Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Wisenthal and I'm Tracy. Tracy. You know, it was really fun last year was Game to Stop? That was a really good time, wasn't it. Yeah, plus a land war in Europe that we haven't seen for many, many decades. But yeah, retail mania was this big thing that happened in early one And I'm just looking at the chart of Game Stop that was sort of the flagship stock for mean stock Madia Mania, and it looks like if you zoom out now, it kind of looks like an earthquake, which in some sense it kind of was, Like it was this thing that just shook up the entire market and people at the time we're saying that this was like the end of capitalism as we know it. It does. It definitely feels like so much has happened over the last year. I mean, we've had a pretty big sell off in areas of the market that are really hot. It's been a long year. So many different things have happened over that time, so many new narratives, obviously tons of focus these days on inflation and so forth. That whole period, it really seems like ancient history, but honestly, it was really not that long ago. I think Matt Levine has had some columns saying things that like, oh, of game Stop is still trading above a hundred and three months, I have to retire because all of markets are broken. And I think it was still there or definitely lasted a long time. And that's kind of the other weird thing about these sort of these manias, which is that you can identify them as a mania sometimes in real time, or say this is ridiculous, this is over overvalued, but it's really hard to call them at the time. It's really hard to time the trades. Yeah, I think that's right. But there was also this aspect of game Stop where people were treating it, you know, not necessarily as there were plenty of people treating it as a speculative bubble, but there were some people who just said I like the company, or I like whatever this stock represents to me, and I'm going to buy it, almost using it as a sort of like go fund me for the business. And I honestly, one of the things that I think is really important in all this, which is that you know, at the peak, you know it got started in the spring of like that's really when it kicked off. That's when we had the explosion of new people trading. A lot of people who are staying home, either they were working from home, people have lost their jobs, and so you had this explosion of people who are getting into retail trading options, trading, opening up a robin Hood account, and for the first time, like I guess really since the late nineties into the dot com bubble, it was the first time and basically twenty years in which it felt like stock trading was like part of the environment, part of the culture, and something that people are just talking about their individual stockholdings in a way that really, yeah, I don't think had been the case for at least twenty years, right, I mean, I remember there's a there's a dorman who works at a hotel in New York who I know who was asking me about Tesla options around that time, and that, you know, like it's verging on the famous JP Morgan shoeshine boy kind of thing when the doorman starts asking you about what options you should be buying for tesla um. But yeah, it definitely was a cultural event, right, it was really it was really a cultural moment, and so I'm really interested in like what became of that. And I have my suspicions, you know, my guests would be that a lot of people have now lost their money, they lost their gains that they experienced during the pandemic, maybe their disillusion. We know that trading volume is down, but I also have to imagine there's at least some people that have done well, you know, they've used this moment perhaps to learn more, wanted to further their own education, become deeply interested in how the markets work, options are prized, how trading works, how to evaluate an investment, And so I suspected at least some decent percentage of people got excited about the market from Spring twenty one one have stuck around and really further their knowledge to quite a degree. Yeah. Absolutely, And this is something that you see on you know, the classic message board for a lot of the retail training, which is Wall Street bets. A lot of the posts that go up on there are incredibly sophisticated in trading strategies, and a lot of them aren't, I have to admit, but you can learn a lot by by reading some of that. Now, I think you make a really important point like some are, they're not great, some are extremely great. Some people have learned quite a bit, some got really smart. Some are much smarter than anything I know about, much more knowledge of market mechanics, how to price volatility. So I think we don't know yet the final chapter of this story and what this new cohort of traders that uh and what became of them that really started at the beginning of the pandemic. I'm really excited. We have two guests to great commenters who've followed for a long time, get to give us different perspectives on the world. What happened all those memes dogs, what's going on with retail trading. We're gonna be speaking with Lily Francis. She's the director of quant research at Moody's Analytics. And we're also going to be speaking with Kyla Scanlon, fantastic content creator, founder of a new finance education startup, awesome on Twitter and Instagram, TikTok, her newsletter all great stuff. So Lily and Kyla, thank you so much to both of you for coming on. Yeah, thanks stoving us. So what do we kick it off? You know, let's say both of you be such great commenters over the last year, of the last couple of years, building up significant audiences, great insights into the world of memestocks, retail trading, the sort of new cohort of investors. But why don't you just give us your perspective, Like, how does right now in Spring two feel different than a year ago? Yeah? Sure, So I'll take you first and then lily up stuff to you. F for for me. So, I wasn't really in the still working at an institution back when game stock kicked off in February. Orry, but I think you have noticed a little bit of a downturn, whether that be from people you know participating in discussions on Twitter or on Reddit. But I think the people that you see who have stuck around, they're even more impassioned than they were back in February April twenty April, um February. So I think that you're seeing a decline in the number of people who might be participating, But the people who are still around are incredibly into a m C G M ME And you still do see these stocks continue to tick back up. And I also see think that you're starting to see people get a little bit more interested in monetary policy. Jerome Powell has become a household name, and I don't think that was the case maybe you know two or three years ago where people knew the Federal Reserve president name. So I think that's a big one as well. Yeah, really, what do you think? Yeah, so I want to echo callus sent men here essentially, And you can see this pretty saliently, and you know Google trends or app any if you've looked at those about the rise and fall of Robin Hood. I mean fundamentally, you can't talk about the meme stock episode without thinking about Robin has impact on the options market in particular. I mean, in my own data you can see fundamental differences over time and the growth of options with a pretty dramatic change in their volumes, as well as impact the paddle the markets when Robin Hood essentially announced the trading of zero costs their transaction options. So I think that you know, you can see now that there's definitely a decline in retail participation, especially in the options market. I think, as you know, I discussed this with something I speculated back in January that when you look at these meme stocks based on the fact that fundamentally, they're trading well disconnected from stuff like fundamentals or even you know, kind of an understanding your future value of the company itself. Then what you're seeing really is the evolution of something that kind of looks for the cults. And I don't even mean this in a bad way or a good way, but I have these this passionate core of people who believe fundamentally in this truth that is extremely heada head. I can never get that word right, head heterodox, heterodox. So what happens is that no matter what you throw at them, whether it was Robin Hood, you know, turning off the buy button, or whether it was new earnings reports and game stop, or whether it is the macro environment where now you're still going to have these people who have faith in this narrative that over time becomes a pretty dominant force. I when you see this in cryptocurrencies, you saw this ten years ago on Apple, and you're salt with Tesla that fundamentally, this group of people is a capital base that the company, if they do play their cards right, can draw on to actually hopefully create value for their investors. So this is something that I've thought a little bit about but it's almost like, you know, you talk about the disconnect between the fundamentals and the share price, and it's almost like the price becomes a token that is representative of an idea or people's idea of what that company or that business or that cryptocurrency or whatever actually stands for. And I wonder what does that kind of meme trading or stalks, like, what does that actually mean? What does that mean to you? Like, how would you define it? Is it that idea of you know, a sort of a belief system getting wrapped up in a tradeable token that people are willing to throw their support behind, or how would you define it? Roughly, everything that trades, fundamentally is an agreement for someone that this is the value and I will be willing to buy it from you. That is the only arbiter price of any asset is that someone is willing to buy it from you at that price in the future or now, you know, I mean, if we're talking about marketing spot prices, so there are institutional memes. I mean, when you think about fundamental analysis, there is no law of the universe, like a law of gravity that says stocks should trade at twenty times Pde. Obviously, we have models which kind of give us mathematical certainty that allows us to look at how the market is reacting and say we disagree with it. That's where you get the idea of theoretical versus market pricing. But at the end of the day, you know, even those models, the models of the mental analysis, they largely depend on either are assumptions being correct or the adoption of the model itself. And this is something that Emmanuel Derman, for example, the famous options plant, has talked about as well. With the advent of black shuals in option pricing, you see that the assumptions of black shoals start dictating market structure. And you know, fundamentals is obviously probably the most cohesive and long lasting meme of the markets in the sense that we all agree that a company should be trading at a certain discounted cash flow evaluation. But it doesn't mean it has to because at the end of the day, if I go to you and I'm saying, look, I will buy this from you at a value wildly inflated, you know that is my prerogative. You know that is the market price at that juncture. And you see this with a higher susceptibility, especially for these smaller companies like a game Stop, because realistically, with a game Stop or an AMC retail, especially if they're highly dedicated as well as newly enriched by you know, the recent bubble and what we call the stock market, they have enough force that they could own a significant fraction of the float. And when that happened, you know, obviously you can have short sellers who can interact with the markets and try to restore what we call efficiency. But at the end of the day, there's a reason why game Stop is still trading in a hundred fifty dollars to share. We're talking now a year and a half later, and you see these companies that I wrote it off, everybody else wrote it off. We were wrong. You know. It doesn't mean that the market and fundamentals are dead in any way, but at the end of the day, everything that trades trades on someone's belief. Yeah, I see, that's a core driver of what's going on. Like I think G and A m C all of that it was. It's really emblematic of like a bigger thing in my opinion, Like it's not just about obviously a video game company or a movie company. It's you know, dissatisfaction with the institution or being upset about how things are playing out. And we were in the middle of a pandemic during that time, and I guess I don't know if we're out of it yet, who knows, But I think there's this big loss of trust in traditional institutions and g M E and a MC somehow we're able to capture that, and they were able to. That's like the premium that they sort of end up reflecting is like people being like, well, actually, I'm pretty mad, and I'm going to buy this company to try and prove to you how mad I am. And that's why it's still going up is because I think that narrative of this loss of trust in institutions or in like traditional structures is continuing to play out, and somehow AMC and g M E and other beam stomps have sort of captured that narrative. And I also think that we are in the era of themification of everything, where um, you know, Elon Musk buying Twitter for example, or even that like the idea of coming through where everything is sort of meant to be laughed at, like nothing is real like there's a lot of financial nihilism, and so I think G M, E, A, M C, etcetera, like this is you can't really quantify that, right, like this is all just speculation. But I think that that is also an element of what we're seeing where people are just like, Okay, what's going on? I don't know, so let me buy the stock because nothing makes sense anymore. What's interesting is it kind of harkens back to date of credit. You know, when we look at firms that are very close to let's say a default point, then fundamentally, you know, the basic model that we all kind of understand is the Merrigin model, where we treat the equity value as an option on the firm's continued survival and a lot of ways. You know, that is the basis of how I viewed the moon stock trade, where you have these stocks which you know fundamentally maybe worthless or close worthless, or as I joke last year, I think at one point AMC had negative shareholders equity. But at the end of the day, you know, you treated the core reason that one buyas stock is a belief that they will make money from doing so. It isn't based on some ethics, it isn't based on true financial calculations. And as you see these squeeze more and more, you know you could almost treat these as an option on the continued mean value of this equity or of this asset. And I think, you know, one of my practical realizations from that is that there are disruptions to this meaning, which you could say are stuff like earnings, where you kind of get this pressure to go back to reality. But then you see an asset like a bitcoin, which has no fundamental value. It doesn't there is no equivalent of a bitcoin earnings. There is an equivalent of something that will directly imply a market price that can be arbitraged downwards. And that's when you see like the longevity of these memes. How means die, I don't know how beams die, Like I think that you see market cycles and it becomes really hard for memes to hang on during that time. Where As Lily just pointed out, like you have earning supports, and if all of a sudden, the company that you're putting all your networth into, it's like, oh, maybe it's not a company, it's actually just like a you know, a holding company, per se it doesn't really have any underlying value like that can be really difficult. So I think like everything sort of boils down to this idea of collective belief. And so if all of a sudden, the collective belief behind whatever the asset is goes away, if people stop saying, if they just stop believing and whatever, that ends up looking like like you're going to see the stock price end up going down, Like I don't know if robin hood is not really a meme stock, right, but like you're starting to see people sort of rotate away from that because collective belief and whatever they were meant to do sort of rotutes away too. So I think that's what I would say is collective belief begins to die out, um, but humans naturally, like we'll just go meme and other things. So it's like as long as the meme cycle continues, they're just going to move on to something else. I think there's a joke on Twitter especially that I treat everything kind of in the lens of option theory, because once you once you have a hammer, everything looks like a nail. But you know you're looking at the attention economy, where fundamentally you know, all of these stocks, especially once they don't have a fundamental basis on what to trade on, are really based on this idea of future liquidity, or you can say it's a greater full theory, or you know, whatever kind of derogatory term a pond Zi scheme. Those are all kind of analogous to each other, these zero sum games where you you assume that at the end of the day someone is going to be holding it back. I've argued, you know, previously last year looking at credit analysis, that it's a bit more muddied in the sense that you know, once you have these stocks, that mean, if they have a base that's essentially rabid enough, they can actually conduct at the money offerings which will turn into capital for the firm, which, assuming a good management and not management that's actually aligned with the vision, you could maybe see a pivot. You could actually rescue a firm that way, fundamentally, just because they have this new capital injection when they wouldn't have been even in the market for refinancing their debt before. But memes inherently are time limited, and since that attention is fleeting, obviously, you have individuals like Elon Musk who are very, very talented at staying in this in basically the news cycle, and I do think fundamentally that a significant fraction of tests Let's value it is due to the fact that Ellen can command this attention continuously. I think you're seeing that when people we thumb our noses that individuals like Elan and be like, why is he doing these crazy stuff? I sec should come get him, etcetera. But you're seeing that the Overton window of how CEOs interact with the environment has shifted toward him, not away from him. You could argue this kind of started with basically the Tea Party and Trump as well, but at the end of the day, it's become a powerful force in the capital markets, even with this macro environment that's become more unfavorable. So I actually want to ask more about the politics. So I remember, you know, thinking a year ago and when all of this was reaching a feed for pitch, and I'm totally cool with it. I have no problem with people trading or speculating or gambling with their own money. I'm pretty Lizzie Fair. It's cool to do what you want. If you want to have fun trading, go for it. I don't have any issues with it. If you want to be part of a club that looks fun, it looks fun to be part of the Game Stop club or the Apes. All that honestly looks really fun to me. I think, you know, and you know you mentioned this sort of financial nihilism aspect. I totally get that. The only part that kind of offended me, and maybe there's just being made old fashioned or what. The only part that sort of like bothered me was the wealthy, successful influencers telling their followers on Twitter and elsewhere, and I won't name any names, but telling their followers on Twitter and elsewhere that buying AMC or buying game stuff is itself a political act. Like if you want to stick it to the man, buy shares of AMC. Everyone buy shares of AMC, and as you say, you sort of breathe the life back into this company. And like, okay, that's great for AMC. Maybe some traders made money, but it's not obviously other than you know, some great strike against elite institutions other than maybe one or two hedge funds that lost a lot of money. And so it kind of bothered me at the time, these big time influencers telling their listeners that buying these stocks was a powerful political act. But I'm curious both of your perspectives about the political logic behind it. Yeah, I can, I can go first and then really passive to you, But I mean it's it's super difficult, right to like figure out what exactly it was or what sort of um people were thinking. I think there was a lot of a rug pulling to use that term, people saying Okay, everybody goes and buy this, I can sell some of my shares. I think that to the point of, like, Okay, this is going to be a way to stick it to the band, This is a way of representing politics, This is a way of conveying your beliefs to the broader world. I think that that like this gets into the idea of crypto sort of being religion, right, Like a lot of people treat bitcoin and kind of as a religion. And I think that you sort of saw that with a m C and gm ME and you still sort of do to at least point around not a cult like a cult essentially, right, Not that the religion is always a cult, but there's threads between all of that stuff. And so I think to your point around like, why would wealthy influencers say like, hey, you know, go and by this. I do think there's this this horrible trend that's always existed where people are like, oh, you go and buy this thing. It's like essentially a pyramid scheme, like you go by this thing and then I'm going to sell it once you buy more, and then I'll make money off of you. Um. But I also think that it was this thing where people thought that they could sort of make a difference, and so I think a lot of people probably got wrapped up in that. In terms of like what it represents from a political perspective, I don't know. I think it was mostly a money grab, though, yeah, I mean i'd add to that. I mean, look, there probably is a contingent which and you know, excuse my language, I mean to give an example, you know, the Soviets used to call them useful idiots, where there are some people who probably did believe that it was this true battle. And I'm not trying to, you know, just count what they viewed it as. But fundamentally, I've talked to institutions, I've talked to traders and prop traders that they they made a lot of money off of people. Like realistically speaking, I think maybe you could argue Melvin Capital had a really bad order on it. But at the end of the day, most hedge funds as well as prop firms jumped into the mess made a lot of money off of retail backs, primarily I mean pain spread. I remember in January the spreads were abysmal when you know, treating Jamie, especially on the option side, and it was kind of co opted by this contingent of grifters. I mean, we know some pretty famous ones who basically took this you know, retail cause celebrate and made it about them. They basically encouraged what was essentially a manic frenzy without regard for you know, consumer protection, without regard for thinking of people who could lose money off of this. And I do not wish those people well. I think that, you know, that is kind of one of the lowest forms of operation. You know. It isn't to say that there weren't true issues that were in masked by the GMME to boggle. I think, you know, I was one of the first people, to my knowledge, on Twitter to break the news that Robin had turned off the by button because I was actually informed by someone in one of the trading groups that I was part of, and I said, this is really bad. I do not understand why they did that, And you know, that is a true issue. But at the end of the day, I don't think that the individuals involved in those decisions were punished in any way. In fact, you could argue that Robin Hood had a fantastic order due to the game Stop and Jamie Friends Frenzy and made quite a bit of money off of again normal people. So, speaking of people taking advantage of retail traders, how do we feel about CEOs and companies themselves tapping into the meme phenomenon? And Kyli you already mentioned um elon Musk, but you know, a MC for instance, has done phenomenally well by playing to a certain base and really like leaning into memes and stunks and crypto and all of that. Is that the smart thing to do in a market where memes can lead to actual inflows of real money or is that taking advantage of, you know, a certain fandom or base. Yeah, I think it's sort of a tough one because theoretically it's just free marketing, right, Like, if you try to memify your stock, you're just doing marketing. But I think the difficult part becomes when you sort of encourage behavior that might not be very good for the people who own your stock, like, oh, whole no matter what, um, even if like the company isn't doing very well. And I think that kind of gets into this whole thing where the stock is sort of separate than the actual company itself. Like there's AMC the company and then there's AMC the stock, and they don't seem to be the same thing. And so I think that, you know, people can do whatever they want with their money, but there is this aspect where you have to be an informed consumer. And I think that CEOs have a responsibility to tell people the information would be both good and bad um. And you know, they can lean into the memification of things because that's just how life is. And Elon Musk doesn't have a PR team for a reason because he theoretically does all his own PR on Twitter dot com and it seems to work okay, like Tesla's the o G memes doonk um. But I do think that there is a level of responsibility that I wish was, you know, underscored a little bit more. Sometimes from leaders of companies when they try to become meme stonks. Again, I'm going to be a bit more I guess sharp with my criticism here right before begin You know, this is my own personal views. I'm not speaking on behalf of you know, either my employer or anybody else here. But I'm just good like how we have a long history of laws on concern protection, we have an accredited investor laws, and it's just mind boggling to me that because the trades on the secondary markets that the CEOs can get away with us. You know, I think realistically there's a line between informing the public and presenting unbiased facts and you know, doing something like you know, basically making memes about you know, I forgot. I think one that remember in was the short shorts that Tesla started selling stock as well, And it's just like, you know, look, I'm a twenty six year old I I am aware that there's been periods of froth in the markets, but what are the regulators doing here? You do see basically that small fishes are being prosecuted for pumping dumps because that's pretty much well established to be on the side of not okay in the markets. But you know, it's just it's it's impressive to me that you have et F providers and funds that are more regulated on what they can say to the general public then the CEO of some of the largest companies on Earth. So I actually want to pivot just a little bit and talk about the cohort of people who are trading, who started trading maybe a year or two years ago, um, and what they're doing now. And of course, Kylie, you're launching a new education founding information company. Literally for a while you ran just like really great discord were extremely sophisticated conversations about trading. I used to lurk of their super impressed. But I'm curious, like, where do you see the people now, Like where where did they go? And what's changed? And I've been I've been out of the woods on the retail side for a couple of months, So I couldn't say specifically, um, what's captivated the retail mindset. I would say that, you know, I do have on good knowledge from individuals still in the space that there is still a pretty dedicated cohort of traders. I think that everybody just assumed that, you know, when the tide washed out with liquidity from bond yields going up, that a retail would be destroyed instantly. You know, I'm sure a lot of people lost money. I mean, realistically, I've seen portfolios, I've seen the carnage and grows stocks. But I do think that a lot. You know, what makes it different, and that's always saying this time it's different is the perennial. You know, usually the top of the market in a lot of cases. I mean, look, you're still seeing crypto, especially in the private markets, command and saying valuations. You're also seeing that we have a new generation of traders who are natives to the Internet. They're experts at getting new information and news, and you're seeing the advent of tooling that previously we're talking ten fifteen years ago, wasn't really available nor financially, you know, within reach of all but the richest retail investors. So you're seeing that with this democratization of information. It isn't to say that retail isn't playing with negative edge still, but you are seeing that it is becoming more and more possible to be competitive in the markets. And you know, there was a recent paper that actually Matt Leevin mentioned where you know, you could see that there was a correlation between retail interests and stock performance. So fundamentally, it's hard to argue that retail investors didn't see success in the period. I think a lot of the will assume the tide would wash out, just like two thousand. From my own perspective, I am seeing people hanging on to money. I am seeing a lot of people who became new vote rish and you know, they are getting more and more sophisticated. You know, my conversations and even my background started in these trading discords very much similar to the old days of let's say like a nuclear finance, where you see these dedicated quantitative people start taking their talents from you know, cs, from mathematics, from other fields that demand pretty similar skill sets, and start looking at the markets and saying, hey, why don't I try this? And I think that a lot of them will give up eventually. I think the turn rate is extremely high, and I've observed that myself. But I do think that this is the market that is going to birth the new generation of traders and a new generation of funds that will look pretty different than the previous generation. From yeah, I totally agree, and anecdotally I post on TikTok every single day, So go into the throws of the devil, right, and the questions that I get asked and the comments that are left are completely different than they were about a year ago. Um, people are a little bit more attuned into like monetary policy, as I mentioned a little bit earlier, and they're just sort of thinking about the broader financial universe. So like I don't have as much insight on what treaders are doing, but it just seems and totally that people have become really interested in which they have the right to be, Like, we're all economic entities, and like we should all kind of be interested in what's going on economically and in the markets because it doesn't impact us. And so I have seen people like really become interested. I get a lot of like really really good questions. And to Lily's point about the paper that Matt Levine mentioned, like there's over twenty one thousand discord investing servers, and so I yea that you know twenty one tho servers you're just going to shut down because all of a sudden, you know, the Fed's gonna rease rate. It's inflation is like all that stuff. I don't think that's necessarily going to happen. I do think there's an element of stickiness to this, and people are just genuinely interested in sort of this like big being that that is the financial markets. And I think, you know, um, the way that it sort of entered into because I like the cusp of gen Z, so I'm a z a lineal. I guess the older edge of gen Z and gen Z is like the way that they learn is sort of through watching TikTok videos, are doing different things like that, and I think that we've had sort of the gamification of finance and that really allows people to become a little bit immersed as well. So I don't think that you see sort of like the same level of frothiness, but I do think that you see people who are sticking around and are just genuinely interested in what the markets are doing. I was gonna, you know, because I've I've been more cleared into the crypto landscape, especially over the past six seven months, and you know, there it's interesting because it's almost native for the trading mindset to be clued into retail chatter. You know, I think fundamentally, if you look at a crypto trading role, obviously there's systematic strategies, but when I talked to trader, especially for smaller funds, there's a role now for individuals to essentially just sit on discord and telegram all days they're involved in the n f T space. You know, part of me is wondering, I'm like, when you tell me that, I'm like, well, this is kind of an anomaly in time, and I don't know how transferable those skills will be later. But the other part of me is like, is this kind of just a paradigm shift where you see that historically retail has been trying to get the crumbs of what the institutionals are giving off, and now you're seeing the converse where you're seeing institutions go on these niche trading discords just to get some insider information before that you know, token goes on hundred cks. Yeah, I mean I've actually written this or about this before, but like, if you think about something like crypto, if it's driven purely by sentiment, which it is, and by flows, then actually you know the person who's sitting in the discord chat or the guy who's like sitting in his mother's basement spending all his time on the internet is probably going to have a better handle on where that's going than an institutional investor in you know, a white tower bank or something like that. But that said, one thing that's interesting to me is that, you know, at the height of the meme investing phenomenon, people were getting really really upset. And we mentioned this in the intro, but people were like, oh, this is the end of capitalism. All our markets are going to stop working. They're making fun of fundamentals and the financial industry and all of that. But actually it seems like the two groups of financial you know, traditional fine an aunts and the retail investor slash crypto, it feels like they're sort of coming together, or at least taking bits of each other and incorporating them into their behavior. Because the other thing that's happened this year is you see a lot more crypto people talking about the FED and what new bond yields mean for bitcoin, and you know, this is sort of all well, and on Wall Street bets you see lots of people talking about the FED and what's going to happen with interest rates and things like that. So it kind of feels like that body, that group has moved more in the direction of Wall Street. Yeah, I would agree that they. I think there's a knowledge that you kind of have to have a broad understanding of, or it's at least good to have a broad understanding of everything that's going on, and I think to at least point earlier about like all these different tools that are being developed, you can kind of get a lot of information that was previously only allowed to Wall Street. Like there's it's like Quiver Quantitative, which are really a valuable um. You can get different substitutions to different news outlets or different data aggregators, and so I think that maybe maybe the two are starting to converge. But I also think the resources and the tool links that they use are starting to converge, and that's sort of reducing the information asymmetry that used to exist. Yeah, I mean I think that, like I said, it's it's really hard to wear the crystal walls see what the longer term impact will be here. I do think that there is culturally, and this could be tied almost to this idea of a failure of capitalism, although this is probably ironically the most capitalist thing that could happen is that more people have been you know, included in especially with inflation and the growth wages to income inequality in the country. And you know, I've kind of I touched on this briefly last year, but it's kind of worth re stating that what you're seeing is it's almost nihil a sick tendency, especially among those who are younger, who are you know, less enriched by the traditional system, where they're kind of like effort. You know, I am going to gible my money here because it is my way to cross the chasm from you know, a diminishing middle class to the land of the rich. You know, you kind of see this. I think someone brought up that this happened in Iran as well, where you saw that a lot of the population started day treating. And I do think, you know, on one respect, people are getting more informed about the financial markets and economics on average, which could only be beneficial for us as a society. I think that obviously the world at large is dictated by the flow of capital, despite how people want to believe, you know, it's different, it's never different. And being more informed about how the markets were and how markets interact with governmental policy. International policy is fundamentally important to being successful in life, so I do think that is a benefit. The downside, of course, is you're seeing this occur because of an erosion of trust and traditional you know, intermediaries like the news, like thanks like these basically cornerstone what we considered a functional society. So I don't know how basically it ends, but you know, it is kind of concerning and sad in the way that this is kind of the ethos that has been adopted, especially by my generation. I guess I don't know if Kyla technically different generations people kind of kind of treating stocks and crypto like lottery tickets. Right, if you don't if you don't think you have that future income growth, well why not just spend your money on on a chance to get it? You know something and Tracy that something you've talked a lot about is like China and this gigantic ball of money, like the trading speculation in trying in China, and you know you have day traders and housewives buying iron or futures and stuff like that. There's basically nobody retail in the US trades. But I guess you know, I'm interested in this idea that if there's the perception that the economy is rigged, that you're never gonna be able to buy a home, that income is never going to be able to outpace inflation, they're gonna have this huge dead burden that basically markets are the only game in town, the only way to get ahead. And of course, if your perception that stocks are rigged, that perhaps crypto is like the ultimate way, Like this is your one shot to get ahead. I just want to add here and then I'll pass it over as well to Kyla and Tracy. You know, I recently saw a friend of mine who is also of our generation. She's a four year old, just got her first job as the designer, and you know, she was telling me when I talked to her, She's like, my dream was really tone to how and it's really sad in a way that you know, this dream of homeownership has become so much insurmountable to the average American where something you know, old adage is what basically a home with a white picket fence and a dog and two kids. It's like, how do you even afford that? At this point? You know, America may be better off even still than other nations which have seen the explosion of real estate prices even more than what we saw over the past two years. And I think that, you know, this may be the fundamental check and the fundamental cost of you know, quantitative easing that started in the global financial crisis basically fifteen years ago. At the end of the day, people are looking at the markets right now as a way to, like I said, skip the chasm where it's like this is your shot. And you're kind of seeing this even in the discord, especially of crypto or just course of crypto Twitter, where you can see this compression of time. Basically Buffett or the tradition of value investor, the way that you look at investing is at a long time horizon. You are less susceptible to the fluctuations and follies of the market if you are investing for thirty years versus for thirty seconds. And I think that because there's this general nihilism and honey ease, and we've seen this solatively the past year, people are thinking hand to mouth here with the markets. It's basically I have this one shot I need to invest. Now. You're seeing the deterioration of even doing due diligence not only at the retail level, but also at the venture level when you're seeing the innovation of stuff now like pre idea investing. So everybody has kind of adopted this ethos, so that time itself has compressed down two years, months, days, and nothing good to come out of that. Yeah, I think we also have this um broad problem of economic fragmentation. So I think the leader of the I M F. I don't remember the exact title, came out and was like, Yeah, the world is increasingly economically fragmented. And I know re Sulton has spoken a lot about that, where you know, sanctions, whether that impacts the reserve currency and how the dollar is going to respond to all that. But I think on an individual level, like we sort of experienced that fragmentation, and I think a lot of people are trying to sort of get some sort of grip on reality because we keep on having things that it sort of exists in the tail end of the distribution happening, like a pandemic, war, like a lot of things have happened, and I think a lot of people are like, wow, like life is kind of crazy. I better go and figure this stuff out, and the stock market and this like get rich quick narrative some in some essences, the gambling aspect of it, I think, are people just trying to like figure that stuff out because there isn't that promise of you know, work forty years and have a home and to have two and a half kids or whatever. That's just not something that is feasible anymore for the average person, and so you almost have to, like to Tracy's point, lean into that lottery ticket of the stock market, because otherwise there's not a lot of other options. What do you think is gonna happen to retail trading over This is such a broad category, but where do you see retail investing going over the next year or so, Because in some respects it feels like the easy gains are gone. In crypto, you know, the idea that you're going to put like a thousand bucks into bitcoin and become a millionaire a few years later seems far fetch nowadays, although maybe you could do it with another coin, who knows. And then and then you have the pressure of liquidity tightening, interest rates going up. A lot of the growth stocks seem to have gotten the air kicked out of their tires. We're recording this the day after Netflix earnings and that is down massively and that was a big sort of pandemic stay at home play. It just feels like there are all these pressures building on typical on the kind of things that are typically popular with retail investors. How do you think that will end up playing out? I think that we're going to see people still be involved in the market, Like I think the meme I guess of long termism, like to stay in the market and you'll be fine for a couple of years, is going to stick around. But I think, like so we are recordings today after Netflix. I do think that Netflix sort of falling is really interesting because that could be a sign of regime change where one of the things is going down, right, Like the tech era is potentially sort of deteriorating, and a lot of people are just throwing money at tech and that's kind of like, you know, crypto has essentially become the nest tech it to a certain extent as well, So you're starting to see all these correlations pop up. Um. So I do think that we're going to see people invest still, but like what they're investing in I think will be an interesting question and sort of how that pm L plays out over the next two years, Like will the stack market continue it's march upwards. I'm not sure, um, but that that it could be interesting. Yeah, I think I'm reminded here of you know, the sort of Mark Cuban basically sold Broadcast dot Com to Yahoo in the late nineties and he was actually paiding out his stock and the reason he was still a billion after the tech bubble crashed was here was strategic. He bought puts basically and he made out and now he's still quite a billionaire. You know, he invested in the next generation at tech and I think you're going to kind of see that basically from whatever the remains of this bubble period is as well, You're going to see that despite the vitriol of many who have been much longer in the markets, I think a substantial fraction of the new beaux reach will hold their net worth from you know, this current period. I think they will be the new billionaires that fund the innovations of tomorrow. I think from what you've seen in the tech bubble and what happened later, Yes, there was a lot of froth. There was pets dot Com famously in their ipo, it crashed. A lot of people lost money, but those people who made money and held on funded the next generation of tech companies, which turned into the Googles, the Facebook's, the Netflix is the I guess Apple, Microsoft already still there, but you're not going to see this money go away. I think there's going to be a demand for retail investor, especially those who didn't make it, for more sophistication, as well as portfolio managers and wealth management solutions which are really tailored towards what they're interested in and what they believe in. I think that you know, and I've talked about this even on Twitter. I think there's a lot of people who are gonna have a lot of net worth locked up in something pretty much a liquid who are looking for these strategic solutions to protect their their wealth to make it last for a long time. I think there are a lot more savvy on how the market works and how cycles work then a lot of people give credit to and I think that this market, if there's savvy individuals, especially in those spaces, can really be capitalized on. Tracy, I think there's a pretty good place to leave. Yeah, I agree, Well, Kyla and Lily, that was a great spot to leave it. That was absolutely fantastic and I appreciate both of your perspectives. Is a great conversation. Thanks to both of you for coming out on Thank you guys. That was for fun. Thank you. Yeah, that was great, It was really good. Thank you, Tracy. I thought that was great. It was sort of like unexpectedly poignant in a way, like I didn't anticipate how that was going to go, but I actually thought that was like incredibly compelling. Yeah, I was ready for lots of meme jokes, but it got kind of dark. I mean, so this is also something I've been thinking about. So I feel like the lightest way or the most optimistic way to view the retail trading phenomenon, or you know, the meme investing slash stunk thing is as a sort of go fund me for companies. So for whatever reason you like this company, you don't really care about the share price versus the fundamentals. You want to show your support for whatever you think it represents, so you buy into it at its darkest. I think it's a prone to manipulation, but be also goes to this idea of the economic disparity that both Lily and Kyla were talking about, and this idea that people see stocks basically as an escape plan from, you know, a life of of economic dreariness, which is incredibly depressing. You know, it's interesting. So, like, obviously the origin of this moment we identify as being March. That was a time when people are stuck at home, maybe they're laid off. The other overriding thing was like a period of like exit mar It was a period of existential dread. People were really worried, and people worried about death and sickness in the way that at that time, in a way that nobody was expecting, like really you know, like a deep depression, great depression levels of anxiety. Stock marketed crash. People were worried about their unemployment prospects. So it's notable that this enthusiastic financial nihilism came out of a period of extreme economic uncertainty totally and lots of people just rethinking their lives versus the kind of life that they would like to have. Um this one to a really depressing place. Shall we leave it there? Yeah, let's leave it there. No, I just thought, you know, the other thing and obviously is negative, but there are some really interesting positive idea positives about this idea of equalization. You know, there's the proliferation of newsletters, the proliferation of quantum computing power that used to be something that only people who had access to a main frame at a major bank would have. So it's not all bad, and there are some really interesting development is Kyla pointed out, people are like getting deeper and they're like deepening their understanding of financial instruments, and they want to learn how monetary policy work and the fundamentals of analysis, So it's not all negative. Sign democratization of finance is a terribly overused um and misused term, but I think it might actually apply in this case. The idea that you're getting more people into this realm who are learning about it is somewhat heartening. Um, I guess as long as they're able to sort of And I guess the other thing I'll just add it was interesting. I think Lily made this point about crypto specifically, which is that in crypto, the chat is the signal, so it's not even a matter of can you get the same information as the pros. It's like, if you're there chatting, you have the signals, you have what the pro wants, and so there is sort of like this inversion of the typical relationship of who has the value. Well, this is the old flows versus pros argument, which is that if you have an asset that is driven purely by flows, like a meme stock or a cryptocurrency or a token of some sort, then really the guy who's spending all his time on the Internet, who's you know, eyeball deep in meme and on the discord chats, is going to have a much better handle on that sort of sentiment than someone who's not spending all that time. So yeah, in that respect, it is sort of a reversion of power from Wall Street to Main Street. So it's not all bad. There's some exciting things happening in the aftermath of the memes dog Mania. Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. I'm Joe wi Isn't Though. You can follow me on Twitter and follow our guests on Twitter. Lily Franka, She's at Nope It's Lily and Kyla Scanlon on Twitter at Kyla scan Follow our producer Kermen Rodriguez at Kerman Arman. Follow the Bloomberg head of podcast, Francesca Levi at Francesca Today, and check out all of our podcasts Bloomberg under the handle at podcasts. Thanks for listening to