I’m sure you’ve been hearing a lot about what’s been going on with the GameStop stocks recently! Everyone is going crazy over it so we figured it was a great time to bring you a special episode of Money Meets Medicine.
You may feel like you’re missing out on what’s been going on. Fear not, because actually FOMO and investing is a very dangerous combination.
Keep on listening to find out why!
Today You’ll Learn
- About all that crazy GameStop stock racket!
- Why FOMO and investing are a terrible combination.
- How investing can be impacted by herd mentality.
- How investing can be similar to the lottery.
- And more!
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Jimmy Turner 0:00
If you haven't heard about what happened with GameStop stock recently, you must be living under a rock. And that's why we're doing this special episode. Today. Ryan and I are going to break routine. Get into the nitty gritty and talk about shorts, options and speculation investing in today's show. So please stick around because it's going to be a wild ride.
Welcome to the money meets medicine podcast where we talk all about the personal finance topics you wish you'd learned in medical school. I'm your host, Jimmy Turner. And here's your co host who missed out on turning 20 $500 into over 30 grand with the recent crazy market events we're going to talk about on this episode. Ryan Inman,
Ryan Inman 0:45
Dude, cut deep instant, like five seconds of the show just shots fired
Jimmy Turner 0:49
Ryan Inman 0:50
Yeah, it is Just facts. And we'll talk about FOMO and YOLO. And Momo, like all these momentum pieces that are happening, we'll get some record going today. But yeah, the world's crazy, it's getting crazier when billionaires are jumping in. And we'll talk a little bit about that as well. But if you have been following at all what's happening, basically, if you turn on the TV, or you opened up a Reddit or honestly, just Google, you probably have heard about gaming stock and what is occurring in there with the shorts position and people making and losing a lot of money. And it's going to be interesting to dive in. So I'm excited to do this. I know we're breaking form, putting out a special show. But we think that this is actually really important to talk about. And it's one of those that we want you to stop and think into witness what is actually occurring in front of your eyes and learn something from it. Because right now, the flavor of today is GameStop. And tomorrow, it's gonna be AMC that's happening as well it might be Bed Bath and Beyond is another one like they're targeting multiple of them. But in a year or two years or five years from now, it'll be something different and it'll be a different play, it'll be a different thing. But human behavior will not change. And so I want you guys to learn something in real time, which is why we're going to push the show actually kind of in between shows, since we've already recorded for a while.
Jimmy Turner 2:10
Before we get to the show, I do want to make sure that money meets medicine listeners are aware of an exclusive opportunity that only comes around two to three times per year. So as many of you know, in addition to being an anesthesiologist and a personal finance podcaster, I'm also a coach for doctors. And our premier coaching program. The Alpha coaching experience is opening up for enrollment really, really soon in February actually. And so I want to make sure that you guys are aware of this because only opens up two to three times per year as coaching is for doctors, by doctors who have training and professional coaching. It includes both life and career coaching, as well as calls on money in business. So whether you're looking to finally get rid of your burnout and overwhelm, or maybe you're looking to start a non clinical source of income through a physician side gig, the alpha coaching experience is right up your alley. And the reason I'm telling you about it right now is that if you jump on the waitlist to learn more about Ace before midnight, on February 12, you will have access to a $500 discount off the price of the coaching program. So joining the waitlist simply means you want to learn more about it. I'm even going to host a couple of live q&a calls with me. So there's zero pressure, you don't enroll no big deal. But joining the waitlist is the only way to get the $500 discount, should you choose to enroll. So sign up for the waitlist before Friday, February 12 at midnight to make sure you can take advantage of that $500 off. And you can join that by visiting the physician philosopher.com slash waitlist or by clicking the link in the podcast description in your podcast player. So Ryan, I found out about this because I talked about this a lot. I intentionally live under a rock when it comes to personal finance because I don't want to get excited about things. I understand how my brain works and psychology of money. And so I know that FOMO is real. And so I actually didn't even know about this until it was this was like well underway for like a day or two. And my buddy David texts me and he's like, have you heard from like, heard what he's like GameStop he just like put one word GameStop. And I was like, What are you talking about? He's not a big gamer. A piece of crap company that's going under you mean that one? Yeah, I like video games. And so like my kids and I would play a Nintendo Switch all the time. It sounds like maybe there's a game out or something. But David doesn't really play games. He's a big, big scratch golfer crazy good. But he's talking to me about the gaming company. And so I just typed GameStop into Google. And this entire world opens up of all of these things that are going on over the last 72 hours over the weekend since Friday. Basically, it is mind blowing, man, like just following up on some of the stuff that that David pointed out to me. I can't wait to talk about this.
Ryan Inman 4:32
Yeah, so let's look at what GameStop is. GameStop is a brick and mortar store. It started right before blockbuster. So some people who are listening don't even know maybe what blockbuster really was but blockbuster was the place you could go and get VHS tapes and rent them for the you know the night and pay a couple bucks. That was a thing back then. GameStop is a place where you go buy physical games since then, like Xbox, PlayStation, Nintendo. They've all gone to DisneyLittle games. And so GameStop is kind of a dying dinosaur. And unfortunately, the pandemic kind of lit fire on the gasoline of this business probably going under, which is sad when people's businesses go under. Now, granted, this is a publicly traded company, it's a mom and pop shop. But this business is a dying business. And what someone, or some people should say, on Reddit, in the sub forum, that's called Wall Street bets. What they have figured out was that the short interest meaning, and I'll explain that, I guess in a second, but the short interest on game stock was 100, almost 140% of its float, and I use some words who saw go backwards by saying 140% of his fault, if, although the game stock and the actual stock itself, let's just call it G. It's terrible. say there was only 100 shares available for the public to buy, okay, which is not, it's millions, but let's say it's 100 shares, that means that a company had basically taken a short position for more than 100 shares outstanding, they can do this by selling it short through options, and they'd sold it 40% more than what was actually outstanding. And so what's called a short squeeze is when the stock price rises quick enough, that causes the people who thought it was a good idea to short this company, to have to go into the market and buy shares to cover their positions. And this is going to get a little more crazy. So we'll unpack it as we're going. But the idea of selling it short means you're anticipating that the price is going to go down. So hedge funds, and all their wisdom said, well, GameStop is a dying business. And the pandemic has accelerated this, we think it's gonna go bankrupt. And the idea is, we're going to take short positions on this, we're going to sell shares to others who think it may be will go up, and we're going to hope that it goes down, and then when it goes down, we're gonna buy back the shares at a lower price, therefore making money. Well, Wall Street bets in on Reddit had a different idea. We say this all the time. It's different this time, and is never different this time. Except for this time, it is actually different. Because the SEC, I have no idea how they're going to regulate this. But it is price manipulation to the grandest experiment ever. A bunch of people who don't know each other, who are collecting on a random ass forum, that are saying to buy the stock to punish hedge funds have now caused the like one of the largest short squeezes we've ever seen
Jimmy Turner 7:37
thing that I love about this, before we talk about the investing side, I just gotta get down to like, like good old American roots, right? Like, yeah, they're totally sticking it to the man like you have this giant company and all these hedge funds, that are basically betting against this business during a pandemic, when they're struggling and Wall Street bets, Reddit, subreddit, whatever comes on there and says, we think this is going to explode. And they basically caused this massive rally. And so in a way, it's like, We the People versus the big, nasty hedge fund managers. It's classic David and Goliath. And I mean, like, from that standpoint, you can't help but love this story, just because like the hedge funds, and these big companies are losing so much money, because of a subreddit. And because of some tweets, and social media influence, it's crazy to watch, oh, we'll get tweets. This is what's more fuel on this already. Crazy fire. Yeah, but from an entertainment perspective, this is great. I just love that they are these big companies that had all this capital, who were betting against this company GameStop to fail during a pandemic, which is kind of a crappy thing to do. Well, it wasn't the only company that they think is going to fail. And we'll talk about that more in a little bit of who else they thought would fail a much bigger brand that I can't believe that they're still actually trying to short this company. But I think they'll just from the Reddit standpoint of what people can do when they get together. This has never happened before. This is incredible.
Ryan Inman 9:01
This is also very terrifying, from an experience of this is what herd mentality will do. Right on the flip side of this that we all can get trapped into, in Jimmy, even myself on what this could happen. I'll talk about how that actually, as well, really quick, we should Disclaimer This like we do not think you should buy this, this is not specific investment advice. Please don't take this as like, Oh, well, it made it to the guy's show. So therefore we No, no, please don't.
Jimmy Turner 9:30
This is an archer from what we normally talk about. And we're gonna get to that in the show. So I think we'll kind of cover our bases there too. But just to give some perspective to this and go back to the beginning of the year gmv, which is the ticker symbol for GameStop. stock was $17.25 give or take. And it has peaked at over $350 $371. As of the time we're recording. Yeah, we're recording this January 27. So in less than a month, this thing has gone up20 x, right? So just sit back and just think about that, right? Like if you put $1,000 on this and invest it at 1725, multiply that by 20. Right? You know, I mean, it's actually potentially even larger than that now, because math that I did earlier was bad math, Brian can do it on the fly here.
Ryan Inman 10:17
I think also, you're doing a disservice for the way that this momentum has moved. So it went from 17, at the beginning of this year, and in 27 days, not even trading days, just 27 days, it's gone up to a peak of 371. If we look at the last week, it is up over 800%. And that was basically over $300. That is like $315. That is up. So if it's at its high was 371. And it's trading up 315 ish dollars in the last week. That means that it was $60. A week ago,
Jimmy Turner 10:54
if you go on the Google graphs go back to like, one day, five day, six months a year, and it's like literally a flatline. And because of the growth it's had in seven days, it's a straight up. Yeah. But I think it is really interesting because something we don't talk a lot about on the show and words that we've already thrown out a little bit shorts and options and calls and puts and that sort of thing. I think that it'll be interesting, just from educational standpoint, just to talk through a little bit of that. And then we'll really dive into the meat of what this means in terms of FOMO and fear of missing out on opportunities and stuff. But yeah, right. So like from an investing standpoint, this is not investing. This is just speculation and speculation. You're gambling, to be honest, my understanding was combination of three things, right? So you had that the Reddit Wall Street bets, and basically day traders and influencers saying that you should purchase GMA, there was a big short sale on this by large companies hedge funds. And then there were some tweets, that kind of added some gasoline to the fire once it had already started. And between those combination of things caused this massive rally for this individual stock,
Ryan Inman 11:59
there's one piece that you're missing. So the shorts had already had their positions on, okay, which then triggered the Wall Street bets, which when we say this, we're referring to the subreddit of a bunch of random people who hang out in that subreddit, figured out that the short interest was a ton, right? It was like upwards of 140% of its float. And then you've got them coming out and saying, Well, why don't we just altogether take a position and force, the short squeeze, one will make money. But two, if we force it high enough, we're going to put them out of business. Alright, and they essentially have pushed it up high enough that the hedge fund Melvin capital, who had the largest position, just got bailed in by another hedge fund. Now that was technically co founded by the same person. But Melvin capital was run by one manager. And this other company is ran by another manager. It was actually the guy that started both. And I don't know a ton about them. Because honestly, I don't care. I think if anyone's shorting a brick and mortar store, in a pandemic, like you're kind of a piece of crap, as it sits, it is what it is. This is the part that I'm like, Yeah, I want them to win. Because I want people to learn like you shouldn't be shorting that is not investing. And none of this, to be honest, is investing. This is all gambling and speculation, then you've got another piece that most people aren't talking about. And I don't know a ton about it. So I'm not an expert in this by any means. One, because it's impossible to find out this information. But two, they've already been sued for it. And I'm talking about Robin Hood, most people are using Robin Hood as it because it's honestly it's simple and addicting. I set up an account and actually have some money in Robin Hood. Because I wanted to understand what it was like, it is extremely addicting, they gamify everything. And in five clicks, you can buy options. It's super simple, and very, very, very scary. And I can see why regulators are coming after Robin Hood going you need to place guards in this because you're giving kids essentially keys to a Ferrari and give him some alcohol let him go drive. It is that simple how reckless people can be inside Robin Hood. And the piece that no one's talking about is not only they using Robin Hood, but where Robin Hood got sued was that they're essentially selling order flow to hedge funds. So when Jimmy puts in an order to buy 100 VTi, again, not investment advice, just using an example he's going to go buy this total stock market, the order flow gets routed to the hedge fund sold off, right that Jimmy's making this trade now they don't just do it him together they do everyone that has a big hole are selling off what retail investors are doing. And these hedge funds have been known to take the other side of the trade to increase the liquidity in execution within the pricing. But what could be happening is that they're also front running the trade which is illegal but who knows what hedge funds are doing and the SEC hasn't fully probed everything. But they could be turning around and actually placing a trade right before and then selling it back to Jimmy higher so the best price isn't itactually occurring. But again, that's speculation, what people aren't talking about is the hedge funds that also are taking the other side of the bed could be getting in trouble, because they're trying to increase liquidity if they're buying. And if people are taking out call options, they might be taking the opposite side of the put option, or selling them the call. And that could actually be potentially escalating this up much, much quicker to the fact that like, on the 27th, today, Robin Hood has actually crashed TD Ameritrade actually crashed as well, because of order volume.
Jimmy Turner 15:33
When you say crashing the website,
Ryan Inman 15:34
the website, yes, not like the stock or anything like in your money safe. I'm not saying anything, like I'm just saying if you wanted to go try to place a trade, there might have been so many trades trying to be placed on some of these stocks. It's like a traffic jam. And just to back up, because we tend to talk about buy and hold investing and simplified diversified low cost index funds. Again, this is none of that. It's the opposite of that, right? We're talking about the stuff you shouldn't do. And of course, leave it to Reddit to pay the way
Jimmy Turner 16:00
but a few words that Ryan's threw out, there is an option, a call and a put. So an option basically gives you the buyer the right but you don't have to, it's not obligated to buy in the case of a call or to sell in the case of a
Ryan Inman 16:14
high level think if you're gonna buy a call, you're anticipating the price to go up. If you're gonna buy a pole, you're anticipating the price to go down. Now there's other sides of options and straddles and selling putts. There's a lot you can go into. And I don't think we should in this show.
Jimmy Turner 16:29
Just let people know what those words mean.
Ryan Inman 16:31
But essentially just think call option. I think now Jimmy is the time where Alex and the whole thing actually started when I was like, check this out. Let's talk about this. And then it was like we should do a show on this. So there's a gentleman chamath Palihapitiya, who was at one time pretty much a Facebook, exec high engineer up there, he's since left there, he's worth over a billion dollars. He's actually a super early investor in Bitcoin. He's got on one of his tweets that if Bitcoin hits like 150 K is going to turn the Hamptons into basically free housing for the poor. Because he'll have owned so much of this, I think he owns like 4% of the total amount of bitcoins can crazy. And he's got a massive following. And he came out and said, lots of gmv talk.dot.we, bought February 15 calls on GMA this morning, let's go. And he posted his activity on the trade and he bought 50 options. And that 50 options was a little over $100,000. Again, rounding error to this guy, this is more money than most people reading this tweet will have in a very, very long time. Now what that means, when you say bought February 15 calls on Jimmy, so he took the underlying stock of Jimmy options have a contract or an expiration date that will occur. So his was in February. So extremely short term. And the 115 is what's called the strike price. And so when he bought this the stock, Jimmy was trading at about $90. And he's buying the ability in the future to buy GameStop at $115. So any of you out there, even if you don't understand options, like why would he want to buy the option at $115 versus $90. Now why and she's gonna buy it, it's because you only pay a small fraction of the amount to do that to control 5000 shares that he would want to be controlling, it would cost a whole lot more money than $100,000 to get into that. So you're buying in the premium, you're buying this ability to do this. Now that's to say that that could have gone to zero instantly. Because if the price if say Wall Street bets and wasn't successful, and we're not talking about it now, and they went from 90 back down to 17, like it probably should be, then these options would expire worthless, and all of that money that 100 plus 1000 would go away. Because the price went up significantly. He's in a much bigger gain position. This is how this whole show started. I saw this and I was like, Huh, I wonder what those are gonna cost. So I pop open my trading app. Now look at the price and I literally load one option in it was gonna cost about 20 $500 and I was like, Hmm, I don't think I want to do that. Because this is gambling. This is not investing by any means. And so it's like, what I go through 20 $500 on black or on a number or play poker or whatever. No, I wouldn't do that. It's way too much money. And if it was $1,000 To be honest, I absolutely would have done it because $1,000 to me, if I lost all of it. Yeah, that stinks. It's like point oh 5% of my net worth. I don't really care. Right It's not gonna hurt me in any way shape or form. But 2500 that was just too much that I didn't want to gamble because if I pushed by I was prepared to lose 100% instantly to go up double or triple instantly. Can we skip to the part where you lost $30,000 Yeah, man, you know, of course we can. You just want to keep digging the knife in. Okay, so where Jimmy's referencing This is that was yesterday. Today. When we look at thePrice Is 350 bucks, I pull open that option that I didn't buy. And to buy that option now or if I owned it to sell that option now it was basically $30,000. So yesterday when it was $90, and if I bought that same option that chamath bought, that was 90 to 115. It cost him $100,000 it would only cost me 2500. So I was only gonna buy one, right? And that 2500 would have turned into $30,000 for less than a 24 hour hold. Obviously, that's not investing, but I wasn't willing to risk 20 $500 to go to zero in that. But if it was 1200 now I would have done it. But 2500 just was too much money for me. It was kind of just to like play. I kind of want it to happen. I think it's fascinating. Now, I've got no horse in the race. I've got my popcorn, and I'm like those chips we see. I'm just shoving popcorn about like this is fascinating stuff. Where it gets more interesting, though, is Melvin capital, who is the one that is basically the largest short on GMA, he has some short positions on some other entities that chum off has gone public with. He's known for spax. And we won't get into that craziness. He's basically taking private companies, merging them with blank check companies out in the public. His most recent one that maybe some of you know, because all have student debt is so fine. But they've got open interest in some of his other companies. So I could see why he was like playing the bandwagon and like hoping it crashed and burned. But most people don't talk about is that Elon Musk? Of course, Ilan, got to be involved in everything right, because it's Ilan, he came out and said, game stock, right? So he's playing off the whole thing of stocks, right, whatever. But he came off and he just said game stock. And it would have been one thing if he just tweeted that and been done. But he linked to the wall street bets subreddit and said game stock, which got 28,000 retweets. It got 171,000 likes, and another 7.8 1000 quoted tweets. So people quoted that tweet and then said something, which is fantastic. I mean, we all know, Ilan, and how much he has influenced of everyone, but one word can cause massive issues. I think when he tweeted that it went up by 40%, just from that one tweet. But why would Ilan tweet that? And no one's asking the why. But if you dig a little deeper, I'm looking at it is that Melvin capital has been very outspoken against Ilan, and they have taken massive short positions against Tesla over the years. So where's Ilan motivation? Well, his motivation is is well f those guys, they've caused me so much pain and misery over the years. He wants to see them get belly up, and watch them go bankrupt as well, which also in turn would actually help Tesla because they go bankrupt and a lot of the short positions on Tesla probably get unwound. But he can't say this. So he links to the wall street bet subreddit and makes fun of it with one word. But that is a profound impact in the market. And I think that was the second catalyst that caused this thing to go nuts.
Jimmy Turner 23:08
Yeah. And so in short, pun intended, Melvin capital shorted GameStop also shorted Tesla. And so when Ilan saw GameStop stock going through the roof, which is bad for Melvin capital, who basically voted against Ilan company Tesla. Ilan said, Now this tweet gets some huge number of retweets, likes and all that stuff. And it's just crazy, because it's what you mentioned earlier, like that herd mentality and, and social media influence and the power that that has over people's decisions. Because clearly, after that, it went up 40%. And it had already been on a tear before that. And so it's just fascinating stuff. But I think that the most fascinating stuff other than that awesome gossip about Elon Musk, which I'm not a big gospel guy, and I thought that was actually really cool. Just because, like linking those things is just so interesting. But what's really interesting to me is the psychology of all of this. And so, Ryan, you had 20 $500, that could have become 30 grand. And so it's very easy to look at this and to have gmv or GameStop FOMO, that you missed out on turning that 20 $500 into 30 G's. What's your mindset? What would you tell somebody that was a client or someone that was a friend of yours, it's man, I almost invested 10 grand, it could have turned into a six figure sum of money. But it didn't.
Ryan Inman 24:20
Every opportunity to push by when I look at this, and I'm like, I'm not willing to risk that. Because it's not investing. This is again, a whole separate pool of funds that I call my Lottery Fund. And inside that I can invest in anything I want. But I have strict rules on what I'm doing and how I'm doing it and when to sell and when to buy and how much of my net worth, they can actually be allowed. I'm very restrictive on my play money, if you will. This is like the money some people are like, well, it's my Vegas money. I go to Vegas, and I'm just gonna go and take out 1000 bucks and if I lose it, I lose it if I went whatever. This is like my biggest money that I trade stocks with because I'm just a nerd and I know that this is not investing.99% of my money is invested correctly. And then 1% is absolutely invested in crap that I know is not the right way to do this, the solves that kind of urge that I have to every once on like, oh man, Biden just came out on the airwaves and talked about how much we're gonna do this Made in America thing and that it's going to be all about Evie vehicles and batteries and charging stations. So part of me was like, well, maybe I'll look at some of that it can be interesting. Doesn't mean that it's right doesn't mean that it's gonna work doesn't mean it's gonna make money. Odds are, it's probably not gonna make money. But when I hear that I'm like, I have interest to go look a little deeper and to see that I had every opportunity to push by here. And I didn't because it wasn't worth it to me. I didn't want to risk that much capital. And the ship has sailed. Does it stink? Yeah, it stinks, I would have been up 30 k again, even if I sold the 30 k like, that is a ton of money. But it would not have been like, well, I'm retired. It's not like I bought Bitcoin at $5. It's worth 14,000 and then lost the password and the dump. Yeah. And then you throw the hard drive away like the guy in the UK or whatever. That's not what is the the behavioral side of this, though. Now that we've told you the whole backstory and what's been happening, and yes, I potentially lost money, but you know what? It didn't because I never put the money at risk in the first place. Because it didn't fit my investor profile my makeup. I didn't let the complete FOMO then turn around and me watch this thing all day. I didn't watch it. I just opened it up this morning with Oh, crap. Once I close the app, when I saw the price, I was like, yeah, it's too much. I'm gonna do it. I didn't watch it all day. I had meetings, I had prospect calls. We were doing all sorts of stuff. I didn't open until this morning and went, Oh, damn. Hey, Taylor, guess what? I cost us 30 cage because you What? So I explained it to her really quickly. My wife is like, Oh, it's gonna go down anyways, like, I know, I just, you know, whatever. And there was my two minutes of like, whatever. And now I'm sitting back watching how this unfolds with no skin in the game. And that's okay. Do I go chase this now? Absolutely not. It was too expensive. When it was $90, much less $370.
Jimmy Turner 27:07
That's the thing is that I'll reference people back to episodes that we've done on people's loss aversion and how we hate losing twice as much as we like winning. And so I'm doing the math in my head, right? Like for you sitting in the chair, having this moment where as you're trying to decide whether you should click Buy or not. And you're like, oh, man, 2500 it's a little, it's 1000. Okay, and like the mental math you're doing in your head. And basically, it's just back of a napkin math is that to lose 20 $500, you'd have to be relatively assured that you would at least get to $5,000 in reward to warrant the 20 $500 loss like two to one. That's where our brains sit. And so when you're looking at this thing, and you're looking at the price, you're like, could it go from here to double this? Probably not. And they decide not to buy, because you don't want to lose 20 $500. That's the thing that is really scary. On the psychological side about this is all those people sitting at 350 or $370, when they decided to buy in now that they finally heard about this, they have set themselves up depending on how much money they put into this thing for that really bad loss aversion. And at the poker table, when this happens, it's called going on tilt, where you just start making really, really bad decision after bad decision after bad decision. And the reason why is because you're trying to make back the money that you lost. And so I'm really actually pretty worried for people that have jumped into this game late. And same thing happens with Bitcoin conversations where it's Yeah, I think it's a really fascinating thing, blockchain technology, all that sort of stuff. If you are that person that buys in, and then things do drop back down to a world of normal, the valuation for GameStop supposed to be like 20, or $30. Some people go as high as 60 or 90, maybe. But it's usually 20 to $30. For most people that are valuing the company, if this thing goes from 350, where you bought down to 30, it's basically going down to zero, I worry about people that have made this decision to invest because I know how painful loss aversion is not just loss versus the actual loss. When you lose it,
Ryan Inman 28:59
it will go back down though that's the thing like there's no fundamentals to this, this is momentum. This is greed. This is not based on evaluation at all, which I think is very different than other forms of investing or other things in companies that you potentially could be invested in whatever. This is greed and fear driven but it's also an emotion inside there is extreme hatred. And this is where I want to kind of transition into why the Wall Street bets are doing this. They did this because they are showing the man the institutions that you can't mess with the people and this is again that David and Goliath and I'm not going to read this whole thing make sure that you have a few hours because this is a rabbit hole. This was like a waste of time but if you decide just plan on you'll be there for a while. But they basically in the TLDR on this was that they put out this long thing of like basically f hedge funds. This is the crosspoint into the future. They are going for the headphones because they don't like man, this is a tug of war, as they call it between traditional, and the future. That's the mentality of a lot of people in Wall Street bets that they're going after, this isn't like a, oh, I want to make some money, let me play the minimum, right, which is what some of the billionaires are doing is they're just like, Whatever, let's just add fuel this fire, it's funny to them, right? The amount that chamath put in $100,000 is point oh 1% of his net worth the 2500 that I could have put in that I deemed was too much is point o 5%. of my net worth, what a lot of these people are doing is they're taking their stimulus checks and money that they didn't have, or they're putting 10 or 20 or 50% of their investable assets in this. Because either one, they want to stick it to the man or two, they're hoping that they're going to get rich quick. And what's going to happen on both of these is maybe they bankrupt this hedge fund, maybe this works, right? We don't actually know how that's gonna play out, maybe this actually works, but they're not going to stop, they're already doing it to AMC today, what they did to GameStop, they're already trying to do it to something like Bed Bath and Beyond, they're going to keep going or they're going to try to keep going. But eventually someone holds the bag on this GameStop is not worth $350 GameStop is worth $17, maybe that's the price, whatever, we'll just use it. And if they bankrupt the short, well, then who wants to own GameStop at $350, it will have to come down. So someone is going to get slaughtered, and is going to be retail as well as the hedge funds on this. But it might not be the guys who and gals who started this whole kind of movement, and they're gonna keep pushing it. It's just a fascinating kind of human behavior concept behind this, and I don't have the time or resources to kind of really dig in and write a white paper on this. I wish I did. I will read it when someone else does. These don't have the time. But I'm fascinated by these things that people are doing. And it is different this time, not from what they're actually doing trading wise. Because that's not they're using regulated markets to do this. What's fascinating, though, is that they've taken something that has never been in existence before the ability to buy options for $0. through something like Robin Hood, it's completely free. The ease of use to buy set options. It's really simple. You click trade, you click trade option. And Robin goes, do you think it's going up or down? You say I think it's going up? And it's like, great, you should buy a call. And then it shows you the dates, you click the date. And it says Well, here's what it's trading on. And then strike above strike below. You click and it's like this costs 20 $500. Do you want to place a trade? Yes, by right. It's that simple. It's never been in existence ever, that it's been that simple. And then you've got it where they don't know each other. They didn't collude in private, they didn't price fix privately, where you might see insider trading happening when they start by definition, outsider trading, actually. But again, this is absolutely price manipulation, but it's a gray area. And so the SEC is going to review this Absolutely. And they're going to come out with some regulations on what can and can't be said, and how this is gonna work. But I don't know how they're going to honestly handle this. This is how do you handle it, no one knows each other. No one knows anything about GameStop, no one's tied to GameStop at all, they used public knowledge, and all buying into the same company to cause pain to someone who shorted the company. It is fascinating. And that's why it is different this time. But the method that they're using to buy these things is not different. This is options, you can go do this on any stock at any time. It's just that they all decided that they were going to go after the short interest. And I hope this also sends a message to the hedge funds. Because I think Melvin capital will go under I don't think they're going to survive this hope that sends the message that like you can't short over 100% of stocks float and not expect that people are going to come in just let it sit. That's a big no no. And the fact that you're doing it to brick and mortar not to be sentimental or anything, to be honest, I don't care if GameStop is around or not because I don't shop there. I don't need anything from there.
Jimmy Turner 34:10
I buy games from GameStop
Ryan Inman 34:11
I mean I have in the past, but it's been more than a decade. But at the same time, what I'm getting at is that you're shorting a company in a pandemic that's struggling to survive that has 1000s and 1000s of people who are working there like I get that some things are for money and some things aren't and maybe this is just me being stupid and naive or whatever but like shorting this to the point where you force it potentially to go belly up is I think just morally wrong. And so I'm laughing that Reddit is having their laugh right now and again I have no skin in the game. I just got popcorn
Jimmy Turner 34:43
yeah just got the popcorn just sitting back toss it in my mouth. Well I will say though is that just the people are clear on who Goliath is and the situation so you know if David's the Reddit and the people on Wall Street bets Goliath is hedge funds and hedge funds are not the same as index funds, which we commonly talk about. So hedge funds arefunds that are run by managers at the hedge fund, they actively pick stocks and investments to help try to beat the market. And so when we talk about active management versus passive management, one of the active management's we're talking about is hedge funds. And we talk about that all the time on the show.
Ryan Inman 35:17
Extreme though of active managers. So like when we talk active manager, we're talking about funds that
Jimmy Turner 35:22
Ryan Inman 35:23
you can buy a mutual fund or whatever, and it's going to charge you one and a half, or 2%, or something hedge funds, they charge that to and 20, right, they charge 2% a year fee, and then they take 20% of the profit that you make, it is, I think, very different than just the normal, active investing piece there on the far end spectrum, they can invest in anything, they can invest in private equity, they can invest in Bitcoin, alternative investments, wherever they want to go, wherever their heart takes them, they can invest, you put money with them. And historically, it's been for large family offices, institutions, like people who have a lot of money, they're not going to go take $1,000 from me to go and invest like, they're going to maybe have a $10 million minimum or a $5 million minimum,
Jimmy Turner 36:07
which is why this is the man versus the institution, like they're sticking it to the man. And so I just wanted to to draw that distinction for anybody that doesn't really know what a hedge fund is. But yeah, it's fascinating stuff, man. And I'm so glad that we did this special episode on this topic, because we don't talk about individual investing a lot or individual stocks, and but I thought this was a perfect place to have that conversation.
Ryan Inman 36:26
Yeah, we're not going to get into habits don't think it's coming up doing special episodes. But when something like this happens, where we haven't seen this before, in the scale that I'm talking about, of redditors, getting together public who doesn't know each other, and colluding and doing all this publicly, I don't even know if I can call it colluding to be honest. It's different, it's new. But this was also a giant disclaimer to all of you, please don't get caught up in the momentum. Please don't think that you're gonna make money doing this. Because you could, or you could lose everything. Everything being whatever you put into this, please don't use leverage in doing this. It's risky. And I want you all to, if I had one thing that I could sit back and just be like, please learn this is to watch the behavior and the things that are said, and how people are treating this and see how the herd for the herd itself. Because the next time This comes, it won't look like this. The next time This it could be, hey, the markets up 20% this year, hey, we should pile all our money in or, hey, Tesla has come out with this new battery. And whatever that is, it's a new trigger a new thing. There'll be momentum somewhere. And when that comes, if you can learn from this fascinating example of how the herd mentality works and how people get caught up, and you can see all of a sudden that these wheels are turning in the herd is moving in this direction. Don't get caught up in that I got to buy this because the Beanie Baby craze back a long time ago, right? It was gotta have gotta do this. gotta buy it. It's the best investment ever. My parents had Beanie Babies. And they're worth nothing. But people were paying like 10s of 1000s of dollars for like the prince's die Beanie Baby. It's just in back in the day. That'd be like 100 k today. Right? But it was because they got caught up in this herd investing thing. I think right now what we're seeing and I could get absolutely blasted for this. But in the sports cards, the trading cards, Michael Jordan, rookie cards and water are going for hundreds of 1000s of dollars. Gary Vee or Gary Vaynerchuk is really into promoting these things. And in terms of investing, and it's not just him. It's he's one influencer that's doing this. But people are coming in. And I'm seeing this, where they're buying 10s of 1000s of dollars, potentially hundreds of 1000s of dollars of sports cards for collectibles as investments, like in their pitches. Well, Michael Jordan's rookie card was $2,000 10 years ago. And right now it just traded a perfect example for like over $200,000. For this, I'm like it's a piece of cardboard with ink on it. Right? But so I need to go back in my car. Yeah, go back and look at all your cards. Unfortunately, I'll have any good ones. But the idea was like, I can see what's happening. This is just an accelerated version of what's happening maybe in the sports card, and maybe is what's happening in Bitcoin. And maybe it's what's happening across the board in several different investments at any given time. So my big hope is that none of you buy this crap. But you look at this and go, Okay, I can fundamentally see how human behavior is working, how this herd is moving, how this evolved. So the next time whatever it is, I don't care if it's Beanie Baby 2.0 or some cryptocurrency or whatever, you can identify that and go Nope, that is not where I want to be. That is not even if you have FOMO you will not make those trades or place that or put money into it because you'll have seen how this plays out.
Jimmy Turner 39:49
And then you can do what I do which is to hide under a rock you never see this stuff and you have to have your buddy David text you you don't miss out if you don't know what's going on. I'm kidding
Ryan Inman 39:56
part of the worst thing ever though, Jimmy becauseYou trust David, right?
Jimmy Turner 40:01
Ryan Inman 40:02
Okay, so a guy that you trust texts you and says, Have you seen this? Right?
Jimmy Turner 40:06
Ryan Inman 40:07
instantly There's your hook. Okay? You're like, no, what is it? Oh, this thing's going crazy. Blah, blah, blah. He's drawing the line out. And then you're like, well, crap, I got some extra money. Maybe I'll just toss it into this, like, sinker.
Jimmy Turner 40:20
Ryan Inman 40:21
Because you trusted someone who informed you about what's happening. And you had the trigger to not miss out on that, because it's already moved. And what if it moves 10 x more, and you can make some good money? Well, why not? Right? That's how the herd moves. That's exactly how this thing goes. So yes, you live on a rock totally fine. But you stopped and you didn't make the straight but not everyone listening. When their friend David or Jean or whoever messages text tells them shows them in the in the lounge or whatever. They're going to open their phone and go trading right away.
Jimmy Turner 40:54
Ryan Inman 40:54
please don't do that. think through how this works. This is not investing at all.
Jimmy Turner 40:59
It's all about singles, not homeruns. Wait, that was a different show. You should listen that one too. It's related. As we close out this show. I do want to remind you that if you're a doctor out there who's looking to get coaching on burnout or business or money or overwhelm, make sure you sign up for the alpha coaching waitlist before Friday, February 12 at midnight to make sure you can take advantage of that $500 off if you decide to enroll, join the waitlist by visiting the physician philosopher comm slash waitlist or by clicking the link at the podcast description in your podcast player. Now it's time for that all important disclaimer.
Ryan Inman 41:30
Well before the disclaimer, don't wait for the hurt you got to get in for now. Okay, fine. Play the disclaimer.
Jimmy Turner 41:35
Hey, that that's actually a good investment. That's a different kind of investment. Not speculation. Come on.
Ryan Inman 41:40
It actually is a good one. Otherwise, I wasn't allowed on the show. Even though whatever way the disclaimer. Exactly.
Jimmy Turner 41:48
We allow you on the show.
Ryan Inman 41:49
All right. Hopefully you have a good week. We love all of you. Thank you so much for listening. Jimmy and I this is absolutely impromptu. But we thought that it was important because we were going to honestly have this conversation together. Like I think Jimmy and I said, Hey, before we just get on the phone and talk about this, why don't we just have this conversation and recorded and just have a special show and boom, Here comes your show that you had on different day than Wednesday. So we love all of you though, please share the show with other physicians and their families. We want to help them with their money to help them feel more in control of their finances. We just appreciate all of you if you have questions or comments concerns if we can do anything better. We're all ears. Send all the negative stuff to Jimmy though. Jimmy money means medicine aka
something. Yeah, okay.
Jimmy Turner 42:37
See you guys. Take care.
Jimmy's daughter 42:45
Dr. Jimmy Turner is a practicing anesthesiologist. Mr. Aiman is a fee only financial planner, you should know that this show is not personalized financial advice. In fact, this shows only for your general education and entertainment purposes. So keep listening to learn how to become a three yourself a joker, or go find a great fee only financial planner like Mr. Edmund to create a personalized financial plan.
Jimmy Turner 43:11
If you haven't heard about what happened with GameStop recently, as hard as they say GameStop stock 321 if you haven't heard about what happened with GameStop stock recently, you must have been living under a rock. And that's why we are doing
Ryan Inman 43:32
Jimmy's Nathan Third time's the charm of the charm. here sorry.
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