Yet Another Value Podcast - Al Grujic from All of Us Financial on Robinhood's issues and $GME squeeze

Episode Date: February 1, 2021

Al Grujic, founder and CEO of All of Us Financial (https://www.allofusfinancial.com/), comes on to discuss the Stonk market. Topics include Robinhood stopping trading last week, gamma squeezes, and how a stock can have over 100% short interest.Chapters0:00 Intro1:50 Al's background4:20 Why All of Us restricted trading last week9:40 Why couldn't cash accounts buy meme stocks last week?11:45 How should Robinhood have handled their messaging?14:45 How can Gamestop (or any stock) have over 100% short interest?19:25 How up to date is short interest reporting?22:00 Gamma squeezes and options23:55 Market manipulation27:45 Risks of social media pumps going forward32:15 The "boring" stuff of revamping the clearing system

All right. Hello and welcome to the Another Value Podcast. I'm your host, Andrew Walker. And with me today, I'm excited to have on the founder of all of us financial Al Grudjik. Al, how's it going? It's going great. You know, it's a crazy time right now, as I'm sure you're aware with stock volatility going crazy. It's moving into silver now. And, you know, Robin Hood and others have had issues with the clearing system requirements they've encountered. It's crazy. Look, I posted this last month was so crazy. Obviously, I'm a financials focus investor, but, you know, I was writing up how crazy the month was. And when I did the write-up, I finished it and I looked and said, you know what I forgot? I forgot that the capital was storm three weeks ago. Like, things got so crazy last week. I forgot the capital was storms. Yeah. Well, it feels a little bit like that. In financial markets. Look, before we, I normally start off by pitching my guest, but let me start with a disclosure first. You know, given what we're going to be talking about, here. I just want to disclose. Nothing on the podcast is investing in advice. We might talk about short selling options, maybe even some gamma squeezes here. These are really sophisticated strategies. So just all listeners, you know, use caution. Nothing's investing in advice. Everything is risky. Don't rely on anything in this podcast. Other disclosure, I'll get for those of you on YouTube, I've got my best Roaring Kitty headband on over here. But those disclosures out the way.

Let me start this podcast by pitching my guest. That's you. That's all I started every podcast. You're a different guest than I normally have, but, you know, I've never seen so much interest in GameStop, AMC, all these gamma squeezes. I think there's a lot of misinformation out there. And given your background and the fact that you're kind of at the head of a Robin Hood competitor, I thought you'd be a great person to come on and kind of talk about what's happening and hopefully maybe dispel a little misinformation. So I don't know if you want to dive into that or if you want to give people a little bit of your background, but I'll turn it over to you. Sure. Let me give you just a few minutes of my background so that you can understand the reference point I'm coming from in the way that I answer. Because these are complicated questions, complicated answers, complicated systems that are operating here. So I, by background and electrical engineer who spent most of my career in finance, almost all of my career in finance, and that includes being a institutional market maker for Toronto. Dominion Bank around the world, you know, London, Tokyo, New York, Toronto, I'm originally Canadian, which means my customers were really big, you know, central banks, financial

institutions, and I made markets and bonds, swaps, structured products. So a lot of structured finance, financial engineering type stuff as well as large-scale market making for institutional customers. I then built and ran a high-frequency trading business, so that was all about infrastructure, speed, all the stuff that HFT is about. And there's a lot of interesting things to talk and think about there that pertain to the current state of payment forger flow because it is the market makers who built their technology on the back of what the HFT guys had originally done. And then I had a quantitative algorithmic hedge fund that I found that again had big bank clients or alternative investment managers as clients. So a lot of quantitative modeling and thinking about what these sorts of things like these gaping moves and things like that. GME actually mean from the standpoint of financial models and statistical implications,

which feed into the models that the clearing system uses, and we'll talk about that, hopefully, a little bit down the road as to how that became important. And all of us financial is about trying to bring all of that expertise to retail in a way that, you know, it's kind of a little bit. Someone said Robin Hood for grownups, and I don't know if that's what I think is, the main crux for us is really deploying all this data science. knowledge that we have to empower customers, but I do think we want to provide a modern experience and people need that. And so the paradox is how to provide that modern experience without

dumbing it down too much or not giving people enough empowerment behind what you're actually offering. So that's what we're all about. And other than just talking about us, I think that all feeds into my thinking about our discussion and what's important. And just all of us. So I'm going to go through the whole everything that happened last week, but just for all of us, I guess two questions if you're okay answering them. Hey, did you guys have to restrict training in any of the kind of, I call them the mean stocks, you know, GME, AMC, anything last week? Yeah, so we also clear through Apex. We actually had a brief period of time where we did need to restrict them. And there's been a lot of calling out on Reddit forums and others of firms like ours that

that responded by restricting and although, you know, some of us have said we did this as a result of requirements of our clearing firm, it's challenging because we both want to break out of that and not do those restrictions, but there are actually valid reasons why Apex and the system did what they did. And the problem to me lies more at the heart of how things operate. So, yes, we did for, it was actually quite brief. Okay, well, I was going to start somewhere else, but let's start about that. I mean, I think what really took this story to the next level was last Thursday, you know, clearing houses were increasing margin requirements. Robin Hood stopped the, stopped their customers from being able to straighten game stock, AMC, all these other mean

stocks. Why don't you get into that? Why, why were the clearing houses concerned? Why did everything, why did everything kind of start shutting down? Yeah, so the thing is, you know, without getting too far into the weeds, the clearing system has inherent settlement risk, amongst other risks than it has. And we still currently settle T plus two. And so that means when a whole bunch of people get into concentrated positions in certain stocks where there's a concern that they may not perform on settlement, it increases the credit risk, it increases the risk,

it increases the risk in the system. And what actually happened last week was that those requirements from the clearing system that were imposed on the clearing firms, the self-clearing broker dealers and the firms that use other clearing firms like we do with Apex, we're actually required to post a lot more collateral. And what that means is that suddenly these firms are having a hard time coming up with that collateral. They can respond by doing things like limiting the amount of additional positions that people are taking. And you saw they did that. That is problematic. That is probably not the right way to do it, different conversation, but the underlying fact of the matter is, with a lack

of anticipation of what could happen, they found themselves with insufficient capital, risks to the clearing system there, and then we should also talk about options. They responded by limiting buying because that would require more collateral, and they allowed selling because that would reduce collateral. Obviously, obviously a problem. I've written about that in a couple of my blog posts. On the option side, there was also unexpected amounts of speculation and options. Now, there's a lot of option exercise that can cause very large positions to occur if people exercise their options or their options get assigned to them. A lot of those people didn't have the margin to cover those result in underlying cash positions that would have occurred. That was

another trigger of risk in the clearing system where not only was it possible that people people wouldn't be able to perform on settlement, but it was even unclear what that exposure was, because with tremendous volatility, you go through, into the money on the option, or you come back out of money on the option. It's called pin risk when you're right there. And the thing is, not only is there a ton of volatility, but that leads to uncertainty about how much settlement risk you have in the system, along with it being really huge. And so it was a major problem.

That was the reason everybody actually responded to the way to it in. So, if I could just summarize, so what it is, is this is a system. currently clears T plus two. That's trade date plus two. So I buy a stock on Wednesday. That doesn't actually clear until plus two until Friday. And what happened was GameStop, you know, at Robin Hood and there were so much volume and these positions were so big. You know, for Robin Hood, it might have been 50% of their assets under management were trading in GameStop. And the clearinghouse has looked at this and they looked at the volatility GameStop and said, hey, we don't know like, you know, if GameStop goes from 400 to 100 by Friday, you guys could have trades break, right? Like you could

you could start having trades big. You're a real credit risk to us. We have to increase your margin on these game stock trades outstanding because we're worried that you're going to blow up if this stock falls a lot. Am I summarizing that correctly? You are. And, you know, I want to give you a concise answer. The problem is it's very complex. There's that. There's the options elements. And there's even more. It's a complex system. I, for example, use portfolio margin at some of my bigger retail accounts like interactive brokers. And it's great. And it makes a lot a sense. But the problem is no one anticipates this kind of concentration risk. No one did. So if I, which I didn't, but if a customer suddenly concentrated a ton of their exposure in

one name as it was happening, then anyone with portfolio margin also should get an increased margin requirement to their retail account because they have concentration risk. So there was just a lot of effects. It was a major domino effect that picked the market here. One of my friends put it, hey, you know, like you're plumbing, you just turned the water on and it's there, you never think about it, but it's a really complicated system behind it. And this kind of showed how complicated the trade system behind it is. You got it. So when I was writing for this podcast, look, I source questions from a variety of people ranging to extremely financially sophisticated investors to extremely unsophisticated investors. Like my mom is super

into this story right now. And she, I love her, but she would say he's quite unsophisticated when it comes to the stock market. So I guess one of the most frequent questions I got from people was on Thursday with specifically Robin Hood restricting these trades, they get why a margin account might get restricted, but if I had an account with $10,000 in cash, why couldn't I go buy GameStop AMC with my cash account, right? Like I'm just putting up the cash, the cash is there. Why can't Robin Hood just use a cash account to go cash settle trades? Well, so this is the thing. Fundamentally, it is not right that you can't. And if you have a fully funded payment through a cash account, there is no reason that you shouldn't be able to.

The challenge is in how the clearing system works. And again, to unpack this, there's things that don't need to happen in this day and age. We don't need to have T plus two settlement. We can have real-time settlement. It's absolutely technologically feasible. And it was odd to me when they went from T-plus 5, T-plus 3 to T-plus-2. There's reasons for it. There's complexity and legacy technology in the clearing system.

But removing delays in settlement and doing real-time settlement is a really big deal and it should have happened and it would remove a lot of the issues here. There are also ways that broker dealers calculate their margin requirements that wind up for them having a problem where you as a customer should not. You should not encounter a situation where you can't buy this stock if you have a cash account. You're exactly right. It wasn't contemplated that the system would come under these kinds of. of duresses, and there isn't a way to clearly allow broker dealers to separate their capital requirements, which are asked by the clearing firms to them and hold to post, and then to react in a way where they can very efficiently segregate that out.

And then, you know, I think a lot of people were mad because on Thursday, the Robin Hood CEO went on, I think it was CNBC and he said, we don't have a liquidity problem, right? the reason he said we restricted trading, but we don't have a liquidity problem. And then last night, I think he did a clubhouse with Elon Musk and said, pretty much said it was a liquidity problem, right? The margins got raised. So a lot of people were just, you know, when I was talking to other people, they were just mad at this turn of events. I don't know what the answer is, right? Like, you run a financial firm. You and I have both been involved with financial. You can't go on TV and say, yeah, we have a liquidity problem. That's an instant run on the bank. So how do you think

this could have been handled better on, I guess, the Robin Hood PR side, or I'm not even sure. I haven't read what you, the recent interview that you, or haven't seen the recent interview that you mentioned. Robin Hood did wind up posting an explanation in writing that I think was handled very well, and I would have modeled it more like that, and I'd welcome people to go and read that. It's a really good explanation, actually, of what happened. They have had a tendency when they were asked, I don't want to be, you know, I don't want to be lamb-based in Robin Hood. Just the softest I can put it is they've had a tendency not to disclose some things that perhaps they even had a right to say these are just the way things are. I saw one of the founders on TV state that he, that the reason they were able to offer free trading was because they had very cost-effective technology.

And I would have thought it would be better just to say, listen, we make some money on payment for order flow to allow this free trading. And this is why we think it is a reasonable thing to do for our customers. And there's Meriden doing it that way. And there's like everything, there's two sides of the story. They avoided even disclosing it. Here, I think the liquidity thing was, you know, perhaps to give them the benefit of the doubt, perhaps he was not seeing their issues as liquidity as such. liquidity can be something slightly different in terms of being able to, you know, to have liquidity to pay your short-term invoices. It can be liquidity in the sense of having margin to buy securities as opposed to posting collateral in the clearing system.

So to give him the benefit of the doubt, perhaps he didn't see the question as the kind of liquidity that was firm survival, liquidity capital. they injected a billion dollars into the company last week. They probably in a short term solved what you would call quote unquote liquidity issues. They could have handled it better by simply saying what they said in that document that they are required by the clearing system to do certain things. They don't like it. It was unanticipated. And in the future, something has to be done to change the way things are going.

But they really should have been a little more straightforward, I think. think that's fair. Perfect. So let's turn over to, you know, kind of the craziness and trading these stocks. And one of the questions that I've done most frequently is GameStop has 120% short interest, right? And the question I've got most frequently is, how can short interest be above 100%? That's one. And then two, and I hate to say this again, nothing on this podcast is investing by, I'm just phrasing the question as it's been posed to me. I'll have a friend comes to me and says, hey, short interest is above 100%. If I buy this now, aren't the shorts going to get squeezed to 500, 1,000, 1,500. Name your number. But as long as the short interest

is above 100%, why doesn't this squeeze, kind of the infinity squeeze is what people used to call it with Dillard's. So I'll just toss over to you. How would you tell people to think about that? So first of all, there's not a theoretical limit about how much short interest there can be. There's implications, which we can get into. In theory, I can buy the stock from you, which you short to me, and you know, you can then borrow it from me in the marketplace. We may not even know. And, you know, that can go on. You can short some more to somebody else. Somebody else can lend it to you. There's no inherent limit to how much of a short position there can be because the people who long lend the securities to the people that are short, and that can kind of go round and

round if that makes sense. There's a lot of debate, a lot of people who don't like to lend out their securities because they don't want the short sellers to have access. I would argue that some amount of short positions in the marketplace, first of all, market makers need to do that. If you want to buy a security from them and they don't know ahead of time, they often have to sell it to you and then cover. So, you know, there's a function to long and short positions in the marketplace if it's not manipulative.

People aren't trying to push the marketplace in a certain direction. So I personally, I understand people's concern, but I'm an advocate for there being the ability to have short positions. And that, of course, can lead to more than 100 percent because there's, like I said, it goes round and around. And there's a marketplace for buying and selling stocks. And there's something called the repo market, which is there for borrowing and lending securities. I can tell you a little bit about how short squeeze games are played. I've been in a lot of them, and that's a whole different topic if you think your listenership is interested. Yeah, let's go for it.

I think everyone would be interesting. So everybody wants to have a sense of how much shortage there is, because while I say theoretically, there's no limit, the bigger the short float, the more opportunity and likelihood that there is, there'll be situations of squeezes because even though many pension funds and mutual funds do lend their security, out. And you do that and you get paid for it. It's collateralized lending, so it's quite safe. But you do get paid an additional return on lending your securities out, which helps these funds increase their returns. So there's a good function there, too, in terms of, you know, if your pension fund is making a little extra money over many years, you should be happy about that. But what goes on is, is there's more and more of a short float. There's less and less of an ability to cover all of those short positions. Some people may not be lending out their

stock. And so you gradually get this kind of increased volatility potential of a short squeeze. And then people play games. What used to go on in the bond market, for example, is people would buy up more than 100% of an issue at times. It was a small issue. And then what you do is you go into the repo market and you do what's called, you lock it in for term. So everybody's expecting they can borrow these securities day to day. One other way to remove float is to lock in a borrow for term, even if you don't have the, it's counterintuitive, but even if you don't have the stock or the bond, you can borrow it for the next few months. If you do, it's not available to anybody else. So you're actually creating pressure where you're removing supply. And so the game

goes, people identify a lot of shorts, they stop lending their securities, they lock in the borrow for months, the shorts get nervous, the market goes up, there's optionality. We haven't gotten to that. But when the positions go up, they become a larger risk for portion of these fund managers portfolios. They need to decrease it. They need to cover losses. And that starts that effect spiral that leads to short squeezes. Yeah. And this, I mean, so this isn't bonds. I think Ron Perlman had a had a bond short squeeze once where he bought up over 100% and called his broker. And his broker is like, we need to figure this up. He was like, you need to figure this out because you owe me 45% of the bonds. But Volkswagen Porsche,

obviously a very famous one. One thing, we can talk about the options in a second, but One question I had. This is a me question actually. So, you know, I see the 120% short interest floated around all the time. Am I understanding which short interest was reported on kind of a lag basis, right? So 120% short interest two weeks ago, my guess would be that by the end of last week, like most of the shorts had just been wiped out. Is there, do you have real time shorting information or anything? Or were people just reporting on a still number? You know, I have not recently looked at how much lag there is in the reporting of that short interest. I think we are getting it with some lag. There are also articles I have read about how in certain cases short

interest does not get reported, so we may not even have the full numbers. It's not the reporting side of that these days I'm not up to speed on. Yeah. No, I use you something because I know people were throwing the same number around and I was looking and I would have been very surprised of something that I had 120% short interest at $5 per share, still had a 120% short interest at $100 per share because all the shorts have been, all the shorts have been forced to cover at that point. Well, you know, the thing is, it gets more attractive for other people to reset those shorts. And I think what happens generally when, as a fund manager, again, that's one of the things I did in a previous lifetime. As a fund manager, when things happen that surprise you, you can go and revisit those, but you're a little bit more careful.

So in this particular case, if I'm a fund manager who sees some of these guys get caught, but now there's an even more attractive short position, what I'm going to do, is have a conversation with a few funds that hold these and come to terms where we can borrow these for an extended period of time to reset those shorts at higher levels. So it's not clear to me that it would have had to have shrunk. We're also not getting on one more thing that's really important. Short interest is a percentage of outstanding equity is important, but so is the short interest in terms of days of trading because that's another measure that's very much looked at. if a security doesn't trade much, it's much more dangerous to be short than one that does trade a lot because the changing of hands correlates with the access to borrow flow. Yeah. And then the other thing, you know, I think people look at shorts and these big evil shorts,

but there's like, you know, for AMC, AMC was before the shorts because they were very much saved by shorts because a lot of their lenders would go short the stock, they could long the bonds, and that let them kind of lend some extra debt. So you can, you know, short equity, long a credit that helps you hedge and you can get access to expert on that way. What about options? You mentioned, you mentioned something on the option side. So you want to dive into that? Yeah, so you mentioned gamma squeezes. Again, another one of the books I ran for TD was a bond options book and a broad equity options books as well at a smaller size.

And the thing is, boy, they're tricky, they're tricky beasts to deal with. And gamma squeezes are inherently also, depending which side holds the steady hands, right? And that's where you'll see these retail comments about diamond hands. I was about saying, I believe it's diamond hands in the house. I have to tell you, not to wander off in the direction, if we have time, there's some sophistication behind all this kind of uninformed retail chatter. Like going after silver as they're doing now, that's the metal you want to go after. Copper has a huge industrial float. Gold has a huge bullion reserve float.

Silver is the one you want to go after. That's why I forget the guy's name. He became the richest man in the world trying to corner silver. So these guys know what to go after in some ways that are surprising. And those futures that they're going after are the right instrument. So it's interesting. But here, they also understand the gamma squeeze. And diamond hands, as they like to call it, it's important because if a person buys an option,

And the market maker or person who's looking to facilitate liquidity will hedge that position. The buyer often doesn't hedge it. He just buys an outright call. Well, his position, he's just looking at it and watching it. But the person who's a professional market maker hedging his portfolio, if it starts to move up, the underlying delta of the option increases. And so he needs to buy, if he sold that call, he needs to buy more stock to hedge. And that pushes the stock up further.

And again, he needs to buy more and more until he gets to 100% delta. So gamma squeezes are this dynamic of the active hedgers of their portfolio reacting while the steady stakeholders of the option that are just looking for the exposure are not reacting. That's a gamma squeeze. Yep, that's perfect. And then, you know, I think the gamma squeeze brings us into market manipulation and foul play. And I've heard people accuse both sides of market manipulation, right? Like I think when Robin Hood hit off trading, there was a lot of accusations.

I tend to think unfounded, but that Citadel had reestablished or they or whoever had reestablished their shorts and then told Robin Hood you can't trade so that the stock price would go down. You know, it was almost the main thing. But I've also heard on the other side, you know, Wall Street bets having a bunch of people on a forum say, hey, buy it all of the money, call options and hold it until we force squeeze like, that is, that is kind of the definition. You could see a pump and dump definition in there, right? Everyone buy and we'll get out before everyone else or we'll get out once they have to cover something. So do you see any types of market manipulation or anything on either side? Yeah, it's a, you know, I've thought about this a lot and it's certainly, you know, the regulators, the SEC are going to have to do something about this. It's a hard problem to solve and the reasons are as follows.

It is clearly market manipulation if a bunch of people, by definition, decide to do something that has nothing to do with fundamentals or an interest in investing or even an interest in speculating in a way that doesn't muscle the market in a certain direction. That is by definition, market manipulation. The challenge is there are so many, if an institutional player did this, it's been prosecuted as market manipulation many times.

If retail investors do this, it's obviously harder to, it's harder to know what to do with that for a couple reasons. One is that, you know, there's even rules about ownership. If you own more than a certain percentage of something, well, you have to report that. And the rules say, okay, it isn't just you. It's not just what you own, but what's under your influence. If my wife and I own more than 10% of something, it's the same thing as if I do, I'm just splitting it up. If I own a company that owns 5%, and I own 5%, and my wife owns 5%, and my brother-in-law owns 5%, clearly I am orchestrating this, that I am in control, it's reportable.

Here we might have situations where millions of investors have had influence on them in a similar way that causes ownership amounts that might be reportable. What do we do with that? It's kind of a, it's hard to figure out how to make sense of that because you don't know who those people are, there's anonymity. Secondly, people responding to legitimate inputs of saying, this is an interesting stock to own, there's a short squeeze, that also strikes me as reasonable on the one hand until it gets to a point of being an intentional manipulation to take prices to a certain level and then get out. So for me, it's a really interesting gray area that I'm still thinking through, and I wish I could give you a clearer answer, but there's a lot of complexity here. And manipulation is bad. Manipulation as an economic tool is bad. It allocates capital where it doesn't belong.

And it also causes big wins and big losses, which are exciting for the winners, but cause financial instability. That kind of results instability causes dislocations, bankruptcies, things that are bad. You know, and it's like bank traders when I was a bank trader. They love the optionality of getting year-end bonuses and taking huge risk. It's not in the best interest of the system that that person can take that kind of risk in the institution. It's not about the institutions being the good guy. You just don't want systems that freak out break and don't work right.

That causes everybody paying. Yeah. And this is, this was my personal last question you're running right into it. But, you know, my big worry with this is like, you know, GameStop, $200, $2,000, $5 doesn't matter in the grand scheme of things. But I do worry, like, you know, last month, Carol Baskin. mentioned a stock on a cameo appearance and sent it up by 300% or Elon Musk tweets Use Signal and he means signal messaging and there's a public company called Signal that sees their stock

price run up by 1,500 right? And I worry this is absolutely right for, you know, you think of the classic boiler rooms of the 90s and stuff. Well, with the internet, the scale is a hundred times bigger and all it takes is doing this once and scammers are going to make millions and millions and millions of dollars, a lot of times it's going to be very difficult to trace or catch them. And by the time you do, you know, they've made a lot of money and a lot of retail investors, most likely retail investors, have lost a lot of money. And I just don't know what the answer to regulating that is, you know? Yeah, again, I think that's a very difficult question.

The regulators have a lot on their plate for the reason that I think a lot of technology, telegram, others are encrypted. They can't track what's happening. You know, the other side of the coin is I do think people have a right to some privacy. So it's tricky. There are business models outside of the United States. Copy trading is one that a lot of people in the U.S. haven't heard of where a person on a platform gets followers that copy their trading. And they then wind up even getting paid for it if they're successful in having a following.

It's very dangerous because what's happening there is that this person is getting inferred. getting everybody to push it up for them, they're getting out first and everybody's following. So fundamentally, as an econometric model, the people who are the thought leaders, who are, you could call them the manipulators, or you could call them the messiahs who are giving people ideas. In any case, those people that aren't acting to influence others will win, and the others who follow later will lose as a group by definition. condition because if you're in first, you have an advantage. If you're in last, you have a disadvantage. So it's really problematic. Social doesn't lend itself in investing to the same implementation that it does with followers on Instagram. It's just not the same thing. It is the

ownership of these securities. It's the secondary market. It's a zero-sum game in terms of profits and losses. There's a buyer and a seller for every security in the secondary market. It's not like the primary market, money comes into the primary market, right? The secondary market, when I buy it from you, we just exchange ownership and money. You take out the money. I put in the money into the flow that's in the secondary market. And so it is by definition mathematically that those leading influence will gain and those following influence will lose. It's really challenging. Yeah. And especially, you know, this is being done in the YOLO short term out of the money call options. Like the decay on those is just so high. And yes, when it hits, like you see these people

turning $30,000 into $50 million or something. But on the back end of this, the people who are last in this, it can get really ugly, really quickly. Absolutely. Absolutely. It's a really, it's a really challenging problem because there is some degree, and I think you look at the proliferation of these independent research sites over many years. I think there was a lot of of great stuff that people could get by being interested in, you know, motley fools, seeking alpha and so on and, you know, access to a lot of research. And then you just have this, I think the ability for people to get ideas and have this course, they have a right to that. And then it's kind of like regular social media. Everybody has a right to a voice, but then you

start to get false news and what do you do with that? And I think we're going through that in investing as well. And it's really tricky. I think the right path is technological. empowerment of individuals and the ability for all kinds of freedoms. But boy, we have a real problem across the spectrum right now in how that's actually being implemented. I don't know what they, I don't know what 2.0 or 3.0 is, but I feel like we're in the right direction, but we're really in a messy spot right now. That's kind of my take on.

Yeah. Look, I think this has been a good overview. Again, there's so much to cover here because once you start getting to the plumbing of the financial market and get crazy, is there anything you feel like we should have hit that? you want to discuss or just anything else? I think that we have to really look at also revamping the clearing system. That's boring stuff that people outside of finance don't talk about. So I want to raise the boring stuff at the end of your show.

But the point is that that will make a huge difference to how things operate. And these things that to some of my compatriots that have been in industry a long time and you start to say blockchain and they go, my God, it's not. not about that. Distributed ledger technology, same-day settlement, different ways of the data, the data

economic model that the regulators have put out there in my opinion that's looking at changing it and I encourage that. The existing model, the data model that they support, the data model that they're now examining, I think they're going in the right direction. Right now, exchanges make a lot of their

money off data, which makes that data accessible only to people that can afford and it feeds through and there's lots of, you know, free, you know, free feeds at brokers like ours and so on. But any way you can allow more data to flow more freely to people is, I think, really important. And so, you know, getting real-time settlement, getting distributed ledger technology, freeing up the data will create a distributed clearing system, which is real-time, that stuff is really, really important. And then identifying different ways to, to, to, within that system, remove the kind of, just the collateral required by brokers will go down.

That will allow these brokers to offer services with leaner capital, which means they can stay in this more competitive price offering range that they're in now, free trading, all these sorts of things, work better if you can leverage your capital better. So all that stuff is really important. Fixing the plumbing, making a 21st century plumbing is a really big deal. Yeah, and look, it's not just with, I mean, stock trading, obviously, because huge sums of money can be one law so quickly is one. But, you know, when I go to the bank and deposit a check, why does it take two days for the check to process and stuff? Like, there's so much of this unregulated, so much of this legacy stuff from the paper system that I think could be improved.

But that's neither here nor there. Yeah, no, you hit on it. Just to mention one last thing, the ACH system, the bank transfer system is prone to all kinds of fraud. there's all kinds of things where things can bounce. That's not necessary in today's world. You can get an ACH that you think clears the next day it bounces. People have a right to rescind their ACHs at the 30 days if there's fraud. So there's some thinking in there about protecting people.

But what it causes is net net, there's a lot of ACH fraud in the system that doesn't need to be there if we rethink it. There's a lot of that that just is a legacy of the way things work. Well, when we started this podcast, I believe GameStop, was trading for $205 per share. We're ending it. It's up to $248 per share. That's a 20% move in about 30, 45 minutes. Just wild stuff.

Al, I think we'll wrap it up there unless there's anything else you want to talk about. No, thank you very much. I really appreciate the chance to do this stuff. This was great. I'll be sure, all of us financial, I'll be sure to link there. People can check that out. This was fantastic. And the next time we have another big gamma speeds or something.

I know who did so much to talk about it. All right. Thanks. I love what you're doing. This is awesome. Thanks a good Al Thanks a lot Bye bye