The Problem With Jon Stewart - Reporter Called Jon Out, So We Called Him Up

Episode Date: March 10, 2022

Last week’s episode of our Apple TV+ show took on the stock market, GameStop, and the Robinhood app. Spencer Jakab, an editor with The Wall Street Journal, took to Twitter to vent his disagreements with it. So we invited him on the podcast (we’re gluttons for punishment) to talk it out. Jon is also joined by writers Kris Acimovic and Kasaun Wilson to talk about rising gas prices and why comedy clubs are the only landmarks comedians know.What did you think of our episode? Call in your questions or comments to our hotline: [phone].To watch our climate episode, visit https://apple.co/TheProblem-ClimateChangeCREDITSHosted by: Jon StewartFeaturing, in order of appearance: Kris Acimovic, Kasaun Wilson, Spencer JakabExecutive Produced by Jon Stewart, Brinda Adhikari, James Dixon, Chris McShane, and Richard Plepler.Lead Producer: Sophie EricksonProducers: Caity Gray, Robby SlowikAssoc. Producer: Andrea BetanzosSound Designer & Audio Engineer: Miguel CarrascalSenior Digital Producer: Kwame OpamDigital Coordinator: Norma HernandezSupervising Producer: Lorrie BaranekHead Writer: Kris AcimovicElements: Kenneth Hull, Daniella PhilipsonTalent: Brittany Mehmedovic, Haley DenzakResearch: Susan Helvenston, Andy Crystal, Anne Bennett, Deniz Çam, Harjyot Ron SinghTheme Music by: Gary Clark Jr.The Problem With Jon Stewart podcast is an Apple TV+ podcast, produced by Busboy Productions.https://apple.co/-JonStewart

Congratulations to us. Our 100th episode. Huge deal, our 100th, yes. It's our 100th, now we can go into syndication. Oh wow. Yeah, so. Very exciting for us. Or it's our sixth.

It's either our 100th or our sixth, but it's been an unbelievable week. Hey everybody, welcome. My name is John Stewart. I host a program called The Problem with John Stewart on Apple TV Plus. We dropped an episode last week. Is it, is dropped an episode?

Yes, that's what they can't say. Yeah, that's good to hear. It's like an album. Yeah, it's like an album. All right, so I'm obviously here with Chris and K-Son. Chris is our head writer, K-Son. He's our, I think, MVP. Yeah, he's our MVP.

Wow. We love K-Son. We didn't rehearse this, guys, this is great. By the way, we did, we got ourselves the stock market episode last week. Today is the day we're actually dropping a brand new episode. It's on, I believe it's climate, climate change. Climate change. And we solve it.

So you should tune into that. Here's what's gonna be coming up. And this is very exciting. So a lot of times we put out an episode and then people will interact with it online, et cetera. And some of those people are actually very smart. And so then they're, and they're writers and they cover these kinds of issues.

So we have a gentleman today who is the editor of the Hurt on the Street column at the Wall Street Journal. We're gonna talk to him in a little bit. He saw the episode and had some thoughts about maybe some directions we could have gone in, maybe some context that we didn't have in there. But before all that, I wanna talk to Chris and K-Son just about what's going on in the world

because I don't know if you guys know, but this may be the last week of the world. So if the world ends and we still have three or four episodes to drop. We'll just have to drop them all on our way out of town, on our way underground. I don't know. I think if the world ends in two weeks,

our show will look profited. Interesting. Can I tell you something? That's very smart because we would have known to time our episodes to the end of the world. By the way, very interesting with the climate episode we're driving today, this just got announced. President Biden is banning Russian energy imports.

Banned, done. That, I mean, it feels like a big deal. I guess I don't know how much of our energy even comes from Russia. My car only runs on Russian energy. You bought a car with the setting? I have the Audi DAH. It's called the DAH.

And it only, if you try and give my car non-Russian energy, it actually has a NET light. I tell you this, so gas prices are, like they affect more people than I think almost anything that could have. Like even milk and other commodity like gas, man, everybody uses gas. And when that pops up, like it's now,

I think gas where I live is $400 a gallon now. That seems a little out of reach for a lot of people. Listen, it's, and obviously there's a gas station across the street from that gas station where it's, I think $5.11. There's a lot of disparity. In California, it doesn't even say a price, it just says rent.

Like everybody who's like, gas is about to be $5 a gallon. I'm like, do you know how much of a blessing it would be if gas went down to $5 a gallon in California? Like California is, their gas prices have always been the energy prices out there. Now, is that because of the state taxes or because it's such a car culture

that the demand for it is so high that they can get away with almost anything? It is because any social gathering you want to go to is an hour and a half away. Right, but they say it's 20 minutes. Yeah, the last factory's like 45 minutes, improv is 50 minutes. It's like, there's no like,

I'm gonna scoot over to the cellar tonight. I like the fact that comedians view geography as where the comedy comes from. If I ever have to lead people to a bomb shelter, that'll be how I, all right, go to the store and make a right. You'll hit the lab factory and then just go in the basement. You'll be safe, I promise. Just go in the lounge.

That's where I do all my, that's where I work on material. Let me ask you a question about the gas prices thing. So do you think that the gas prices put pressure on the United States and the EU and all those other people to not help Ukraine? Or like, how much will the personal sacrifice of these higher gas prices affect how people view? Because the images that are coming out of there

are like, how do you put pressure on Russia to stop doing this? Well, I guess my question is, it seems like oil companies are still having record profits. So if they're having record profits and gas prices are coming up because of some thing that's out of our control, can they help minimize the price at all?

Chris, you've just brought up, so we're gonna have to obviously, this is going to be censored because the government is gonna step in. The idea that you would ask them to forego record profits is, can I tell you frankly? I know, I know.

Frankly, un-American. And Chris? I know, I should be embarrassed by bringing it up, but it just feels like, we don't know how to behave when we're at war. And we keep getting these messages that we're at war, so we're supposed to sacrifice. And it just, who?

Who is supposed to sacrifice? I remember the last time we were told, I mean, we were at war for 20 years. Right. And I think I remember actually being told explicitly not to sacrifice. I was told explicitly, this was probably around 2001, 2002,

to just keep shopping. Now at the time, I wasn't even really shopping that much. I actually had to go out and pick up my shopping output. It is kind of funny that the only thing that you can do to try to discourage a country from going to war is being like, it's from the other side of the street,

being like, we're not gonna do business with you no more. Keep doing that. It's just like, it's always money. Like, money is the only thing that gets the job done. Think about this in another way. Like, Russia is bombing the shit out of civilian evacuation corridors. And we're still like, that's fucked up,

but I do have a 35 minute commute. Right. And it does cut, like, it's a really difficult, you know, and then you've got the Saudis who like, tell me that's not a repressive regime. Like, look at what energy and dependence on energy does to our souls. Our, like we can look at these images and go,

this is awful, but, you know, I can do without vodka. I can do without herring. Can do without black bread or borscht. Aspic, I could do without aspic. Is aspic a Russian import? Yeah, they eat a lot of aspic. Now that seems unfair to Russians.

That borscht's gonna eat aspic. Can anybody tell me and define what this word is? I'm trying to smile and nod my way through it, but I feel like I should ask you. Do you know, like, you ever see like food that's got like a weird gelatin around it? That's like clear. It's like a clear gelatin where you're like,

shouldn't somebody have scraped that off? Yeah, that's not supposed to be there. That sounds like half of the food my mom cooked growing up. So I, you're thinking about schmaltz, that's schmaltz. It sounds like just Crisco to me. All right. That's Crisco, that's animal fat, that's lard. Aspic is like, I actually don't even know what it's made of.

I think it's just some sort of gelatin. I don't know, maybe I couldn't even guess. It's like a chemical process. That they put around like ox meat or beets. Yes. Yeah. Something along those lines. Quezon is utterly disgusted.

His body language is suggesting that he's actually left the chat. I'm thoroughly looking forward to our next potluck. By the way, next year's holiday party, the Christmas party, we're giving everyone the problem with Jon Stewart, aspic. It's going to be branded, but this just speaks to the difficulties that we have in, you know, look, we've got this whole episode on climate.

We were talking about that before any of this sort of intrigue and gas prices and Russian energy pulled in there. And it just speaks to the ramifications. I mean, for God's sakes, how many people right now are like, fuck, why didn't we go to Wind and Solar and we wouldn't have to deal with this shit? Right.

Can I ask you a question first, Jon? Oh, please do, okay. All right, so I know we're going into this like stocks episode. And I'm very curious. Yes, sir. Because we've dropped the episode, dropped. We've done six, like six YouTube videos on it, a couple of podcast episodes.

You did a Twitter Spaces and a Reddit AMA. I'm curious, is this the most you've ever engaged on any episode of television you've ever produced in your life? Well, it's a different, so it's a different model now. So I was of the school of television where the good thoughts that I have, I put on the television show. But the idea of this show is to stimulate conversation,

is to get at the groups. The thing that I always felt was missing from all these conversations were the stakeholders. It was all punditry or hosts on high or those kinds of things. So let's try and generate and let's try and stimulate the communities that are most affected.

And that's why the strategy for this show is different. Right. Engaging with the people. I think that's a great segue into our conversation that you're about to have. It is an absolute segue. So what I do wanna do is welcome. Do you guys wanna welcome our guests?

We're gonna welcome our guests and then we're gonna listen quietly. Beautifully done. I'm gonna welcome now Spencer, Jacob. Spencer, are you there? Yep, I'm here. Yes, Spencer. Yay.

Of the herd on the street column at the Wall Street Journal. He's the author of The Revolution That Wasn't. GameStop Reddit and the Fleecing of Small Investors. Spencer, thanks so much for joining us. Chris Kaye, we'll talk in a little bit. Spencer, you saw the episode we did about stocks and you did a thread.

I'm gonna call it a thread. I apologize if I'm not, the terminology is not so accurate. But there were things in it that you thought, that seems right, but there were some things that you really felt were misguided. So I wanted to get into that a little bit. Sure. Well, I think your show did a great job.

I mean, you showed the first, I'm gonna call it the first 14, 15 minutes, did a really good job of sort of without putting people to sleep, explaining how Robinhood works, how this whole thing works. And then that's where I started to disagree with you. I have a few issues with it. So I wanna explain very quickly.

The episode was basically that there were some complexities and intricacies of the stock market that this group called the APES had exposed that we thought we did a show about it. Then we had a couple of guys who represented the APE movement. And then we spoke with Gary Gensler, who is the head of the SEC about these issues and about how some of these, what we thought were

unfair issues within the stock market, could be addressed and regulated by the SEC. Basically, there was a group of retail investors that executed what's called a short squeeze on GameStop. And they held it and it created this firestorm on Wall Street. And it created a really big problem for a lot of the people that had been holding this short position on this stock,

meaning they were betting that the stock would go down. And by bidding it up, they created a problem. But we were talking more about the intricacies of how those trades were executed. So that gives like, is that a pretty decent explanation of where we're at? Yeah, it is, yeah. Okay.

Yeah, and I mean, I think sometimes people's eyes glaze over when you explain things. And so I always try to boil it down to its simplest parts. I mean, and I think when you say short selling, people are like, okay, yeah, I guess I kind of get what that is. But just to explain it, I mean, the reason that this caught everyone's attention was that people were doing something

that hadn't been done in a long, long time because it wouldn't have been legal to do. So creating a short squeeze, creating, intentionally creating a corner is something that used to happen all the time before there was an SEC. You know, big rich guys would do another big rich guys. They corner each other and bankrupt each other

and then they would do it back. And those were the bad old days of Wall Street, but nobody said that you can't go on this subreddit called Wall Street Bats and all talk about it for months that nobody on Wall Street appeared to be reading or paying much attention to and lay out the plan. There were some people there who were pretty sophisticated who said, listen, no, this is what you have to do

to get the maximum bank for the buck and then you're gonna bankrupt these hedge funds. That's what they said. They were gonna bankrupt these hedge funds. We're gonna bankrupt billionaires and make money in the process. And so it's a wild story that they did that. And as a journalist, I guess we're slightly guilty

because the headlines at the time were like, tables are turned on Wall Street, retail investors on Reddit give Wall Street a black eye. Will it ever be the same? And the thing is it's always the same. The retail investors always get the short end to the stick. But they got upset about something and they're like their conspiracy theories.

And one of your guests is still participates in these kinds of conspiracy theories that say that they were kind of heads we win, tails you lose. And you guys, you know, we're gonna take away the buy button and you can't buy anymore. And that's the injustice that was done. And it's like a little bit more boring than that.

Let me roll back real quick though and just explain very quickly. So they were all making their trades pretty much through this company called Robinhood. That's sort of the kind of pitch themselves as a populist alternative to even like an E-Trade or those kinds of things. There were no commissions on it.

And you go on and you make, and there's a buy button and a sell button. And what happened was in the middle of this short squeeze, the buy button went away, but the sell button stayed. So I think that was the, the essence of their issue was, how could you take away the buy button and leave the sell button?

What the hell happened? Well, what happened, and this is the least interesting part of the story, and you called it in your show, a bookie, the Clearinghouse. It makes sure that the money you pay for a stock, it's the people who need the money and the stock you bought gets to you

and it all takes a couple of days and it matches all that up. And if one broker fails in that system, if one broker takes excessive risks with its clients, then every other broker is on the hook. You could actually cause a financial crisis. So they went to Robinhood and said, oh, it seems like almost every single person

on your platform is buying the same 12 or 13 stocks. And they're using borrowed money and you're lending the money because they opened accounts and you're saying, hey, no, you can start trading right away, which is something that Robinhood does, part of its business model. And you're using options.

Now, if the price were to go in the opposite direction, because this thing has gone up 20,000% in the last year, gee, it might be a little vulnerable to going back down a little bit, at least maybe losing half its value, then your customers are no good for it. So can you please pony up $3 billion in the next three hours? But doesn't Wall Street use

that kind of capital leverage all the time? That's not unusual. It's not illegal to use leverage. No, I'm just saying that that's... But if every single hedge fund in the world was all buying the same stock and using as much leverage as they could, then someone would freak out.

Their own risk department, they have, you know... But isn't that the point? And their risk department, so they also would face the same problem and they might go out of business. But this clearinghouse can't go out of business. They would have passed the cost to everybody else and if the cost were high enough,

other brokers would have gone bankrupt. So it was just a technical thing. And the thing that Robin who did is wasn't well-capitalized enough, nearly to handle this, but also it egged on the behavior. That's the scandal. That's what people should be upset about

is this whole system of encouraging, really not investing at all. They're like, you were born an investor. Well, you weren't born a speculator or a gambler. And so my book, you know, goes back to the origins of this and they play lots of... And to your credit, you bring it up,

it's like DraftKings or FanDuel, right? It's like FanDuel for the stock market. That's what they did. That's not right. You know, a lot of young people, this is their first experience with the stock market and they think that this is normal. And that activity,

even how many times you check your account is correlated with poor performance. You know, so they're acting like a bookie, except it's stocks and options that people are buying instead of, you know, betting on the next game. I mean, it's damaging and that's the scandal. And the outrage was all directed in a different direction.

But there wasn't a conspiracy, but then you're missing the real scandal, which is this shouldn't be happening, you know. Well, let me back up, because I think I agree with you that there might not have been a conspiracy. I don't know. And that probably wasn't the point of the episode.

The point of the episode was these guys exposed an unnecessary lack of transparency and an unnecessary complexity and intricacies of a game that all these other guys are playing. But when they came in and played the same game, suddenly it was, you're fucking this up for everybody. And the point you make about this isn't good for them,

I'd like to address that, because I think, so let's use the casino model, right? Right. When people go into a casino, it's not necessarily good for them, but you know the odds, you know that a two-deck blackjack is different than a six-deck blackjack.

You know the odds you're getting on craps, if you're getting 10 times or you're getting 100 times, but it's transparent. So you're aware of the risk you're taking when you walk in. You may not, now they encourage you with $1.95 prime rib. They encourage you with maybe they're gonna get you a room if you lose enough. They're gonna have neon lights,

they're gonna bring in entertainers. They try and bring you in because the more money they bring in, the better they do, because the odds are with them. The stock market is the same way. Robinhood didn't invent that and retail investing didn't invent that.

The difference is the system isn't transparent and that's what we're saying. Let's say you went and played blackjack and you said to the dealer, give me the hand and he handed the cards to Citadel and then Citadel handed the cards to you. So they exposed this idea of wait, why are these middlemen here?

And what if they were paying the casino to give the cards to them before they gave them to you? Then you'd have to wonder. So I'm not quite sure why you think the outrage is that retail investors were taking risks and not that the market itself isn't transparent enough and is too complex. So what Citadel does is it operates a business.

It's not altruistic. They make so much money. It's a private business so you can't know how much they make but there was a leak that they confirmed. They made over in 2020 before this, which was just a wild year also, but not as wild. They made $4 billion in operating income, $4 billion.

So they're not doing this out of altruism. It's an enabler for the system. It's just the way the system works. If you wanna get free commissions, but free commissions are an insidious part of this. So that this huge increase in share turnover and allowing these people to play in the first place and kind of gamble away their savings

wouldn't have been possible without what companies do, which is to pay these brokers for the trades. But let's go to a casino analogy. It's like, yeah, come in. First spin on the roulette wheel is free. It's not free because then you make a second and a third spin, right? And so it's not free at all.

The costs are hidden and opaque and they don't talk to you about how it damages your performance because their business model relies on at least some subset of their customers being hyperactive. It's really geared towards millennials. We're democratizing games. Which they have, right?

Yeah. Which they have, right? And that's what they did. So you never was possible for these people to get on the ladder. And that's in one respect, that's a good thing. Finance already was democratized before Robinhood showed up

because all this competition and all this lowering of costs made it possible for you to get on the financial ladder at very low cost without Robinhood. You don't need them. And you can do it in a much, much smarter way. But their business model depends on you being as active as possible.

And so that's what they do. The $0 commissions, the confetti, the FOMO that they create. When you open up the Robinhood app, you see what's going up, what's going down. You feel like you're missing out. And it's enabled by the payment for order flow. But the payment for order flow is just,

I mean, it goes into a black box that doesn't mean that it's corrupt. I mean, I think people are kind of chasing the wrong thing here. It's just what enables it. But isn't the point that, because the whole stock market relies on volume and volatility. Look, these guys, the point we were trying to make in this is

the idea that you can hold 140% short position in a stock is insane. That there are all these people that can go and that these banks who don't even own the stocks, who are basically just lending somebody else's stock to somebody else, so that they, what I'm saying is I would go the other way and say that allowing retail investors access to a market

at 0% commission is the least corrupt thing about the market. And that the market's real corruption, yeah. The fact that there was 140%, that's extreme, of course. And so these guys pounced on it. So they basically, the GameStop and the other meme stocks, the reason that they went through the roof is because they were terrible companies. And that's the reason that all these hedge funds

were betting against it. They saw that GameStop was like blockbuster before Netflix put blockbuster out of business. It was put a fork in it, it's done. I think the crux of maybe our disagreement is, and I don't wanna put words in your mouth, but it feels like you're maybe more excusing of some of the excesses that I'm trying to say

are systemic on Wall Street. And don't think that the eight movement is sophisticated in terms of their investment strategies. And my position is they exposed something systemically wrong about the infrastructure of Wall Street. And that to me feels really important. Well, I think this whole episode does expose how the sausage is made, which is not very pretty.

So I do have a problem with it. I have a problem with all the things that enable Wall Street to be turned into a casino that brings people in. So I don't disagree with you at all there. The eight movement got, it was a movement to make a lot of money and to stick it to Wall Street because this is a generation, their formative experience was their parents

losing their jobs or losing their homes or friends, family, suffering during the financial crisis is before they had their own money to invest, but they all remember it or have heard about it depending on where you are in the 18 to 35 year old spectrum, mostly this group, maybe student loans, struggling to buy a house. And so Wall Street was seen as a bad guy, not rich people.

It wasn't class warfare because they like Elon Musk, who was the richest man on earth. And he sort of egged it on. And other billionaires like Chamath, Palaiapiti egged them on who also made a lot of money off of young retail investors, by the way. But anyway, so they didn't like Wall Street and they wanted to give it a black eye.

They weren't out there to expose corruption. They didn't know what payment for order flow was until this whole system had shut down. And it shut down because Robin Hood and its ilk made it too popular and the system fried its circuits. That's what happened. It wasn't a conspiracy to shut it down. But now it's been turned into like this kind of vendetta

when like, look at why were you doing this in the first place? Who got you to do all this? But their intention isn't really the issue. The issue is what they exposed. And I also have maybe a little bit of pushback on, you know, the idea that they shouldn't be allowed to be as, to try the get rich quick scheme that many people on Wall Street do.

Like how is Citadel not a get rich quick scheme? It's just one that's got a lot of power. Like you have, here's the thing that I like about the eighth movement. They're not afraid of any of these guys. Like everybody's afraid of Citadel. Everybody's afraid of Goldman Sachs. Everybody's afraid of the big banks.

Finra's afraid of them. The SEC is afraid of them. They won't even go after them. Like nobody will go after this inherent corruption that is a Wall Street model. And I think the issue that I have is that whatever the apes intention was or whatever the foolhardy nature

of their investment strategy is absolutely not the point. The point is they exposed the system that is supposedly the heart and soul of the American free market system. And it has, it appears to be anything but that. You have middlemen that are market makers that it doesn't even seem competitive. It's not open to a lot of different.

By using payment for order flow, they've cornered the market. It's not that the apes cornered the market and put Wall Street out of business. It was a stunt to a large extent. But what that stunt exposed to me, like monetary policy in the United States makes it so that Wall Street's kind of the only game in town

if you want to build wealth other than real estate. Yeah, absolutely. Yeah, that was part of the reason for taking rates to zeros to get animal spirits going and people to take crazy risks. So if you're flowing everybody into this market, but that market is in and of itself, not very transparent, not competitive

and is absolutely tilted towards the house, why shouldn't you give it a black eye to try and expose this system? Even if that wasn't your intention. It's because Wall Street likes it. When people show up and think that they can beat the house, then Wall Street really likes it. It's like, let's go back.

I hate to call Wall Street a casino, but it's kind of becoming one in a lot of ways. But if you're gonna use- It's always been one. They used to, they ring a bell. They ring a bell, right? The morning begins with them ringing a bell. But let's go to the casino analogy.

You're in a casino and then you see sirens go off about 50 feet behind you and bells ring and someone's, I don't know, I guess they don't have coins anymore. I don't spend much time at casinos. I've been one a long time ago. It's already buried in gold coins, right? Yeah, yeah.

The casino just lost a lot of money. That person won a million dollars and whatever, right? It's a bad day for the casino. They lost money that day, but they don't care. There's a reason they draw attention to it is that it's very, very exciting when one or two people can beat the house or can claim to beat the house, right? And just through just sheer dumb luck.

And so that's what this was on steroids in the stock market, is these people saying, I made so much money. We blew up hedge funds and we took GameStop to the moon. Well, most of those people did not make money. Some of them did make money, but the whole thing just was one more element creating this level of excitement that Wall Street craves in order to bring in.

So Wall Street had a problem before this, John. The problem that Wall Street had was that people were wising up to it. They knew that if you were active and if you paid a lot of fees, that it cost you two, three, four percentage points a year of your performance. And to put that in perspective,

over a lifetime of saving money, if you're a middle-class person and you're trying to save for your retirement, you might have a fourth or a 10th as much as you should have because of all the ways that Wall Street picks your pockets along the way, right? And people were wising up and saying, I need Wall Street so I can have a 401k

and I can engage with it, but I don't need to be active. I don't know what stock to buy. I'm gonna buy, instead of looking for a needle in a haystack, I'm just gonna buy the whole haystack, buy a super low-cost index fund, something that wasn't possible generations ago, and Wall Street hated that. Someone wrote a thing comparing it to communism.

Like seriously wrote a report saying, it's like communism. Well, tough, people are wising up. That's really what people should do. If you wanna give Wall Street a black eye and you wanna beat Wall Street, and by the way, beat 80% of the pros who invest money on Wall Street, like hedge funds, just buy index funds and don't check your account

seven times a day like Robin Hood's customers do. But they need to create this excitement to make money. This was a bonanza for them, this whole episode. And what the apes are doing, it's like being mad at McDonald's for all of a sudden, you realize like, you know what? I think they might kill cows for these hamburgers. When you never really thought about it

before when you're eating them, let's all go to McDonald's on the same day and order a Big Mac through the drive-thru at the same time, and then they'll be out of business, right? It's like pouring money into Wall Street. Like all the efforts even since this game stop squeeze have been like, why are you guys doing this then? If you hate Wall Street,

why are you continue to play this game? It's just like- I don't know that it's that they hate Wall Street. It's that they see the amount of money that's generated there and the corruption of it. But I still think we're ill-advised to put our attention on reforming the eight movement. And not-

I didn't say that. Okay. But there should be guardrails, right? You had people who they'd sign up for an account. But why guardrails for them and not so, so let's roll this back a second. In 2008, you know, the corruption that exists in 2008 demonstrated that those guardrails

don't exist for the big players. Right. So it seems strange to me that we wanna put the guardrails on the retail investor when we haven't gotten ahold of the system in general. What I'm saying is, if you reform the system of Wall Street, you automatically make it safer for the retail investor.

Yeah. But it's not the other way around. Well, it is because there are a lot of things that Wall Street doesn't want, right? I mean, you had Gary Gensler, you interviewed him, and he's like, oh, well, I work within the system. I can work in, I mean, I think he's, as people atop the SEC go, he's pretty good,

but his hands are really, really tied. That's interesting. So what's tying his hands? The fact that money buys influence in this country, and it always has. And so you have, you know, and so Wall Street kind of gets the rules at once. But Spencer, Spencer, Spencer, look at me.

Spencer, look at me. That's the problem. Right. Spencer, the problem isn't retail investors pooling together to try and gain the kind of power that is endemic on Wall Street. The problem is the power that's endemic on Wall Street. And what those guys exposed is the essence

of what we have to change. It's not changing the guardrails, it's changing the influence that money has on policymaking. It's changing the complexities and lack of transparency. It's the problem with complexity is it's much easier to exploit those loopholes in the nooks and crannies than when something has been simplified to make it. And the complexity is there

because that's how the big boys on Wall Street want it. Because they know they can take advantage. So I don't understand why we're not wholly focused on reforming that part of the system which will automatically make it safer for retail investors. You know, I've been a financial journalist for a long time. This is not the only thing that outrageous me

that I've written about. But look, Robin Hood are not angels here. Robin Hood, they employ a former SEC commissioner. I'm against, listen, I think that they are absolutely not on the side of the retail investor. I wholeheartedly agree with that. They make their money, they work for Citadel. But you criticize this process

and they're like, they wrap themselves in the American flag that we're democratizing finance. You're trying to hold people back. We believe that everyone's born an investor. How can you argue with that? Oh, you're democratizing? Well, I guess I'd be anti-democratic then or I want people to be poor if I oppose what you do.

You know, but it's- Oh no, I'm with you on that. And they have high-ranking SEC people including an SEC commissioner on their payroll to protect this. This is just a part of the business model but it shouldn't happen because people they're especially young people and then they're misdirecting their anger.

You know, payment for order flow is just like, you know, maybe it's good, maybe it's not good. Yeah, Bernie Madoff as you point out, he's the guy who came up with it, so not so good. But it's just a mechanical way of these things happening. It's not like that insidious. It's actually one of the few areas

where you get a lower- I don't think they necessarily, like I don't think most of the apes are like payment for order flow is the worst. Like I think it's something that they discovered as they were going through it. But I do want to talk about that a little bit. And believe me, part of the episode is

this is how the best regulated, most lit part of the market works. But I do want to ask you about it in terms of mechanics is that the thing that they always say is, well, that's what gives you best price, you know, and all those sorts of things. But I can't figure out why you should trust that. So if they don't make all the information transparent

and they're, in other words, let's go back to the casino because we can never get away from the casino. But if you're at a blackjack table and you say to the dealer, you know, hit me. And, you know, a guy has paid the dealer to get that card first and then gets to look at that card

and decide where it's going to go and just say to you, trust me, I'm giving you the best card I can give you. First of all, what are they doing there? Right. Second of all, why in God's name would I trust them? Because they're paying the dealer. They're in league with the house.

So you may say, well, it's just a mechanic, a mechanical aspect of executing a trade. I can't understand why it's necessary or why it's so non-competitive. Well, so this is getting a little wonky, but I mean, they have to, so it sounds very sleazy, but it's only slightly sleazy

because, you know, they have to give you, so there's a price on the stock exchange at the same time that you send in your order. You know, let's say it's $11.13 is where the stock is trading. They can't sell it to you for more than $11.13. How do they make money if their price is at least as good as the stock exchange?

Because the stock exchange makes money too. The stock exchange, you know, is a business. They're like 15 stock exchanges in the US. But why isn't that a utility? Like, here's what I don't understand. The whole point of the stock exchange is, I get an iPhone and I look at the iPhone and I go, holy shit, this is gonna change the world.

I want to invest in help create capital formation for this company that sells this product that I like. Then they create all around that transaction this incredibly complicated world that's kind of a Rube Goldberg machine of, and they are making money at every level of that complexity. And they are feasting on what is a simple transaction. And then they're coming back to us and saying,

this is your only option at Building Wealth. You're too dumb to understand how this actually has to go. And they roll their eyes at it when in truth, they have created unnecessary complexity, unnecessary lack of transparency, all so that they can make a shit ton of money. And that to me is the fundamental flaw at the heart of what is supposed to be

the free market system. Well, that is the fundamental flaw of finance in America because you make it complicated so that you can charge a lot for it, right? And you baffle people with this and you go on TV and you talk about this and profit cycles and all the punditry and stuff like that. And you over complicate finance.

The people, by the way, John, who do best, they've been studies of what professions do best in terms of their personal accounts. As people who are very far away from finance, like teachers, people who very infrequently check their accounts and they just sort of- Yeah, you just put it into index funds. Just put it into index funds.

They do a lot better than people who work in finance because people in finance are arrogant enough to think that they can kind of beat the system. And then it's a lot of, you know, this is full of trapdoors. But they're not trying to beat the system. They're making money on the mechanics of the system. In other words, it's all about churn and volatility. Most of the people that make all the shit

ton of money on Wall Street aren't going like, I'm gonna guess that this company, they're making money on volume and volatility and complexity. Right, all the middlemen, they made a bonanza on this. And they made a bonanza on getting lots. Like a whole bunch of people participated in this particular episode who never would have, they never would have given them the time of day

on Wall Street 30 years ago or 40 years ago because it wasn't worth their while. And technology and competition has brought things down to a level where everybody on the street can come in. And there's an analogy for this in the early days of Wall Street. You know, if you go back to the 19th century, you know, there was a Wall Street, whatever,

but it was just a bunch of rich people trading and screwing each other over, right? And then you had the ticker tape invented and you had these things called Bucket Shops. Bring on Joe Kennedy. Joe Kennedy. Well, this is before that, okay? So before that, you had these things called Bucket Shops.

And Bucket Shops, you know, if you call a broker a Bucket Shop, they'll be really insulted because it's like a pejorative thing, right? But a Bucket Shop was literally like, you'd go in and there'd be a ticker tape and they'd give you like 10 times your buying power, right? And say, yeah, just put in like a little bit of money and you can buy a whole stock with like 10 times.

The invention of leverage. Right, exactly. And it was just for chumps, basically. They made tons of money and they didn't even place your trade. They didn't have a wire to the stock exchange. It wasn't a real brokerage house, but they let you bet. And because you use so much leverage,

a small move in the stock would wipe you out. They said, oh, sorry, lost all your money. Wanna try again? And people would come back again and again. And sometimes they'd make a lot of money. Sometimes they'd make 10, you know, like a casino, 10 times their money, but they weren't actually, they weren't buying stocks, right?

And then when Bucket Shops were outlawed, then Wall Street Brokerages found a way to accommodate all these people who were kind of hooked on the adrenaline rush of the stock market. And then you had the Roaring 20s, which was the biggest stock bubble of all time, which was fueled by mom and pop.

And those people were wiped out and they never came back to the stock market. And that is kind of what's happened here where you have made things lower the barrier enough that you've drawn in a lot of people who never could participate. And it's gonna cost some of them a lot of money because if you're like, you know what, Wall Street's crooked.

I lost a lot of money on GameStop or whatever. This game is rigged. I'm gonna just put my money in the bank or buy a house or not save money. And it'll cost them in the long run. There's a retirement crisis in this country. So playing with these people, it's not just that they're profiting off of the apes

and not everybody's an ape, by the way, who participated in this, but this young generation that got into the market and got super excited about it by treating it like a casino. But it's gonna hurt them in the long run because a lot of them are just gonna walk away. And the one good thing that came out of this

is that at least they got on the ladder financially and opened accounts. Over 10 million young people opened accounts because they were bored during the pandemic and they had extra money. But to my mind, exposing this corruption is the first step to making it. Look, you're never gonna make it to the point

where people have the right to invest their money, however they wanna invest it. And if they make mistakes, they make mistakes. But to have a market system that we just throw up our hands at and say, well, it's corrupt and complex. And look, these guys are gonna make billions and billions and just stay out of it because you're gonna get hurt.

That seems unacceptable. Listen, I mean, it's part of my job as a financial journalist. I don't have a dog in this fight, except as a person who saves money and stuff like that. And it's just their index funds to point out this corruption. But the issue is that this ape movement,

however well-intentioned, they rushed into this meme stock squeeze. Then the buy button was taken away. They're all kinds of conspiracies. They're upset with short sellers. They're upset with dark pools. They're like kind of chasing ghosts when like the system at large is kind of bought and paid for.

So if they wanna be upset about that, they should be upset about that. But you know what? There's a perfect way for them to avoid it, which is just opt out. I mean, you can- That's not right because monetary policy in this country makes the stock market the most attractive option.

No, but you can buy stocks. You can buy stocks for free, right? I understand that. But I guess my point is it's not enough to say, like, hey man, this is a corrupt and, you know, a casino, there's transparency and regulation that keeps the games on the up and up because, you know, Gary Gensler said it best himself.

He has two jobs. One is capital formation. The other is investor confidence. And if what you're saying to people is the American, the heart of the American financial system, the stock market is so fucking corrupt that you're best staying out of it, then we have to change financial policy

and monetary policy in this country to give people an opportunity to save at rates that make sense to them. Or you've got to go in there with some form of regulation and clean this mess up. I don't think it's right to say it's too dangerous for you. These waters are too rough. But you can be in the stock market

without being a speculator, John. I mean, that's the- That's what they are. Look, they blew up the world because when they went to mortgage derivatives, I'm not saying financial instruments are in and of themselves or financial innovation is in and of itself corrupt, but it's very clear that actors there

exploit those things really quickly. And when you look at how 2008 went down, they have the potential. There are weapons of mass destruction buried in the corruption of Wall Street that can get people, get their houses foreclosed on, get them kicked out, have them lose all their money. I think it's an absolute mistake

to turn it back around and say, don't be irresponsible. This place is fucked. And you can do it, but you have to do it in this one certain way that you can't try and maximize the profits. They're allowed to maximize profits to whatever they wanna do.

And if it all blows up, we'll pay for it out of our pockets anyway. Right. Well, I'm not saying that it's not a free country and people shouldn't be allowed to speculate. What I'm saying is that- Why aren't you more vehement about reforming Wall Street? What part of Wall Street do you want to reform?

I mean, there are many parts of it to reform, but I'm talking about the part that are like the Carnival Barker saying, step right up, step right up. And here's a free drink if you come in, right? I mean, that seems like a pretty corrupt part of Wall Street, how all these young people were drawn into Wall Street, how influencers, a lot of them lining their own pockets

directly and indirectly got them in. And that's a pretty corrupt thing. I mean, there are other corrupt aspects of Wall Street that I just didn't touch on because they weren't germane to this episode. But I mean, of course, but you can engage with Wall Street in a way that Wall Street hates.

If you want to hurt Wall Street, pay it no money. Pay it peanuts, right? But what choice I'm telling you, my position is you've made it impossible everywhere else. So I feel like you're just throwing up your hands and going, hey man, Wall Street's going to Wall Street and you're either wise to that and hip to that or just stay out of it.

And what I'm saying is why not go at it? Why not go at the heart of this and say, we need to make the market makers, if we're going to have market makers, a competitive field where it's not just two giant companies that control it all through the money that they do. And let's make sure that high-frequency traders who are putting microwave towers next to servers

and are front-seeing the market and making their moves, like let's control this and make it so that retail investors have the access to a fairer, more transparent, more efficient, less corrupt system than the one we have right now, rather than saying, let's just control the carnival barkers that are trying to bring them in. Look, that's one part of the puzzle.

I mean, my point is that you can participate in Wall Street. I do, you know, without speculation. And like I said, you'll do, it's been proven with beyond a shadow of a doubt, you'll do better than 80% of the so-called pros. But if you wanna go head to head with the pros, they have those microwave towers, they have faster computers than you.

They have all kinds of special information that will probably lead them to be you. And yes, the carnival barker is saying, you were born an investor, you know, you can do this. And that's their business model, that's not right. I'm not saying don't engage with the Wall Street. I'm saying engage with it on your own terms in a way that you don't get the pockets picked.

Yeah, it just seems like a separate issue. And there are other things to reform, of course. You know, people ask me all the time, because I speak to like a lot of like groups of like, not apes, it's like men in or near retirement usually will show up like, you know, for a friend. Older age, gibbons. Older age, exactly, silverbacks.

But no bones and gibbons. Right, and exactly. And baboons. And they'll be like, what about this high-frequency trading? And like, yeah, they're jumping ahead of you in line. If they can read the information coming out faster than you, they can trade faster than you, you're never gonna beat them.

If you've got the quickest fingers on earth, you're not gonna beat them. So why are you trying? Why are you just do what is proven successful? Like you can build a nest egg without trying to be a high-frequency trader yourself. And, you know, and a lot of these guys say, you know, I've got a guy who told me I can make a lot of money.

Like I'm surprised like how many people have lost a fortune on trading options and like lured into these workshops where they get a free lunch and they're showing how to trade options. But that's everything. That's real estate. That's like every gambling casino.

You know, the first thing you do when you walk in is there's the little sign in the elevator that says like, if you have a gambling problem called 1-800, blah, blah, blah. And I always look at those and be like, I'm gonna play those. I'm gonna play those numbers. I'm gonna get, I'm gonna take that gambling hotline number and I'm gonna go down to the crash table

and I'm gonna see what I can do here. But I guess my mind always goes to, we're allowing a system to exist and throwing up our hands. And the reason why I encourage not the way they're investing but the movement is they brought a light to something that most people were unaware of. That the inherent complexities and corruption of the market.

And my point to Gary Gensler was, can you use their energy? And this is where I think the movement is valuable. And I agree with you that there's a lot of people that are gonna get hurt there, just like there's a lot of people that go to casinos that are gonna get hurt. And I think that's really tough.

But I also think they're not owned yet by any of the interests that are down there. And they've exposed some real inequities and corruption that exists as part of the infrastructure of what is considered the heart of our free market system. And if that can bring an energy to reform, and I think it can, I think they can put a lot of pressure

to get these things more efficient and more transparent. And I think that's worthwhile. So that's where I admire their movement. I agree with you like, I think they're easily exploited by the Robin Hoods of the world or the other people. But in your mind, is there a value that they can bring to this

that could bring about some of the more positive changes that could make this ecosystem healthier? So what Matt Kors, who is this YouTuber who you had on your show, he says, we're not a monolith. Well, yeah, they sure aren't a monolith because it's a lot of people with a lot of different interests. But the problem, John, is that the core of this movement,

they got very angry that the buy button was shut off. A lot of them continue to believe in some kind of vast conspiracy when the explanation is not, it's like a lot of circumstantial evidence. And most of what they discuss in their forums, and I've spent a lot of time talking to them and getting hate mail and stuff like that,

it's just cuckoo crazy. Like there's not really a conspiracy. So I do admire, there's a group that's not bought and paid for, that's not like a part of any industry and they're trying to affect change. I'm always all for that, for a grassroots movement that's trying to improve things. But 95% of what they're trying to do

is like their phantom shorts and there's gonna be the mother of all short squeezes. I don't know how much time you spent on these things. It's just not, that's not true. And so they're expending a lot of energy in directions that are not going to fix anything. How about the, let's have lit markets or let's not allow the revolving door of someone

who's an SEC commissioner to go straight to a broker like Robinhood. How about, let's look at how much money the finance industry spends. They spend more than like the next five industries combined. They're, because it's such a regulated industry. So they have to make sure that the rules are very carefully tailored to them.

And then you have different parts of the industry fighting against each other. One group wants the rules to be this way and another one wants the rules to be their way. And so it's a cesspool. That's an outrage to me. Plus all the ways that the SEC, like when you, they kind of go for like the low hanging fruit.

Their enforcement actions are shambolic. They pat them in the back, but they won't go for anything that's difficult or embarrassing when you bring it to them as a journalist. So that's an outrage. And so I like a grassroots movement that's not bought and paid for. That's good.

But don't get caught up. They're just going off on a weird tangent that is not going to help anybody, including attacking short sellers, by the way, who are a pretty useful part of the market. I think we're probably more useful years ago than they are now. I mean, honestly, like 140% of the total float of a company.

Well, they, you know, that's their, their hubris, you know, they, you know, that's, there's not a hubris. It's that it's allowed. It's, it's that you can go to five different banks that hold 50 million shares and short all 50 and that those bigger banks are incentivized to get you to go higher. Cause they're going to, when they lend that to you,

they can just keep jacking up the fees. Like that system is incentivized for these corrupt short sales. So I, I disagree that, that it's actually, Wall Street is expert at taking something useful and perverting it for a crooked profit. And the SEC is expert at ignoring it. Yeah.

And that's the system that has changed. I'm not going to disagree with you. But I mean, the short, like again, the short sellers, these young people, like they, they grew up going to GameStop. Like I've got three boys, you know, so I've been there like eight billion times, right, John? And so, you know, I kind of hate GameStop actually because I had to spend so much money there.

But my kids love it. And oh, these short sellers are trying to destroy GameStop. You're not trying to destroy a company by selling it short. You're betting that it'll do badly. Okay. There's, there's, you're conflating, trying to destroy a company with, I think it's going to do badly. But that is a self-fulfilling prophecy.

When the market knows that, you know, that short position is being held by a giant fund. You can't pretend that that doesn't have a psychological effect and actually does. It has destroyed companies. It has driven the price down to a point where it's not really even about the fundamentals anymore. It's about what the market thinks or bets is going to happen.

That's a whole other debate. But getting the internal mechanics of the stock market to also trade on simple fundamentals is, I just think, a bigger problem. And you're absolutely right. There are fringes within these movements that have concocted all kinds of things. But what's also right is Wall Street has given them no reason to trust them. And it hasn't given the country any reason to trust them.

And so if you want to retain the kind of credibility or build back the credibility and trust of the American people, when this is considered like, I mean, when you turn on the news and the first thing you see in the corner is the stock ticker, they're saying to the public, this is the heartbeat and pulse of the American economy. And what I think these apes showed was we have arterial sclerosis and high blood pressure and plaque buildup that needs to be addressed.

And the SEC seems utterly outgunned. And the energy of these apes, I think, has to be channeled into productive reform. That's what I'm hoping happens with the movement. And I think the financial journalists like yourself have a real role to play in helping. You know, when you said you don't have a dog in the hunt, I think you do. Well, not financially. Financially, I mean, I do, you know, ethically, I do.

That's why I do this job, John. I mean, you know, that's, you know, I want the truth to come out. And the job that he does to wrap it all up is editor of Hurt on the Street. It's a column at the Wall Street Journal. And he's the author of The Revolution That Wasn't. GameStop, Reddit, and The Fleecing of Small Investors was just released in February of 2022. Spencer, thank you so much for coming on

and doing this and bringing a different perspective. It gives a fuller picture. And that's all you can hope for. Hey, thanks for having me. I really appreciate it. Thanks so much. Thank you. And thanks so much for joining us.

We really appreciate it. All right. All right. I am back from my education at the hands of a reporter. So interesting that, you know, and maybe it's based on, you know, he's worked on this book and the focus of it was so much about, you know, retail investors being like, you know, hooked into this scam

that I think that's where like his focus is. But boy, it's so clear to me that like, that's the wrong direction to look. Right. It is like this, you know, this grocery store is poison. Now, there's no other way to get food, but this is fucking poison. So if you want to go in there and buy candy, go ahead and do it.

But it's your fucking problem. And you're like, what if we made it so that it wasn't poisoned? And you're like, I don't know. It's just a poison store. I don't think that's the way this thing is going. That whole conversation felt like one large dark pool to me. You know, I think the most interesting part is like, we kind of get in the weeds of like apes and robber hood and citadel.

And it's like, at the core of it, people just want to invest the money and know that it's fair. Right. Like. That's it, man. Regardless of if it's like, I don't care about the corruption. Like we know this corruption everywhere. Is there a place where we can invest where it's not Ben Stein,

but also not call of duty, like corrupt call of duty? Like, is there any middle ground where I can learn how I can have a fair chance at creating wealth? That's right. And by the way, like, you know, we were talking about, you know, some of these guys, they make $800 million in a year or 750 million. And so as an outsider, you look at that and go like, Jesus, I, you know, I'm never going to get to there. But like, there's got to be some way that I can maximize my money.

Like they are demonstrating that this thing is for them, you know, a road to riches. But, but, but then say what they're saying to people is the stock market is the heart of the American economy. But let's not let anybody who's, you know, actual people into it, because they're going to get hurt. Right. And these guys, they buy 10 houses. A lot of the people, the retail investors want to buy one house eventually.

That's right. And by the way, like, who gives a shit if people get rid? Like, great, you get rich on it. That's fucking awesome. But if the system is designed so that only you can, or that if the more people that they bring in only elevates you, then that's actually, that's a system problem. That's right. There's, there's a you problem and there's a system problem.

We've all, you know, it was funny. We kept going back to that casino analogy and the short sellers are, I don't know if you guys ever play craps, but man, there's always a couple of dudes that are betting against the line and it's a fine bet. But when you're rolling and there's a couple of dudes on the table who are like waiting for you to crap out. Yeah. Fuck those guys.

I hate those dudes. Yeah. Yeah. Fuck. You know what? Fuck those guys. Thank you, Chris. I mean, this was an emotional, unexpectedly, I think emotional episode for us to make,

not because the apes were like leading our expertise. I don't think that's true at all. I think we were having kind of an empathy experience with the apes as we discovered what they discovered and we're like, holy shit, this is, we would get off a call with an expert and just scream at each other for 10 minutes. And then, and then decompress. It's such a, all right. So like we call people apes, right?

Which don't ever call me that, but, but. All people equal. Yeah. But these are just investors who are trying to figure it out. These are people. Amen. These are just people that are trying to be investors because there's no other choice because the housing market sucks and because there's no savings because we've artificially

kept interest rates at zero. Like this is their only avenue to build some generational wealth or some cushion for the difficult lives that everybody has. And to know that it's a fucking meat grinder for these folks and that they're waiting with a little bib on and a fucking knife before like, come on in. Yeah. Like that's what's so upsetting to me is it's exploitative. And then to flip it on, amen, you know, if you can't swim in these waters, fucking get out.

That's, that's the hard part. It seems like there's like a theme with a lot of our episodes where the people who fight against the system get critiqued for the how and we lose the conversation of the why. Like if there was a better system where we just fairly, even if you lose, it's a fair system, then we wouldn't have apes. We wouldn't need them. Right. We wouldn't need them.

That's, that's a fucking great point, Kason. All right. So that's it. That's the show. Thanks to Spencer, Jacob. Thank you to you, Kason and you, Chris. The problem with climate change is out today, March 10th on Apple TV Plus. There's a link in the episode description.

And let us know, man, we'll be back next week with a new podcast on it. We'll talk some climate stuff. And I think there's a new episode of the TV show on the media on March 17th, because here's what we do on this show. For one month, we put out a shit ton of content. And then like bears, we go into a cave and sleep for five months. And then we come back out again and do it again. It'll take us that long to go through all the comments from the four topics that we chose

to do episode. That, that, that, that's exactly right. Thank you guys very much. And we'll see you guys next week. Bye. See you soon. Boomboy!