YouSaid · the spoken record

Spencer Jakab

lines on the record: 135
first: 2022-07-08
most recent: 2022-07-08
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“It also plays a role in this because he is the major shareholder in a security swirm, also called Citadel. That caused lots of confusion and lots of conspiracy thinking that was a really big beneficiary of this. But what people don't understand is that this was a burden to them too, because it was a dangerous level of speculation in a very narrow set of stocks. You op”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. Well, Apex clearing got into trouble, which was the clearing broker for. Lots of brokers and the market makers who were processing the trade said, we're going to stop processing these trades because you're going to create a problem for us. So Citadel... Which was the biggest processor of their trades, and they got into a conflict with Citadel. Yeah, Ken Griffin is the hedge fund manager, his holding company plays a role in this because it injected money into Kate Plotkin's fund after he lost a bunch of money.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Not only that. We knew they were very close to going under, what we didn't know was how close they got to taking other people under.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“They got a call, and now we have more detail, by the way, recently a report came out from this congressional committee, very recently, very recently. Good. And a good report worth reading.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. Sorry. Yeah. But he was not totally unknown then. And he stopped doing those videos. And yeah, exactly. So people were very curious. It was probably one of the more watched. Congressional hearings, you know, because of him, really. And he got asked the fewest questions, or almost the fewest questions. But, I mean, they didn't want to antagonize him. And it's strange because he was the only retail investor there. And it was really all about retail investors. They could have asked him some. Some pretty good, juicy questions had they been curious about it, but I don't think they were. They were outraged that trading was halted. And that's a key part of the story.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Because he was called to this congressional hearing. That's the only time we've ever heard his voice or seen him. I mean, he was interviewed by two other YouTube.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think intraday he probably had $60 or $70 million. But I think About 49 or 50, like an end of day. And you would have had more. Had he not because he cashed in somewhat, he had perfect timing almost. He cashed them in during the week that was the real mania.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And options are trading even more. And only 13% of Robin Hood's customers traded options. But options were the most lucrative product for them because And that's, you know, you've heard a lot about payment for order flow. Payment for order flow, I don't think it's just Mechanical way of paying for trades. I don't have such a big problem with it, but it is a practice where you basically you sell your orders to a market maker that's off a stock exchange, that pays you to execute it, and then keeps a little bit of the money, basically is very efficient at matching it up. Payment for order flow, the only problem I have with it is that it enables this behavior by making trading free. Otherwise, I don't think there's anything really insidious about it, which is a controversial view now, I know”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“That if you look at your account last, you'll do better because you're less likely to see a loss, which pains you more than again pleases you. And so that is not the formula for success. They understood that.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“You open up your app, and the first thing you show is what everyone else is doing and buying, what's up, what, what's down, that's not useful information. Their active customers, the people who use the app, were using it in twenty twenty on average over seven times a day, opening it seven times a day. They had customers who were trading eleven thousand times over a six month period. This is just absolutely no reason for anybody to trade 11,000 times or even a thousand times or even 100 times in a time span like that. Study after study, by the way, has shown that that is inversely correlated with your performance. The more you trade, The worst you do. It's a very well understood effect. And even just checking your account frequently, it's called myopic loss aversion. It's well understood.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no. And so today you can do that. And Robin Hood and others, you can buy a fractional share. You can buy an exchange traded fund that costs 0.03% a year. You can do all these things. The door is open for people with very little money today. And it was prior to Robin Hood, although the Robin Hood effect did kind of accelerate things very, very cheaply, very easily to get on that ladder, which I urge anyone, especially in their like their teens or 20s, getting started out with lots of decades to compound their wealth to do. It is a smart thing to do, to get on the ladder, but not in an active crazy way, in a kind of put your money and let it grow and don't check it a lot way and save as much as you can way. And that really has been democratized. But then when you talk to Robinhood and say, hey, you guys are just encouraging you've gamified this thing and you're inducing FOMO.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a phrase that drives me crazy. Democratizing finance to me is basically bringing investing to a level that anyone can participate. And basically that has been accomplished through years of competition and technological progress. You know, I gave the example we were talking earlier about the paperwork crisis. It was very expensive to trade then. If you had a little bit of money that they wouldn't bother giving the time of day on Wall Street, you had to have a lot. And then you really got fleece because of big charges, even just to, you know, people talk about these long-term charts where like, oh, if you had invested in 1926, you had this much money. There was no index fund then. And it cost you money to reinvest your dividends. And like if you had a little bit of money.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Went up a lot. And Warren Buffett, the greatest investor of all time, got out of airline stocks, which he wasn't right, but he very well could have been right. I mean, things looked pretty hairy. We didn't know there was going to be a vaccine. We didn't know how bad the COVID pandemic would be. It certainly looked really bad in March and April 2020. And he sold out of his airline stocks at a big loss, not typically buffety behavior. You make the best decision.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And that really formed the attitude of this, there are people who were participating in the Steam Stocks crews who had three months, six months, nine months, maybe a year of investing experience, all of it in these crazy markets. Everything that some serious guy like Barry Ritoltz goes on TV and talks about and says I would not touch this, those are the things that went up, right? So, I mean, and went up.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, and that tells you why a quarter of a trillion dollars almost was lost by short sellers in 2020. It's because The dumber it was, the better it did.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and 98% of what they post is just rude jokes and memes and things like that. So there's not a lot of, the thing is that the memes were the message. The memes, you know, they used... Hieroglyphs, or rather they use to communicate. And so, which is why we call them meme stocks today. And yeah, I mean, they did not take it seriously. They do today. As a matter of fact, there was a study done that showed that today 95% of hedge funds, either themselves or they pay a service to monitor social media for their positions. So, you know, they take it very seriously.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's a pretty good guess at what happened. I think it also gotten to his level yet. I think it just... The person one or two levels below him just didn't take it seriously. They were like these break. Why would you?”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“There are, although he owned puts, which do have a limited laws. You can only lose the premium. And that's what showed up. And then he was being talked about. On this forum, when Ryan, at the same time that Ryan Cohen came in, and then he opted. And even when he was being talked about, and I mean, I don't want to kind of get into, you know, let me say things that you don't want to say because I.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Still 100%. The reason that they became aware of him, because the way that short selling works is you can see how much short interest there is in a stock, but you can't see who is shorting it. But if you buy derivatives for your fund that have the same effect, and he did. And that turned out to be a fatal mistake.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I mean, obviously, you know, in reporting a book, there are people you speak with who are on the record, people are off the record. I did try to kind of suss that out. I never really to my satisfaction did it. I just think it was because... Was just nothing else too short. I guess $2”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it was probably $40, $50 at that time. So, you know, you wrote it down to $260, I think. Which raises the question?”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And he testified that in 2014, when he set up his fund, that was one of the first positions he put on. It was a good bet too. In 2014, because it went down a lot between 2014. Where was he initial?”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“It was so and $7 billion of it went poof in a few days because of this. Yeah, so, but he was. And there are other hedge funds that were short GameStop, but he was especially short because he had a fund that specialized in retailers and things like that and consumer discretionary.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Totally. He personally, this is like just incredible to me, this number. I've mentioned this. People said, no, you must be wrong about that. People not from Wall Street are like, Really? Like he earned personally $846 million the year before this whole episode went down.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“But he was seeded by Steve Cohen, and he for years had huge success. He was a very good fund. People weren't laughing anymore.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, people laughed at it. Like they were like some of the commentary when he set up the fund because he came from SAC, which was then later shut down. Steve Cohen's fund. And he now points.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“He was like, no, no. It was his grandfather's name. His grandfather was a convenience store owner who we really admired. And so he named his lovely sentiment.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And then they told them on the board hey, there's this hedge fund manager who, like otherwise a low profile guy, his firm is, believe it or not, called Melvin Capital. What a dweib. And how did the name Melvin?”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“They love Shabbat. Exactly. Yeah, he's cool. But if you wear a suit and work on Wall Street, you're like a cartoon villain to them. And then specifically, if you're a hedge fund manager, hedge fund managers to them are evil personified. And then if you're a hedge fund manager who sells stocks short where there's already this bias against betting against something, there's this kind of sense that like they want to ruin a company, which is not what they want to do because that's not what happens when you bet against a company.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“You've had a further kind of spread. You know, the rich have gotten richer and the poor have not gotten much wealthier. And so you really do have polarization in terms of wealth and income and access to all kinds of things in this country. It's not a very egalitarian society that we live in, much less so than the past. And so they focus that animus on not on rich people because they like Elon Musk and they like other rich people. They like Silicon Valley rich guys. They love Chamaf.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's a really interesting point at which to kind of understand where the people who mainly were involved in this came from. So it's like young people between the ages of 18 and 35 primarily who participated in this, mostly male, as I said, but gender doesn't matter in this case. But their form of financial experience before they ever could invest was the global financial crisis. And so, and there's this lingering anger that we never really got our pound of flesh. My parents lost their home, my parents' friends lost their house, or I had these student loans that are really hard to pay back. I can't earn enough and I can't buy a house and these guys are getting rich. And the decades since the GFC, you've...”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Especially bad times in the market, and research has shown this again and again. When you restrict short selling, then you wind up kind of delaying the normalization of the market, like in 2008 and around the time of the short sellers who are the first.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Do something hopefully good. Yeah, so they, I mean, I'm not holding short sellers up as like a paragon of virtue there. Out there on Wall Street, they're trying to make money. That's the free market. They're out there. They're playing a very dangerous game. They have to be really confident in selling something short because as I said, the losses are theoretically unlimited, the gains are capped. It's the inverse of what you face as a normal investor. By the way, I'm not encouraging anyone out there to go and sell stock short. It's a very dangerous and complicated thing. It's hard. And I don't think that people need to do it. But I think that we're all better off.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“As Jim says, short sellers are financial detectives and regulators are financial archaeologists. After the fact, they come in”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“But there were no short selling, then there were only two things you could do. You could say, I'm going to buy the stock or I'm not going to buy the stock. You abstain or you vote yes. You can't vote no. You can't say, you know what, the stock is too expensive. And so there's nobody to really kind of correct the value of a stock. It takes a much, much longer time for the scales to fall from our eyes, not just when there's a fraud like Enron, which was explored by Jim Champ.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“If you look at the way that short sellers, and I just encourage readers to go to Google right now and type in short sellers R and tell me what you see. And it's not going to be a nice word. It's not going to be a nice description. So going back to the history of stock markets, back to the 1630s in the Netherlands, short sellers have been reviled because whereas most of us buy a stock and then hope it'll go up and keep paying us dividends, they are making the opposite bet. Making that opposite bet, though, is not predatory at all. As a matter of fact, the existence of short-selling Is very beneficial to everyone in the markets, but especially to a retail investor that doesn't know a lot. And I'll explain why. One reason is that short sellers provide a lot of liquidity to the market that wouldn't otherwise exist.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Terrible time financially in 1975, and you're like, oh, this is the first step in this kind of revolution that's going to make you guys really rich. You're going to have this surge of people in the 80s coming, 401ks are going to be invented and all this stuff. They would have thought you were crazy. And then some guy's going to go on this thing called the internet. His name is Roaring Kitty, and he's going to make a video game store, you know, be the most traded security on the planet from total obscurity. Like then they really think you're crazy. But that was the beginning of it. That was a key step.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Down to free, that kind of makes it a little bit easier for there to be a speculative mania. And so that was just kind of part of the kind of long arc of history on Wall Street that I tell. Yeah, and so making it free, you really crossed a Rubicon, but even making it cheaper made things easier. Of course, it got made cheaper in the middle of the worst decade ever, really, except the 1930s for Wall Street 1975 was a terrible time. If you had gone to these brokers with sideburns and wide ties and polyester suits and stuff in 1975, who were like having a...”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Wall Street was hot, and that was at a time that it was really expensive to trade, which is the that's the reason that one reason that I brought it up because it wasn't until 1975 that commissions were deregulated. So for years and years and years, this is a complaint saying that like brokers could charge fixed commissions and it was just really expensive for brokers to help themselves to your money, basically, on Wall Street. You know, all these people who were involved in this never could have been involved because the hurdle financially to get into trading was just too high. And then you couldn't be hyperactive. And even then, people were hyperactive. Then when you brought commissions down and down and down, you had the dot-com and whatever. And then now you had this, which was like makes $8.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. Well, there's a great book by John Brooks called The Go Go Years, where I think I first heard about that. I've read about it other places too. But the paperwork crisis was something that happened during a previous speculative mania in the late 1960s when you had just an explosion in trading activity. And this was before things were computerized. There was so much paperwork, in fact, that the stock market had to be for a long, long time closed on Wednesdays just in order to allow people to catch up”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“It totally was. I mean, 140% of the float. And people, and of course, they're ongoing sort of complaints and conspiracy theories like, that's illegal. You can't, you know, it is not illegal because there's a process called rehypothecation where If you go on the market today and you buy a stock and then it's in your account at Schwab or whatever, Schwab might lend that stock out, even if you purchase that stock from a short seller. They don't know where it came from. So a stock can be popular. Right. It could be lent twice or three times. It happens.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Because then he would be forced to buy back. Then his money, he would pile his buying on top of ours to buy back the stock, and then there'd be a stampede for this sort of, it's like shouting fire in a crowded theater. Short squeezes happen all the time, but Don't like those ambushes, they used to happen before there was an SEC. Now you can't do that.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, you had a terrible day, but that's it, not a terrible day, you had a bad day. It was probably some small part of your huge portfolio. And so... What these meme stocks had in common was that they're all losers like that. They're all companies that had not made money in years, were headed for possible bankruptcy, were sort of just anachronisms like BlackBerry. The companies that like in 2001 were sort of hot, not in 2021, right? And so they were on a horrible year for short selling. They felt safe betting against these companies, but they felt too safe. And that was the kind of the dry kindling that started this fire was that they felt so safe betting against some of these companies that their short positions left them no exit if things really went wrong. But no one, as we said at the beginning of the show, it's not like you and I, it would be illegal for us to gang up and say, hey, I happen to know that X, Y, Z hedge fund is very heavily short this thing. And we can ambush him by basically all colluding, putting all our money together, and pushing it to the moon.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Totally. And that's usually a smart bet because you usually don't worry about something terrible happening to you, being ruined, right? I mean, you don't think, what's the worst thing that's going to happen? You bet against GameStop and let's say somebody shows a Best Buy shows up and buys it. Pays double pays double. Okay, you had a really bad day.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that is just a world of pain if you're a short seller. And so think about it if you were, I mean, there are people out there, Jim Chanos and what have you, who are dedicated short sellers. There are a lot more people out there who have short selling as part of their strategy. That's the bulk of short selling.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“2020 was possibly the worst year ever for short sellers or people who bet that stocks are going to decline, usually by borrowing the stock and selling it. So basically they opened themselves up to unlimited losses in theory and limited gains. And so 2020 was a terrible year. You've had all kinds of dumb stuff going up that they were betting against. Nicola and... You know, I can go on and on and on about. So let's”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“The mother of all short squeezes, you know, the kind of the Saddam language. And it briefly doubled and then settled back down. But that was a foretaste. And that's the first time he mentions like, hey, in addition to all the good stuff I think about GameStop, there's this additional possibility. I'm not going to really count on it that there could be a short squeeze because the thing that GameStop and the other, they call them meme stocks had in common was that they're all kind of losers.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“But then a light bulb goes off, and even before this, a light bulb kind of went off in his head some months before because someone had pointed out on this board, like, hey, this could be the greatest short squeeze of your life.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Just a million, just one million. One million, then two million, a couple of million, no big deal. Life-changing money for everyone. Exactly. Before taxes.”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so he shows up, and then things start to get interesting. It starts going up to the point that it was at the point that Deep effing value would have sold. He said, I think he had made enough money. He was a millionaire”
2022-07-08 · Masters in Business · Spencer Jakab on the Death of Meme Stocks · IDENTIFIED FROM THE TRANSCRIPT · source