added to the float. The same share is effectively owned by the original owner and the one who bought it from the short seller who borrowed it. Cullen Roche. If there are 1,000 shares of X, Y, Z outstanding, and you borrow 500 of those shares to sell them short, then someone is long 1,000 shares and you are short 500 shares. And someone else is newly long your 500 shares short. There are still only 1,000 shares outstanding. You have a negative 500 share balance.

while two other investors have a positive $1,500 share balance. Again, this is besides the point, but this is how it works. And do we need guardrails on this sort of thing? And if so, why? I mean, regardless of the, was it more shares than they had, the number was too high. Whatever it was, the number was obviously too high. They overplayed their hand. Let's just leave it at that.

I mean, I think this comes down to the investors, though. This is a short seller's problem. They should have their own internal guardrails that say the red flags go up and say, we don't short companies that have this much short interest. I don't know that the regulators can do something on this. Do you? I don't know that regulation is the answer here for this specific thing. Don't you think the market reacts and then they jack the prices up on the short interest for these things? That would be my thing. I think the market is going to react to this and causes its own correction in this stuff. We saw that in silver. Maybe we'll get to maybe we won't. But here's

more from Cullen about people saying like, oh, the evil short sellers. I thought this was a really good point. Cullen said a pump and dump scheme is far more common than a short and distort scheme because it's a heck of a lot easier to pump and dump a stock than it is to short and distort. But you don't have people out there screaming about pump a dumpskeeps saying, we need to ban buy-in. The point is, every single person pumping the price of game stop unsustainably above its intrinsic value is involved in something that is just as harmful as every person who dumps the price of game stock unsustainably below its intrinsic value. I think that's a pretty good point. And I honestly get why people are going after short sales history because it does seem like, oh, these people are betting against the system. Personally, I will never short a stock in my life.

I don't have the personality for it. I like to think that I was making the market more efficient to 2011 when I was short on the Amazon. I was playing my small part. Here's how short sellers actually contribute to people who are along the market, though. When you lend out your shares, if you're an index fund at Vanguard or I shares, you're getting short interest back that essentially lowers the fees that you're paying on your index funds.

So short sellers are effectively lowering your cost. But I understand why people think, like, these people are paying it's a system. They're just trying to take stuff down. But it goes in both directions of people talking their book in either direction. And honestly, I don't know if Colin said that. this or someone else, but one of the better points I saw was short sellers have never taken down a high-quality company before that didn't deserve to go down. It's usually the Enron's and laymen's of the world that actually deserve it and they've just got there ahead of time.

Yeah, here's exactly what Colin said. He said, the short-selling distort price discovery, does it actually hurt the underlying business? I am inclined to argue that it does not distort anything in almost all cases. That's because stock markets are mostly secondary markets. That is, they're just a place where stocks trade after all the actual investment has been done. Those stocks just reflect the underlying business to some degree, and the firms mostly don't care who own the shares and the markets don't impact the actual companies all that much. That is, a secondary market is a lot like a horse track with betting. The horses run the actual race and the betters do stuff that reflects the value of those horses,

but the bets don't actually make the horses run faster or slower. Buying a stock long or shorting a stock is very similar. And this is why the AMC thing is so out there, the fact that they were able to change their whole capital structure because of their run-up and stock price. Right. That's actually an outlier. That's not what usually happen. Most of the time, no amount of share purchases can lift a failing business.

Conversely, no amount of selling short in the world can turn a good business south. I mean, do you think, though, I've seen the picture of a GameStop store 768 times in the last week. Did they get some free PR where people actually going to go to the store or just people just do not care? and this is an internet story in a week, they forget all about it. I mean, maybe that's the case. But think about how much GameStop is a brand or a company name that every single person knows now almost. Right.

What do the losses look like? Balchun is tweeted on January 27th. Back of the envelope math here, but looks like WSBS cost of shorts in GME, about $25 billion. Those losses go up to $55 billion if you include the top 100 most shorted stocks over the past month. This is S3 partners, which I hadn't heard of until this week. They've been everywhere. terms of their data on short interest. Maybe this is one thing that needs updated. How often is short positions are disclosed? Is it every two weeks? The 13F filings? No, that's like monthly

or quarterly. It's not a serious lag. Maybe we need more transparency there. Anyway, the hedge funds want less at this point, though. And we talked about this before. Like you said, there's no way they're going to be able to do any of these presentations anymore and talk up their short book. Because in the past, that's what they were doing. You would have an Irosone, David I and her would talk about a company short and then it would go down 10% that day. Those days are probably way over. That stopped working pretty much a long time ago, where Einhorn would speak and the market wouldn't react. All right, so per S3 partners data, while the value shorts that were in GM earlier have been squeezed, some the Melvin Capitals of the world who covered, most of the borrowed

shares that were returned on the back of the bite of covers were shorted by new momentum shorts in the name. So hedge funds got squeezed, but you got to think that it was new hedge funds that are going to make an absolute killing off of today's 66% decline. Right. Who was, there had be people that shorted it at $3 and $400 who have made a ton of money now. That's not Wall Street bets people. That's hedge funds. Boy, wouldn't that have been great, though, if Wall Street bets would have flipped and shorted it? Yes, yes. That would have been sticking it to the man. Not hold forever, but let's flip. That would have been... I mean, on principle, they couldn't have done that. But if they would have

said, all right, this is 400, this is not going to $1,000, let's short it and make some money on the way down to. Everybody would have been cheering for them on that one. All right, so let's move on to Robin Hood. This is the story I think I've gotten the most questions on. When this first happened and in Robin Hood and what was it Thursday or what I can't remember whatever day it was it's all kind of running together here my initial thought when they halted some trades in some of these names I told you you and I were talking about this all day I said this seems fishy but I'm guessing some of the SEC stepped in and said shut this down that was my initial reaction I didn't think Robin Hood is working with Ken Griffin on this in Citadel which a lot of people obviously thought

and this is another one story where I understand why people think this is rigged and they think it seems fishy and that the Illuminati all got together at a roundtable and called in Robin Hood. The actual story is so much more boring, but we have to get into the detail. We have to get into the details on this because I think it's important to understand that it wasn't, this is not a conspiracy, even though, boy, this one, the optics of it are the worst for sure. Terrible. So somebody tweeted, just got a tip that Citadel reloaded their shorts before they told Robbins to stop trading game stock. If this is true, Ken Griffin and the Robin and Founder should be in jail. this is class warfare. I agree. If that is true, then it is illegal and people should be in jail,

but it's not true, at least as far as I know. So Corey Hofstein retweeted that and said, And why would Citadel ever put themselves in that position? They're making so much money in all this volatility. It doesn't even matter. We'll get into that in a second. Corey tweeted, so as a dust settles, and today looks more and more like a balance sheet issue, I hope the lesson we can all take away is Hamlin's razor. Don't assume malice when you can assume incompetence. Seriously, adopt it. to low your blood pressure tremendously. And I think that's the long and the short of it. That is the thing. People want to assume Robin Hood is this evil corporation. They were way over their skis on this. We're going to get into this balance sheet stuff. I want to say, how did they not

have one person in their entire organization who said, hey, guys, guys, listen up. If this continues to happen, we are screwed and we're going to get effectively our own margin call. How is there not one person in that organization who said that. It really is. It's an incompetent organization who is probably going to be wildly successful either way. This is sort of Silicon Valley M.O., move fast and break things and figure it out later. This was a technology company who didn't understand how the financial system works, basically. That's the way I look at it. You said that you think that Robin Hood might be the Facebook of finance, and this comes from the New York Times, and I'll let you expand on this. They said Robinon's distress file is a familiar narrative, is Silicon Valley

company that promised to disrupt an industry ends up being overcome by the forces it unleashed, and that's to be reined in by its regulators. Or in this case, the industry, it promised to change. It's arc is not all that different from Facebook and Google, which changed the way in which billions of people socialize and search for information, but are now caught in the quastires of lawmakers and an angry public. My take this weekend was I think the initial thought from people is, Robin Hood just crushed their brand. Everyone is trashing them in social media. They're done with. My thought was, I think this is going to be good for them, probably. the way I look at a lot of these technology companies is the founders care more about the technology

than they do about morals. That's Mark Zuckerberg. He thinks that the technology is more important than what actually happens to the people and the users. And so they probably have been in much more trouble if they were a public company. They had to raise money by selling equity or something. But the fact that they probably care more about Citadel who they sell their order flow to than their users is kind of like Facebook in that Facebook cares more about their advertisers than actually users. But the technology is so good. And Robin Hood, bar none, has the best app that I've ever use for trading. It's so easy to use. And I'm sure there's some that are going to come out that are just as good or better. But you're based on his vanguard target date fund. So yeah,

the technology is a little bit better here. But they signed up 500,000 customers in a week before this happened. And now I think it's probably gone even higher. So I think this is the kind of thing where Robin Hood does something shady. They have enough money and backers to take care of it. People complain about it online. And then they move on and continue to use it, which is basically the same story with Facebook. They do a hashtag delete Facebook. And then, oh, by the way, three billion people are still using it. Robin has been the top downloaded app in the app store all week. By the way, it's been all finance apps, which is incredible, all trading apps, Weeball, public, all those. So Kate Rooney tweeted yesterday, despite all the backlash we're seeing on Twitter,

Robinon added 600,000 accounts on Friday last week during the chaos. This is good for them. Far more, far more than Weebole, than SoFi, then Cormise and Shrobb, then TD and Fidelity, combined probably. Oh, maybe not combined, but far more. Before we get into what really happened with Robin Hood, and maybe people are bored by this, but the fact that they were able to snap their fingers in race $3.4 billion in 48 hours, where the hell did that money come from? Docha coin? I mean, I know they have some big venture backers who are hoping that they're going to IPO, and they're probably lucky that they had an IPO before this. This is a side tangent, but the fact that they were able to come up with this money so quickly and that money sucked up so

bad for a company that is just getting crushed in the press, I think anytime we have a correction or something comes down, there's so much money sloshing around, I don't think it's going to last long. I'm turning this into like a market idea that like even like a 20% bare market, I think money's going to rush back in so fast. It's going to be hard for these things to last. That's my market takeaway from this. So on Thursday, we found out that they were restricting purchases in these names. On their blog, they wrote, our mission at Robin Hood is to democratize finance for all. We're proud to have created a platform that has helped everyday people from all background, shape their financial futures and invests for the long term. We continuously monitor

the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing. You know the names. We also raised margin requirements for certain securities. Okay, so that was on Thursday. First of all, let's be real. That caused the crash on Thursday. I don't know how much the stock was down on Thursday. 40%. It was a lot. So people lost their mind. And in my opinion, this was an epic, epic failure to communicate. I mean, seriously, stocks are too volatile? And this is a company who has never been good at educating. They've always just been kind of like take the technology and do with what you want. We're going to stay out of your way. Then they've kind of pushed you to do stuff.

I think they've sent out an email pretty much every day since then. Just at face value hearing this story, well, they're restricting buys and not sells. This doesn't make any sense. They're trying to kill it. And of course, it did come back Friday. And if you held for two days, guess what, you're fine. I guess maybe the investing lesson here is don't ever get in a position where one day in a stock is going to make or break your life. Maybe that's for another time. But this is a company who just has some really bad PR. I think the leadership from the company is awful. I think it's these technology guys who don't understand people or empathy or what their clients are going through. The guy went on CNBC or Bloomberg and basically said, oh, this is amazing. Our app is the number one

downloaded app. That was so toned. I mean, just so toned. I think that these guys are just, I don't know if they're just puppets for their VCs or whatever, but I don't know how you could be on the board of this company and not just be enraged at how they handled this. And I'm sure they're going to change the way they do this and communicate, but this is just a company who was not ready for the prime time, something like this. And maybe they will in the future, but because they just raise so much money. It was more of a PR thing where they just, maybe they didn't want to tell people, hey, we really need money right now. Maybe they were trying to play their cards close to their vest a little bit. It's so crazy how quickly this happened. So they released that on

Thursday. They got destroyed rightfully so. They deserved every bit of it. On Friday, they put this on their blog. Vlad put this in USA Today. They basically said what happened. The amount required by clearing houses to cover the settlement period of some securities rose tremendously last week. How much, to put it in perspective, this week alone, our clearing house mandated deposit requirements related to equities increased tenfold. And that's what led us to put temporary buying restrictions in place on a small number of securities. So why didn't they just say that in the first place? I know. I honestly think they wanted to get some capital in first. That's the only thing I can think of. They're just so incompetent. I don't know why they

wouldn't have said that. Just to say, like, basically, we got margin called. That's more or less what happened. We don't have to get into all the intricacies of T plus two settlement or whatever, all that. Well, let's just go there for a little bit. Okay. Here's a good quote. From a marketing standpoint, they position themselves as new, innovative, and cool. What I think everyone is missing is when you peel the onion back, they are just a heavily regulated business. Right. Technology is hard to implement in a regulated financial world. Let me ask you this, though, before we get to the T plus two stuff, Robin Hood has had issues in the past. They had that infinite leverage glitch, right? Obviously, the tragedy of that teenager committing suicide earlier this year.

That's one of the strangest things about this whole story to me is earlier in the year, everyone was killing them for overtrading and it caused this young man to take his life, more or less. And now we go to the other side and this outrages people and people say, no, no, Robin Hood has to let people do everything. When the outrage masses just get on one thing and they don't think through context and nuance and that's what discourages me about this kind of stuff is that people don't stop to think before they just say stuff.

How about when they announced their CIPIC checking account where the leader of Pacific was like, I haven't heard anything about this. Oh, the 3% for all. Yeah. They're doing whatever they want. And guess what? You can't just do whatever you want. Somebody tweeted this screenshot. I don't know if this is accurate. Maybe this is a margin account, in which case, I guess this has to be a margin account. In light of recent volatility, we are restricting transactions. However, due to the unreasonable risk involved in brokering your position, we have closed your 45-500 shares of GameStop for an average price. Has this been confirmed? Are they just liquidating accounts? Because if so, that's pretty effed, if this is not a margin account.

I'm guessing that's a margin call. There's no way they could do it if it wasn't. That'd be my guess. But it's just crazy to me that the company that really pushed people to overtrade, their brand was taken down by overtrading. And I don't see how earlier in the week they didn't have a bunch of red flags going off saying, okay, we need to nip this in the bud now. We need to restrict some sort of margin requirements. And maybe they'll have those in the future of these, you talk about guardrails, increasing margin requirements or taking margin. Like they could have done some steps prior to this before it got to this place where they had to shut down. trading. I think they could have really gotten ahead of this if they're a little smarter. And obviously, everyone was pointing out it wasn't just Robin Hood. It was these other places, too, that had to shut down trading in these companies because they're dealing with the same regulations from these clearing houses as well. But Robin Hood is the one who has feasted on this stuff, and they rightfully so deserve to get the brunt, the backlash. So there's a few threads on Twitter that explained exactly what happened. This is completely foreign to me. They don't teach this stuff in the CFA curriculum. them. This is all news to me, how the clearinghouse works, like exactly the mechanics of

T plus three. I don't know anything about this. So by the way, kudos to Twitter. Some of the people on Twitter bringing education to the masses. How cool was that? It was a great week for threads. There were some people who went through these 100 tweet threads to explain exactly the inner workings of how it works. And one of the knee-jerk reactions, we need to deregulate this and put it in the blockchain. And that would be like a T-plus zero, like your trade settles immediately. Don't you think that just opens up a whole other can of worms for fat finger trades that you can't get back because of the blockchain? Maybe someone can. I haven't thought through this. T plus two sounds so archaic. By the way, you speak T plus three, not long ago. I know. So basically

that means trades settle in two days. So these places have time to make sure that they get everything right, basically. All right. So here's Matt Levine. Generally, if you buy a stock on Monday, you still want it on Wednesday. Even if you don't, we live in a society and you'll probably cough up the money anyway because that's what you're supposed to do. But at some level of volatility, things break down. If a stock is really worth $400 on Monday and $20 on Wednesday, there is a risk that a lot of the people who bought it on Monday won't show up with cash on Wednesday. Something very bad happened to them between Monday and Wednesday. Some of them might not have made it. You need to make sure the collateral is sufficient to cover that risk. The more likely it is that a stock will go

from $400 to $400 to $20 or $20 to $400 for that matter, the more collateral you need. Larry Tab at Bloomberg said, it's not really Robin Hood doing nefarious stuff. It's the D.T. TCC depository trust clearing corporation, I believe that sort of stands for, saying this stuff is just too risky. We don't trust that these guys have the cash to be able to withstand settling these things two days from now because in two days, who knows what the price could be, it could be zero. Basically, the moves were so gigantic that they couldn't tell two days later if they were going to have enough money. And that's why they had to raise capital. The system was not built for this. It got overloaded. It got overheated. And if they were a more seasoned company,

Charles Schwab came out and said, we're fine here. So a couple of company like that that's been around for a while, they understood this stuff and they had a bigger balance sheet to handle this. I don't think we're done with mistakes from Robin Hood by any stretch of the imagination. Well, how about in March they were down a few days, right? Yes. In the heat of the battle when stocks were going crazy and people wanted to buy at that point. At first, I thought, okay, this is a death now for Robin Hood. Now at this point, I think they'll be fine. I think people would rather complain. Think about how much inertia is involved if you want to change your bank account or change like your dentist, something like that. Now think about trying to transfer out

securities. You can't transfer out crypto out of them. Some people said you have to pay a fee to transfer it out. It's not easy unless you want to sell all your stocks and take the tax hit and then buy them somewhere else. I think most people are probably going to stay put at Robin Hood. This is probably not going to be that big deal from. And frankly, they were able to raise more money before potentially IPOing. And maybe they did so at a discount. But I think they're- I doubt it. They're going to be fine. You don't think it was a discount? I guess maybe. If they raised $3 billion in an afternoon. Yeah, good point. Let's talk about Citadel. Last year, trading revenue at Citadel securities, which again is separate but still under the Ken Griffin

Empire, was $6.7 billion, which was double the previous high. And why? Well, we know why. The explosion in retail accounts. So Citadel was responsible for 29% of GameStop trading volume last week. Overall, 41% of U.S. retail stock trading volume goes through Citadel. There was no incentive for Citadel to step in, which is why what they did was such a bad look in terms of giving money to Melvin. It was so obvious that people were going to connect the dots and say, this is shady as fuck. That was so easy to see that happening. So Citadel paid through the first three quarters of last year, they paid $700 million for the privilege of matching buyers and sellers from Robin Hood. And why? Ben Eiffert, who's a...

an expert in market structure stuff. Ben Eiffert said, the profitability of order flow determines its pricing power. The product is the user and high volume of non-toxic, uninformed order flow in high spread options trades is highly profitable. And we spoke about this months ago. The payment for order flow that Robin generates is multiples higher of TD and Schwab. And why? Here's what Packy McCormick wrote.

Packy wrote, saying Robert and traders are unsophisticated isn't mean. It's facts. The market puts a price on how. bad the trading on each platform is, and it pays Robinhood more than anyone else. Because people over trade there. That's the whole point. There's more volatility, more trading. They're trading in the more highly volatile names. So it makes sense. And in a weird way, this effectively lowers the cost of trading for other people, I think, because they're providing liquidity. You looked at things like bid-ask spreads, and I'm writing a piece on this now.

There's a chart that goes back to like the 1930s. I just put it in here. It's like the bid-esque spread on Dow Jones stocks going back to 1900. And at one point in like the 1930s, it was like 1.4%. This only goes through 2000. And it was like 20 basis points. I'm sure now it's probably half that, maybe even lower. And so a lot of these places like Citadel actually do provide a service. But you're right. That Melvin Capital investment, I can't believe they didn't have a lawyer say, you know what? This is legal, but do we need it? Is it necessary? Well, Citadel claims that they saved individual investors a total of $1.3 billion. last year by executing their orders at better prices. Maybe they did. I have no way of knowing if that's

true or not. And that stuff is so impossible to track just because stocks move around so much. But here's the other thing. We've been explaining the inner workings of the financial markets here. How many Robin Hood's customers give a shit about selling order flow? I don't. I'm a customer. Honestly, I don't care. No one's going to care. I mean, this is stuff that people like us argue about and talk about, but Robin Hood's customers are not going to care. They don't see this. To them, it's out of sight, out of mind. So it's never going to matter for them, I don't think. You know what's interesting? So Rob and I took the blow of this. We know why. They're democratizing investing. They are the anti-establishment. But interactive brokers, the CEO of Pedofy was on TV talking about

this. I didn't really see much ire directed towards them. This is from an article, I forget what market watch article, Charles Schwab, Corpse, TD Ameritrade, curb transactions at both of those companies on Wednesday, media AMC and GameStop. Interactive brokers and Morgan Stanley's E-Trade took similar actions. Did anybody get mad at them? And I think because the professionals who trade on there, understand they can change these. This happened to short sellers in the past with margin requirements. They can change the rules, unfortunately. Here's the other thing in terms of people talking out. This is a little off topic, but how have we not heard from one member of GameStop yet in terms of their CEO or maybe they have into their credit? Probably staying quiet on this

is not a bad idea because what are they going to bring to the table in this conversation? But I'm surprised we haven't heard from anyone there. Let's move on to the speculators. Let's talk markets. Let's talk people. So Sentiment Trader tweeted, this is beyond optimism, euphoria, or even a bubble. It's an all-up mania. Despite the largest losses in months, small option traders nearly double the amount of money they spent on buying calls to open last week. That's more than $44 billion dollars in this month alone. Can you imagine how many call options were incinerated last week, now that we're coming down from this, money that just gone? That can't all be stemming money. It was $44 billion spent. If you look through some of the Wall Street bet stuff, a lot of people,

this was like life savings for people. Yeah, but I'm sure some people took it way too far, but don't you think most people were not completely irresponsible? That's the hard middle ground to find is that people want to talk about how we need to like ban this stuff and Robin Hood's bad for everyone, but the people that write into us, they know the risks they're taking. They're taking 10 or 15 or 20% of their portfolio or 5%. And they're saying, listen, I know what I'm doing here and I'm taking care of the rest of my stuff. It's in Target Date Fund or Inject funds or my 401k. And this is money I'm having fun with. I'm trying to speculate with. I know what I'm doing. So, that's the thing here. Like, what are the extremes here in terms of people that are doing really well

on the Wall Street bet sides? They're making millions. And then on the other side, you have people who are going to lose their life savings potentially in this. And then you have people in the middle who kind of sort of know the risks and know what they're doing. And they're doing this because it's entertaining, it's fun. And then maybe it gives them some hope for a huge gain in the future. It's hard to generalize when you talk about these sort of things because there's people on the spectrum all over the place. So in the market last week, I forgot what the day this was, but it was a really weird day where bespoke to this great chart, sorting a desk, styles based on short interest as a percent of float. This was the day in the market when

everything was down. But the 300 stocks with a high short interest were up an average of 4.6% that day. That must have been Wednesday, I think. I don't know. And everything else was down. Yeah. You know that that was hedge funds jumping in on these trades. Had to be. Yeah. This was not individual money pushing this around. Goldman Stacks did a most short basket a rolling three-month return. And this is by far like nothing we've ever seen before. Three month, 98%. We had GameStop as the number one trade of security. the entire market. So here's the crazy thing. You expect to see these short baskets get their faces ripped off in the bottom in 2009 or the bottom in 2002 when a bare market is done. Right now,

it's happening in a raging bull market. Right, right. It's so wild that this is happening now. This is not the kind of time this happens. The other time it happened were at these inflection points. So this was interesting. This got a lot of attention. Matt Levine showed a chart from Citadel showing that retail actually had slightly more sell orders than buying. orders for GameStop. So it's like, well, then who was actually buying? So somebody tweeted, I think this was to Jake, Fidelity customers have been net buyers the whole week. So Ben, look at this chart. This was on, I forget what day this was. Fidelity is a chart showing 170,000 buy orders for GameStop and only 56,000 sell orders. So way more aggressive

buyers and sellers. That's how price goes up so much. So somebody tweeted to Jake, Fidelity customers have been net buyers the whole week. I'd expect the same on Robin Hood. Is it possible those numbers are not what was routed to Citadel, but where Citadel chose to be the counterparty, and the rest was routed onto exchanges. I think that's probably the answer. So this is showing, though, that it wasn't just these Robin Hood apps, a place like Fidelity, which has more seasoned investors, we're trading in this stuff too. Yes. So James Seifer tweeted $430 million. That's the estimated market making revenue solely on GameStop since Friday. Again, the idea that Citadel is going to step in and stop this,

no way. I talked a minute ago about bid ask spreads. So he's showing on the 28th when it was trading the most, the biddesk spread ended up being 75 basis points, which is a huge spread. So Wall Street is the middleman there collecting that. The more highly volatile stock is, the more Wall Street makes, basically, which is why in the end... Again, stick it to the man as a joke. Wall Street always finds a way to win. Josh said, Wall Street is not one of the roosters in this cockfight. Wall Street is the fucking ring.

Yeah. They will always get their Vig on this, right? Yeah, Dave Nadig wrote a great piece, and I want to talk about where do we go from here, right? Where does the herd go? Nottig wrote, GameStop will stop being a story. Marketmakers will start pricing out of the money options so outrageously expensive that eventually that eventually the pro-cyclical gamma trade will exhaust. By the way, we haven't even mentioned the gamma squeeze.

Credit to us. Credit to us. But it would be a mistake to dismiss us as a craze of the moment. The herd, which isn't a real group, it's a herd created by an algorithm. We'll move on. When it does, just like a sea shanty TikTok, it will move on with the semantic content. of this entire event, along with the meme-focused content of the entire platform. When someone on Wall Street Betts talks about attendees, they're drawn on literally

six years of meme content around chicken tenders in precisely the same way as someone who says they're a Ben Graham value investor, relying on not just one book, but decades of interpretation to convey a huge amount of information in a few words. By the way, are memes the new cash flow? I guess so. I mean, this gets back to the flows over pros thing, at least for the short-term determine. It's like the amount of money and sentiment going somewhere has seemed to matter so much more than any other fundamentals anyone cares to think of right about, which is effectively how it used to be in the bucket shop days. Disconded cash flow analysis, I found, I can't remember what book it was in. It really wasn't a thing until like the 1930s running those sorts of discounted cashful analysis.

It was basically people traded based on sentiment and herd and momentum and trends. And that's kind of the market that we're in now. We've been in for a while. And this just took it to another level. Yes, zero hedge tweeted. He's been monitoring the WSB stuff. Wall Street bets, five million members, a record increase of 900,000 from 4.1 million yesterday. Wall Street is building an army against itself. By the way, I think it's up to six million now. Chimoth tweeted Wall Street bets is now the largest hedge fund in the world. Okay, so this game stop story ends. But where do we go from here? I don't know. I honestly don't know. Would it surprise you if in six months, this is just a blip and then it's back to normal? Yeah. I mean, surprise, no, but I think it's more likely that this is here with us. I think that the market, to Dave Nadig's point is, these people are going to be around and continue to do this. The market is going to adapt with them, and it's going to be so much harder to do this in the future in the same way they did. I think this is like the crescendo. This is their masterpiece. They're going to look back in years and go, how did we ever pull this

off? Like, we took down a huge hedge fund. Silver was supposed to be the next thing, and that's already kind of been snuffed out a little. Here's my best guess as to what would happen. need to be in front of a monitor when you're trading in these names. So I think that once the economy truly reopens and people go back to work, I think this is going to slow down. So maybe it ends with a whimper, just sort of fizzles out more than a bang. But what's interesting is that maybe this started out as a highly organized coordinated effort. It's not that anymore. I mean, there's no leader in six million people. So does this splinter out? Are there going to be like people that try and grab the mantle and try and take power? Are there going to be acolytes that

follow one person and it just sort of fissures with the splintering out. What do you think happens with the mob, for lack of a better word? Right. If the mob gets that big, I don't see how other people don't try to take advantage of this. All these internet personalities try to jump on board for two days and tell people like, stick it to the suits. Let's buy with them. And then they're noticeably quiet now on the other side. Well, we haven't even spoken about the political angle. So you saw AOC and Ted Cruz agreeing with each other. In the New York Times, they said for Republicans, the market upheaval was a referendum on elitism. Democrats saw pure corporate greed and the need for greater regulation. So they're coming together. The House and Services Committee is coming. They're doing a hearing, I think,

on February 18th. That is going, oh my God, Twitter that day. Are you kidding me? It's kind of funny, though, that people are talking about the greater need for regulation while also saying, we can't let Robin Hood regulate. We need free markets. It's a weird dynamic people speaking out of both sides of their mouth and not really understanding what they're saying. I know. Well, it's tough because these people, they don't want to be spoken down to. They could think for themselves. Right. And that congressional hearing, though, is going to be super boring. That's the problem. Well, Twitter's going to be lit. Twitter will be following it. But I mean, when you get into the mechanics of the market,

everyone's going to go, oh, really? This is what happened? That's not what I was told by all my conspiracy theorists. You know what's interesting? Let's talk about the broader market for a second. So we had that big de-levering. The market fell 3%. That's it. Three percent. Santoli said the total market capitalization of the stocks with a short-to-float ratio above 20 percent is only about $40 billion. That's one-tenth of one percent of the entire U.S. market cap. This is effectively like the quant quake in August 2007. All these quantitative hedge funds got slammed. And no spillover. The broader market was fine. Didn't matter. And I think that's what happens when you try to push around these smaller stocks. You can see these huge moves in individual

names. And the broader market just kind of yawns and doesn't really care. So Wall Street always wins. We know the golden rule. Those with the gold make the rules. This is from 1873. Jamie Catherwood found this. Young men, ye wealthy, curled up darlings of our nation, who are about to put up your money in the street, let me whisper a word in your ear. Before you venture on this perilous step, go to Cornell or Jay Gold and make them a free gift of all the money you are willing to risk for into their strong boxes it will come at last. And thus, you will be saved a world of wrong and trouble entailed by that mysterious protracted and to you, painful process, which will surely end finally in the transfer of your money into the strong boxes of

fourshead. 1873. Here's the other side of the other side of that. this, Wall Street always wins, though. I think the dumb money has won for the last 12 years. Quote unquote, everyone calls them the mom and pop, dumb money, the Muppets. I'm writing a piece about this. Free trading has been spectacular for young people, even if they're going to let themselves on fire with it. Who cares? The barriers to entry have been taken down. Index funds have crushed. If you look at the 15-year returns for mutual fund, it's 80 to 90% of index funds have won and all the money has gone into there. And then you have these two bull markets that Wall Street basically completely whiffed on. You're right.

The whole bull market from 2008, people mistrusted Wall Street and they put all their money to index funds. So Wall Street had nothing to do basically with the bull market. And then you had crypto in 2017 that I think really planted the seeds for this to happen because it invigorated people when there was a bull market that didn't need Wall Street to give permission to happen. And they didn't jump on in a lot of institutional money is only now jumping into that space. So we have these two bull markets at Wall Street had nothing to do with. And I think that's like a huge win for the individual investor. And that's why I think even the Wall Street, will take their cut eventually, individual investors over the long haul have still been the

winner. And that's the main market point of this. You're talking about something that happened during a week. Individuals shouldn't care what happens in a week. It's hard to get people to think that way, but that's the point. Look at the chart I just sent to you. This is from Goldman Sachs. It's shown with the SDP 500 versus hedge funds favorites versus retail favorites. Look at that retail favorite chart. Right. Can you say that retail won in Tesla too? That's another one. Yep. The professionals bet against it and the analysts have been wrong the entire way up and retail people have won on that one. They won in Tesla, they won an arc, they won in Bitcoin, they won an Apple and Amazon

and Nvidia. Yeah, retail won. So I think even though Wall Street will always kind of win, Wall Street will win the battle. I think retail has won the war in this cycle. I think we hit it all, Ben. I think we did too. We have more in here, but I think we got to everything we needed to. Anything we missed that you really wanted to talk about?

I don't think so. I just, I really hope people don't lose faith in the markets because of this. That's my biggest worry because we had a lot of dangerous people out there. who were spouting nonsense and grifters and charlatans who hopped in that really angered me when they were trying to stoke the flames on this. And like the outrage mob, people do stuff in a crowd that they would never do on their own. And social media is the herd mentality on steroids. So I understand why people sometimes get caught up in this. I just don't want people to lose faith and assume that the system is rigged against them because in the long term, the system

is still rigged against Wall Street. If you're able to think an act for the long term, I still think you have a huge advantage over the professionals who don't get to play on that same time horizon as you. I think that's how you stick it to the man, really, buy index funds. That's like the most boring advice ever, but I think that's it. There you go. Let's move on to listener questions, shall we? All right. We'll do one to two here. Currently in MBA student at Nebraska, I'm taking classes in portfolio management. It's all stats, variance, coefficients, et cetera, and formulas in Excel. Am I wasting my time if I want to be a financial planner? Because it seems to me like I am, but I'm not really sure. Yes. Well, wasting your time is harsh. I don't want to say,

you're wasting your time. Those are not the skills that are going to make you a successful financial planner. I don't know who says this, but personal finance is way more personal than it is finance. I think you still need to have some of the technical aspects. But yeah, a lot of the textbook stuff is not going to be that applicable to working with client. You will never do a covariance calculation ever as a financial planner. Fair. Yes. There's a lot of stuff that I learned in finance classes that didn't apply. If you could get some psychology classes in there, I think that would be probably more helpful. And then the first thing you do when you get out, I think you can even start when you're in school now, try to study for a CFP. I think that probably helps.

All right, let's just stick with this. I'm getting in touch today because I could use some advice. I'm strongly considering a career move out of banking and into financial advisor CFP role. I'll spare you the details, but I know it's something I'd be very good at it. And I think it would bring me a lot of fulfillment, something my current career definitely doesn't do. So my question for you is, do you have any advice for a 35-year-old like me trying to break into the industry? Any resources, research, anybody specifically I should reach out to. Assuming this career is a good fit for me, what are the first one to three steps I should take? All right. This is tough because if you're 35 years old and you're in banking, then you're

probably making good money. And to start over in this role, you're going to have to take a major, major step back financially to start. Probably. I've had a few conversations like this with people in recent weeks. If you're already at a bigger place, the surprising things of me is that young people know what they want so much more these days than people didn't even in my generation or the generation before me. They maybe don't want to work for like a bigger place. They want to work for a smaller independent RIA. And they're asking how do I break into there? And I tell them one of the best things you can do is probably get some training for two or three years at a big place like that. So if you're out at a bank, go to their advisor training program for two or three years,

learn everything, get your CFP type of thing, learn it. And then you can hopefully transition into like a smaller independent place. I think that's probably the way to do it is if you're already at a place like that use all their resources they have and they'll teach you a lot about how to be an advisor and then you have that on your resume and then you can hopefully bring your book to somewhere else if you want to. Right. And if you don't want to go down that road, if you want to go independent and work at an independent RIA, I would reach out to people and say, listen, I'll work for free, not literally, but you're going to have to take a serious step back. It's hard because there are very few entry-level positions at an RIA. Well, because unlike say Merrill Lynch, there's not

a war chest of money for training programs. Right. If you can't bring a book of business with you, it's hard. Independent advisors are not publicly traded companies that have cash on the balance sheet to pay somebody like that. Right. All right. Man, we're going to move on to recommendations. Ben, I watched The Road to Perdition this week for the first time.

That feels like three years ago. Yeah. I mean, I was at my computer screen until 10 o'clock most nights, like organizing this doc. Yeah, we did a lie here. We probably could have gone for another hour if we wanted to, but I think we hit most of the big things. So you said you didn't like road to perdition It's not that I didn't like it It upset me

It made me feel Which is probably a good thing Yeah It was surprising in that way You didn't expect it to end like that Can you even say no spoilers A movie's from like 2002 I think you're good

Yeah Anyway whatever I would highly recommend it You know I didn't feel like I was watching Tom Hanks He's such a good actor Tom Hanks is the bad guy

Hitman I like that Oftentimes you're watching Tom Hanks You know you're watching Tom Hanks This to me felt like I was completely into it I thought it was a very good movie On your recommendation

I watched Edge of Tomorrow which is fitting. It's today's Groundhog Day, right? It's true. It's kind of Groundhog Day-day-ish. Edge of Tomorrow was Groundhog Day for science fiction. Very, very good movie. Speaking of Root Perdition, Paul Newman was in the movie. He was the old gangster. This blew me away. Paul Newman's a very famous man, but he was before our time. I saw him in the color of money, but I didn't see him in his earlier things. I'm reading about him. You know Newman's own?

Okay, I saw you put this in here. Did you really not know that existed? Well, no, no, no. I 100% knew that this salad dressing existed. because when I saw it as Wikipedia page, it was like, wait a minute, you knew that this was his company? And he gives away all the money to charity. That was completely news to me. There was a picture of him on the label. It's a cartoon. Paul Newman was always my mom's favorite actor in the world.

Well, there you go. Completely unknown to me. And then lastly, also based on your recommendation, Dave killed me. Did you watch the whole thing? I watched four episodes. A little bit of a caveat. It's raunchy, right? Yes.

You learned that like the first scene of the show. Watch the first scene and if you laugh, you're going to love it. And if it's too raunchy for you, then it gets even more so. So I watch it on Hulu. I guess you could stream it on FX. Yeah. So that is absolutely a full endorse assuming that you're good with the raunchy stuff. Yes, it's players and it gets better. Sort of like a Larry David-esque in terms of making you feel uncomfortable. Yes. He plays it perfectly. He's like the straight man. He does it good. Okay. I watched in and of itself on your recommendation. Oh. Really? You don't like it? I feel like if I was there and watching it in person, it would have had a bigger impact to me. No offense to you. I didn't get it. Which part? Anything. He is an amazing storyteller.

I was just kind of like, huh, it didn't speak to me. Okay. I had tears down my face. It was interesting. It was whatever reason. Maybe I just, I'm heartless. I can see how it could for some other people. For some reason, it didn't speak to me.

Okay. Well, I'm not going to get mad at you. I mean, he was an amazing story. tell her in, like, speaker. The illusions he did. I guess I couldn't tell what his whole point was. So that's fair. So you didn't understand the meaning of it. I was waiting for an aha moment. Never hit me. Okay. Fair enough. It hit me like a pile of bricks. But would you agree, like what he did was beyond mind-blowing? I don't know how he thought about it. And it must take him forever to come up with that. It was impressive. Yes. And some of the illusions were amazing. I watched the little things

with Denzel, the new HBO Max one. Did you watch it? No, worth watching? Getting better views. To me, it was like a 1990s movie they don't make anymore. It was a psychological thriller. It was slow. Jared Lido was in it and Rami Malik. I kind of liked it. I'm a huge Denzel fan. Well, who isn't?

It felt like a movie from another time. It felt like a 1990s movie. That's what I'll say. Favorite Denzel movie? Oof. This is easy for me. What's that? Training Day.

Okay. I like the one. What's the one in Mexico? DejaVo? No, the girl gets kidnapped. Man on Fire. Man on Fire. I think Man on Fire is amazing.

I love that one. Okay. And then I finished two of the Alex McNex, Night Books in the last... Come on. Bullshit. I call bullshit. There's no...

Dude, there's no way you had any time to read books last week. Stop it. I needed an outlet. This is the one of my guy in Northern Michigan in the UP.

And it's talking about... What's the UP? Upper Peninsula. Sorry. You know what the UP is? Sorry, it must be a Michigan thing. There's an upper and lower peninsula. And it's like a whole other world up there.

It's basically Canada. It's one of my favorite detective series in a while, Alex McKinite series. I'm not letting you off the hook. When did you find time to read that? Please. We need to know. We need answers.

I read at night. All right. He reads at night. I thought we were always on the same page with time management wise. I mean, this just kept me so, so, so busy the last week. All right. We went over an hour, first time ever. All right.

I think it was, yeah. I think we're good. I think we're going to move on from the story next week, assuming that the story is behind us. Yeah, and I think, unfortunately, for people who are invested in the stock, it looks like it is. It's done. So as of right now, game stops. Yeah, it's down 40 some percent today. Well, it's way off the lows.

Yeah. That would be something. If it goes back to $3.50, my head will explode. I can't handle that. Yeah. Stranger Things have happened, I guess. But have they? Have stranger things happened?

Yeah. Okay, maybe not. All right. So we spoke to DPL financial partners, which is a platform for commission-free insurance products for advisors. We're going to have David Lau on the show on Friday. I'm very interested to see where this goes. Right.

I agree, too. There's so many new tools for advisors. If you're an advisor, You kind of have to listen to this one. All right, Animal Spiritspot.com. Thank you for listening. We appreciate you giving us the time. We know that there are a million and one outlets for you to choose this week.

So truly, we really do appreciate it. And we'll see you next time.