Thread by @dlauer

This podcast from @jonstewart was so good:
theproblem.com/podcast/stocks…

Jon finishes with: "The energy of these apes has to be channeled into productive reform, that’s what I’m hoping with this movement."

Me too! Join us at we-the-investors.org, let's fix it. #WeTheInvestors

@jonstewart In the podcast, @Spencerjakab argues there should be guardrails for retail investors (and the apes), but Jon asks “why guardrails for them? … the corruption that existed in 2008 demonstrated that guardrails don’t exist for the big players...

"so it seems strange to me that we want to put the guardrails on the retail investor, when we haven’t gotten a hold of the system in general… If you reform the system of wall st, you automatically make it safer for the retail investor.”

This point from @Spencerjakab is a theme.

I've heard it so many times from professionals on Wall St who suddenly become paternalistic, and explain that retail just shouldn't be doing these things.

First of all, there is some truth in it. Trading is bad. The more you trade, the worse you do.

But the hypocrisy of it is astonishing. Nobody is telling these giant firms on Wall St not to actively trade. The point made in this thread is excellent.

https://twitter.com/mittalbestex/status/1502152884531589130

But it also strikes me as a deep misunderstanding of Reddit and the apes in general. They are not traders - they are, generally, investors.

They like the stock.

They want to be long-term investors in companies they love and they want to know they own their shares.

For Wall St to condescend and look down their noses at this attitude is absurd and hypocritical. This is what markets are for - to connect investors and issuers, not a casino for ever more complex derivatives and high-speed speculative strategies.

The system is perpetuated by systemic corruption and corrupt politics. The continued existence of PFOF is perfect evidence of that. @Spencerjakab rightly points out that Gensler's hands are tied, because “money buys influence in this country… so Wall St gets the rules it wants.”

Jon's response is *chef's kiss*:
“That’s the problem. The problem isn’t retail investors pooling together to try and gain the kind of power that is endemic on Wall St. The problem is the power that is endemic on Wall St. And what those guys exposed is the essence of what we...

have to change. It’s not changing the guardrails, it’s changing the influence that money has on policy-making, it’s changing the complexities and lack of transparency. The problem with complexity is, it’s much easier to exploit those loopholes in the nooks and crannies, than ...

when something has been simplified to make it. And the complexity is there because that’s how the big boys on Wall St want it, because they know they can take advantage...

So I don’t understand why we’re not wholly focused on reforming that part of the system, which will automatically make it safer for retail investors.”

YES - I couldn't agree more.

They go on to discuss PFOF. As Jakab says: “It sounds very sleazy, but it’s only slightly sleazy.”

Well - no, it's very sleazy.

Jon's distrust of PFOF is exactly right: “They say that’s what gives you the best price. But I can’t figure out why you should trust that. If they don’t make all the information transparent… I can’t understand why it’s necessary or why it’s so non-competitive.”

They both seem to agree that complexity “is the fundamental flaw of finance in America, because you make it complicated so that you can charge a lot for it.”

Jon points out how so much money is being made on volatility, churn and complexity.

Jon talks about how the purpose of a stock exchange is capital formation/price discovery, but questions why the system is such a Rube Goldberg machine – “and they are making money at every level of that complexity. And they are feasting on what is a simple transaction…

they have created unnecessary complexity and unnecessary lack of transparency, all so they can make a shit-ton of money. And that to me is the fundamental flaw at the heart of what is supposed to be a free market system.”

@Spencerjakab expresses concern that if people are hurt by meme stocks, they will probably walk away from markets, and that's bad. I completely agree with him. But Jon is right, we can’t just throw our hands up when we see corruption and complexity – “that seems unacceptable.”

This is part of a conversation in which Jakab talks about the apes “chasing ghosts” in their concerns about off-exchange trading and short selling, and urges them to “opt out” because the “system at large is kind of bought and paid for.”

Jon's point is that they can't opt-out, the fed has created a situation in which you need to be in the stock market to get returns. And there's no reason that investing in individual stocks should only be for large institutions.

"Gary Gensler says he has two jobs – one is capital formation, the other is investor confidence. If what you’re saying to people is that the heart of the American financial system, the stock market, is so fucking corrupt that you’re best staying out of it, then we...

have to change financial policy and monetary policy in this country to give people an opportunity to save at rates that make sense to them, or you’ve got to go in there with some form of regulation and clean this mess up."

Jon is fired up about this movement & about fixing mkts.

"The reason I encourage … the movement, is that they brought a light to something that most people were unaware of, that or the inherent complexities and the corruption of the market. My point to Gary Gensler is – can you use their energy? …

They’re not owned yet, by any of the interests that are down there. And they’ve exposed some real inequities and corruption that exist as part of the infrastructure of what is considered the heart of our free market system. If that can bring an energy to reform...

and I think it can, I think they can put a lot of pressure to get these things more efficient and more transparent, and I think that’s worthwhile. That’s where I admire their movement."

This is exactly what we want to do with we-the-investors.org. Let's bring that pressure!

I think much of Wall St sees the apes and Reddit crowd as a bunch of degenerate traders from wallstreetbets. I think they've missed the growth of the movement to one that wants long-term, direct investment in companies they love.

Informed investors who understand markets and market inefficiency, and want it fixed so they can be sure that companies they admire can thrive, are an amazing addition to the financial ecosystem. Social media has helped with this, and I think it's a great thing for markets.

Maybe this should've been a blog post, it's a bit excessive for a twitter thread!

Looks like I messed up the threading a bit - thread continues here:

https://twitter.com/dlauer/status/1502278982972104707