In 2021, many hedge funds on Wall Street took a beating...

And strangely, thousands of retail investors made out like bandits.

Was it an anomaly? Or is it part of a new paradigm shift in the world of finance?

Dan looks to answer some of these questions by sitting down with the one man who knows more about the rise of retail investors than just about anyone.

He was one of the most anticipated guest speakers during this week's Stansberry Conference in Las Vegas...

And he's even had a film crew follow him for the past year, creating a documentary on his life...

He's the original founder of the infamous subreddit WallStreetBets – the one and only Jaime Rogozinski.

Jaime originally founded WallStreetBets on Reddit in 2012... And by 2019, WallStreetBets amassed over 1 million subscribers and had over 3 million monthly unique users.

Earlier this year, the group caused quite a stir when they bid up stocks like GameStop, AMC, and other so-called "meme stocks" up hundreds of percent.

During their conversation, Jaime recalls some hilarious stories about WallStreetBets members who have made and lost massive fortunes in the stock market. He even shares the story of some members who invested in the wrong stock... and accidentally made a ton of money.

Risky? Yes...

Dangerous? Perhaps...

But Jaime contends that the many people on WallStreetBets are learning to trade the best way possible – with a smile on their face and some real skin in the game.

If you've ever been tempted to trade meme stocks, or just want to hear more about some of this crazy world, this is a conversation you must listen to...

Announcer: Broadcasting from the Investor Hour studios and all around the world, you're listening to the Stansberry Investor Hour. [Music plays] Tune in each Thursday on iTunes, Google Play, and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here's your host, Dan Ferris.

Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I'm your host, Dan Ferris. I'm also the editor of Extreme Value, published by Stansberry Research. Today we'll talk with Jaime Rogozinski. He's the guy who created the online community known as WallStreetBets where people are running up stocks like GameStop and AMC Theatres. Very cool conversation I'm sure we're going to have with him. In the mailbag today, questions about gold, the financial conditions index – of all things – and more. The mailbag's a conversation, so talk to me. Leave the message on our listener feedback line, 800-381-2357, and hear your voice on the show.

For my opening rant this week, I'll just tell you some of what I told the audience this week at the Stansberry Conference in Las Vegas. That and more right now on the Stansberry Investor Hour. [Music stops] Oh, what did I tell them this week in Las Vegas? I told them some things you've heard before. [Laughs] That's for sure. I told them stocks are overvalued, and I told them that – and we'll talk about this in the mailbag, too – I told them the financial conditions are weak.

And what that means is, simply, it's almost another way of saying stocks are overvalued. Because it really just says financial conditions are poor if you're an investor putting money at risk who wants to get a return. It means you're not getting paid enough. And really, that's exactly what stocks being overvalued means too. It means you're not getting paid enough for the risk you're taking. Risk in general was an interesting topic throughout the conference. A lot of people sort of addressed it in different ways.

But we all arrive at the same general place, I found. You know? Everybody who was mindful of risk and brought it up as a topic. They all wind up back at, you know, "Make your position sizes right. Don't put in so much that you're going to lose sleep. Have a system for exiting..." Especially a hyper-risky... if you're taking a flyer on something risky, have a system for exiting. Keith Kaplan was here from TradeStops and he did a great presentation as he always does. He's got a whole full-blown system for how to exit stocks.

And, you know, nobody ever [laughs] talks about how to sell because, in my opinion, nobody knows how to do it. So risk, selling, some folks talked about. I talked about how overvalued stocks were. I also talked about the fact that investors aren't scared. They're not scared. And it makes sense. That's the way it looks in a market frenzy, so we expect this. But it's so counterintuitive. [Laughs] At the exact moment when stocks – we'll just stick with stocks but it really applies to bonds and other things too.

But the exact moment when stocks are really least attractive and most likely to generate, really, their lowest 10 and 12-year returns looking out 12 years on the S&P 500, historically speaking we've never been this high. But every time it's ever been anywhere near this high, the subsequent 10 and 12-year returns were really poor. So at the precise moment when it's rational to assume that you're going to get a really poor return, investors seem to be more interested than ever in owning stocks. More Americans have a bigger percentage in stocks than any time in the last 70 years. They can't get enough of them. A little crazy.

And if you just – there's other ways to look at this too, and I mentioned the IMX from TD Ameritrade. They pull together data from 11 million customer accounts, which is a really good swathe of investors. So it's a really good sample. And that index, that IMX – I think it's called Investor Momentum Index or whatever. It doesn't matter. It just measures how crazy people are about stocks. And it's up around the all-time-high region. It's bumping up against the all-time highs. You know?

So they're just more ecstatic than ever. They have more money in stocks than ever. They seem to [laughs] want to buy more of them at the precise moment when they offer really the worst risk-return profile in history. It's perverse, man. It's perverse but it is classic, classic bubble stuff. It's classic investor behavior at the top of a bubble. And that's what my presentation was called – "This Is a Bubble." That's what it was called. And I started out by getting the audience to chant with me those words. "This is a bubble."

And my point was one that I've made here before in the very beginning of the presentation. Which is that you really – when you're in a bubble in real time – when it's just, say, March 2000 and the dot-com bubble is peaking – you don't feel it. You don't feel it till many months later when maybe the Nasdaq was down 50% or something. But even then... we were talking about this before. Even then, when the Nasdaq was down 50% the S&P 500 – the general sort of broader market index – was only down 9%.

So you could say, "Oh. Well, you know, it's a tech-only event. I'm only down 9%. It's great." That's not how it ended up. You know? The S&P 500 wound up down almost 50% as well by the end. So you really – I said I don't predict these things because you can't. All you can know is what the market presents you with. And the proposition you're being presented with today is especially poor. And, you know, I know you guys don't want to hear the political stuff I talked about.

But, you know, really the political stuff was kind of an offshoot of what's happening in the market. Right? Because we focused a lot on economic and financial topics when we were talking politics. But the one thing that came up that I really want to talk about when I was on a political panel on Tuesday night at the Stansberry Conference was the Federal Reserve and its relation to inflation. And a couple of subscribers stopped me in the hallway and said, "Wait a minute. Wait a minute. Wait a minute. Walk me through this again."

And the deal is, the Federal Reserve prints a dollar, it goes into the bond market and buys $1 worth of income-producing securities. And so, it owns the securities now and the bank that it buys them from has this newly printed dollar in its account at the Federal Reserve. So you tell me. You draw me a line from that dollar to the stock market. Because mostly that dollar just sits in that account and the banks don't quite have the animal spirits to do all the lending and spending.

The overwhelming part of our money supply – and I haven't made this point before. The overwhelming part of our money supply is created by bank lending activity. Right? It's created by banks lending money. Right? They lend $1, they put it into another account. Then that dollar gets lent and lent and lent, you know, like 10 times and it creates a lot of money. That's what you get in a fractional-reserve fiat-currency-type system.

So the Fed isn't really – the direct link between the Fed – people say the Fed props up the stock market, it causes inflation. You know, eventually – eventually – if all that money gets lent and spent. But the direct line – you can't draw me that direct line from the Fed to the stock market or even from the Fed to inflation, to rising commodity prices and things. It's really hard.

So why does it happen, then? Well, it happens when the velocity of money – when people do all the lending and spending. So if we could get that dynamic going, then we'll have real inflation. What else did I talk about? I talked about the relationship between economics and investing in the stock market. Tell me if this happens to you. You're talking about the stock market to someone and you say, "You know, I really think the market is overvalued," blah-blah-blah. Whatever you think.

And then, their answer comes back to you and they start talking about the economy. "Well, the economy is really good. I don't see this stock market crash happening that you're talking about." And you're talking past each other because they don't necessarily have much to do with each other at all. And Warren Buffett covered this in a really famous piece in Fortune magazine, 2001. You know? The period from 1964 to 1981, the economy grew almost 400%, like 370-some percent. And the stock market was flat. Lots of growth, stock returns flat.

Then start from the end of that period, 1981 to 1998, and you have the exact opposite. Stock market was a 10-bagger and GDP growth was less than 200%. It was half the previous period. Right? So be careful mixing up stocks with the economy is the point there. The market can easily peak and fall apart while it seems like the economy's recovering and doing really well. That is the point there. And it goes back to another point. People are always asking me, "Well, Dan, you have all these bearish views. You say the market's overvalued. What's the catalyst?" they say.

Well, my answer is something like [laughs], "Hey, whatever, man. The catalyst is whatever it is. You won't know it and I won't know it, and it'll happen. And we won't know it until six months after it happens." And then, in hindsight, we're going to say, "Oh, yeah. Yeah. Look what happened inflation really got going," or there was some big financial disaster event in the world that kicked it off or something. But in real time – in real time, you won't know it.

And so, where do I wind up? Back in the same place I always do. "Prepare, don't predict, man. You got to prepare your portfolio." You can't base your portfolio on your ability to predict stuff. It just doesn't work that way. So really, what I did in Las Vegas is what I try to do every week... I'm just trying to have a really candid conversation about how wealth is preserved and money is made in the stock market.

In just the same way that I believe you can't afford not to have money in stocks, you also can't afford not to own some gold and silver and you can't afford really not to own at least a little bitcoin I think. You know, it could wind up being a 100-bagger 10 years from now or something. And you can't afford not to hold plenty of cash, gold, silver, a little bitcoin, and stocks. You can't afford not to be invested in the relentless ascent of man.

And you do that and benefit from that through the stock market as an investor. And aside [laughs] from all the political stuff that I mentioned, I did give a stock pick at our Alliance meeting. Probably can't give you that. You know? The Alliance folks pay a lot of money to be in the Alliance. So if they pay all that money and I go throwing the advice around for free, they wouldn't like it very much.

But that got into somewhat of a political discussion as well. And more and more, I find that politics and investing... like, I'm just having real trouble separating the two. Am I getting old? Maybe that's it. Old men worry about, you know, the world falling apart and society's going to hell in a handbasket. You know, and they of course have the money to invest, so these two topics are kind of swimming around in their head all the time.

Maybe that's what it is, man. Dan's getting old and he just can't stop thinking about politics and investment returns. All right. I'm going to leave you right there. That's what I told them this week in Vegas. I just gave them a whole lot of Dan, just like I do with you every week. All right? Our guest today is Jaime Rogozinski, the WallStreetBets guy. Can't wait to talk with him. Can't wait for you to hear from him. Let's do it right now. [Music plays and stops]

On October 20, during what I can only call Stansberry's most highly anticipated event of the year, our newest analyst at Stansberry, Matt McCall, made a shocking new prediction. And he said, "Despite everything you see in the news – like the supply shortages, talk about inflation, and the things I say about the aging bull market, and just everything else," he said. There's an even bigger story that he believes most investors are missing. I mean, that gets my attention. I think it should get yours too. So for a short while longer, you can see exactly what Matt is predicting and what he thinks you should do in response.

Plus, when you check out the replay of the event you can also get the name of a tiny little stock that he thinks could go up like – huge. Like 50-bagger. Maybe 100-bagger in the years ahead. 100 times your money is worth paying attention to. So to hear Matt's big prediction for yourself and learn how to get the names of Matt's three favorite crypto plays, simply head to www.mattbroadcast.com. Again, that's www.mattbroadcast.com. Go check it out right now. [Music plays and stops]

All right. It's time for our interview once again. Today's guest is Jaime Rogozinski. Jaime Rogozinski founded WallStreetBets in 2012, a large online community which yields a commanding presence today in the world of finance.

It has been featured in Wall Street Journal's MarketWatch, Bloomberg, CNBC, Money magazine, Forbes, Vice, Business Insider, Fortune, probably half a dozen others. In 2019, WallStreetBets amassed over 1 million subscribers and more than 3 million monthly unique visitors. Wow. He holds a degree in economics from the University of Illinois Urbana-Champaign and is actively involved with tech and startup communities having been a judge for a range of awards, including the Entrepreneurs' Organization Student Award and AngelHack, both focused on fostering entrepreneurships. Jaime Rogozinski, welcome to the show, man.

Jaime Rogozinski: Yeah. Thank you very much for having me.

Dan Ferris: So I was saying before we started recording, Jaime, your presence doesn't scream crazy online stock promoter... which is really what WallStreetBets has become known as, this crazy online stock promotion website. What I'm interested in then is what were you doing when you created this subreddit? And feel free to tell our listeners what Reddit is and what a subreddit is.

Jaime Rogozinski: So I guess I'll start with Reddit and the subreddit. So Reddit is a social-media website-slash-platform. People can go there and talk about a wide range of things. It's almost like the forums from Yahoo back in the '90s with a little bit more interactive capabilities. And so, the way that Reddit works is, you go there and you say, "I want to create a community that talks about German shepherds."

And so, you create your German shepherds community, people go there and they hang out and they post pictures of their dogs. Right? And that's where I started WallStreetBets. What am I doing at the time? This is 2012. Well, I just started a new job after having lost my financial services-related job thanks to the financial crisis. Now I'm making a lot of money and I'm single. I can take risk. I'm not spending all my disposable income.

So I decided, "Let's put this money to work. I can't become Warren Buffett with this income, but maybe I can try." So obviously, risk and return go hand in hand in the stock market, and so I wanted to try and find a lax community that doesn't take themselves too seriously and it's not professional traders and they're not professional investors. That they're just, "Hey. I think that Netflix is going to go up and I think I want to use leverage to do that." And so, I created it because I didn't find a place for it. And to my surprise, there was a lot of people that were interested in doing the same thing, because the thing took off since the beginning.

Dan Ferris: Right. You remind me a little bit of a previous guest, a guy named Chris Camillo who is a social-arbitrage trader. Have you ever heard that term before?

Jaime Rogozinski: I know those three terms, but I've never heard them be used together.

Dan Ferris: Interesting. You sound like you're on the vanguard of this. So it was not taking it too seriously are the words that sort of jumped out at me. How long did it last of not taking it too seriously?

Jaime Rogozinski: Well, I still don't take it too seriously.

Dan Ferris: You still don't. All right.

Jaime Rogozinski: Yeah. [Laughs] Taking it not too seriously, meaning like it's OK to lose money and it's OK to laugh it off or it's OK to make fun of the absurdities that take place. You know, you have investing where you take a company and you said, "This is a good long term, 30-year investment because it's undervalued and it's going to pay dividends," and whatever. And that's fine.

But in the interim, if you zoom into those 30 years and you look at what it's doing at like two o'clock on a Friday afternoon, it's going to do weird things that have nothing to do with their balance sheet. Right? Or their financial statements. And there's room in that moment at that time – it doesn't have to be so zoomed in. But there's fluctuations with which you can afford to take chances, try and catch some of these moves, and not worry about whether your long-term thesis is correct or not.

Dan Ferris: Right. So this sounds very cool to me. You know? You're openly saying, "I want to take some flyers." You know? "I want to do some trades and I want to have a little community where we don't take ourselves too seriously." But the reason I ask, "How long did that last," is because obviously – and you tell me. Was it really overnight? Because it seems like overnight – I never heard of WallStreetBets before GameStop in January. What was happening before that? Had you achieved any notoriety? Had it grown substantially?

Jaime Rogozinski: Yeah. You know, it was an overnight – whatever word we'd attach to it – when GameStop happened. Right? It became very public, very visible and the world found out about it... the world outside of finance. Prior to GameStop, the world of finance knew very well who we were. You know we had been featured in the cover of Businessweek magazine which is owned by Bloomberg about a year before the GameStop, and we had been covered maybe six months before that all over the news for pulling similar maneuvers.

So if you look at GameStop not as a short squeeze but as an inefficiency that was exploited or arguably created in this case, meaning the inefficiency was created, that's not something new to WallStreetBets. It's retailers saying, "I want to make some money. I want to have – I want to have fun doing this. And this is my idea, guys. What do you think if we do this?" And we've seen some really crazy things.

In fact, if you go to Wikipedia and you look up box spreads – right? Box spreads is like an option strategy – there's a dedicated section for WallStreetBets inside of that article because one individual who learned about box spreads in their finance class are like, "These things" – that are too complicated to explain now. But in theory, this is delta-neutral options thing where you buy and sell and do crazy things, and it's a "risk-free trade." There it is. That's the key word, right? Risk-free trade. And this guy goes, "You know, Mr. Professor, why is it risk-free and nobody's doing it?"

And the professor's answer was, "Well, if you wanted to do this, the thing that's not factored into this is commissions. Commissions cost a lot of money to have to buy and sell puts and calls, and that's going to eat the little profit that you get risk-free." So this guy turned around and said, "Oh. Robinhood doesn't have commissions." So he decided to do this risk-free trade and learn the hard way that, in textbook, finance does not necessarily translate to the real world because he ended up blowing his account and another $57,000 past it.

Dan Ferris: Yeah. And wasn't that guy's original account – it was like $5,000?

Jaime Rogozinski: It was. You actually know that story. That's good. That's exactly what it was. And what's funny about it is, he had $5,000 and then after his trade began, he withdrew $10,000 – so he made profit – and then it blew up.

Dan Ferris: That sounded crazy to me because... yeah. Well actually, the way you explain it makes sense. But the way I read the story, I thought, "How was he allowed to withdraw the $10,000?" But obviously. You've got the order right. The original story I read did not. And from that point on, what did Robinhood say about box spreads? [Laughs]

Jaime Rogozinski: Robinhood sent out a mass e-mail to all of their clients saying, "We no longer allow box spreads on our platform." So this individual single-handedly banned this maneuver from their platform.

Dan Ferris: Yeah... One guy's claims to have had like a $1 million position on a $4,000.

Jaime Rogozinski: That's correct. Actually, that was the version two iteration on that. So we get the spreads thing that happens – I lost track of time, somewhere around 2018. About a year later, someone decides to kind of modify that theory and add the fact that you have margin, because the first round didn't have margin. And they took out a $1 million position with $5,000.

Dan Ferris: Well, you know, look. Anybody can make a mistake. But wow. I mean, I just – either that or I'm stupid. I feel like I'm a little stupid because I can't find those glitches. You know? I have all these online accounts and I'm like... you know, even when I think all the numbers are lined up, they still won't let me do the trade. But gosh. What a crazy – yeah. I want to say what a crazy nine years you've had. But the nine years wasn't crazy. It's just the one month, really. January of 2021, right?

Jaime Rogozinski: I mean, I think the climax can be interpreted as – at least, I'm guessing that's the climax. Who knows if it [laughs] will or won't be? Because I don't cease to be amazed by it. But no. It's this progressive thing, right? You start off with a newsworthy story about how some underaged 17-year-old using his parents' account from high school taking $900 or $1,000, turning it into – what – $55,000 in a period of a week? That's huge news. "How did this guy do it? You know, he's about to go to college. He's great," blah-blah-blah.

And that was buzzworthy at the time. And it was. It sounds like a great story. And then as years go by, then you start seeing different things that happened. And so, I start becoming kind of accustomed – and people start becoming accustomed – of, "Oh. What's going on on WallStreetBets? You know, this guy took out a $1 million margin YOLO trade with $5,000 collateral. What's happening today?" And they're like, "Well, it's a Tuesday."

Right? "This is what happens on WallStreetBets." They're constantly on the lookout. And to your point, it is very sophisticated. People that wanted to copy this infinite margin, you know – this free-money cheat code – it requires some pretty important knowledge of the mechanics of all these components to pull it off right. It's not like, "Hey. Click this button over and over." It's, "You got to pick a stock with these properties and this, that and the other." And so, that's when even though they use memes to express themselves and they call themselves degenerate or apes or whatever it is to self-deprecate, they're actually quite sophisticated.

Dan Ferris: Yeah. Interesting. Yeah. They hide their sophistication very well, I have to say.

Jaime Rogozinski: You know? They do the opposite. So you have the veil of sophistication for the – let's call them – insiders in Wall Street. These are the talking heads that work at some of these big investment banks or are on TV all the time and say, "Oh. Well, this is according to blah-blah-blah," and the use really multi-syllabic words to make it seem complicated. Which it can be. It doesn't make them wrong. But it's just this artificial barrier of entry into, "Yeah. You could try this, but you're going to lose your money." They've taken the opposite approach in saying, "Yeah, we're dumb, but look at what I just did." Right? Like, "Can you do that? I didn't think so."

Dan Ferris: Yeah. Yeah. I kind of like that better. You know? [Laughs] I mean, it's just like, "You're smart but I'm rich." It's like, "If you're so smart, why aren't you rich?"

Jaime Rogozinski: Well, that's a really great example. Yeah. During the pandemic when the whole world gets shut down and everyone's flocking to the stock market, there's a couple really fun, notable examples. One is Hertz, the rental car company, declared bankruptcy and their stock started to plunge. And then you see people on WallStreetBets saying, "Well, you're supposed to buy low and sell high." Hertz is pretty darn close to zero, so that's low. Right? So it can only go up, right? Very sound logic. Believe it or not, it worked. And so many people went to buy it that the stock, you know, went up hundreds of percent. I don't really remember the number.

The stocks went up by so much that Hertz went to a judge and said, "Hey, judge. These maniacs put it in the request." He said, "These maniacs are buying the stocks because they think it's funny. But if we were to do an additional offering right now, we could actually pay off our debtors and get out of bankruptcy." Right? The judge said, "Yes," but then FINRA said no. But the people made money because the stock went up. The other example, which is really cool too, when they announced everyone was going to be locked down, people said, "All right. Well, the new way that we're going to work is going to be through teleconferencing and Zoom," and whatnot.

And so they all ran to a company called Zoom whose ticker symbol is ZM. However, as luck would have, it there was another company that was also telecommunications that had the ticker ZOOM, the word Zoom spelled out, so that people that open their broker and they would search the search bar for Zoom... they didn't realize they were actually typing in a ticker symbol. So they invested a ton of money into this thing and the stock price shot up.

But you had the sophisticated observers that were correctly criticizing this entire thing saying, "Haha. You children don't know what you're doing because, first, your investment thesis is wrong. Just because a lot of people maybe have to use Zoom does not make it a sound investment." Right? "There is a situation in which they have a per – you know, unit economics where their per-user is actually negative. You don't know where they are on their J-curve or if they even have a J-curve. So your logic is wrong because demand that goes up does not mean that..."

Dan Ferris: The fundamentals are wrong.

Jaime Rogozinski: Yeah, the approach is wrong. "And the second thing is, you're buying the wrong company." Right? And so, these guys are like, "Yeah. So? Even if I bought the right company, I'm making more money with the wrong one," because it was a smaller-cap company so the price was easier to push up. So they made more money being wrong. But they're like, "If the name of the game is making money, then who's laughing?"

Dan Ferris: Right. Now, you've gotten this – by mentioning the example of Hertz and now the Zoom – and the other good example of this are the ultimate meme stocks GameStop and AMC. And this is classic George Soros reflexivity. And if our readers don't know, the stock prices respond to the fundamentals of the business. But the business can respond to the stock price. The stock price, which is a response to the fundamentals, can then change the fundamentals. So all of a sudden, a crap business like GameStop or AMC Theatres can raise $1 billion and dramatically change the balance sheet and change the fundamentals of the business.

Jaime Rogozinski: Absolutely. Right?

Dan Ferris: And you started this, man.

Jaime Rogozinski: Activist investors, right? They like the company, they like the stock, so give them the resources with which they can survive, because without them they're likely to fail. You know?

Dan Ferris: They're not exactly Dan Loeb, though. Right? I mean, [laughs] this is…

Jaime Rogozinski: If you have a company that goes public that is startup-ish or a young company, and they go public, then by definition people are speculating on this thing. Right? They're saying, "Look. They're still losing money, whatever, but they'll turn the curve." Amazon went I don't know how many decades without pushing a profit. Clearly, they were reinvesting and whatnot. But there is a legitimate approach in which you say, "I like this company," and not necessarily – or in addition to – whatever the cashflows look like. And so now, we're having it happen with companies that are now fresh IPOs. Right? This is a company that's been public forever. And it's giving them kind of a second wind to get capitalized and be able to reinvest it.

Dan Ferris: Right. That's a good comparison. It's like a second IPO. And gee, whiz. It's like right in the middle of one of the biggest market frenzies in our – certainly in our lifetimes. Right? This is every bit as big – bigger in many ways – than the dot-com boom. What a wonderful time to sell equity. You know? Even if your business is like movie theaters in the age of Netflix, you can still sell $1 billion of equity because the people on WallStreetBets are trying to crush the giant shorts. I mean, how do you feel? What do you think about that dynamic that Robin Hood – not Robinhood the trading platform – but, you know, the little guy getting back at the big guy? What do you think about that dynamic?

Jaime Rogozinski: I think there's a feel-good component that certainly was part of what made the story appealing to the nonfinancial world. You know, finance people may have heard about WallStreetBets prior to GameStop but – I got messages, a lot of them, during the GameStop frenzy. And one of them is the most – out of the thousands that I received, this is the one that I remember. There's a taxicab driver from Spain.

And he says to me, "I don't know what you're doing. I don't understand the stocks. I don't understand half the things you're talking about. You're a hero. Keep doing what you're doing because it sounds like you did the right thing. You know, standing up for the small people" That's a really good feel-good component that people can latch onto. I think that it's also tied into the post-financial crisis, post-Occupy Wall Street lack of closure of what happened there. People got mad. I personally lost my job with it. I didn't go Occupy Wall Street. I got another job. But [laughs], you know, people were understandably upset with the situation.

And nothing ever happened. The world got better, the economy got better. Things, you know – people went back to work and they just never went back to it. So now this happens, you're like, "That's right. You see what happens when you mess with the 99%?" Right? "Like, we're a lot more blah-blah-blah." So there's that feel-good component. All that said, it's not black and white. There is no good and bad. These hedge funds are not bad. Just because you're big, it's not bad.

And shorting, not necessarily is bad. There is very productive uses of all these things. And look. These hedge funds that are the Goliath in the story often times are running the retirement accounts for people that are just the 99% or the people that are teachers or firefighters or whatever. So you're not really hurting the guy with the suit. You're hurting the, you know, whole system. So it's more nuanced, but at the onset it does feel good to say, "Hey. These individuals had their day in getting a taste for this."

Dan Ferris: So you created this thing. Are you still active on it?

Jaime Rogozinski: I'm still active in everything related to Wall Street. I'm not active on the subreddit anymore.

Dan Ferris: OK.

Jaime Rogozinski: I am active everywhere else. Right? I'm trying to create this thing on a global scale. One of the other things that I realized –

Dan Ferris: Did I – I'm sorry, Jaime. I have to interrupt you because did I read right that you were kicked off of this thing by Reddit?

Jaime Rogozinski: Yeah. I was kicked off by Reddit because I was trying to make money [laughs]. I wrote a book, right, and apparently that's not allowed. But the current moderators are selling T-shirts, so I guess that's allowed. No. Look. You know, there's a story there and that story – I can't tell you what it is because I sold those life rights to a movie studio. But you'll be able to find out what it is once this documentary movie comes out, and you'll be able to actually see. But on the face of it, yes, Reddit removed me for profiting or trying to profit from the subreddit after writing a book on this community.

Dan Ferris: And all these people are making money off all these stocks but you can't sell a book. OK. I don't want to get into that. It's too weird.

Jaime Rogozinski: It is.

Dan Ferris: So, Jaime – the guy who created this thing – is WallStreetBets a net-good thing in the end for the individual investors who use the platform?

Jaime Rogozinski: It is. You know, there's a reflexive approach to that answer, which is most people that try to do this lose money. And it's statistically a fact. So there's no disputing there. But I don't know that necessarily people losing money is a net negative. And what I mean by this... I'm sorry. Before I get into that one, there is certainly a subsection where it is counterproductive for people that lose more than they should that get into gambling issues. These are, you know, actual addictions that are clinically diagnosable, whatever. That exists and I'm really sorry that does happen. But if it doesn't happen on Wall Street, it would happen in the casino. So outside of that – which is the majority of people – they know that they are taking these risks, they know that they're taking chances much like myself when

I started risking thousands or tens of thousands early on. I knew that I didn't have dependents or kids. But here's where the positive comes from. When somebody goes in and says, "Hey. I think that I like Tesla because they have a button on it that says ludicrous and makes it go really fast, and I like that." So they'll go in and they'll buy Tesla. Or another one which is really funny, Tesla splits their stock – and so, that was a flashback to the '90s. The stock price is low again, so people are like, "Buy low, sell high." Right?

Like, "I get another chance at buying this three digit" – and so, people do. Whatever it is. They have it, and then they're looking at this thing every day and they say, "All right. Tesla's up 1%. That's great. See? I'm a genius. I know what I'm doing. That's what it's supposed to do because I was right about the button." The next day, the stock goes down 2%. What does everyone do? Say, "Why is it going down? It's not supposed to do that? What's the news?" They go and they Google it and they don't find anything specific to Tesla but they realize the whole market's down.

They're like, "Why is the whole market down?" There's this guy called Jerome Powell and he's talking about some interest rate or some bond sale with the yields. "What does it have to do with my Tesla button?" Right? And next thing you know, they're understanding monetary policy and how that ties into the entire investing – and now they're educating themselves and empowering themselves on finance in general. And so now, they're more educated for the next round. Right?

Dan Ferris: OK. I have to push back on that. Right? Are they really more educated or are they just more invested in the narrative? You know what I'm saying? Are they really just letting the narrative work on them more or do you really think they're getting more educated? In the end, net-net. You know what I'm saying?

Jaime Rogozinski: Yeah. I do. No. There's definitely a component where you have this confirmation bias where people are looking for the thing that justifies that thing. Right? At the end of the day, the stocks go up because they go up and they go down because they go down. Sometimes you can spot something that is definitely tied to a catalyst. Right?

If you're watching the stock market and it's moving a little bit every few minutes and all of a sudden it goes down 5% and then it bounces back up 5%, we know something happened and you'll actually find that catalyst. You know, famously, the Associated Press Twitter account was hacked many years ago and they said there was a bomb in the White House. And so, this thing I just mentioned happened. Stocks fell, it turns out it was a rumor. They corrected the Tweet, the stocks bounced back up. But more often than not, it's just waves in the ocean, stocks are moving up and down.

And, yes, people go in there and find their confirmation bias and they only read the stuff that they want to hear about. Or let's say that it's not tied to a stock move. If they said, "I just invested in Tesla because of this ludicrous button. I'm going to choose to only read bullish news stories because that's what's going to make me feel about my investment and that story over there says it's bad because they're not going to meet their production thing – I'm not going to read that story because they're probably wrong." Right?

Dan Ferris: Sure. Sure.

Jaime Rogozinski: So there is that component there. But that is across the board.

Dan Ferris: Got you. So it's interesting to me that subreddit was around for a long time before most of us ever heard of it. Then all of a sudden, the GameStop phenomenon put it on the front page of everywhere. And yet, right up until this minute from day one – as you've described your reason for creating it and what you were trying to do – it looks like it is still kind of true to its roots to me. It hasn't morphed into something perverted.

Jaime Rogozinski: It definitely –

Dan Ferris: Which is a miracle.

Jaime Rogozinski: Yeah, especially after the growth. Yeah. No. It most certainly has stuck true to its original ethos, the original kind of approach to things. How it manifests itself has changed the magnitude at which these stunts or maneuvers or inefficiencies are exploited has also changed. But yeah. This kind of mentality of, "Let's try and make some money aggressively." Right? "Let's be risky about this and embrace it and call things what they are," Unapologetically honest about their perspectives, their wins, their losses, whatever it is.

Dan Ferris: And their own ignorance even.

Jaime Rogozinski: And their own ignorance. Exactly. Well, it's a breath of fresh air that you don't see elsewhere.

Dan Ferris: Right. You never see this on Wall Street. You never see people say, "I don't know but we're still going to do this anyway."

Jaime Rogozinski: You know, it's funny. Like, just recently this guy called Minervini – like this guy on Twitter that I follow – he was on CNBC and he's an investor that's supposed to be this world-acclaimed... they're asking him about some investment of his. He goes, "Yeah. The fundamentals, the cashflows, everything's really good. The earnings..." "And what does the stock do?" And he goes, "What does the stock do?" "Yeah. Yeah. Like, what is the company? What are they?" "I'm sorry. I can't hear you." Right?

Dan Ferris: Oh, I remember this. This is fairly recent. Yeah.

Jaime Rogozinski: Fairly recently.

Dan Ferris: Yeah.

Jaime Rogozinski: And I responded to him on Twitter on this one with the video that I'd made just two or three weeks prior. Right? It was on TV as well and they're asking me about a stock. And they said to me, "What does this stock do?" And then, I smiled and I go, "I have no idea." It went up 50%. Right? People are talking about it. The chart makes it look really bullish. She's like, "So we don't know what this stock does?" And I go, "I don't know what the stock does, but I don't care." Here's the difference between two people essentially getting the same question, right, and embracing it differently. I am not apologetic.

Dan Ferris: Well, you embraced it.

Jaime Rogozinski: Yeah. Because I don't believe –

Dan Ferris: He was caught basically lying. He was caught.

Jaime Rogozinski: Correct. Right?

Dan Ferris: You can't be caught.

Jaime Rogozinski: I can't be caught because I call it what it is. I'm not sorry that I don't know what that company does. Right? And in my opinion, he shouldn't have been either. He should've been able to say, "I don't care. You know, I don't take this approach as a meme stock, but the earnings are good. Their this is good. They're actually solid financial statements." That is a – you can make a bullish case without knowing if this company sells widgets or phones or cars or whatever they're selling. So he could've said that but he didn't because they're so used to trying to pretend that, "I know and I'm good and I win and I never make mistakes." And WallStreetBets is like, "No, dude. I don't know what I'm doing. The button, the thing, the stock – let's have fun. [Laughs]

Dan Ferris: I mean, it's a miracle that there's this whole community of people involved in the stock market who openly embrace their own ignorance. I mean, that is just – I can't even tell you. In the newsletter business, in the finance business, economists – they're like the worst at this. They know everything, right? Nobody does this, and yet the last number I saw was close to 11 million people on the subreddit on WallStreetBets are openly embracing... call themselves apes and say, "I don't care. I'm making money." It's beautiful. It's beautiful.

Jaime Rogozinski: It is. It's beautiful and it's fun, it's entertaining and it's creating an opportunity for people to learn about something... you know, if you go to a 12-year-old or a 15-year-old and say, "Hey. Do you want to study finance," like, "Finance? What do you mean, look at numbers? Like do math all day long? No. No. I want to be an influencer on TikTok or whatever." Doesn't sound sexy at all. But it's now sounding a lot more achievable.

It's like, "Hey. Do you want to try and take a bet on this thing? Because you can do that now from your phone and you get confetti animations." And it's – yes, it's going to leave people losing money. I guarantee you. But in the long term, I believe that that loss of money makes people more empowered. I personally lost tons of money when I got started with this. I was an idiot. Like, I would trade these crazy stock options trades and I would make $20,000 overnight.

And then, I would lose $20,000 and I would refill my slot machine with more money from my paycheck. [Laughs] But during the process, now I can speak very competently about fundamental investing, technical analysis, algorithmic trading, arbitrage. Now I can add meme stocks to this thing and I can hold a conversation on a very intelligent level about risk management and all sorts of other things that are perfectly relevant all because I wanted to YOLO stuff. Right? And that was a very good tuition that – I no longer use money.

Dan Ferris: To YOLO, meaning exactly what?

Jaime Rogozinski: YOLO stands for "you only live once." It's an acronym that's used often times when you're going to make a very risky all-or-nothing trade, and often times – more often than not – results in losing all your money but occasionally it can pay back 100-fold.

Dan Ferris: So I'm going to ask you, now that we've acknowledged the inherent beauty and the fact that this thing has remained true to itself right up until the current moment, which I consider a minor miracle considering the growth and the rapid growth and all the attention... Jaime. Be real. There's a dark side here, is there not? You alluded to it earlier.

Jaime Rogozinski: There absolutely is a dark side. Right? So there's a couple of them that come to mind. One that I don't believe it's a large-scale problem... there was a famous case in which one individual took his own life after what he thought was a huge loss on Robinhood. This was heavily published. This was sad on a lot of different levels. To me, the loss of life is really sad. But what's crazy is, this individual hadn't actually lost money. It was like the interface.

It showed him – he didn't know what he was doing and he clicked too many buttons, and that showed him a big negative number. So that's bad. But I don't think that that's representative of a bigger trend of a problem. I do believe that's an important case that's isolated that everyone can learn about and hopefully they did. But there was another side which is more likely to be a bigger problem, which is this gambling component. Right? There is a gamification section to it. These interfaces are really easy to use.

When you're going to buy stock options on Robinhood, it starts off by telling you, "Do you think this stock's going to go up or down?" Right? And you answer with a color-coded arrow, up or down. And then it tells you, "OK. When do you think it's going to go up by?" Right? And then, "How much do you think it's going to go up by?" Thereby simplifying a very complicated options chain which uses like differential equations from Black-Scholes model for pricing these things into three simple questions and now you're using hyperleveraged products with potentially infinite exposure and blah-blah-blah.

Won't get too much into it, but they're using things that are really above their pay grade and accessed it easily, and now all of a sudden you have people that make $100,000 from $1,000 overnight. And that's addicting and that is a problem. There was a journalist who reached out to me that said, "Hey, I'm working on this reality TV series on..." – I don't remember what. And she said, "I called Washington, D.C., the Bureau Department of" – who knows what gambling and addictions are – "and this government official recommended that I speak to you."

Dan Ferris: The first thing [laughs] out of his mouth when asked about gambling and, "You got to talk to Jaime."

Jaime Rogozinski: You know, I thought it was funny. But I also – it was a wake-up call. Right? It was a reminder that people probably are addicted. If people are having an issue with that, there is ways to get help with it. I can recognize that there are actual issues and I know that there's resources. And I do feel sad for the fact that this mindset is a facilitator, but I rest easy in knowing that people who are addicted to anything usually will find a way to – unless they get help – to feed their vice. And so, if it wasn't this it would be something else.

Dan Ferris: OK. You've also acknowledged – I just want to pile up the dark side in one place. So you've also acknowledged that there's – people are learning about investing, for sure. But there's also a lot of confirmation bias. So, you know, the learning processes can be painful and you can get some things wrong. But you know what this reminds me of, what this has me thinking about? I'm sure a few dozen of the guests I've interviewed on this podcast, folks in their – they would be in their 40s and 50s mostly –who got started investing during the dot-com boom. Right?

And they all have the same story. "I got started investing during the dot-com boom, I didn't know what the hell I was doing and I lost a ton of money." So on the face of it, it's easy – and it's easy for a fundamental-value long-term guy like me – to make fun of WallStreetBets. And a lot of people do, of course. But having heard all of those stories, I'm sure there will be many people who say, "Well, I made a bunch of money on GameStop but I lost it all back," or something. "But 10 years later, I'm a successful mutual fund manager," et cetera, et cetera.

Jaime Rogozinski: You know, I get this parallel all the time. There's definitely a ton of similarities. Who knows how the story ends? Right? We're still in the middle of it. The market conditions... the dot-com was followed by the dot-com crash. And although we had a 50% – let's call it drawdown if that's [laughs] a word you can use – last year it was not this whole thing that took years to recover from. So we don't know how story ends. There's also – it's also fair to say that there's some differences that may or may not actually affect the outcome of this particular story.

But let's just assume that the story ends the same way in the dot-com age. Then these individuals will lose money – I mean, a lot of people are losing money now anyways. But the individuals whose thesis is, "You know, stocks only go up," whatever it is, lose money and then will then be just as wise as the existing people that are looking at WallStreetBets thinking about that. In other words, this is the generational opportunity to learn that lesson. If that's what happens. There is a possibility where the story ends up different... not the stock ends up going forever but it turns out that people kind of stray in a different direction and the outcome ends up being different. Who knows?

Dan Ferris: Right. All right. I'm going to ask you my final question soon. But before we do that, I openly, blatantly want to give you a chance to talk about your book and the documentary.

Jaime Rogozinski: Yep.

Dan Ferris: The film. Either one.

Jaime Rogozinski: The documentary, there's not a whole lot to talk about because I can't really talk about what's in it, but it's been a fun process. You know, the film crew's been following me all around and get some great interviews, so I'm really looking forward to that. It should be out next year. The book – I wrote it before... 2019 is when I wrote it and then published it in 2020. And it was bout exploring these changes, these macro-level tendencies, that were becoming apparent.

So this is the increase in retail participants. It goes a little bit into what their mindset and what their background is and how their value systems are slightly different – right – and how things have been changing alongside Wall Street. In the book, because it's a topic on finance, I try to make it fun and funny and entertaining, so I use a ton of stories from individuals from WallStreetBets that made fortunes, lost fortunes, made then then lost them – whatever – accidentally made funny [laughs]... it's really entertaining and it's a great way to simplify some of these different points.

And I laid out a handful of predictions which I figured would become true over the next decade. But thanks to the pandemic, it accelerated a lot of these things, added a lot of fuel to these tendencies. So a lot of them have come true and we'll see which other ones end up coming true as well... such as the system being unable to handle the volume of meme stock investors coming in droves into this thing. Like, there's been no stress tests to make sure it can withstand this type of activity.

Dan Ferris: Right. We don't know the entrance or the exit of that. Right?

Jaime Rogozinski: Mm-hmm.

Dan Ferris: There's two ends to that and we don't really know ultimately where that winds up. OK. Great. And the book is out – the book has been out. You can get it on Amazon.

Jaime Rogozinski: Mm-hmm.

Dan Ferris: And the film will be out next year.

Jaime Rogozinski: It'll be out next year. Yep.

Dan Ferris: Great. OK. Time for the final question. It is the identical question for every guest of the podcast, exact same no matter what the topic. And that is, if you could leave our listeners with just one thought today, what would it be?

Jaime Rogozinski: You know, my word of advice or thought would be just get into it. Right? A lot of the learning can take place if you just decide to take a little chance, have a little fun with this. Don't take yourself too seriously. But you'd be surprised with how much you'll be motivated to learn and chase your own direction if you just buy a share or a portion of a share. And if it's $10 you put at risk or $1,000 that you put at risk, then whatever's enough to make you feel worried that you'll lose it but not so much that you'll be damaged if you do – that's going to take you down a really fun adventure.

Dan Ferris: Brilliant. Love it. Well, thanks for being here. Jamie, I have enjoyed this conversation thoroughly. I wish we could do it for three hours.

Jaime Rogozinski: Thank you very much [laughs]. And I enjoyed this very much as well. Thank you.

Dan Ferris: Yeah. And so, at the very least maybe when the film comes out we got to have you back.

Jaime Rogozinski: I'd be happy to. Absolutely.

Dan Ferris: Yeah. Great. All right. Thanks a lot, man.

Jaime Rogozinski: Thank you. [Music plays and stops]

Dan Ferris: Right now, I just want to share a quick story about a woman named Sandy Chaikin from Roxbury, Connecticut. Some years ago, she suffered a massive financial disaster. Now, this happens all the time, so it doesn't usually catch my attention. But it did this time because it led to one of the best money-making breakthroughs our firm has ever discovered. Back in 2008, Sandy lost around 50% of her 401k. It was cut in half. She was furious because she entrusted that money – it was like the bulk of her life savings – to a money manager.

And when her husband, Marc Chaikin, saw how upset she was, he created this whole new investment system to help her make it all back. And since then, she's made 3 times her money overall. In fact, in about a year, Sandy made 7 times her money just on one stock alone just by logging into this website her husband created to help everyday folks like her get revenge against Wall Street. As you can imagine, she's told hundreds of people about the system, and that's why today I'm telling you her story on the Investor Hour. In short, Sandy is offering you a chance to claim free access to the system today. Simply go online to www.sandy2021.com to learn more.

Her husband Marc, who spent 50 years on Wall Street, charged his former clients $5,000 a month to access the system. But today, Sandy is asking Marc to make an exception. That website, again, is sandy2021.com. Again, sandy2021.com to claim your free access. [Music plays and stops]

In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Just send your questions, comments, and politely worded criticisms to feedback@investorhour.com. I read as many e-mails as time allows and respond to as many as possible.

Or call our listener feedback line, 800-381-2357, and tell us what's on your mind and hear your voice on the show. Lots of feedback this week. Lots of good stuff. I'm going to start with Steve J. And Steve J. is asking about the Goldman Sachs Financial Conditions Index that I've mentioned it before – I mentioned it today.

"The Goldman Sachs Financial Conditions Index you mentioned sounds like a good indicator but I couldn't find it on the web. Is it available for retail investors or does one need a Bloomberg Terminal? Is the Chicago Fed National Financial Conditions Index similar?" Steve J. Yeah. I think it is similar. I took a look at it.

And I think you might need a Bloomberg. I couldn't find it either anywhere but on Bloomberg, the Goldman Sachs. And Goldman Sachs is credit spreads, risk-free interest rates, equity valuations, and exchange rates. And I looked – there's like 105 indicators, they said, in the Chicago Fed Financial Conditions. And it looks like all spreads and rates. And the VIX is in there too, so volatility. But you're measuring the same thing. You're measuring how attractive it is for, you know – how much your investor's going to get paid. Are they well compensated for putting money at risk?

And the answer right now is absolutely not by both of those. We are below – on the index you mentioned, Steve, the Chicago Fed, I think it was around 0.7-something. Now, the bottom in – at the peak of the housing bubble was 0.6-something. And that's negative. So we're negative-.7 on that, and negative is bad. The conditions are too loose. Investors aren't paid enough and the money is, you know... you can put it either way. You're not paid enough, you're taking too much risk. Same thing. All right. Good question.

Next comes Brendan K. And Brendan K. says, "Longtime listener here. I don't know if I feel great exactly about buying more than a couple thousand dollars in precious metals bullion and keeping it in my apartment." I don't feel great about that either, Brendan. He continues. "I've looked at using a storage company like OneGold to buy and hold larger sums of metal and just paying them the quarterly storage fee. Thoughts? Keep up the great work and I hope you didn't receive too much hate mail from your controversial comments about carbon credits during the last episode. Regards, Brendan K."

Didn't get any comments about the carbon credits. No negative ones, anyway. But – I actually forgot. I have some gold in OneGold. You know? I bought it. It was really easy. It's just sitting there. I'm happy with it and, you know, that's the way it goes. So I'm a user. That's all I can really tell you about it. I mean, it's up to you. You know? Just look at what they charge, look at what you get, and make a decision. I don't think there's anything really deep to know about it.

And, you know, just keeping stuff laying around in your apartment with no security to it whatsoever sounds like you're not comfortable with that, and I think you shouldn't be. [Laughs] Next comes Don J. And, Don, you wrote me this kind of longish e-mail and then you said, "Do you feel my overall game plan and area chosen is reasonable or would you suggest other? Don J." So, Don, I can't really comment on your individual – you know, I can't give individual investment advice. We simply don't do that here for legal reasons.

However, what you described in your e-mail, you're kind of – you seem thoughtful about it and I would just continue to think the way you're thinking and make your own decision and you take the responsibility for it. Or if you really don't want to do that, there are paid financial advisers in the world who can do this for you and tell you and look at your portfolio and all that stuff. We don't recommend these people but they do exist. Sorry. That's the best I can do. And I didn't want to ignore your question, Don.

Next is Mike K. He says, "Hi, Dan. I enjoyed the discussion this week with Daniel Fields." That was last week. "In your opening comments, you mentioned that bitcoin isn't perfect. Just wondering what you might change to bitcoin if you had the power." I don't know, Mike. I just assume [laughs] nothing's perfect. Right? He said, "Your comment made me recall when you had George Gilder on a few weeks back." So without reading the rest of your question, Mike – and he said, "Keep up the good work. Thank you so much."

Without reading the rest of your question, Gilder's point was simply that by limiting the number of bitcoin and not having it grow the way the stock of gold grows or the way the money supply grows when there's more value to exchange, he said, "That's why bitcoin is so volatile." You know? Because the supply doesn't change and then if all of a sudden lots of new value is created, money floods in and runs it up and it creates more volatility than you want in a currency. And I've said this before. Bitcoin trades like a biotech stock or a risky mining stock. And I think Gilder thinks it's because the supply is strictly limited.

Next, Greg F. Greg F. says, "Hey, Dan. Stansberry Alliance member since 2008. Listened to almost every podcast going back to the old days. First time writing in. A lot of your guests give stock recommendations or at least name stocks that they're bullish on. Do you track these stocks to see what guests give the best-performing ideas? And if not, have you ever considered doing so? Just thought it might be interesting. Greg F." You know, Greg, since they're not our recommendations we do not track them. And I don't really have plans for doing so. I think the point is to get a lot of different investors on here and to just give you ideas.

And what you do with them is up to you. Right? When we're on a podcast, we're writing a newsletter – like, I can't reach into your life and grab [laughs] ahold of your portfolio and get control of it. And there's no such thing as like on-the-shelf one-size-fits-all financial advice. So what we do – and Doc Eifrig made a great point of this this morning in our presentations here in Vegas – what we do is, you know, we just give you all the information we would want if we were in your position and we try to do everything we can to help you make the best possible decision. We do all the research and thinking about things and looking around. You know, reading the news, crunching data, anything you can name.

And then, we try to present something that's really valuable to you so you can make a good decision. Next is Aussie Stu from down under. Haven't heard from Aussie Stu in a long time. He says, "Hey, Dan. Still haven't missed a show. Fantastic." Thanks, man. And he continues, "In my opinion, you have no need to apologize or feel guilty about pointing out the high valuations to the stock market and reminding us each week of the dangers we're in right now. To be honest, I need it. With so many bulls everywhere, it's nice to hear the other side." I appreciate that, Stu.

He continues. "Second, gold and silver. Matt McCall has pointed out that he thinks gold is dead. He made a great argument. All the conditions for high inflation and a big move in gold have been in place for some time, yet it won't budge. Seems to be a great case for getting out of the gold and silver miners and the metals and buying bitcoin. The miners are flush with cash, have great valuations yet are dropping. Will these assets really move higher again? Is it just a matter of patience? Thoughts? Have a great week. Love the show. Aussie Stu."

Stu, you asked about real estate. Real estate is too local of a thing. I can't really comment on it the way you framed the question. But I can comment on gold and silver and Matt McCall saying gold is dead. [Laughs] So, you know, you might've heard of Daniela Cambone. She talks a lot with hard-asset gold and silver people. She and I are going to get together and do a little thing about this. And she talked to Matt McCall recently and he made that comment when he was talking to her.

He made it on Twitter and I reacted to it. I don't think gold is dead, and I think the comparison between gold and silver on the one hand and bitcoin on the other is – it's wrong. It's not correct. One is not a substitute for the other. Gold has been a consistent store of long-term wealth for thousands of years. It is a 50-bagger since Nixon cut the cord between gold and the U.S. dollar in 1971. It's been good. To expect every little tick in gold to perfectly align with every mention of inflation... life just doesn't work that way.

This is a liquid – not huge but large enough – market and it trades the way it trades from day to day. Over time, do I believe it'll maintain value and protect you from inflation? Sure. But just take like the housing-bubble crash for an example. Right? Gold went up with the housing bubble. It dropped with the housing-bubble crash – then it parted ways with the stock market which continued down and, by the bottom of the market in March 2009, gold was up substantially from where it started at the peak of the housing bubble. Right?

So it did its job. It was a volatile ride but it did its job. So, you know, the vagaries of short-term performance can fool you. But don't get fooled. I think it is a matter of patience. And gold and silver will do their jobs, and I think bitcoin will do its job too. There's plenty of – there's plenty of room for what gold does and what bitcoin does, and they're different. Good question, though. Glad you asked. We have to return to that topic often enough because people just – you know, the narrative is being hammered at them.

All right. Two more to go, guys. [Laughs] Just had a lot of feedback this week and I really like that. This is Dave H. He says, "I'm a paid-up Alliance member, longtime listener of the show. I listen every week. Always enjoy the content. Thank you and keep up the great work." Thank you, Dave. Dave says, "My question relates to the leveraged index ETFs. If the market over the long term always goes up, why would I not simply invest in an S&P Index Fund which is leveraged to provide 2 times or 3 times the return of the S&P? What are the drawbacks to this approach? Thanks. Dave H."

Dave, the drawback is the leverage. You could say, "OK. Well, with two or three times leverage I'm not going to go to zero." But, you know, you could go – if you're down 20 or 30%, multiply that by two or three and how do you feel about staying in the trade? You know? It looks good on paper but, in practice, it will be gut-wrenching. It will be too difficult. Unless you are a human cyborg, you won't be able to do it.

And, you know, your account – it might get called away from you. You might use too much leverage and your broker will call the whole thing away from you and say, "You're going to lose your money." But I understand – you're talking about the ETFs. Right? So with that, your real concern is just the performance. And the performance will be so God-awful in a bear market you won't be able to take it. Period. That's the real human – what happens to human beings in practice answer.

You know, academically in the abstract – yeah – I would probably have to say I agree. But no human [laughs] being can withstand that. Well, that's another mailbag and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We provide a transcript for every episode. Just go to www.investorhour.com. Click on the episode you want, scroll all the way down, click on the word "transcript," and enjoy. If you like this episode, send someone a link to the podcast and help us grow. Anybody you know who might enjoy the show, tell them to check it out on their podcast app or at investorhour.com.

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