Gamestop, Robinhood & Crypto: Are You Missing a Once-In-A-Lifetime Opportunity? | Erik Averill, Brandon Averill, Justin Dyer | AWM Insights #47

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Episode Summary

There is only one topic we can possibly talk about this week. It has set the investing world ablaze. It's GameStop, AMC, Robinhood, meme stocks, hedge funds, short squeezes, and of course good versus evil - retail versus Wall Street.

On today’s Insights podcast, Erik, Brandon and Justin cover everything you need to know ranging from, “is this a once-in-a-lifetime opportunity?” to “how the best investors in the world are responding” and everything in between.

The investment world has been changed forever. Listen to today’s episode to understand why.

 

Episode Highlights

  • (00:59): What is a hedge fund?

  • (02:32): What is a short?

  • (04:49): What are options?

  • (07:25): How the Gamestop saga started.

  • (10:05): Why we are wired to do everything wrong in investing.

  • (12:02): Trading versus investing.

  • (12:59): Are you a pro or an amateur? It applies to both trading & investing.

  • (17:01): Investing versus speculating.

  • (20:46): What’s a short-squeeze?

  • (26:29): Is it ever appropriate to invest in crazy ideas like this?

  • (30:16): How Kevin Rose and Tim Ferriss invest.

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Erik Averill: LinkedIn

Brandon Averill: LinkedIn

Justin Dyer: LinkedIn

+ Read the Transcript

Erik Averill (00:01): Hey, everyone. Welcome back to another episode of AWM insights. It's your power three, two CPWA's and a CFA. We are Erik, Brandon and Justin, and each week we cover what you need to know to capture the returns that you deserve and invest like a pro. And of course there is only one topic we can possibly talk about this week. It has set the investing world a blaze over the last week, week and a half. It's GameStop, AMC, Robinhood, meme stocks, hedge fund, short squeezes, and of course good versus evil, retail versus Wall Street. And so today we're going to cover, what does all of this mean for your portfolio? Is this really missing a lifetime of an opportunity that you need to jump on? Is the structure of the market permanently changed? Really, what does this mean for you and your portfolio?

Justin Dyer (00:59): Yep. But before we get there, let's hit on a couple of definitions. So we're all, I guess on the same playing field. You mentioned a bunch of interesting terms in that intro, Erik, hedge fund, short squeezes, options. So, I mean, we'll start with some of those basics. What is a hedge fund? It's a super, super broad term, first and foremost. And they actually date back quite some time. And the namesake was given to them or the name was given to them for the exact purpose of what that name is. Managers would hedge bets. And it was a fund that would hedge bets if you were long a stock. Long a stock means you're holding it, you own it, you expect it to go up and you want it to hedge the ability that, the potential that it could drop.

Justin Dyer (01:46): And so that's how they got started. Fast forward to today, there's a plethora of different strategies. There's so many different approaches that hedge fund managers take. There's macro hedge fund managers, which are really trying to pick the direction stocks are going all over the world. Maybe they're shorting, maybe they're going long. It really is, they can kind of go anywhere and do anything. There's something called merger arbitrage. There's long, short, which they try and take half of the portfolio go long, half of it goes short, and we're going to talk about what that means. So there's really no single definition of a hedge fund anymore today. So you kind of have to take that broad, Hey, the hedge funds are all bad. The hedge funds are all doing this. You have to take that kind of broad statement with a grain of salt.

Justin Dyer (02:32): So first and foremost. And then let's talk about what a short is. So we've talked about long short funds. You're seeing a lot about shorting stocks in the market, short squeezes to be specific. And a short is essentially, Hey, I think a stock is going to go down and instead of just not buying it because I think it's not a good investment. Let's take advantage of that. Let's actually implement a trade based on that. And the way you do that is you go to your broker, your broker dealer, your custodian, and you say, Hey, can I borrow shares in a stock from another investor in the marketplace, put those shares in my account, and then I go sell them? But I don't actually own those shares. I'm borrowing them from another investor. And to do that, I actually have to pay them interest as long as I borrow.

Justin Dyer (03:20): And then at some point in time, I actually have to give those shares back. Now, the way it ideally works for a short seller is that you borrow those shares, you sell them. The share price goes down, you buy it back and you get the difference. You actually get that money in your account and you give back the shares. Win-win, right. And shorts actually do play a good role in the market most of the time. They are definitely tools that can be misused and they often are, but they actually are a good voice within the marketplace at times. So a recent example of that is a company called Wirecard, which is a big payments processor, similar to PayPal here in the United States. They were based in Germany and short sellers really caught wind of fraud that was going on, early on.

Justin Dyer (04:10): And it took years actually after short sellers made these claims until the regulators actually caught up. And now Wirecard is a bankrupt company. And I think some of the executives are going to jail. So there is a role short sellers can play. Now what's going on here is some hedge funds put in some short positions that were pretty stupid, I guess, if you ask me and we can get into that a little bit more in a second, but they got a little overzealous, a little over confident and kind of has some implications for active management as well. And we can talk about that in a bit as well.

Justin Dyer (04:49): Then options are also a big part of this. So options are what are called a derivative. They derive their value off of another investment. And the simple form of an option in this case is a what's called a call option. And so a lot of people are buying call options on GameStop. And that basically means, defining even further, they're buying deep out of the money call options on GameStop. And they basically think that the price of GameStop is going to increase so much above the price of their call option so they can buy the stock at the price of their option and then go sell the stock in the market. An option gives them the option to buy the stock at a specific price at a point in time. Hopefully that all makes sense. So those are some good entry level definitions that are critical to understand what's going on here. It is fascinating. We're all students of the markets here and it's been a hell of a ride over the last week, week and a half to see what is really going on.

Justin Dyer (05:53): It's like Erik said, the little man versus the institutions and institutions making silly bets and it has, unfortunately, I think at this point in time, it's ended up where the little guy, if you will, the day traders are somewhat at a point where some people are going to get hurt. How many, how much, who knows how many people are investing their life savings in something like this? Hopefully not many, but people are going to lose money. The hedge funds have lost money. I think some retail traders will lose money. Some retail traders have made a lot of money as well. Hopefully if they've sold. Some people might just be sitting on gains and not doing anything with it and expecting it to go further, but it's been a fascinating ride. So let's let's talk more about GameStop.

Brandon Averill (06:42): Yeah. I think that's a great question. So let's just start there. What in the hell is going on with GameStop. We got the lay of the land now, and we're trying to figure out what's actually happening. And what ended up happening is we have a company in GameStop that hasn't made money in a long time, has totally underperformed. So to Justin's point, we had these big institutional hedge funds or traders that had taken short positions in the stock. Well, what we're seeing now is that we had a pretty sophisticated group of day traders that are leveraging the power of social media and specifically Reddit to band together and execute upon a strategy.

Brandon Averill (07:25): So I think one thing to be really clear about is this whole thing kicked off, not by your brother's best friend who had some tip and has a Robinhood account, and he's going to trade something. No, these were pros. These were pros that got together, very sophisticated and decided we're going to make a couple of these hedge funds pay for shorting gamestop. So, that's what kicked this whole thing off. And I think where it's led to right, is the euphoria, the big FOMO of, Hey, this thing's taken off. Of course, it's going to continue to make money. I think we've gotten more questions about GameStop and AMC and what's going on right now than any other topic out there. In the history of the 15 years, 20 years in the financial services, I don't think I've gotten so many questions on a single topic. So I think it's that euphoria that you got to take a step back. If we start to think about some of the things, unique circumstances that are happening right now, people are home potentially bored, could that be playing into it?

Brandon Averill (08:38): We just got a whole bunch of stimulus last week. And we know like maybe there's some dudes sitting at home, you got your stimulus check. You don't know what else to do with it. Let's see what we can do here and make a mess on the market. And then the power of social media. Zero commission trades. Let's not forget about that. Trading has never been easier. So this may just be, we get the question a lot, like should I be in GameStop? Should I go buy some? And let's just take a step back and remember, we may be just looking at the perfect storm here for a couple of these stocks. And often when these things start to get away like this, to your point, Justin, it's the game of hot potato. Don't be holding the potato at the end.

Brandon Averill (09:24): Whoever's going to be holding this at the end is probably going to get hurt. And so when your buddy tells you they've made 500 grand on GameStop number, number one should be like, why'd you invest in it? what were your expectations? That's kind of interesting. And two, Oh, so you made 500 grand. Did he actually sell? I think that's a fantastic question. These are all paper gains right now, unless you actually sold, the money's in your account. So I know we're going to continue going on this because it's such a fascinating topic, but yeah, let's dig a little deeper. I'd love to hear more from you guys, how you're looking at it. The difference of trading and investing is probably a great place to start.

Erik Averill (10:05): Yeah. Well, one of the things I want to say here is taking that step back and the word FOMO. We all kind of laugh at it, but the reality is the reason we use that is because it's a real thing. And I think this quote from Brad Klontz, who happens to be a psychology professor at Creighton university is so important that I read today is you need to recognize that you're wired to do everything wrong when it comes to money and investing. If your fear of missing out, lead you to day trade on speculative stocks, you're taking an approach that typically results in failure over the longterm. And I think that that's really important is our croc brain.

Erik Averill (10:48): If we see a hundred and whatever, 2000 people running in one direction, it's very hard to stop, use our intelligence, look at evidence and go, Hey, historically that direction's off a cliff, let's not go there. Everybody's going, it's a really fun ride. And I think that that's the difference is, in the short term, trading is an emotional high. This is why gambling happens. There's an excitement. There's a thrill. It's very boring to be a long-term investor. And so I think sticking on the conversation of definitions, what we're not saying, hopefully for everyone listening here is that you're a horrible person if you choose to be a day trader. What we started this conversation off was saying, this was actually not a game of amateur versus professional. This was a game of very skilled professionals that happen to aggregate, not for a specific company, but for a specific purpose on a Reddit forum. I mean, it's one of, Justin's a CFA chartered holders that has been in the mix of this.

Erik Averill (12:02): They were so intelligent. They understood how to squeeze out a short, they were so intelligent to understand what were the decisions that the hedge funds would make in response to that. And they've created this tidal wave. And so, yes, we had retail versus Wall Street, but it was professional against professional. Where it's dangerous is if you're an amateur. And this is where I like to talk about what a trader is versus investing. Traders are, it's a whole different game. One is very short-term. It's, they're more concerned with what is the price of the position? What's the momentum, what's the volatility? And we're trying to be in and out, in and out. And if we recall a few years ago, the famous book Flash Boys. It's with algorithms, these are very sophisticated people moving in and out of markets extremely quickly. Whereas, investing is we care about the fundamentals of the business.

Erik Averill (12:59): We believe that you're purchasing pieces of future cashflow. And so there is this evidence that says, Hey, over the long-term, you will be rewarded. There's a ton of risk in trading. And so what we talk about is saying, Hey, if you want to participate in the trading game, no different than when we talked about investing, are you a professional? Do you have a game plan? Do you have a buy position? Do you have a sell position? Do you have the right size? Are you risking something that could blow you up? What type of tools are you using? What's the best time to trade?

Erik Averill (13:34): I mean, your eyes have to be attached to a screen to have any chance of being successful here. And so I think that that's just, I'll let you guys jump in. I want to put it there is, the other thing is we talk a lot about here capturing the returns you deserve after tax. Nobody's talking about all of this trading going on generates, well generates fees on some platforms, and then there's a tax implication. This is all short-term. So I just think there's a lot more questions at play here of how do you be a professional and set yourself up for success. That's what we're concerned about.

Brandon Averill (14:09): Yeah, certainly. I mean, Justin, if you want to jump in, I'll just say really quick. I think this topic of trading versus investing. Just back to Erik, your point, I mean, it's the competition. It's understanding what you're up against. And as a long-term investor, you can stay patient. You can capture those a returns that you expect, but to your point, think about the marketing. You're going to hear a million times come out of this. I can already see all the marketing ads of option strategies and short sellers and this and that. And I think a good place to go back to is, and everybody's going to make it seem like this is brand new. This just started happening. But let's go back to it. And Justin, you can probably fill in the history here, but this isn't a new thing.

Brandon Averill (14:59): Yes, of course. It's new with GameStop, but we've had people trying to take advantage of market anomalies like this or band together. I mean, this happened before. It happened most recently, 2008 when we had the mortgage crisis. And there are some people that identify once in a lifetime opportunities in cases like this. But what ends up tricking most people is thinking like, it's called once in a lifetime for a reason. John Paulson shorted the mortgage market in 2008. And it was great. It was a one-time once in a lifetime opportunity. It's all the people that came after that didn't have that plan, Erik, they weren't professionals. That ended up absolutely getting crushed. So I just thought it would be good to mention, like we're not facing something brand new.

Erik Averill (15:50): Yeah. This is great homework for people. And then I'll let Justin jump in. There's this really cool movie with Christian Bale called The Big Short. And I think it's super educational for a few reasons. Number one, it tells you the herd mentality is usually where most people sit. So if you're like everybody else right now saying, Hey, how do I get on Robinhood? And how do I buy these things? You're most likely in the herd mentality. You're not Michael Berry professor hedge fund, who everybody literally says, I'm going to sue you. I want my money back. You're an idiot. You don't know what you're doing. And he had the answer the right way.

Erik Averill (16:26): And we know the thing about markets is they can stay far longer irrational than you can stay liquid. And that goes to positioning of not risking stuff that you count on. And so I just think there's so much truth in that movie. That number one, it explains what's going on, what goes on on Wall Street and just how difficult it is to be successful, even when you are a professional when it comes to trading and shorting. So I just thought that... Go watch that movie. It's fascinating. It's the only thing that actually makes finance interesting. Hollywood did a good job there.

Justin Dyer (17:01): Well, let's see, there's been a lot of commentary. I jotted down a couple of things I want to make sure we touch on. But kind of Erik, to your point, what's really important when you're differentiating investing in speculation. And I mean, I would even argue this goes a little bit beyond speculation at this point. And I'll get to why in a second. It's calculating probabilities of success. And we know with fairly high likelihood, if you participate in the market over the longterm, in a disciplined fashion with exposure to areas of the market that compensate you for the risk you're taking, you're going to earn a range of returns. And it's going to be positive over the long-term. There's things that go into how positive it will be. And things like inflation and the equity risk premium and all these CFA terms that I won't go too much into detail on.

Justin Dyer (17:58): But the probability of success in long-term investing or investing should be high. As you go away from long-term investing, "investing in general," you're starting to move more towards speculation where the probability of success becomes much lower. Where we are today in this GameStop mania, at this point I would it's become more of a mania type bubble if you will, is beyond speculation. If you go to the market right now, there is no way you can get anywhere close to an accurate probability of success that it will go up from here. Could it go up? Yes. But there's no way you can accurately measure the probability of your outcome. And so that is no longer really investing in our opinion, you cannot...

Justin Dyer (18:57): And one of the main reasons is it's not trading on fundamentals anymore. There's no way you can make an argument that GameStop is worth what it is today. I mean, if you look at the chart of GameStop, it's parabolic. It literally looks like something you learn in your calculus class or something like that. So the odds of success are critical when you're talking about investing and really in the case of this, that kind of goes out the door. It really, it becomes more gambling like, and I think you could argue, even when you go to Vegas, you know the odds that are stacked against you in almost all cases. You know when you go up to a roulette table, what your odds are. In this case, you don't really know that. So in a way, it's beyond gambling, like I said.

Justin Dyer (19:40): To Brandon's point, these type of market environments have been around since markets began. You could go look up the tulip bulb mania in the Netherlands. And I think it was the 1800's. I might be getting that off, but like, there was a very similar mindset that took hold way back then, and it's repeated itself time and time again. Yes, technology is different. The speed at which these things can pervade markets is different and it's faster. I mean, the speed of information is just almost light speed at this point in time. And so that has certain impacts. And I think Brandon mentioned like some element of this type of activity or environment is here to stay. It's not like it's going to happen each and every week or each and every year even. But as information moves so fast, as social media feeds upon itself, et cetera, et cetera, we're going to see stuff like this continue to happen.

Justin Dyer (20:46): And I think what's also important to understand is to kind of going back to the definition of what exactly is happening. It's what's called a short squeeze. We mentioned that, but what that means is these these day traders, the Reddit community. And it's probably beyond that now, but let's just say the Reddit community has squeezed the short sellers. And basically what that means, they've propped up the price above where the hedge funds sold it short, and they are forcing the hedge funds to buy it back at a higher price. So the hedge funds are losing money on that trade. And the day traders are making money as this feedback loop continues. And this is where it kind of becomes that hot potato thing is there's no one else really buying the stock. No institutional investor is going to touch GameStop right now.

Justin Dyer (21:41): So it is really only these day traders kind of buying it amongst themselves, amongst themselves and driving it higher. There are probably some short sellers who are still trying to cover their trades, but for the most part, at some point in time, all of those are going to go away. And it's just a matter of day traders continuing to buy it. And when they stop, I mean, look out below. It's kind of the unfortunate side of this and where people will lose out, unfortunately. Some people will make money, like I said, and some people will lose out. So anyway, I think I touched on a couple of things there, and I don't know. Erik, where do we want to go from there?

Brandon Averill (22:14): Yeah, one fascinating thing. I just looked this up because we were talking about how do you actually ascertain a probability of outcomes for GameStop. And you mentioned fundamental analysis, and I think it's good for people to understand what your expectations should be when you go to buy a stock. They should be that when you're buying a stock, you are buying the earnings of that company. That's fundamentally what you're buying. And so those, then we look at, okay, well, how much are you willing to buy those earnings for? When you look at some companies that are, they're growing quicker, you're going to pay more for those earnings because you expect those earnings to accelerate at a greater pace. We're looking at an instance here with GameStop where, to my knowledge, I don't think they actually make money. So we're seeing the price that you're willing to pay for a company that doesn't make money. So those negative earnings you're willing to continue to pay more and more and more and more.

Brandon Averill (23:14): And I just look to see basically what the market cap was of GameStop after this increase. What people are saying is that, I am putting my money into this company, and I expect it to grow at the same rate as Slack and Affirm and Delta and Dollar Tree and Cannon, which companies would you rather own for the long-term? I think when you look at this, I would make the argument. I sure as heck would rather own Slack and Affirm, and these other companies longterm than owning GameStop. And so I think it's just, when you start to think about investing that's how you should look at investing.

Brandon Averill (23:55): And then the other quick note I'd like to say is just if you are a long-term investor, and if you are looking and using the data to have a positive investment experience, you're in a globally diversified investment portfolio and you own GameStop. Because we don't know what's going to happen next, or what company this might happen to. And so you participate by owning the wide variety of companies. So don't feel like you're missing out. If you are a prudent investor, you do have an allocation to GameStop. You are participating in this mania at some level. And so I just think it's good to note that as well.

Erik Averill (24:33): Well, yeah, a few things I'd say on it, I'd be remissed if I didn't talk about Brandon's favorite cryptocurrency, Dogecoin. Brandon Averill (24:42): Doge baby.

Erik Averill (24:42): Doge. I mean, this thing literally was started. It was founded as a joke. It is a sword over 400%. Robinhood has restricted trading and which is a whole nother conversation of what even, what are the other difficulties that now people are trying to pour in while there's all these other hurdles. Restrictions on liquidity and ability to trade. But taking a step back and saying, who are our clients? Those of you that are listening to this, you guys have worked extremely hard for the money that you have. And you hear us talk about investing in your human capital. Is we also talked about your priorities. It's so easy to get caught up in a frenzy and start to forget our priorities.

Erik Averill (25:36): Why are we doing any of this and all of this, it's to say, I want to live the life that's important to me. It's not to risk things that I actually have some certainty around in some high confidence of. I'm not going to take that and go chase something to really hopefully make an amount of money that I've got no statistic, no probability that I can rely on. And so I just think it's one of those things that we say, Hey, what's going on here, is if you're a prudent investor, if you're someone who is really a professional, we have to break this down into a few different buckets. First and foremost, what are our priorities? Once we know that, then we start to create an allocation to the type of investments that historically have evidence based research saying, this is going to give you the highest confidence to accomplishing your priorities.

Erik Averill (26:29): If you want to have a bucket of money that you would use for entertainment, because that's what this is. This is entertainment. This is not investing. This is no different than you buying a lottery ticket. I would say you even have less of a chance of succeeding than going to Vegas with this amount of money. But it's that type of money that you're willing to, you and your wife are willing to go take out on a weekend and blow on a life experience. So if you're going to chalk this up as entertainment money for life experience to learn a little bit about investing, fantastic. You would never spend all your money on one piece of entertainment and blow up everything that's important to you. And that's all we're asking you to do is really name it what it is. It's entertainment. And we want to make sure that we're investing like a pro. I'll let you guys kind of make comments on that, but I just want to make that really important thing that we're talking about here.

Justin Dyer (27:21): Yeah. I mean, I think that's super, super critical and I agree wholeheartedly with everything you're saying. I think just one thing that's fascinating about this again, the whole thing is, but it brings up all these interesting facets of the market. So people are now hearing what a clearing house is. They're realizing that Robinhood is not just like this open platform where they have no impact in the amount of trading and the amount of accounts that they're opening. That's the unfortunate side of it, where people are blaming Robinhood, which has provided a ton of access for shutting down their access to the markets. And Robinhood has to do that because of regulations. Robinhood is potentially on the hook if something goes haywire and clients can not actually provide the money to buy these shares that they're putting orders into the marketplace for.

Justin Dyer (28:21): So it's really interesting to see all these, again, these kind of the underworld of the market come up and have people learn about that. I still think that there's a misunderstanding around it. And everyone's like, well, give me my access to my GameStop. It's our GameStop stock. It's more than that. The markets need to function appropriately. And regulators are looking into this across the board. And they're complicated structures. They're not just the simple, Hey, I'm going to click buy and I get my shares. The technology that has been built makes it appear like that on the surface, but it is very complex and very complicated and incredible underneath that. And I mean, it's something I love about what we do. It's this fascinating system that's been created and it works incredibly well. And until it doesn't, I guess, in this case, but it's important for people to understand. There's usually more to a story and more to what we're doing as a society then than is on face value, I guess, is what I'm trying to say.

Brandon Averill (29:31): Yeah. I think that's a great point. And with these platforms, the Robinhood's of the world, like you can be angry. I mean, you have the right. They just took away your ability to buy more of it. You could probably still sell it, but it doesn't seem fair on the surface. But to your point, I mean, there are reasons why they do it and let's just go back, this isn't the first time. Should you be surprised? No, quite frankly, you shouldn't be surprised because this happens. We've seen this on the short side where short interest goes through the roof. These platforms will start restricting trading on that. So this isn't a new thing. This happens. You should expect that if you have a mania like this, it's probably going to happen. It's part of the risk spectrum.

Brandon Averill (30:16): The other thing I just wanted to touch on real quick, Erik, were your comments. And I think there's really interesting and important nuance about the sizing of your positions, because I think we hear these famous people. And especially the venture capitalists who are the most skilled people in the world at identifying what company is going to grow, how quickly it's going to grow, how much money you put in those. And I actually heard a fascinating conversation between Kevin Rose, the founder of Digg. And he's now a VC with True Ventures, him and Tim Ferriss, which most people probably know Tim Ferris. And they're going through this whole, they're into crypto and they're into this. And these companies that are going to go five X, but then you catch a small nuance at the end of the conversation and it's, well, how much money do you actually put into this?

Brandon Averill (31:05): And Kevin who is probably worth North of 30, $50 million, who knows? And it's like, Oh I won't put any more than 5% in crypto. And I don't put any more than 25% of my net worth into stocks, I think are going to explore it. And the rest of it's in a, guess what, globally diversified index portfolio. So it's these really incredible, these smart people are still taking the bulk of their wealth and doing what everybody listening to this call should be doing. And then if you achieve that, you achieve all your priorities. You've got so much money that your priorities are set. Then that's arguably in these guys as case, that's where you go and you do some of this stuff, not on GameStop. I'm almost guaranteed these guys aren't in GameStop at this point. But it's going after the companies that they think are going to five X and 10 X, and as we all know, that's in the private markets. So anyways, I just thought that was a highlight that should be mentioned.

Justin Dyer (32:03): Yeah. One other, oh go ahead, Erik.

Erik Averill (32:05): No, no, no, go for it.

Justin Dyer (32:07): I was going to say one other thing is that's fascinating and I think is worth highlighting is kind of the social impact or social aspect of this that it's really taken on. So to our point, or to the point we've discussed quite a bit so far in this podcast is that it was started by a pretty sophisticated trader. And then the day traders have taken it on and adopted this little guy versus, or David versus Goliath mentality. And I get that and I can somewhat relate to it, I guess, to an extent. But back to my prior point in that we live in such a complicated world or complex world rather, and especially when it comes to investing in markets, it's a complex system.

Justin Dyer (32:54): They have enriched plenty of Wall Street firms or private equity firms doing what they're doing. Brokerage firms, which are all, "institutions" owned by Wall Street, if you will, love volume. So what I mean by that is when volume, the amount of shares that are traded on a daily basis goes up, brokerage firms make more money. They're making money on every single little transaction. They're picking up pennies, but the more there is, the more money they make. And I think that's one thing that's missed. Something to highlight is with AMC, so a private equity firm called Silver Lake has been a debt holder of AMC. They had something called convertible debt, which means it can go from debt to equity at a certain point in time. But because of this whole mania around AMC, they've been able to convert that into equity and make a ton of money off of it. AMC actually was able to go to market and raise $300 million of new cash to support their business because of what's going on.

Justin Dyer (34:05): No change in the valuation of the business at all yet. I mean, they're still struggling because of the pandemic and who knows if there'll be around. I mean we'll see, time will tell. But there are all these knock on effects that have enriched some people. Yeah, a couple of hedge funds have lost a decent amount of money and hopefully some day traders have made some money and hopefully not too many day traders are left holding that hot potato or holding the bag and don't lose too much. And hopefully they've right-sized their allocation, but by all means, this is a complex marketplace. People have benefited from what's going on, namely these Wall Street institutional types that these people are claiming to stick it to if you will. So there's always more to the story and unfortunately it doesn't seem like people are taking a step back and understanding that yet. I mean, maybe we will in a little bit, but yeah, the whole thing is fascinating.

Brandon Averill (34:58): Erik, I know you're going to close this out, but you can either touch on or I want to touch on it. The market is not broken. I want everybody to be clear about that. We're talking about a very small sliver of the market and what is happening right now. So if you're a long-term investor, the market is not broken, stay diligent, allocate to where you expect the returns to be, be it globally diversified over the long-term. This is a blip in the radar. It is not going to throw off your entire investment plan. So I know I've gotten a couple of questions on that, I'm sure you guys have. But I just want to reassure people that are doing the right thing, that this whole thing isn't going to implode your portfolio.

Erik Averill (35:39): No, it's actually a picture of capitalism working. It's actually a picture of markets working. It's something in a really, I guess direct way is you've heard us talk about on this podcast. It is very difficult to outperform the market by picking individual stocks, market timing, or using derivatives or short selling. It's just very, very difficult. And what's happening here is some active hedge fund managers got caught with their pants down. Like evidence worked here. Other active investors took them out. That's a zero sum game right there. And that's why we laugh because after transaction fees, after fees and taxes, you can't do it unless you take evidence-based information like we do. And we stay disciplined and vigilant over the longterm. And so I think that that's the thing is markets are working. It just may not be working the way that some other people want it to work in.

Erik Averill (36:48): The other core tenant, timeless truth is risk and return, they are always attached. So you absolutely might be shooting for the moon right now. You might be on this rocket ship of GameStop or Dogecoin or whatever. And you think the hard mentality is it only can go up. There is a risk associated with it in a very bad analogy. It's swinging for the fences every time you're at the plate. You know what? Barry bonds, you were pretty good at being able to do that. For all the other guys that tried to implement that mentality, they never made it to the big leagues or they didn't stay there very long. And so I just you as the listener listening, think about whatever it is that you do.

Erik Averill (37:33): So many of you are the best in the world. Whether you're the professional athlete, whether you're a founder, an operator, a doctor, is take a step back and say, what if somebody just rolled off the street, walked into the OR and decided that they were going to cut somebody open. They could get lucky for sure, but they're most likely going to kill somebody. And I think it's the same thing as a professional athlete, you would just laugh. It's like, you might be able to get a hit. But I mean, you're going to get laughed out of the stadium. They don't even let you in the locker room.

Erik Averill (38:07): And so with this, you guys have worked so hard for your money. We love having these conversations. We're paying attention to this, obviously, every minute as it's going on. We welcome all the questions, all the conversations if there's something you want us to cover. We've talked about a lot of resources here, head over to awminsights.com, where you can access the show notes. And the last thing we would leave you with is, this is about priorities. It's about living the life that you've envisioned and giving yourself the highest confidence to be able to do that. And so until next time, stay humble, stay hungry and always be a pro.