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

Post by Rick Ferri »

.
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]

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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Grt2bOutdoors »

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

Post by ThankYouJack »

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

Post by Mel Lindauer »

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

Post by sschullo »

Thanks Rick,
Listened to every episode, and looking forward to this one.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

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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!
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by mikejuss »

Excellent episode! I wish only that it were longer.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Fallible »

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
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by TheDoctor91 »

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.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Rick Ferri »

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.
Benjamin Graham said, “In the short run, the market is a voting machine but in the long run it is a weighing machine.”
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by arcticpineapplecorp. »

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

Post by nisiprius »

Loved the podcast.
Rick Ferri wrote: Fri Jan 28, 2022 1:52 pm
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.
Benjamin Graham said, “In the short run, the market is a voting machine but in the long run it is a weighing machine.”
He probably didn't. Nobody's been able to verify that. What he did say, in Security Analysis, was:
...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.
and
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.
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.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

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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.
Yes, it's in the book.

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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Nate7out »

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.
They mentioned Gabriel Plotkin (but did not name Melvin) in the podcast.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Rick Ferri »

Nate7out wrote: Sat Jan 29, 2022 6:16 am
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.
They mentioned Gabriel Plotkin (but did not name Melvin) in the podcast.
Melvin Capital Management's involvement is discussed in many places in the book.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by sschullo »

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.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by ApeAttack »

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").
:P
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by LadyGeek »

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.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Wings5 »

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.
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by drk »

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. :happy
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by Barry Barnitz »

Hi:

We have completed the transcript for Episode 042 with Spencer Jakab.


regards,
Thanks to the transcription team (asset_chaos, sycamore, and yours truly)
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Re: Bogleheads on Investing, Episode 042: Robinhood, Reddit, and Meme Stocks with Spencer Jakab

Post by ClevrChico »

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

Post by asset_chaos »

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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