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David Sacks perfectly summarizes the Robinhood debacle

January 30, 2021 / 03:12

This episode discusses the impact of Robinhood's decision to halt buying on its platform, the tactics of hedge funds, and the response from retail investors on Reddit.

The conversation highlights how hedge funds operate, focusing on their strategies to short companies and manipulate outcomes. The hosts mention the show "Billions" as a reference for understanding these tactics.

They also discuss the Reddit community's reaction, likening their actions to a modern-day Occupy Wall Street movement. The hosts describe how 2.7 million retail investors banded together to challenge the hedge funds.

As the hedge funds faced significant losses, the discussion centers on the critical moment when Robinhood's trading halt allowed these funds to regroup, ultimately changing the outcome of the situation.

TLDR

Robinhood's trading halt allowed hedge funds to regroup after retail investors challenged them.

Episode

3:12
00:00:00
i mean the effects of that decision they made to  stop trading and specifically they didn't stop
00:00:04
people from selling they only stopped people from  buying so they shut down one side of the trade and
00:00:10
the effect of that was we had these hedge funds  from wall street they were on the ropes right
00:00:15
i mean let's discuss who these guys are these are  the apex predators of wall street they are in the
00:00:21
business of shorting companies to destroy them i  mean that is their business model and they are not
00:00:27
academic traders okay who are just speculating  on outcome they engineer the outcome right look
00:00:33
at their tactics just watch the show billions  right they hire pr people they hire private
00:00:38
investigators they're participating on these  message boards spreading disinformation look at
00:00:43
the the year of hell that elon went went through  right they tried to destroy like five years yeah
00:00:48
yeah exactly they try to destroy uh companies  to engineer that outcome they create nothing
00:00:53
they're in the business of of of destruction now  the beautiful thing is you had these reddit kids
00:01:00
these pirates who published this manifesto right  on reddit basically being the heirs to occupy
00:01:06
wall street they recognize look occupying like a  like a physical space does nothing to these guys
00:01:13
we are going to hurt them where accounts in their  pocketbook we are going to get together and we're
00:01:17
going to basically create a trade mob that's even  bigger than their cartel and they did they got 2.7
00:01:22
million people taking the other side of this trade  and then when the hedge funds doubled down they
00:01:26
said [ __ ] you we're gonna double we're gonna  triple down and the guy on reddit said listen he
00:01:32
uh paraphrasing john maynard kane said we can be [  __ ] longer than you can be solvent and they were
00:01:37
winning that was what they said right and they  were winning the trade okay and melvin was dead
00:01:43
busted and citroen was on his way to being dead  busted and they had to go to big papa stevie cohn
00:01:49
okay and ken griffin to get to get their rebuys  to buy their revised to get back into the game
00:01:56
okay and then they had these guys on the ropes  they had them felted okay and then what happens
00:02:03
just at the moment where they're gonna like  basically bust them out of the game for good
00:02:09
robin hood shuts down the buy side of the trade  and so what does that do it gives these hedge
00:02:13
funds time to regroup to unspool the trade to  reposition and save themselves and to get out
00:02:19
of the trade if they want to get out of the trade  you can never take that 24 hour time period back
00:02:24
no matter what robin hood does now hey  everyone hey everyone welcome to the all-in-one
00:02:48
these are really big numbers is spread the  opportunity that that technology represents
00:02:59
we're probably going to have four  kardashians on there so four besties on there

Badges

This episode stands out for the following:

  • 80
    Most shocking
  • 80
    Biggest twist
  • 80
    Most controversial
  • 75
    Most intense

Episode Highlights

  • The Reddit Revolution
    A group of Reddit traders organized to challenge Wall Street hedge funds, creating a massive trade mob.
    “We are going to hurt them where it counts.”
    @ 01m 13s
    January 30, 2021
  • Robinhood's Controversial Move
    Just as the Reddit traders were winning, Robinhood shut down buying, allowing hedge funds to regroup.
    “You can never take that 24 hour time period back.”
    @ 02m 09s
    January 30, 2021

Episode Quotes

  • They are in the business of destruction.
    David Sacks perfectly summarizes the Robinhood debacle
  • We can be longer than you can be solvent.
    David Sacks perfectly summarizes the Robinhood debacle

Key Moments

  • Hedge Fund Tactics00:27
  • Reddit Pirates Unite01:00
  • Robinhood Shutdown02:09

Tension Over Time

Words per Minute Over Time

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