Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
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Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
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Don't judge by the title. Listen first. You will enjoy this one!
LINK> Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Spencer Jakab is the Editor of the "Heard on the Street" column for the Wall Street Journal and the author of two books. His new book is "The Revolution That Wasn't: GameStop, Reddit and the Fleecing of Small Investors," which is the topic of our conversation. Previously he wrote "Ahead of the Tape" published in 2015. Prior to joining the WSJ, Spencer was an analyst and later a director of emerging markets equity research at Credit Suisse.
Back in 2020, when millions of mostly young people opened brokerage accounts for the first time while sheltering from the Covid-19 pandemic, it seemed like they could do no wrong, even as some legendary investors could do no right. But that all changed after a climactic battle between the haves and have-nots during January 2021. In this surreal interview, we look back over the rise and fall of meme stocks, young and wild Robinhood traders, COVID checks and easy credit, and the Reddit revolution that wasn't.
This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012. Your tax-deductible donation to the Bogle Center is appreciated. [Link fixed by admin LadyGeek]
Rick Ferri
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Don't judge by the title. Listen first. You will enjoy this one!
LINK> Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Spencer Jakab is the Editor of the "Heard on the Street" column for the Wall Street Journal and the author of two books. His new book is "The Revolution That Wasn't: GameStop, Reddit and the Fleecing of Small Investors," which is the topic of our conversation. Previously he wrote "Ahead of the Tape" published in 2015. Prior to joining the WSJ, Spencer was an analyst and later a director of emerging markets equity research at Credit Suisse.
Back in 2020, when millions of mostly young people opened brokerage accounts for the first time while sheltering from the Covid-19 pandemic, it seemed like they could do no wrong, even as some legendary investors could do no right. But that all changed after a climactic battle between the haves and have-nots during January 2021. In this surreal interview, we look back over the rise and fall of meme stocks, young and wild Robinhood traders, COVID checks and easy credit, and the Reddit revolution that wasn't.
This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012. Your tax-deductible donation to the Bogle Center is appreciated. [Link fixed by admin LadyGeek]
Rick Ferri
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The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Looking forward to listening to it. Thanks Rick.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Excellent podcast, very informative and interesting. Thanks Rick and Spencer!
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
I got an advance copy of the book from Jakab to review and write a blurb for. Really good read and I recommend it highly.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Thanks Rick,
Listened to every episode, and looking forward to this one.
Listened to every episode, and looking forward to this one.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Very nice podcast. Spencer tells his stories very well. And you and he had an easy rapport on the podcast.
I’m looking forward to reading his book.
Well done!
I’m looking forward to reading his book.
Well done!
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Excellent episode! I wish only that it were longer.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Looking forward to this and thanks, Rick. He has another good book, “Heads I Win, Tails I Win,” that is on the wiki’s reading list and among Taylor Larimore’s “Gems.” I read it and it’s Boglehead all the way:
viewtopic.php?f=10&t=221968
viewtopic.php?f=10&t=221968
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Great episode! I think Spencer did a great job explaining a lot of the terminology and explaining what actually happened during the meme stock saga.
I think another thing I would have liked to have seen touched is the significant number of people still holding on to the delusion that a short squeeze is incoming and that the price is going to go to 10,000. There’s still a subreddit called superstonk where people are convinced. People are dumping not insignificant amounts of money hoping for their lottery ticket.
There’s also the CEO of AMC that has become exceptionally wealthy selling his now richly valued shares while going on YouTube shows and podcasts trying to court the meme stock buyers.
The whole saga is wolves in sheep’s clothing enriching themselves at the expense of the naive.
The only way to win is to not play. Hold a broad market index fund at the lowest expense ratio you can find.
I think another thing I would have liked to have seen touched is the significant number of people still holding on to the delusion that a short squeeze is incoming and that the price is going to go to 10,000. There’s still a subreddit called superstonk where people are convinced. People are dumping not insignificant amounts of money hoping for their lottery ticket.
There’s also the CEO of AMC that has become exceptionally wealthy selling his now richly valued shares while going on YouTube shows and podcasts trying to court the meme stock buyers.
The whole saga is wolves in sheep’s clothing enriching themselves at the expense of the naive.
The only way to win is to not play. Hold a broad market index fund at the lowest expense ratio you can find.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Benjamin Graham said, “In the short run, the market is a voting machine but in the long run it is a weighing machine.”TheDoctor91 wrote: ↑Thu Jan 27, 2022 6:49 pm The only way to win is to not play. Hold a broad market index fund at the lowest expense ratio you can find.
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Nice podcast Rick. Unless I missed it I don't remember hearing one mention of Melvin Capital which was one of the biggest short sellers of GME who got squeezed. The CEO of melvin was brought out in front of Congress along with vlad (robin hood) and citadel. I saw the testimony. Hopefully they're documented in the book as a record of this historical event.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Loved the podcast.
He probably didn't. Nobody's been able to verify that. What he did say, in Security Analysis, was:Rick Ferri wrote: ↑Fri Jan 28, 2022 1:52 pmBenjamin Graham said, “In the short run, the market is a voting machine but in the long run it is a weighing machine.”TheDoctor91 wrote: ↑Thu Jan 27, 2022 6:49 pm The only way to win is to not play. Hold a broad market index fund at the lowest expense ratio you can find.
and...the market is not a weighing machine, in which the value of each issue is registered by an exact and impersonal mechanism, in accordance with its specific qualities. Rather we should say that the market is a voting machine, whereon countless individuals register choices which are partly the product of reason and partly the product of emotion.
He is only on record as saying that it is not a weighing machine. Many have inferred that he must have meant that it does become a weighing machine in the long run, but Jason Zweig devoted a whole article to looking into this and wasn't able to find evidence.The stock market is a voting machine rather than a weighing machine. It responds to factual data not directly, but only as they affect the decisions of buyers and sellers.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Yes, it's in the book.arcticpineapplecorp. wrote: ↑Fri Jan 28, 2022 2:58 pm Nice podcast Rick. Unless I missed it I don't remember hearing one mention of Melvin Capital which was one of the biggest short sellers of GME who got squeezed. The CEO of melvin was brought out in front of Congress along with vlad (robin hood) and citadel. I saw the testimony. Hopefully they're documented in the book as a record of this historical event.
Rick
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
They mentioned Gabriel Plotkin (but did not name Melvin) in the podcast.arcticpineapplecorp. wrote: ↑Fri Jan 28, 2022 2:58 pm Nice podcast Rick. Unless I missed it I don't remember hearing one mention of Melvin Capital which was one of the biggest short sellers of GME who got squeezed. The CEO of melvin was brought out in front of Congress along with vlad (robin hood) and citadel. I saw the testimony. Hopefully they're documented in the book as a record of this historical event.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Melvin Capital Management's involvement is discussed in many places in the book.Nate7out wrote: ↑Sat Jan 29, 2022 6:16 amThey mentioned Gabriel Plotkin (but did not name Melvin) in the podcast.arcticpineapplecorp. wrote: ↑Fri Jan 28, 2022 2:58 pm Nice podcast Rick. Unless I missed it I don't remember hearing one mention of Melvin Capital which was one of the biggest short sellers of GME who got squeezed. The CEO of melvin was brought out in front of Congress along with vlad (robin hood) and citadel. I saw the testimony. Hopefully they're documented in the book as a record of this historical event.
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Thanks again Rick,
The revolution that wasn't. I know it's been said before and I'll say it again, the most effective revolution is what you and the John C. Bogle Center for Financial Literacy are doing.
If people could manage their own money with financial literacy, they would know to stay away from what happened during January 2021 with the puts, calls, options, shorting, and the dozens of other distractable and downright dangerous strategies to make a quick buck.
The stock market only returned about 9.0-9.5% since the 19th century according to Morgan Housel and others. By the time you take out ordinary income taxes (IRAs), capital gains taxes (after-tax investments), pay the investment costs, consider the impact of inflation, there isn't much money left to pay that adviser's 1.0% AUM too. Returns higher than 9.0% are based on speculation and luck, nothing wrong with that when you time it right, get the right individual stocks or sectors, the right active manager(s), and know that it's luck and not skill. But it is NOT a long-term plan.
The revolution that wasn't. I know it's been said before and I'll say it again, the most effective revolution is what you and the John C. Bogle Center for Financial Literacy are doing.
If people could manage their own money with financial literacy, they would know to stay away from what happened during January 2021 with the puts, calls, options, shorting, and the dozens of other distractable and downright dangerous strategies to make a quick buck.
The stock market only returned about 9.0-9.5% since the 19th century according to Morgan Housel and others. By the time you take out ordinary income taxes (IRAs), capital gains taxes (after-tax investments), pay the investment costs, consider the impact of inflation, there isn't much money left to pay that adviser's 1.0% AUM too. Returns higher than 9.0% are based on speculation and luck, nothing wrong with that when you time it right, get the right individual stocks or sectors, the right active manager(s), and know that it's luck and not skill. But it is NOT a long-term plan.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
It was the first time I've heard someone say the word "meme" with a short e sound (like "gem"). I've only heard it with a long e sound (like "beam").
May all your index funds gain +0.5% today.
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
The podcast is now on YouTube: Bogleheads® on Investing Podcast Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
I appreciate Rick Ferri mentioning Taylor Larimore's 98th birthday at the start of the podcast.
I appreciate Rick Ferri mentioning Taylor Larimore's 98th birthday at the start of the podcast.
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
That was a great podcast! Rick, thanks for educating everyone on a topic that's suspect to any level-headed indexer. It helps to see the pitfalls and Spencer does a great job simply telling the story of what happened.
Keep up the great work.
Keep up the great work.
“Spending money to show people how much money you have is the fastest way to have less money.” - Morgan Housel
Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Great episode. I found it interesting that the GME thread has recently come back to life with one poster pushing the "movement" version of events. Maybe there's some reflexivity to Spencer Jakab's media appearances.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Hi:
We have completed the transcript for Episode 042 with Spencer Jakab.
regards,
Thanks to the transcription team (asset_chaos, sycamore, and yours truly)
We have completed the transcript for Episode 042 with Spencer Jakab.
regards,
Thanks to the transcription team (asset_chaos, sycamore, and yours truly)
Additional administrative tasks: Financial Page bogleheads.org. blog; finiki the Canadian wiki; The Bogle Center for Financial Literacy site; La Guía Bogleheads® España site.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
Excellent podcast! I plan to read the book.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab
The Economist has a review of “The Revolution That Wasn’t”. From the review
Mr Jakab’s knowledge of Wall Street shines in the historical context he provides and the industry aphorisms he relays .... Despite the density of the subject matter, which includes “rehypothecation” and “gamma squeezes”, the story is deftly told. If the first draft of history was not quite on the money, as Mr Jakab contends, his second go has set the record straight.
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