Episode
E19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
1:26:09
Published: Sat Jan 30 2021
Description
Follow the crew: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/MikeSylvan Referenced in the show: David Sacks on Bloomberg https://www.youtube.com/watch?v=K2lJg4sxl2U Chamath for Governor https://www.chamathforca.com DeepFuckingValue's Reddit page https://www.reddit.com/user/DeepFuckingValue Show Notes: 0:26 Besties intro 2:11 Chamath breaks down the entire WallStreetBets/GameStop saga 15:38 Jason responds, debating Robinhood's liquidity crisis, Citadel's potential involvement & more 39:18 How can this be prevented in the future? Restructuring capital gains tax, censorship, where Robinhood can go from here 53:02 Major learnings from this week's events, risks of decentralization, do stocks need to be reflexive of the underlying business? GameStop's endgame 1:15:01 Chamath for Governor of California, Friedberg on leaders vs. managers & the problem with career politicians
Chapters
In this podcast episode, the hosts share their current favorite recipe, hobby, and streaming guilty pleasure.
00:00 - 02:12 (02:12)
Summary
In this podcast episode, the hosts share their current favorite recipe, hobby, and streaming guilty pleasure. Guests include Chamath Palihapatiya and David Sacks, and they discuss Young Spielberg's new track and the Queen of Kinwa.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Michael Burry, famous for predicting the 2008 mortgage crisis, disclosed a 3% position in a struggling company in August 2019.
02:12 - 06:10 (03:58)
Summary
Michael Burry, famous for predicting the 2008 mortgage crisis, disclosed a 3% position in a struggling company in August 2019. The company recently made false statements to the public, causing controversy.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Retail investors have been buying GameStop stock and call options, while institutional investors have been shorting the stock.
06:10 - 12:57 (06:47)
Summary
Retail investors have been buying GameStop stock and call options, while institutional investors have been shorting the stock. However, as the stock continues to rise, many hedge funds are now facing large losses and margin calls.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The GameStop situation moved from a debate about the true value of the stock to a momentum trade.
12:57 - 17:54 (04:57)
Summary
The GameStop situation moved from a debate about the true value of the stock to a momentum trade. The restrictions imposed by firms such as Robinhood caused economic disruption and revealed insolvency issues.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Robinhood makes money through arbitrage of pricing in the markets and by providing leverage, but they were exposed to losing money when spreads started to widen.
17:54 - 22:17 (04:23)
Summary
Robinhood makes money through arbitrage of pricing in the markets and by providing leverage, but they were exposed to losing money when spreads started to widen. Resolving their liquidity problem with a $1 billion investment, Robinhood faced criticism for preventing users from participating in trades due to an arbitrary decision.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The speakers discuss the difficulty of building rapidly scaling startups and the potential effects of stopping trading on shorted stocks, while acknowledging the importance of having all available information before impugning motives.
22:17 - 24:55 (02:38)
Summary
The speakers discuss the difficulty of building rapidly scaling startups and the potential effects of stopping trading on shorted stocks, while acknowledging the importance of having all available information before impugning motives.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The stock market has seen an increase in volatility due to allowing people to trade on margin with low bank account balances and volatile stocks.
24:55 - 31:24 (06:29)
Summary
The stock market has seen an increase in volatility due to allowing people to trade on margin with low bank account balances and volatile stocks. Despite the attention being drawn to it, more people are buying GameStop which will eventually lead to its downfall.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
High margin trading and synthetic instruments take away from capital that could be invested in actual businesses, driving job growth and economic prosperity.
31:24 - 37:44 (06:20)
Summary
High margin trading and synthetic instruments take away from capital that could be invested in actual businesses, driving job growth and economic prosperity. These trading practices are a danger to the traditional purpose of the capital markets.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The implementation of a 0.1% sales tax on every share sold, coupled with the elimination of the capital gains tax, would be an effective way to regulate high-frequency trading and generate revenue for the government.
37:44 - 42:01 (04:17)
Summary
The implementation of a 0.1% sales tax on every share sold, coupled with the elimination of the capital gains tax, would be an effective way to regulate high-frequency trading and generate revenue for the government.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Lowering the capital gains rate would make investing in meme stocks more attractive for retail investors, but caution is advised as hedge funds have regrouped and are executing trades through platforms like Citadel.
42:01 - 45:40 (03:39)
Summary
Lowering the capital gains rate would make investing in meme stocks more attractive for retail investors, but caution is advised as hedge funds have regrouped and are executing trades through platforms like Citadel.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The role of an investor is to become a mentor and a savior to a challenged company in the private markets.
45:40 - 50:12 (04:32)
Summary
The role of an investor is to become a mentor and a savior to a challenged company in the private markets. The right approach would be to pause the business, allow customers to transfer their money out elegantly, and give the company time to resolve its issues.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
This week's events with Parler and the Robinhood trading app display a growing trend of individuals using social media as a mechanism for sharing and communicating their beliefs, which can create a collective outcome that wouldn't have happened in a centralized system.
50:12 - 58:03 (07:51)
Summary
This week's events with Parler and the Robinhood trading app display a growing trend of individuals using social media as a mechanism for sharing and communicating their beliefs, which can create a collective outcome that wouldn't have happened in a centralized system. This could lead to decentralization and new ways of trading, communicating, and building.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The challenges of building a new social media platform are discussed, including the optics issue of charging for user data, the importance of user autonomy, and the difficulty of obtaining capital without diluting ownership.
58:03 - 1:02:09 (04:05)
Summary
The challenges of building a new social media platform are discussed, including the optics issue of charging for user data, the importance of user autonomy, and the difficulty of obtaining capital without diluting ownership.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The podcast discusses the dangers of the swarming approach to resolution where decentralization can cause issues like cancel culture and capital riots, and how the community decides before a judge and jury determines whether someone did something wrong, leading to the individual's life and career ruined.
1:02:09 - 1:07:18 (05:09)
Summary
The podcast discusses the dangers of the swarming approach to resolution where decentralization can cause issues like cancel culture and capital riots, and how the community decides before a judge and jury determines whether someone did something wrong, leading to the individual's life and career ruined.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The idea of promoting rational objective outcomes, while engaging people to think about social issues in a positive way, has the potential to be a powerful driving force for change, however, achieving this is likely to require changes within government regulations.
1:07:18 - 1:12:26 (05:08)
Summary
The idea of promoting rational objective outcomes, while engaging people to think about social issues in a positive way, has the potential to be a powerful driving force for change, however, achieving this is likely to require changes within government regulations. Entrepreneurs can consider decentralization as the key feature to realize the end game of expanding their businesses.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
This episode discusses how the recent actions of Amazon and Robinhood to silence Parler and restrict trading of GameStop have brought to light the issue of who gets to decide and whether or not the game is rigged against outsiders.
1:12:26 - 1:15:01 (02:35)
Summary
This episode discusses how the recent actions of Amazon and Robinhood to silence Parler and restrict trading of GameStop have brought to light the issue of who gets to decide and whether or not the game is rigged against outsiders. The host suggests for most people, investing in Vanguard funds and not worrying about it is the best approach.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The speaker gives a shoutout to the people who built their website and mentions that they will share more details in the midweek episode.
1:15:01 - 1:18:00 (02:59)
Summary
The speaker gives a shoutout to the people who built their website and mentions that they will share more details in the midweek episode.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
During a crisis, leaders must be able to synthesize information and make effective decisions, regardless of the potential repercussions.
1:18:00 - 1:24:25 (06:25)
Summary
During a crisis, leaders must be able to synthesize information and make effective decisions, regardless of the potential repercussions. It is important to find leaders who are willing to take risks and prioritize the wellbeing of their community over their own political careers.
EpisodeE19: Breaking down Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Inviting to a poker night with a request to sign a petition and take a selfie with it.
1:24:25 - 1:26:01 (01:36)
Summary
Inviting to a poker night with a request to sign a petition and take a selfie with it.