Welcome to Bogleheads On Investing podcast number 42. Today our special guest is Spencer Jacob. Spencer is the editor of the Wall Street Journal, heard on the street column and the author of a new book, The Revolution That Wasn't, GameStop, Reddit and the Fleecing of Small Investors. Hi everyone, my name is Rick Ferry and I'm the host of Bogleheads On Investing. This episode, as with all episodes, is brought to you by the John C. Bogle Center for Financial Literacy, a 501c3 non-profit organization that you can find at BogleCenter.net. Your tax-deductible contributions are greatly appreciated. The Bogleheads were formed in 1998 on the Morningstar message board before moving to its current site at Bogleheads.org. The founder of the Bogleheads is Taylor Laramore. Taylor is a highly decorated World War II paratrooper from the 101st Airborne Division, where he fought in the Battle of the Bulge. He is 98 years old this month and on behalf of all the Bogleheads, we wish you a happy birthday and many more. One year ago this month something phenomenal happened in the stock market that was called by some the Reddit Revolution. Millions of individual investors, mostly young men, banded together on a Reddit message board called Wall Street Bets to take down a couple of large hedge funds who had gone short companies that they thought were down and out. The phenomenal story of what happened next and the ultimate demise of many of these small investors is a fascinating tale. Here to tell us about it today is Spencer Jacob. Welcome to the podcast, Spencer. Thanks for having me, Rick. It's a real pleasure to have you on this podcast. I've been following a lot of your work, including your previous book, and this book is really interesting. I put it up there with Roger Lowenstein's When Genius Failed, which talks about long-term capital management. Here we are 25 years later and something new on Wall Street. But before we get to your newest book, The Revolution That Wasn't, talk about your background and your past. How did you get into Wall Street Journal and writing books? Tell us a little bit about yourself. First of all, thank you very much. I'm blushing to be compared to the author of When Genius Failed. It's one of my favorite financial books, a great account of the whole LTCM debacle. Lowenstein takes this really complicated thing and puts a human face on it and simplifies it. That's what I always tried to do when I write. If I accomplished anything on that scale, that's great. Back when LTCM happened, when that story happened, I was a director and later become a managing director in equity research at an investment bank. I was working in emerging markets a year or two in emerging markets.  You see a lot of stuff. What you might see once or twice or three times in a career on normal Wall Street, you'll see 10 times in emerging markets. You saw panic and euphoria and all kinds of crazy stuff and crime and whatever. That's when I spent the first 10 years of my career doing. I ran a team of emerging market analysts at Credit Suisse and I just got bored of it. I found all this stuff really interesting. More and more, I just found myself managing people and talking to clients. I had saved money. I was pretty frugal. What I'd really like to do is write about it. I wonder how I could do that. I met a woman on a plane who was a longtime Wall Street Journal reporter. Two days later, I was in the office speaking with her. Three days later, I was writing my first column for Dow Jones News Buyers. I wrote several pieces for Barron's Magazine. I worked for the Financial Times and the last 10 years, I've been a columnist at the Wall Street Journal where I run the Heard on the Street column, which is our financial analysis and opinion column. It's 14 people around the world. I love my job. It's much more interesting than being an analyst. Unfortunately, it does not pay as well, but I get to write books on the side, which is also nice. This is my second book and the latest one. One of the things that interests me about you is you are heavily involved in the dartboard contest. Basically, Burton Malachial saying, you know, monkeys throwing darts at a dartboard would outperform most of the active managers. Can you tell me about that whole contest at the Wall Street Journal? Well, Burton was very kind to write a really nice blurb for this book. The dartboard contest is something that ran for many, many years. When I was in graduate school at Columbia University, I was introduced to it. That was towards the tail end of the original dartboard contest. He said in a walk down Wall Street that monkeys throwing darts at a dartboard would do as well as mutual fund managers. He basically is correct. They actually do better because monkeys are free or don't cost very much. We decided to revive that. You might be aware that every year, there's a big hedge fund conference in New York City called the Sone Investment Conference where people pay $5,000 to be there. They'll invite journalists for free, but $5,000 to be there sitting in the room when Bill Ackman and all these other people and a couple of characters who show up in this book, by the way, go and give their best ideas. And they'll say, I like this stock or I don't like this stock and the stock will move immediately. And I said, I wonder how those do in the long run. And I wonder how we would do throwing darts at the stock listings. And those don't exist in very many papers anymore. Barron's Magazine, our sister publication still does it. So I got my whole team and bought darts at Models on 42nd Street for $9.99. They had no monkeys, so we had to do it.  Both years, we beat the pros by an embarrassingly large margin. I remember the first year it was 22 percentage points. And not only did the pros not beat us, but they didn't beat the market in either of those years. And they generally do not. And it just illustrates a deep truth about investing, which is that there is such a thing as expertise, but it's very, very hard to find. And you're better off usually not really chasing it. And also, why would they invest your money if they're really that good, right? Yeah. And for that matter, why would some stranger with a pseudonym on a Reddit message board, which is the whole phenomenon that I'm writing about in this book, have any good advice? And it might even be self-serving advice. You don't know who that person is. Well, before we get into the book, and we're going to go through the book because it is a great story. We need to define some terminology and define who the players were, who the companies were, who the characters were in this story, because listeners may not be familiar. Yeah. The first thing that comes up is a memstock, M-E-M-E. What is a memstock? Did I say that by the way? Is it a meme stock or is it a memstock? Prosessions vary. I think meme might be the more common one. I think meme is technically correct and meme is the more common one. What is a meme? First of all, meme is something where it's a picture from a movie or some cartoon or just some humorous illustration that instead of words, you use that picture, perhaps with some text attached to convey something. So you'll take a movie poster and you'll change it to make your point or to make a joke. And so memes or memes are something that young people love to send around. I've got three sons and my youngest recently informed me that I can't make a meme because by definition, I'm just too old. I showed him some funny thing on my phone. He said that can't be a meme because you showed it to me. It's therefore not a meme. But people on these message boards love to exchange memes. They love to kind of convey messages in them.  Okay. Now, Elon Musk sort of made a famous quote in this book. And I recall him calling one of those stocks. The stock was GameStop, but he called it GameStunk, S-T-O-N-K. What is a stunk? Let's say you're a young person and you don't think that the stock market is very cool, but you think it's kind of fun to dabble in it, then you call it a stunk. And a stunk is something that you kind of buy as a joke that you don't take too seriously. And there is a meme about people buying stocks. It's like a really crude drawing. You might see if you just Google it, do stunks. You'll see it.  And that's where the stunk thing comes from. And he, that tweet of his, which is, I remember what it was, it was 408 p.m. on January 26th, 2021, set the financial world on fire. This episode was going on. It was already a crazy, crazy story. And because he's so widely followed, especially among this cohort, it was like there was this forest fire and then he just dumped a ton of nitroglycerin on top of it. That's, that's kind of what, what his tweet did. Okay. The next couple are a bit around a long time. There's a lot in the book. And a lot of the story is about the shorts, the people who are shorting this stock or did short the stock. And so just for listeners clarity, what, what's a shorting a stock? What does that mean? Well, shorting a stock, I'll tell you what it is. And I'll tell you why it's, it's especially important here. Shorting a stock is the opposite of what most people do you and I do with funds or with stocks. We buy them and we hope that they'll go up in value and pay a nice dividend. They do the opposite. And they're not evil because they do that. But they're basically making a bet that a stock will go down in value. And the way to do that generally is to not own the stock, but to borrow it from somebody.  It doesn't, it's not illegal or, or nefarious. And you then sell it to somebody else. So you benefit from the price going down. But like, if I go out and buy a share of IBM, the worst thing that can happen is tomorrow IBM is, you know, mired an accounting scandal and the share price goes to zero and I lost all my money. The best thing that can happen is that it's worth a trillion dollars tomorrow. And I make a lot of money. But they face the opposite situation where if a stock starts to go up, they start to lose money. And since they tend to move in packs, if a stock goes up unexpectedly for no reason or, or for some reason, there's something called a short squeeze which happened here. And that's probably an understatement here.  And, and some people lit the fire on purpose. It wasn't something that just wasn't the news. They like doused the whole place in kerosene. They agreed to do this on the internet. And these guys all had to go out and there was only one exit door and they all trampled each other. And some funds lost billions of dollars, like some of the most respected funds on Wall Street lost massive amounts of money. And it was all part of the plan. And they had to buy the stock no matter what. Right.  That's the old saying. Yeah. He sells who isn't his and must buy it back or go to prison. Okay. Now one more thing. I mean, so we talked about shorting stock and that thank you for that explanation. And let's talk about call options. What are call options? And how do they affect the price of a stock? So call options play a big role in the story too.  A call option is saying, let's say the stock is at $100 that you are interested in. And you say, I'm going to give myself the option of buying it at $110 in a month. I'm going to write a contract with you and it probably won't get to $110 in a month. And you sell me a contract. You say, okay, that's a deal. I'll sell it to you at $110 a month. Let's say that this company cures cancer and it goes to $500. Well, I still get to buy it for $110 because I signed that contract with you. So I make the difference. I probably put down a tiny amount of money for that contract. And I get all the difference in price. So it's like almost like a lottery ticket at times that you can buy. Now, that's not the main way that they're used, but it is the main way that they are used by this newest class of investors as a purely speculative instrument. They're also put options, which do the opposite. It gives you the option to sell. But the person who sells you the option is taking a pretty big risk, right? That company cures cancer, they have a big problem. So they have ways of protecting themselves. They're not in the business of taking that risk. So they do things. And the things that they do play a role in this story as well. And the seller of the option gets a small premium. And most of the time, these options just expire worthless, correct? Yeah, options are seen as the ultimate retail investor, soccer's bat. And during the time that this story takes place, tens of billions record, record shattering amounts of call options were purchased by people who were mostly not very sophisticated at all. Okay.  Now we can get into companies involved in the story. And the first company we have to look at is Robin Hood. Who is Robin Hood? So Robin Hood steals from the rich to give to the poor. Great name if you want to be a financial services company for young people. It's a great name for a company. It's a great idea for a company. They have a great app the year that it came out in 2015. It won app of the year. It's slick, it's intuitive. It's, it's a brokerage house, but it's really it's an app with a broker attached to it. That's how I see it as opposed to whatever broker most people on this might use, where they have a brokerage. And then there's also an app that they can use for convenience. The story is backwards. You know, they designed this app, they showed it to people and they had a huge waiting list before they even had it going mainly of college students and people on that age group. Somebody mentioned it as the gamification of stock trading. It is. That's the criticism that this company has come under. They said, we want to make investing fun, but I don't think that it's any accident how fun they made it. For example, when you use Robin Hood, you'll occasionally get confetti on your screen. And that they've disabled this since because of criticism. When you open a Robin Hood account and they still do this, you get a free share of stock. What stock? Well, could be a $5 stock, could be a $200 stock. Who knows? It's like a lottery ticket. And some people go in and open accounts with 20 bucks or 50 bucks. So you put 20 bucks into an account and you got a $200 stock. It's a pretty nice gift, especially if you really only have 20 bucks to your name. You just made 10 times your money.  And there's a psychological lure to that. And you open up Robin Hood and see what's trending. Like, hey, these are the 10 things that people are talking about. These are the stocks that are up a lot or down a lot. Now, why is that important?  You kind of fear missing out. You're going to see what the whole excitement is about, right? Things go viral and things go viral in the stock market too. And that virality is a big, big part of what's going on. Now, Robin Hood, from what I understand, they don't charge commissions on these trades. So how do they make money? So these two young men and their names are Vlad Tenev and Bejubat who got together to start this company. They had a little business helping hedge funds trade. And they said, you know what? It's incredible that trading costs almost nothing. It's basically has become free. You just hook up to a computer. We could do that for people. And they weren't the first company to realize that you could do this. There were a couple of companies that came before them that said, hey, we'll have zero commissions, but they were the first to really make a success of it. That sounds crazy, right? Because there's the old story about how much did you pay for that watch or I got it for below wholesale. How does a guy make money? So he sells a lot of watches. That is kind of what their business sounds like because they're giving away trades for free and trading still costs something. It costs a lot less than it used to, but it still costs something. So how on earth do they make money? And the way that they make money is part of the problem here. The way they make money is that they get money for those trades. Instead of sending it to a stock exchange, they send it to a wholesaler or a market maker that takes the trade and executes it, doesn't rip off the customer by any means. They do it legitimately. And then they will pay the broker who sends them the money because the market maker can shave some fractions of a penny off for themselves. And then they'll pay something to the broker that sent them the order. And the vast majority of Robin Hood's money has been made that way by getting paid by the broker. And what does that mean? That means that they're not making money doing other things, providing other services to you. They're making money mainly in two ways. They're lending you money on margin. So lending you money so you can borrow against your stock portfolio and speculate more and they're selling your orders. So they want you to trade a lot and they like it when you trade a lot. And so the whole app is according to lawsuits filed against Robin Hood is just designed to get you to trade a lot. And we know from many, many, many studies that the more you trade, the worse you do. The more you check, the worse you do. People on Robin Hood check their account eight times a day on average. On average. And some people are constantly on the app. They can't put it down. And I also read in your book that they trade 40 times as much volume of shares based on the amount of shares they have in their account as somebody at let's say Schwab or Fidelity would. Yes, that's right. Yeah. Well, okay, let's go to the next one, which is this middleman who they sell trades to. And here's where some confusion comes into the story. And this is many conspiracies have been hatched from this. There's a company called Citadel LLC. So Citadel is a hedge fund founded by Ken Griffin, who's one of the richest men in America. He started trading from his dorm room in Harvard University. It was precocious and he actually made money in the 1987 stock market crash, believe it or not, from his dorm room. Very, very savvy guy. And he had this business that was pretty small some years ago that after the financial crisis started to get bigger and bigger, which is called Citadel securities, a separate business from his hedge fund, but also called Citadel. And it is now the biggest middleman like this, not a stock exchange, but executing orders mainly for retail investors, not just at Robinhood, but at other brokers too. There are other companies in the business, Veer 2, Susquehanna, but they're their number one. And Ken Griffin is kind of, especially by the people who felt a bit bitter about this whole story that I tell is kind of the Darth Vader of the episode. He's kind of some kind of dark lord who has his hand in everything, supposedly, and made this whole thing happen, which is not true. But, you know, it's easy to see how that story was concocted because he did make a lot of money. This business Citadel securities is private. It recently got an investment valuing it at $22 billion. And he is by far the largest shareholder of this company. So it has been a very, very profitable venture for him. Last is Reddit. What's Reddit and what is Wall Street Pets? So Reddit is a social media company. It got started by two young men in a college dorm room. There's so many tech companies do at the University of Virginia. It's Steve Hoffman and Alexis Ohanian. They call themselves the front page of the internet. It's different than other social networks in a lot of ways to just be clear. I like Reddit as a user, because there are about 100,000 communities on there. But anything you might be interested in Reddit is one of the kind of the few things in social media that I really sort of think can be good and a good sense of community. But it also was the perfect breeding ground for this crazy story. It has a bunch of subreddits where people with very narrow interests and very similar mindsets can gather and exchange advice, exchange stories using pseudonyms. So you don't know who anybody is. It's not like Facebook or Twitter where you use your own name or usually use your own name and then people follow you or LinkedIn or something like that. You have the pseudonym and the comments that you see are the ones that are upvoted where humans say, yeah, I like that or no, I don't like that. They downvoted. So something that that it gains the approval of these groups moves up. And in this particular case, there is a one subreddit called wall street bets that found itself at the center of this. It found itself at the center of the investing universe. As a matter of fact, stocks that it was talking about GameStop in particular became the most traded stocks in the world. And these are not big companies and they became the most traded stocks in the world. So we have the terms. We have their companies involved. We have some of the people. The timing of all of this is important too with COVID and stimulus checks and so forth. But go ahead and now start the story ready to go. So as you know, I'm an editor at the Wall Street Journal when something happens in the stock market. I tend to see it at least out of the corner of my eye starting about a year before the story took place. I became aware of wall street bets and you would see some stock go up 100% in a day. And let's see what news happened. Well, there's no news. The news was that they were talking about on a wall street bets and particularly if it was a smaller, less traded stock, that surge of interest where everybody kind of jumped on the bandwagon at the same time for a few hours could send the stock up. It was just all seen as a joke at the time, at least around where I work. It was seen as a joke. I think it was seen as a joke on wall street too. Of course, there were probably some people who were trying to ride the coattails who were in the business of managing money, but you had to be pretty quick to get ahead of these guys. Then the pandemic happened and stimulus checks and the lack of sports and the lack of sports gambling all happened at the same time that supercharged the number of accounts and the activity level of people who were new to investing primarily. And those people were getting their advice on wall street bets. So let's fast forward though. Let's go past all the things that the ingredients that made this possible. It's the morning of January 25th, 2021. I have three boys. My oldest was a senior in college at the time. His return to college was delayed by COVID. I was at home editing an article for the next day's wall street journal at home because of COVID. We're all at home and he comes over and says, dad, are you going to write something about GameStop? He's like, well, why would I write something about GameStop? I think I've driven him to GameStop about a billion times in his life. I mean, why would I write something about it? So I take a look at it. GME is the ticker. I put it in. It's up. It doubled in the last two days. So what made you ask about it? He said, well, my friend, Sean bought it. It looks like wall street bets is talking about it. And that's why it's up. I said, well, that's great. This usually kind of lasts a day or two. I think he should sell. He said, no, no, no, he's not going to sell. So what do you mean he's not going to sell? He's not going to sell because these people online are all agreeing not to sell. And it took me about 10 minutes of research to see that something extraordinary was going on. We mentioned earlier in the show what short selling is. Well, people on this bulletin board had on wall street bets had figured out that this was one of the most shorted stocks out there with good reason, you know, based on how his business was going. But there was so much short interest that it was more than the number of shares available to train to purchase, which is possible. And for that reason, they had devised a scheme and it wasn't even a simple scheme to basically buy the stock, not sell it, no matter what, keep on buying. And hundreds of thousands of people were joining this forum every day and seeing this message and they were seeing what was happening to GameStop. And there was avalanche of buying by young investors on Robinhood and other brokers. Robinhood was the biggest one that played a role. And Rick, if you and I both had investment funds and we worked to try to do this, you'll be talked on the phone or whatever and agreed to do this to a third fund. The SEC would show up at our door. You can't do that. Creating a squeeze through collusion is not legal anymore. It was in the old days, you know, the Vanderbilt and whatever before the there was an SEC. It's not legal now. But what these people were doing was a huge loophole to that because they were doing it way out on the open. They've been talking about it. Just nobody was nobody put a suit on every day was reading about this plan. You could go back and look at the messages and see that they were very specifically talking about it and really understood what they were doing because a few sophisticated people on this board explained to them how to cause this thing to happen. And it just built on itself and became huge than they even could imagine. You know, they called it bankrupting institutional investors for dummies. And it is the craziest thing that I've ever seen. And I do tell the story bit by bit in the book. I mean, it's not just a crazy story. It's also a lesson in finance and a lesson in economics. And it's a lesson in generational attitudes. One of the main characters in the story, one of these people on that message board was a fellow by the name of Keith Gill, who goes by the name of Roaring Kitty plus another name, but I won't use any derogatory names on this show. That's right. But how does he get involved in all this? He is the most interesting person here and in a book full of interesting people. Keith Gill, 34 years old at the time that the events take place is of that generation, but very, very different from it in many ways. He's a chartered financial analyst, which is a difficult financial certification to get. It takes about a thousand hours of study for most people. He worked for a financial firm, MassMutual. You can track his online presence and his video presence on Reddit and on YouTube way back to the beginning of this story. But at the beginning, he was kind of ignored and ridiculed even. So he decided that GameStop was worth a lot more than it was. And he made some pretty good arguments. He is financially sophisticated. And there's a value investor that makes an argument that says, I think this stock is going to go up. They're never sure. And he wasn't sure, but he had a pretty good feeling that the stock that he was buying for four or five dollars was worth more like 10. And he was making an argument to anybody who would listen. And Michael Burry, the famous value investor, saw it at almost the same time as him and jumped in. Michael Burry, he became famous through, Michael Lewis is the big short, another fantastic book, which tells the story of a handful of people who made a bundle by betting that the housing bust would happen and that mortgages would implode. And so, yeah, he's a very, very smart guy. And so the first message that we see, the first public mention, the first public appearance of Keith Gill is being upset that Michael Burry had bought into it because he was buying these call options in the stock, very long dated call options that would pay off a couple of years in the future. And Michael Burry had shown up and publicly said he was buying the stock and then it made the stock go way up. It doubled the value of the account of this guy, Keith Gill.   I'm going to sell this and move on to the next thing. And Keith Gill did the opposite. And people were making fun of him. Like what's wrong with you?  And he had bought call options that could lose all their value. So he could have wound up with zero. And he called this, by the way, YOLO, an acronym. Yep. And YOLO stands for you only live once. It's really a rally and cry of this new generation of investors, like let's take a huge, huge risk. And he was taking huge risks because he's not a rich guy. And he had gone from having $50 something thousand dollars to a hundred something thousand dollars. So he had more than doubled his money.  And he said, no, no, no, that's not how you do it. And he was writing like a base of behavioral finance professor. And these guys just did not, he was just pilloried for the most part on this bulletin board. And he would make videos later. And then maybe 12 people would watch the video and talk about Benjamin Graham and stuff like that. Like it was, his references were going over everybody's head. He was just a guy who was pushing the stock for a long, long time until other people discovered him, discovered that the stock was prone to a short squeeze. And they did it during a very particular moment in history when all the ingredients came together in a perfect storm.  And nobody knew his name. Nobody knew who's Keith Gill or who he was. They just knew him by this obscene name that he used on the, on the bulletin board and by the roaring kitty name that he used on YouTube. They didn't, there's no connection to his expertise or who actually he actually was. He was just a guy. And he changed his, his message too, to, from being cerebral to being, to posting memes, to posting all kinds of, you know, change movie posters. He was really kind of hip and cool. And after a while, all he did was just post a screenshot of his each rate account, which every time he posted it, he still hadn't sold. And he went from having, you know, 50 grand to 100 grand to a million, to 2 million, to 3 million, back to a million. So he'd lose a couple of million dollars and he just stood pat. And people couldn't believe it. They couldn't believe how, how gutsy he was. And by the time our story ends, at one point he had an excess of $50 million in this account, life changing money, a thousand times what he started with. And he was just a, he was just a hero just for holding on. And by those posts, by the way, had an important psychological effect too, because it's called social proof. You know, you want to follow somebody who's made a lot of money. They must know what they're doing. And so also during this period of time, as you mentioned, sports betting went down the tubes. March Madness was canceled in March. At the same time, stimulus checks started coming out. I think there were three rounds of stimulus checks. One of them came out for $1,200 in April of 2000. And then there was another 600 in December of 2000. And then in March, when March Madness was canceled, there was a distribution of another 1400. And that caused some people to, some young people to do some kind of wild and crazy things. Talk about John Modder. Who is John Modder? So John Modder is somebody who I introduced in my book. He was interviewed during the peak of this squeeze because some reporters in the Los Angeles Times went out and they were looking for real people, not just people with the screen name, who were doing this. And this guy, John Modder, is pretty interesting because it's just the way that he talks about it. He represents a certain not very small subset of this group. He said that he bought the stock. He didn't have a lot of money. And he didn't care if he lost at all. He said he would buy magic beans for a man on the street if they could be used to bankrupt some hedge fund billionaire. That was the goal. So this is a group where, and especially the people who were late to this, not early to this, but late to this. So he bought, he bought in that week, not, not weeks or months earlier, who wanted to use GameStop and the other new stocks as a weapon to weaponize it, to harm Wall Street, to hurt these hedge funds. And it sounds strange, but you have to understand. I do have kids in this age group. What's their experience? I did not lose my house when the financial crisis happened or my job, but a lot of people did. And my kids don't have burdensome student loans, but a lot of young people do. And they struggle to pay them back.  And so, hey, here's a chance to hurt some rich guys on Wall Street. What's a hedge fund or whatever. What they fail to understand is Wall Street is a very big place. And Wall Street will gladly accept their business, including John Moder's business, for however many shares he bought of GameStop, and say thank you very much. So he exemplifies this group that it's like any movement, a religion or political movement, the people who join it on the late side are the most enthusiastic. They're real believers in the mission. And so this went from a way to make money to a way to hurt Wall Street. And for a lot of people, that's what it was. And that's when it moved into the political realm. As we move along here, the stock is going up.  More people like John Moder are opening up millions of Robinhood accounts with a little bit of money, a thousand bucks, and then they're able to borrow money and buy a little bit more stock. So you've got this huge influx of new investors, very unsophisticated investors who are just buying just to buy, because everybody else is buying, and maybe it's their opportunity to either make money or to punish those who they think should be punished or whatever the reason is. At the same time, the shorts are getting squeezed. And so they have to buy. And at the same time, you've got people like Keith Gill, roaring kitty, who has out there buying options. And when you buy options, as you described earlier, the option seller, the people who are selling you the right to buy it from them at a higher price, have to hedge themselves. So they're buying stocks. So everybody's buying stock, but there's only so much stock outstanding. That's right. That's right. There's only so much stock. And so when you have a short squeeze, which also turned into a, it's called a gamma squeeze, when you affect it through the options market, then their buying goes crazy. Now, Keith Gill just for the record, he had bought his options long before. He was not buying more during this time. It would hardly have mattered because there was just so much buying going on. But he was the hero. He was the exemplar. And he had bought options. And so a lot of people bought options. And options are like, Warren Buffett called them weapons of mass destruction, just tongue in cheek. But they really kind of were weapons of mass destruction in this case, because it's like a suitcase bomb. You could take something very, very small, small amount of money in this case. And you could have a really outsized huge impact if you wanted to just use it as a weapon. If you bought an option on a stock that was way out of the money, so basically had a very small chance of paying off. And also that the date that that option would expire was very, very close. Then it's like you're buying a lottery ticket. But once the stock starts going up, the person who sold you that lottery ticket all of a sudden turns around and says, Oh my God, I need to my computer says, I need to go buy this many shares of the stock. And the higher it goes, the more and more share every dollar of increase is a greater increase on the number of shares they have to buy to cover themselves. And some smart people on the bulletin board knew this. And that gave these young people way more bang for the buck. This stock starts kind of creeping up. You know, it has its ups and downs, but it's going up generally. So there's a short squeeze, more people are piling on. It had been going up. And in the fall, another person showed up another young cool person whose name is Ryan Cohen. Ryan Cohen was the founder of chewy.com where I am a happy customer of chewy.com's buy things for for my dog. It's a pet goods retailer. He was no longer associated with it at the time, but he had a big pile of money from selling it. And he showed up and said, I bought, you know, 5% of GameStop, that it was 10%, that it was 12%. I want the board to change this. And his appearance really set things off further where they saw this guy who had deep pockets who knew a thing or two about e-commerce and about retailing. Maybe he actually could come in and turn the company around. And first the company was kind of humored him. And then they gave in to him. And then he in January, 2021, he put himself and two of his former colleagues on the board of GameStop and caused a bunch of other people to step down. That kind of really, really lit the fuse for this. That's when the stock really started going up. And then you had this very high level of short interest. And the short sellers started to really notice and to panic. And there was a real deer in the headlights moment. And then one short seller in particular showed up and did not help his cause at all. There are some short sellers who are dedicated to the business, but fewer and fewer. It's like a sort of last the Mohicans kind of thing. He is one of the last of the Mohicans. He is an activist short seller. He specializes in finding companies that he thinks are overvalued or perhaps even fraudulent and sells the stock short and then writes a report and tells the whole world about it and why he did it. And he's done quite well for himself doing this. And he miscalculated in this case.  And then went on Twitter and told the people on Wall Street Bats that he understands short interest and they don't. And they're quote unquote, the suckers at this poker table. Well, what do we know about poker? Let's say you're a really good poker player and some five drunk tourists with way more money than you show up and start playing poker and throwing money around and doing unexpected things like playing hands the way that they shouldn't be played. You know, you might lose all your money if you really put all your chips into the pot, even though you technically know more than them. And that's what happened.  And he got run over, but he was like waving a red flag at a ball what he did. He really set them off by saying this. And he became public enemy number one. First, the public enemy had been a guy named Gabriel Plotkin who was a hedge fund manager who was the one person who they knew for sure through some securities filings had heavily sold the stock short. And he was like a normal hedge fund manager. He also owned stocks mainly, but any really successful guy, one of the highest paid people in the financial world period. He'd made over $800 million personally in 2020. So he was he was a real star. But then then the the attention turned to this other guy who was more hateable, I guess, and they had already had a couple of run ins with him on the on the on the message board. So he became the public enemy. And that's when it went beyond the point of no return when it absolutely went crazy. Just for a point of reference, on December 31, 2020, the stock closes at 1884 and realize it was like trading at $3 at the beginning of 2020. So it went from like $3 something up to 1884. And now we're starting the year 2021 at 1884. And by a few days, the stock goes up to 65. So it basically doubles again with within a couple of weeks. But then it really starts to take off from there. Yeah. Yeah. And mind you, nothing had changed for the company. The company actually was having a terrible time. They were announcing this too.  If revenue was going down, earnings were not good. Fundamental standpoint, this company was in trouble. Yeah. But Rick, who cares, right? I mean, it's a meme stock. So, you know, it's so yeah. And it went to 40 and 50 and 60. And that's when the fuse was lit.  And a lot of people joining it every day. That's when my son's friend got into this, for example. He was lurking there. A couple of my sons were lurking there too. Thank God they weren't buying this stuff. And yeah, then it took off. Then it went up and up and up almost every single day. And from there, the SEC wrote a report on this. It's hard to disentangle who's buying made what difference. There was a lot of buying. But in the end, the peak price ended up being $483. So this stock went from, what did I say? You said three. It actually got down to $2.17 at one point, less than the year before to $483. Same company not doing any better, doing worse, as a matter of fact. But on December 31, the stock was trading at a little less than $19. And within 27 days, the 28 days, excuse me, it goes from $19 to $483 and the fundamentals were getting worse for the company. That's right. That's right. What happened to the efficient market here, by the way? Well, the market's efficient in the long run. Is that it? I mean, what did Benjamin Graham, and I think Benjamin Graham is quoted by Roar and Kitty are paraphrased. But the market in the short run is a voting machine in the long run. It's a weighing machine. But it was a voting machine during this period, for sure. So all of the short squeeze and these people buying call options and the option writers having to go out and hedge their position and buy stocks and all of these speculators coming in millions at a time with small accounts just jumping on the bandwagon. The stock gets all the way up to $483. And by the way, on that day, 128, who is it that does a feature story on who Keith Gill is? It's the Wall Street Journal. Yes. That's right. Yep. Yep. We were the ones who found him, not me, a couple of my colleagues. They had done the detective work and figured out who he was and they found Keith Gill's mom who's a Wall Street Journal reader. Thank goodness. And she likes the Wall Street Journal and put them in touch and they interviewed him that day. And yeah, it's an incredible story. To me, he's a really sympathetic character. And so the next morning he was unmasked as Keith Gill from a suburb of Boston. And the stock skyrockets even more. But there's a problem that develops with Robin Hood. Yes, that data is a problem. All this trading when the stock going up and a lot of people doing it on margin and doing it using options and everything else, it develops. And at that point was an unknown problem for Robin Hood. And at three o'clock in the morning, somebody gets a phone call, I understand. That's right. So when you buy or sell a stock, you say, I sold $100 worth of the stock and the $100 is in your account. Well, it's not really in your account because the brokers have a broker too. So there's a bunch of plumbing behind the system that has to work. And if it doesn't work, then the system fails. So it's very important that everybody be liquid in that system. And if one broker fails, then every other broker basically has to chip in and cover their shortfall. It does happen from time to time, but very rarely these days, your accounts are insured, by the way, up to a certain value. But but the those other brokers still might have to chip in. And so basically the agency that that does this and looks at the risk said, you have all these clients buying the same handful of stocks buying not selling, they all have positions in them. A lot of them have borrowed money. Some of them just opened accounts and you allow them to buy the stock before that their checks even cleared. And they bought options and they bought all the stuff. Now, if this stock goes down sharply, which it did, if it goes down sharply, you could be out of business, you could you could basically not have the money to pay us. And that would have caused a domino effect on Wall Street, just like when long-term capital management failed was the same thing. Only this was with Robin. That's right. And this could be a totally different book. If that had happened, this would be about like an LTCM or Lehman type moment, maybe not as big, but pretty big. But can you imagine, this company had never raised a billion dollars in its entire history. And they get a call in the middle of the night, 3 30 in the morning, California time. So 6 30 in the morning, three hours before markets open, East Coast time. And they said, hey, can you please send us $3 billion? There's no way they could send them $3 billion. So they panic, they called in all their bank credit lines and they called their investors and asked for more money, but that was going to take at least a few hours. And they went back to the DTCC, the agency that does this. They said, look, what if we don't allow any more buying of these stocks, this list of stocks that everyone has been buying were options in those stocks. And DTCC said, okay, we'll crunch the numbers again. Okay, it'll be about 700 million dollars that you need to pony up, which they could just about do. So it was a scary day for them. And that's what they did. Now, I don't know what I would have done differently. Vlad Tenev is the CEO. And he sent out some not dishonest, but not totally forthright messages to his customers about why they couldn't buy the stocks. And what wasn't completely clear is that they would be out of business, you know, if they didn't do this later, he spelled it out in great detail. He wasn't buying, but he just wasn't being totally open. And I guess when there's a kind of a run on the bank in a sense, you don't want to panic people. And so that's what he did. But he instantly went from being this Robin Hood hero, robbing the rich to serve his poor customers to having done a terrible thing. Basically, to this day, there are conspiracies that hedge funds called him up and told him he had stopped the buying because they were all about to be bankrupted. Well, Andrew Left and Gabe Plotkin, just for two people who were known in this story, they had been out of the trade for days. They took their lumps, they lost a ton of money, and they had skedaddled. They were no longer there. And it just happened. The system couldn't buckled. It couldn't deal with all the buying. Robin Hood did too good of a job encouraging all this buying. And Robin Hood and social media made for a pretty potent combination that the system couldn't handle. Did anybody actually go short this stock on the 20th? Because by the 29th, this lost, but more than three quarters of its value, correct? Yeah. And within a week, it had lost 90% of its value. And there were other people shorting the stock. We just don't know who they are.  And so there were a lot of people out there shorting the stock. And you know what? I know people who were involved in this on the investor side, the individual investor side. And I know people who work on Wall Street. I'd send them a note saying, hey, I have this book coming out. And a surprising number of them, like, oh, yeah, I saw that. I bought put options that day. And I made whatever hundreds of thousands of dollars personally. So people who were financially sophisticated were a guest. And some of them leapt at this kind of once in a lifetime opportunity to make money on the back of these people. So rich, already rich people who I know got a lot richer. Bill Gross, who's the bomb king, made $10 million. He's retired now. He's a multi-billionaire. And he sent out a memo, public memo that any of these people could have read explaining why they weren't going to succeed. But then for good measure, he just couldn't resist. So he sold call options to these retail investors on the open market. And he made $10 million. And there are a lot of people like that. And that's the story of this whole thing is that Wall Street did great. Wall Street did great in many, many, many ways. Citadel did great. Robinhood had a, after almost going bankrupt, had a pretty good month, right? And so did other brokers. So did Goldman Sachs. So did Morgan Stanley.  And they did it on the backs of these millions of small investors who had a few thousand dollars who were just chasing what they read in the revolution that wasn't basically the Reddit Wall Street bets board. In the end, the aftermath, House Financial Services Committee comes in, investigates, did anything come of that? Well, no, but the rules that might come out of it might be kind of unhelpful rules. So for example, payment for order flow, which is how the, you know, it kind of makes all this possible, you got to pay for trading somehow. It's nothing evil about it. It's just, it's what how Robinhood exists. That came under a lot of scrutiny. The SEC might crack down or change some rules about that. And the other thing is short-selling. And the short sellers, they were just the victims here. And so they're also likely to face some more stringent rules. So as usual, nothing helpful will come out of these congressional hearings and possibly some counterproductive stuff too. Let me pivot here to a different topic. And that is, what's the story? What's the moral of the story here for investors? Because you do get into that in the last couple of chapters. Yeah. So I think there is a positive takeaway here. First of all, I'm not going to get into anyone's politics in terms of whether they don't like Wall Street or want to stick to Wall Street or don't trust Wall Street. Fine. You know, none of my business. But let's say that that's your attitude. And you have this dual goal of making money and sticking it to the man. Well, the moral of the story is that all of the financial and technological innovations that made this story possible, being able to trade for zero commission, being able to buy funds that cost 0.03% a year in terms of their expense ratio, all those things that have made investing so easy, so cheap, so transparent, all can work to your advantage too. All the things that the technologies that armed this group to do what they wanted to do, actually armed this group to really do what they want to do because make a lot of money and to stick it to Wall Street. If you don't like Wall Street taking big fat fees out of your account, if you don't like them making a lot of money off of your period, there's a perfect way to do that, which is just to basically buy a handful of the index funds, check them infrequently, trade them infrequently, and just kind of be a free rider on the sole system. It's like you can be a free rider in so many things in life and you can on Wall Street too. That's the, I think the moral of the story is that you can, if you really feel strongly about accomplishing what these young people want to accomplish, this is the way, not the way they did it. Index funds, you know, I'm an index fund investor myself and a lot of people listening to the show are index fund investors. They actually benefited from this and how, well, there's an awful lot of money that maybe that wouldn't have come into the stock market from before now that all these young million, millions of young people for the first time, you know, came into the stock market, all that money's coming into the stock market and if you own a total stock market index fund, you owned GameStop back when it was $3 a share. I mean, no, no more stock was issued, so it went up in value in the index fund. All these stocks went up in value, all these meme stocks went up in value, and you actually benefited from that with this money coming in. That's really fascinating that all these young people lost money, but you know, actually, I made money on it too, just being an index fund investor on this because all this now new money is in the market. But I'll also want to make one comment on all of this. I've seen this before, by the way, this is like a replay, if you will, of eToys and Enron and, you know, things that happened during the late 1990s, early 2000s, during the dot-com boom where people were just crazy quitting their jobs, buying stocks, didn't even know what the company did or where it was located or who the competitor, it didn't matter, the stock is going up, that's all they cared about. This is like a replay of that, but where are those people now?  They learn their lesson from this. And hopefully, if there's a silver lining in this storm that occurred, it's that these people, these young people who are now, you know, who got burnt, who lost money, and yes, Wall Street made a bunch of money because of what they're trading and what they did, whether it was ultra-alistic or whether they were just trying to make money, however it was. The bottom line is these young people, I think, hopefully, if they've learned something, they'll become index fund investors and long-term investors in investing the way they should be investing. So it's a cheap lesson, a very painful lesson, but it's spread across millions of young people. So my message here is, I'm not so upset that this happened. I think it's actually a good learning thing for a lot of people. Now, I realize that a lot of people they get burnt pretty badly, but how do you feel about that message? Yeah, no, I basically agree with it. I give like a little bit more of a nuanced answer to it. I think that there are people who are going to have a very positive outcome from this because maybe they weren't interested in investing or finance at all, as many young people aren't, and they don't save enough. And that's the root of the retirement crisis is starts young, right, when you're young and you don't start putting money away. So some of them will have learned kind of a painful, but in the scheme of all the money they'll make and save in their lives, not such an expensive lesson.  I think that there's, there are a couple other groups that unfortunately might be larger. The hardcore of this group have attempted to make lightning strike a second and third and fourth and fifth time by doing all the things they did the first time around, except now everybody sees them coming. These hedge funds are all, they've written computer programs to monitor these message boards and so they're not going to get caught with their pants down. And then there are people who are just going to sort of be bitter and throw on the towel.  I mean, you think about people during the Great Depression, for example, that whole generation didn't touch stocks again ever. It took a new generation. So if it's traumatic enough, then you're like, this, the market's crooked. I'm out of it. And just say you would come back and been able to, you know, have a job during the Great Depression and been able to save a bit of money. What a great time that was to invest, right? I mean, if you started investing in 1932, 1933, you would have had really, really nice return. And, and you did the wrong thing by, by like, just walking away from the market overall. And so I'm afraid that that will happen. I hope it doesn't. It's important to be in the market. It's way into compound wealth, you know, the stock market's the obvious vehicle to do that. Well, it's been great having you on Boglehead's On Investing. The name of the book is The Revolution That Wasn't GameStop, Reddit, and the Fleecing of Small Investors by Spencer Jacob. I wish you a lot of success for the book. I highly recommend it. It was very entertaining, great book. So thanks, thanks for being on the show today. Thanks so much. I love your podcast. It was a pleasure to be on with you. This concludes Boglehead's On Investing, episode number 42. Join us each month as we have a new guest and talk about a new topic. In the meantime, visit Bogleheads.org and the Boglehead wiki. Check out the Boglehead's new YouTube channel, Boglehead's Twitter, Boglehead's Facebook, and find out about your local Boglehead chapter. And tell others about it. Thanks for listening.


Hello and welcome to NewsClick. The AIADMK government in Tamil Nadu has been facing charges of massive corruption in different departments. The opposition led by the DMK has even submitted a charge sheet of different charges, different corruptions by the ministers to the government of Tamil Nadu and has sought action against them. The Arapuri Ekam Anti-Corruption Organization has also released documents substantiating their claims on the corruption by different ministers. To discuss more about this, we have with us Mr. Jairam Mucatation of the Arapuri Ekam. Welcome sir. So to begin with, the AIADMK government is being alleged of fixing tenders in favour of few people. How do you substantiate your claims on such fixing of tenders? Yeah, so whatever tenders that are happening in Tamil Nadu government, most of the majority of them we call them as F-tenders which are fixing tenders and not E-tenders as the chief minister claims it to be. We have released evidences of many of these corruption. When we say that these are given to ADMK people, we can give proof in almost many departments. For example, if you take the corporation Chennai Corporation, Coimbatore Corporation, we have released evidences of how tenders were awarded to the brother of sitting minister, Mr. S.P. Vedemani. He is the minister for local administration and his brother's company, Sindhilanco, wins along with another person called Rajan Ratnasamy. They two alone participate in almost 47 tenders and in these 47 tenders, this Rajan Ratnasamy person who competes along with Sindhilanco. Sindhilanco is a firm belonging to the minister's brother, Mr. S.P. Anbarasamy and with the compete amongst themselves. What we have to see is that this Rajan Ratnasamy is said to be working in the same Sindhilanco company itself and they both upload the tenders from the same IP address. They upload the tenders one after the other and the phone number given for both of these people are same in the Coimbatore Corporation website. So, they are one and the same. So, how tender transparency act in Tamil Nadu has been violated, how tender fraud has been done violating IPC sections, how favoritism and enrichment of people who are relatives of minister S.P. Vedemani itself has happened violating the Prevention of Corruption Act. So, there are so many violations which amounts to corruption and these are the tenders what we call as F-tenders favoring ADM case people itself. The government has denied such charges and have claimed that these E-tenders are completely transparent. How do you substantiate your claims on such a fixation by the government and the officials? See, today the chief minister says that every tender is a E-tender. Let us look at what are the claims that he makes. He says that any payment of EMD, earnest money deposit that needs to be deposited before the closing of the tender, this can be made, the payment can be made through email. The payment can be done through email, probably he means that it can be done online. Now, we challenge the chief minister, we challenge the local administration minister, we challenge all ministers to show from their department, let the chief minister show from his IAS department or PWD department the link for making online payment of EMD, it is not there. We have made several representations to the government asking for this EMD payment to be made online, none of this has been done so far. Secondly, chief minister claims that all documents needs to be uploaded only online and therefore no one knows who is bidding. Now, we have released evidences of highway tenders when the clauses, the conditions clearly says that they should not only be uploaded online, but the technical bid documents has to be handed over to the superintendent engineer before the tender closes. So, there is a physical point of contact that the superintendent engineer knows, he says no one knows before closing of the tender, but on the other side you have to get missionary certificate from the same engineer that your missionary is in working condition. So, the contractors have to get this certificate from the engineer and submit it. So, the engineer knows well before the closing of the tender, who are all the people who want to participate in the tender and these are the ways, these are the physical points of contact that is being used to fix tenders. And on top of it, we have emailed at least four times so far, clearly mentioning who is going to be the winner of each of this tender before the opening of the tender. If no one knows before opening of the tender, how did we get to know and each of this time it is the same person who has been declared the winner of the tender. So, it shows clearly that all these tenders are fixed tenders which is fixed in favor of a particular person that may be a person close to the minister, close to the chief minister or you know close to officials, we do not know that has to be investigated to see whether bribery has been, whether any money has been shared between them, any bribery has been paid all that is a matter of investigation, but it is extremely clear that these are all F-tenders. But in spite of all your allegations and even the cancellation of a few tenders by the court, the government seems very much unfazed of all such actions. Has the airport come to explore any legal remedies to this problem? Yes, definitely the government has been continuously coming up with the F-tenders after even after the expose. It shows that they are there to make money at all costs, they are ready to loot people's money at all costs before the election. So, we definitely need also need to take the legal route, we have complained of many of these tenders to direct rate of vigilance and anti-corruption with respect to Chennai corporation, ration, Tamil Nadu ration scan, many others, but you know there are certain tenders that have been cancelled, Bharat net tender was cancelled after very clearly establishing that this tender is a fixed tender, so that the central government gave a director to cancel the tender. Number two, the direct rate of vigilance and anti-corruption, of course we cannot expect any action to be taken by them because they come directly under the same government and how will they take action against the ministers who are above them. So therefore, we have to take the legal route, move the course, we have done it in a few cases where the courts are hearing the cases with respect to the corruption in Chennai and Bharat net corporation and it is going on. With respect to the other complaints which still at the DVAC, we have to go through the legal route and challenge them, but on the other side it is also important to create awareness amongst people, pressurize through them and by doing so what we have been able to achieve is that several tenders of such nature have been cancelled by Chennai corporation was cancelled, by metro waters was cancelled while we exposed it. And number two, after exposing today for the corruption behind the road tenders, this whole favoritism, today citizens have come forward and have been asking for milling the road before laying off the road after exposing the corruption in the milling. So once citizens become aware and starts questioning in the last one and a half years, now we have seen within Chennai at least that every road is being milled. If not every road at least most of the roads are being milled, the top layer being scratched away and then the road is being laid. This is what happens when citizens become aware, citizens question the corruption and that is what will result in long-term changes as well.


industry have really helped the process or you think have really improved the quality of the editorial process? Well I definitely have to say things like the the cross-track report that we use that's been huge and I think a lot of journals are now using tools like that because that has been such a problem for for many journals. I think tools like that are just it's a great way to educate especially international authors on you know things that we expect ethical concerns that we may have you know as I mentioned it's text duplication it's it's not necessarily just using work from other authors but even self even like self plagiarism if you take work that you've published in the past and and and reuse that you know you need to make sure that the content is different. So so definitely things like authenticate reports have been just so helpful I think to members of our guild.


Welcome to the fourth edition of the Banking Supervision Forum. The title of our conference this year is Tomorrow's Banking, Navigating Change. Now the banking sector as well as regulators and supervisors have been facing many changes over the years. Some ongoing such as digitalization and some unexpected such as the pandemic. We have a great program for you to discuss how the industry has managed through these challenges and what tomorrow will bring. Now to open the conference let me welcome President Lagarde who is joining us remotely from Brussels. Following her remarks we will have a discussion, we will have a conversation between Maria Tadeo of Bloomberg and the chair of the supervisory board Andrea and Ria. But first let me give the floor to President Lagarde. Well thank you so much Coni and it's a pleasure to participate in the four ECB forum on banking supervision and to welcome all participants. The coronavirus pandemic has been by all accounts a most unusual crisis. We saw the sharpest contraction in output ever recorded and one of the steepest recoveries ever observed. The response from policymakers was bold in terms of both the support provided and the alignment between policies. But an often underestimated yet exceptional features of this response has been the role played by the banking sector. Unlike in past crisis banks were not part of the problem they were part of the solution. Banks were not only in a strong financial position to withstand the pandemic shock but they could help strengthen the common response to the crisis. This role reversal is partly attributable to the contribution of European banking supervision. Back in 1999 Tomaso Padua Chopa one of the fathers of the euro much missed said I am convinced that in the future the banking industry will need a true and effective collective euro area supervisor and it will have to be enhanced to the full extent required for banking supervision in the euro area to be as prompt and effective as it is within a single nation. The pandemic was the first real test of whether European supervision could act as effectively as a national authority and more and it was the crisis that proved Tomaso right. Of course looking beyond the crisis it is crucial that banks adapt to the challenges of the future to ensure that they remain fit to support the economy and those are the three key themes that I would like to touch on briefly in my opening remarks. So European banking supervision proved valuable to the crisis response in my view in three ways. First of all European supervision ensured that the entire banking system built resilience in the run up to the pandemic crisis. Having a common European rulebook enabled European supervision to hold the entire banking sector to a higher common standard. Since 2014 core equity ratios have increased from around 12% to more than 15% now and the stock of non performing loans has decreased by around 50%. This focus on resilience meant the sector entered the pandemic in a much more robust position. Second European supervision supervision leveraged banks strong financial positions to unlock lending across the banking union when the economy urgently needed it. Supervisors removed prudential barriers preventing bank from maintaining the credit flow to the economy allowing them to maximize the funding made available via the ECB's targeted longer term refinancing operations the TELTROS. The combined response allowed banks to rapidly funnel liquidity to the economy between March and May 2020. Bank lending to companies in the euro area rose by almost 250 billion the largest jump on record in any three months period. At the same time European supervision recommended suspending dividend payments notably to ensure that capital was not flowing out of the banking sector but was instead used to support the economy and absorb losses. Banks that did not distribute dividends increased their lending by around 2.4% and their provisions by around 5.5%. The third way in which European supervision was successful was by ensuring the consistency of these measures across the whole banking sector. Having a single supervisor meant that bold collective action could be taken to reduce banks natural incentives to retrench and cut lending to the economy during a recession and crucially that action could happen in all countries simultaneously and at breakneck speed. In many ways this would have been unthinkable before the banking union however incomplete it remains today and it helped ensure that the ECB's monetary policy which is largely transmitted through banks could be delivered more evenly across all parts of the euro area. Through these actions European supervision was decisive inverting a much worse outcome for the economy but its actions also showed that the post financial crisis reforms are working as intended combining resilience with flexibility. Higher capital and liquidity buffers did not constrain credit they allowed banks to act as shock absorbers and we saw that the prudential stance across the banking union can be adjusted when needed to support economy wide stabilization. So thanks to this exceptional crisis response banks are not playing their role in supporting the economic recovery. They have started releasing loan loss provisions which is creating welcome leeway for maintaining credit supply as the recovery matures and the ECB's most recent bank lending survey showed that credit conditions were being supported by a reduction in banks risk perceptions for the first time since 2018. However as successful as this crisis response has been we now need to prepare for the post crisis challenges which have multiple facets but I would like to focus on two components the first is addressing the long run consequences of the pandemic for asset quality the full impact of the pandemic will become visible only gradually which poses challenges for the management of credit risk. Public support and regulatory measures may have blurred the underlying credit worthiness of borrowers. As those measures are lifted and the true financial health of companies come to light asset quality could be affected at this stage it is too early to predict the trajectory of asset quality. Fast moving indicators such as the change in the share of foreborn loans and stage two loans are already showing signs of deterioration but the ultimate impact on non-performing loans will only occur with the delay of several years and will crucially depend on the strength of the recovery banks should have robust risk controls in place to be alert to these risks and address them early on. Second the pandemic has triggered more fundamental changes to the environment in which we all operate banks as well it has accelerated the digital transformation and underlined the urgency of tackling climate change both of which inevitably have an impact on banks. In terms of digitalization consumer preferences are changing rapidly new players from fintechs to large technology companies are increasingly are increasingly driving competition in the finance service market. This creates an opportunity for the euro area banks which have struggled for low profitability and cost efficiency to refocus and maybe redefine their business models. The banking sector has seen a 23 percent increase in first-time digital users since the start of the pandemic. Maintaining this focus on digitalization could allow banks to reach customers without having a dense branch network or extension of it. New products and services could be introduced at very low marginal cost and pricing could be improved using advanced data techniques. In Europe a number of digital only banks are already leading the way in showing how digitalization can generate higher returns and help improve cost efficiency. The impending risks associated with climate change and environmental degradation much talked about at the moment also call for banks to adapt how they do business. The ECB's economy-wide stress test revealed that the default probabilities of the corporate loan portfolio of the most vulnerable banks could increase by 30 percent in a scenario in which climate change is not addressed. Currently few banks have integrated such risks into their existing strategies or risk management. There are all still a long way of meeting the supervisory expectations we have laid out in our guide on climate-related and environmental risks published a few months ago. We all know that time is running out so banks need to act now to be fit for a carbon neutral economy by 2050. They need to adapt their strategies and risk management practices to ensure that their business models are resilient in the short, medium, and long run. So to summarize and conclude the pandemic has been an exceptional crisis. My colleague and friend Mr. Andrea as mentioned I think this turning point of the pandemic. But the combined response of policymakers was just as exceptional as the crisis was. European supervision has ensured that unlike in the last crisis banks acted as shock absorbers rather than shock amplifiers. This common response reflected the realization that all policy areas needed to act together to combat this unprecedented shock. Even more fundamentally it reflected some core lessons from the great financial crisis. Let me mention two of them. First systemic perspective is needed in situations of stress to avoid excessive prosyclicality in the financial system. Second common rules are needed to prevent regulatory arbitrage. Now that the recovery is underway European supervision is keeping a close eye on the build-up of risks. However for banks to thrive in the post-pandemic world they must also embrace the changes that the pandemic has triggered. I'm confident that this is possible. Just as the banking sector has contributed to a successful solution to the crisis it can also provide one to our next challenge. Facilitating the transformation of our economies towards a greener and more digital future. And I will quote Sir Winston Churchill by way of closing who once said success is not final it is the courage to continue that counts. Thank you very much.


Everybody forced here one second might restart this Yeah, I'll give it a sec here. Yeah, it's back up. But yeah Yeah, Jeff. It's the it's the streaming service. It's it's OBS It's a software. I wonder if like it's been terrible for like months now Well, what are you doing on a day where we're not breaking her before we break if we Reinstalled it some days it does some days is totally fine other days like this is terrible. Yeah, all right started for real now Everybody forced here ripping a box of 21 22 mosaic basketball hobby for Jeffrey. Yes. Good luck Jeffrey. Here we go, man I'm just wondering about you two. They'll just restart it automatically Which is just kind of come back up. All right, man. Let's see a big rookie here Or big that silver Moses moody rookie red mosaic Robert Williams the third Mosaic rookie Herbert Jones Red mosaic Nicholas Claxton Mobley bass introductions mosaic introductions Chris Duarte Scotty Barnes bass rookie book night Davion Mitchell auto. 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Mosaic is Kevin Durant national pride red mosaic rookie Cade Cunningham debut Rising stars mosaic is Tyrese Halliburton. That is gonna do it. Hey, thanks again Jeffrey Decent box are not the best. I appreciate it though. We'll get this out to you So I looked up that clip of airbugs in the football game and the title of the video is just airbugs gets it Random title that video you can head out if you don't need me I'm just gonna keep going but I know you I never like every night. So Well, I'm probably getting two nights off Six seven months, but Erin K with an update and then Gary P with that pro-set. That's what I'll do All right, so last three that are gonna be Scott and Aaron K Gary P guys We'll go a little after two here just cuz group breaks finish late But we'll get the ones done that I said I was gonna get done Everybody forced here ripping 2022 optic UFC hobby boxes here two of them for Scott in Thank You Scott. Good luck my house John Jones Daniel Rodriguez hollow Curtis blades Ed Volkanov ski numbered 61 of 199 nice bulk My house Conor McGregor Rated rookie orange is Sean Strickland 9 of 49. There we go. Nice color there. Let's see a big auto in here Sean Brady hollow Anderson Silva aka Jorge Masvidal Hello, Sean O'Malley See some more color now My house GSP Rafael Vizier hollow Jessica Andrade Joe Martinez hollow Habib no Magamadal Dominators red 17 of 99 is Bryce Mitchell Joe Martinez auto it sure is that's pretty interesting voices of the Ottegon base auto there a Blue rated rookie of Paul Craig 1999 pretty good box here A couple of nice numbered rookies in there and one more go over to Shara Ilya Taporia hollow is a Donald Soroni rose Nama Eunice on the optographs hollow Nice rose auto definitely solid hit there in Gary Dominators Hello, young block of it. I'll see some nice colors. See a gold. I'd be cool Algeman Sterling my house That's a green that's a true green of Peter yon number two of five That's awesome. Well green lower number than a gold Peter yon for you Scott Dawson hollow Colby Covington Anderson Silva Yeah, good couple of boxes overall great box the second one for sure red Jessica Andrade 41 of 199 there is a dense like a crease Right there you see it right at the top of the card like where her head is Yeah, we'll get a box and wrap her out with it as well Ian Gary. Hello is Brian Ortega Hello Is he out of sign? Yes, they're gazing already rookie Chris Dawkins. Oh rose Nama Eunice And pink velocity is Alexa Grasso One of 79 and that will do it. Thank you again Scott. We'll get these out to you Next One of the update rooms Everybody forced here ripping a box of 2022 tops chrome update series baseball hobby for Aaron K. Thank you, Aaron. Best of luck I'll see a big hit here Chateau All-Star purple rookie Bill Bryce key purple rookie debut Jeremy Pena clear Rodriguez base rookie Purple rookie debut Spencer Torvalson Purple rookie Richie Palacios happens like once a night almost or some weird noise Purple rookie go sukey Kato wins purple rookie debut Julia Rodriguez Let's see a number J rod Xander All-Star purple Adam Fraser purple rookie Jose Azucar purple rookie Elliott Ramos Purple rookie debut Vidal Bruhan purple rookie Royce Lewis pretty solid box here See a nice color or auto now purple rookie Simon was a yachty Aaron judge All-Star purple Roberto Perez Purple hunter dozer purple Kyle Schwerber Come on purple rookie Bryson Stott now Sergio Romo Winter green All-Star Miguel Cabera purple MJ Melendez debut Purple Logan Webb Pepeot purple rookie William Woods Was a Miranda purple debut Stop purple debut and Rookie auto is Kosuke Kato Base refractor rookie out of there and Ryland Bannon rookie refractor rookie purple refractor There you go, Aaron. Thank you again. Appreciate the order. We'll get this out to you All right guys one more last one tonight. It's gonna be Gary P He's Friday, right? Like now that it's past 12. Yes Now we got to wait till Monday is what you're telling me Unfortunately, but wait, what does the 30th fall on? Oh Maybe it's better. I don't get paid going to the weekend to spend it all All right. Last one of the night everybody. Good luck, Gary. All right. Here we go Last box of the night here one box of 2022 pro-set metal football hobby for Gary P. Thank you, Gary for the order and best of luck All right, here we go Starting off with a I'll say quarterback hit here. It's Matt Corral On the pro-set prospect out of one of five Matt Corral Solid start another QB here looks like we got a looks like a snakeskin auto Devin Brown Numbered one out of five for an auto here is going to be an emeca a buca auto 32 of 50 action Inc chris all the doken five out of 20 Damian pierce auto now Numbered five out of 15 Pretty good box here It's gonna finish pretty nicely as well redemption CJ Stroud There you go, Gary. Congrats, buddy CJ Stroud auto redemption Again card and level including parallels awarded at time of fulfillment Thank you, Gary man. Great way to end the night for us here and for you. I hope We'll get it out to you All right y'all Sam and Matt are live at 10 a.m. Eastern Matt's on baseball channel Sam's over here with group breaks Uh, y'all have a good night Sam's quench J. I see you guys in chat Jeff as well Y'all take care everyone else. Have a good night as well See you tomorrow


Welcome back to Kids Fun Science. My name is Ken. Today's experiment is what causes waves. What you need for this experiment is water, a container. I used a rain gutter, a fan, or an air blower. So today's experiment is what makes waves. So wind generates waves and the way it works is it blows across the top of the surface of the water and that generates ripples which in cause takes the energy from the wind and transfers it to the water and it makes the waves so the longer that the wind blows and then for the further distance and time will determine how large the wave is. And so we're going to do a couple experiments to try to show you how we can create waves with wind. There are three main wave generations, right? So there's the gravitational pull that the moon and sun do with the tides. There's earthquakes that do tsunamis and then there's wind stress which creates the wind waves that we're going to experiment with today. So the first experiment is I'm just going to blow and make my own wind go across the surface and we'll see how large the waves will go. Wind blowing across the surface of the ocean transfers energy into the water. Initially light wind like me blowing hair generates small ripples called capillary waves on the water surface. If the wind increases added roughness creates the capillary waves to increase in the rate of energy transferred and the waves begin to form the ocean surface even bigger. And you can see that mine doesn't go for a long enough time or is strong enough to be able to create large waves. It did create the ripples that you might see in a lake and stuff but it does not create humongous waves. So I'm going to get a little help for my second experiment to see if we can create these waves to be a little bit bigger. So for the second experiment I got a fan and so we're going to try to increase the speed of the wind, the strength of it and the distance for the amount of time to see if I could create a bigger wave than I did when I just blew a little bit of wind. How large the waves get depended on three factors, the strength of the wind, the amount of time that the wind blows and the distance which is called the fetch over which the wind blows in a straight line across the ocean. And it looked like it did get pretty big so I'm going to try one more thing to see if I could increase the waves. So the last one here I got an air blower. I'm sure it's going to be enough. So the waves of the ocean's surface are usually formed by wind. The faster the wind, the longer it blows and the farther it can blow uninterrupted, the bigger the waves as seen here. Therefore the wave size depends on the wind speed, wind duration and the area over which the wind is blowing called the fetch. You can see I had to move my camera back and zoom in because the waves are splashing all over the camera where before I had it up close. I hope you enjoyed this experiment. If you did, please click thumbs up and subscribe and thanks for watching.


Ladies and gentlemen colleagues and friends, it's also for me a great pleasure to be here at the first Asia Bond Challenge conference in Palembang and thanks to you governor for inviting us the whole Bond Challenge family into this wonderful region I Arrived yesterday and already enjoyed a little bit at least of the city, and I'm looking forward to see more in the future I'm impressed to see so many high-level representatives from the Asian region here at this conference and also from other parts of the world with this Conference you establish the first the third Regional track of the Bond Challenge it started in Central America and the Caribbean two years ago And we also saw a regional process in Africa, and I'm really delighted that we kick off today the regional process for the Bond Challenge in the Asian region Alex nerdyn you really have been in this process from the very beginning You are our partner. You are a bit a co-father of this Bond Challenge initiative You participated in the first meeting in 2011 when the German government Launched the idea of the Bond Challenge with restoring with the target to restore degraded land to reforest to Reforest landscapes forest landscapes in a scale of 150 million hectares by 2020 this was really a landmark Target and for me colleagues and friends the forest landscape restoration Is something like a masterpiece of our? 2030 agenda for sustainable development it addresses so many issues we need to address to Reachieve a sustainable world to keep the world inside the planetary boundaries our economies and our societies forest landscape restoration Can benefit in multiple? Perspectives it can serve the Paris agreement to reach the two degrees target, and we will absolutely be unable to come close to the 1.5 if we don't look at the storage capacities as Heel the soul back and said the natural soul Storage capacities for carbon in our forests and and our landscape We the forest landscape restoration can also serve The itchy Nagoya targets under the Convention of Biological Diversity We will not be able to achieve The biodiversity targets without looking into our forests without looking into natural forest as well as in Sustainable is sustainably managed for us forest landscapes restoration also helps to protect soil under threat and Also our water resources it can create economic and social benefits, and if we in to implement it properly it will be also part of Developing inclusive societies Ladies and gentlemen the bond challenge can provide all these wonderful benefits But we have to be aware that we are just talking about a plus. It's a plus from red plus the reduced emissions from deforestation and destruction of forest and When we developed this idea we started under the climate regime first we talked about Reforestation and afforestation And then we thought that we should widen our scope and that we should look into this landscape as well the concept of Reforestation or the Restruction of degraded forest landscapes Is only meaningful colleagues and friends if you also look again and again in reducing Deforestation we have to stop finally deforestation. It's a long way to go I know but we first have to start with reducing deforestation and finally get it to net zero I know that for many countries forest countries in the world. This is a huge challenge Not only in this region also in Latin America in Brazil for example at the Amazon region in Africa as well. It's something like the challenge Like my countries and others have to face to get away from fossil sources and driving machines for our economies Stopping deforestation and phasing out fossil use are two coins of the same side and Looking at into what we have achieved We have to realize that on both tracks. We have not been Enough successful at the moment. We are losing Forests in the scale of 13 million hectares each and every years Colleagues this is the size of the Carago or if you put it in into European terms It's a size of Greece that we are losing each and every year If we fail continue to fail in stopping deforestation Then we will fail to achieve all our sustainability targets and this regards I really want to applaud the Indonesian government For the recent decisions you took you have been engaged in in red and red plus over so many years But the recent decisions are moratorium for new deforestation For the production of palm oil the decision to protect them remaining peatland and in the addition your commitment to the bond challenge. These are really These are really leadership Activities and we hope that many regions and many countries in the world will follow your example Colleagues here in Indonesia and South Sumatra You have strong partners at your site I want to take take this opportunity to thank our colleagues from Norway For their long-standing Leadership on red plus you really kicked off this whole debate You were so committed over such a long time and I think we have to thank you for this engagement Germany spent already 120 million euros for the bond challenge activities for many projects something around 40 projects in partnering countries I'm happy to announce that we will add another 80 million Until 2020 support or to support our partners in the pond bond challenge Family we believe that this is the right investment into the future After 200 years of destruction of forest we have to enter a new century of forest landscape restoration Alex Nordin you said yesterday It's a wonderful reception That bond the bond challenge is needed for your country for your region Here in South Sumatra and for the future generations in South Sumatra These sentences are true, but not only for South Sumatra, but for the whole world. Thank you a lot Thank you, Mr. Johan