The following Is a partial transcript of Big Technology Podcast, edited for length and clarity.
There’s one part of the market that is this meme stock driven explosion, and that is something unto itself.
And we can debate about whether there’s going to be more infrastructure spending or what the Federal Reserve is going to do.
It’s a bunch of people who have an idea, I don’t the idea is about fundamental investing, it’s about demonstrating that they can push up the price of a stock.
Other people are doing it, hopefully just to make a lot of money because they think they can ride a wave.
There’s an argument that this is totally normal, that all stocks are traded on momentum and stories.
But there is, I think a distinction between what’s happening in this meme stock era and the frankly blatant manipulation that happens — to the extent that we’re going to call it manipulation — in the market via institutional investors.
And that’s why we’ve always, as in we, as an industry, the media, but hopefully the laws and regulations that are in place have always been about trying to protect the smaller investor.
What’s so unique about this moment, is that a lot of those smaller investors are saying, no, no, no, those laws you say work in the media, they don’t protect us at all.
But I think, or at least I want to think, unless my head is not screwed on straight and I’ve got this totally wrong, I think it’s also about protecting them on the downside.
Look, there are people who believe that Ryan Cohen who’s now been installed as the chairman and the new team, most of whom come from Amazon are going to reinvent the company.
Maybe the argument in this case is, look, those kinds of bets in these private areas where typically the public can’t participate, we want to participate.
One other thing, I think there’s a distinction between what you’re seeing GameStop.
But you look at the secular trends in the theater business, in the film business, before we had the pandemic and then are we going to believe that somehow the secular trends are going to be even going the opposite direction after the pandemic? I don’t think anyone’s making that argument.
Adam Aron’s not claiming he’s going to do anything different.
And so he’s taking that money, using it hopefully to pay down debt and maybe put the company in at least a better position to not fail, but is he putting it in a better position to have great shoot the moon success? I’m not sure that’s his plan.
I think there’s a whole world of CEOs who are saying, oh my God, could this happen to us? How’s this going to work? In some respects, there’s an argument to make, this can’t really happen to every company out there and especially massive large companies.
I don’t want to say that nobody’s susceptible, but I think there’s a range of company with a valuation and a perspective around these issues around what the short interest is like, for something this to happen and be attractive to this group.
I started to think about this and I don’t think it happens unless you start to have some of the stock market unhinged from the fundamentals to begin with.
And so why can’t that be AMC? Why can’t you will the valuation — not just the valuation, but the success of a company into being, simply by getting behind it and getting behind its stock and effectively giving them the opportunity to raise so much money that they can do these things? That is possible.
So, yes, if people decide they’re going to believe in AMC for the next hundred years, and they decided they want to keep giving Adam Aron money, maybe this can end spectacularly.
But could you subpoena some of these individuals’ emails, have them talking about how they don’t believe the stock is worth anything, and that they’re trying to manipulate the price to push it higher.
One of the things that’s so interesting is if you own the Russell 2000, which is an index, passive index, it’s actually doing quite well, almost spectacularly so.
But again, by the way, at some point everything’s not going to go to the sky, something will go wrong.
Michael Lewis wrote a piece, probably 20 years ago, this is after the dot com bubble burst, about an 18 year old kid that the SEC had actually prosecuted.
And so could he go after some individuals? I wouldn’t be surprised if he were and I wouldn’t be surprised if he even went after an Elon Musk.
The order of operations on that is going to be important.
Let’s talk a little bit about another speculative asset — although I’m going to get in trouble for saying that — bitcoin.
I think there’s now a considerable group of people who believe in the idea of bitcoin.
I don’t own stocks as you probably know, because that’s a policy that we’ve long had and because of the information that oftentimes I’m privy to sometimes in the reporting process.
It’s funny because my kids now, now that it’s become a mainstream thing, it might even be a bit of a currency.
And second, he flat out said, the reason why he bought was because he bought it as a hedge against inflation.
I thought that was the right thing to say, if you’re the mayor of Miami and you’re trying to become the mayor of the crypto capital — if it becomes the crypto capital — he said the words he was supposed to say.
I think inflation is real by the way, but around whether bitcoin becomes the standard? It may, it may not.
For the first time, we just learned that there’s a couple of companies that are going to start working on 401 plans to allow you to put crypto into them.
And once you get there, okay, so now are you going to say there has to be a know your customer, what’s called the KYC policy around bitcoin, anti-money laundering, implementations in the same way that banks have? If you actually do that, then what does that do to bitcoin? You can’t have a private wallet.
But if you were going to create a new currency in this day and age today, you would think you would try to deal with how much electricity is used, whether it has KYC, know your customer information, except, but that’s the virtue of it, by the way.
Talking about the inflation, I don’t agree with Francis Suarez that bitcoin a good hedge on inflation.
There’s a lot of money floating around.
If you think that the SPAC people are being irresponsible and you think that the SEC is not minding the store, you can name whatever you think is bad.
Think about the amount of debt that we took on even during the pandemic in the United States, let alone every other country in the world.
That’s I think what ultimately happens, the question is if every other country is doing the same thing at the same time, you could argue, maybe it doesn’t matter.
Goodness, if you can own assets, if you own property, if you own stocks, if you could just own anything right now, at least it appears that that is the winning ticket at the moment.
In so far as they’re going create more regulations and other policies and better practices around these things, so that they’re not effectively backdoor ways for companies to go public that shouldn’t be public.
I think longer term, you’re going to find more SPACs with more reputable sponsors, and that’s not to say that the current sponsors aren’t reputable, there are some that are, and some that aren’t, that we’ll have more attractive pricing and more attractive transparency around what they’re doing.
I think Chamath’s an interesting, complicated, brilliant guy, who I think skates close to the edge, no question.
I’m sure that if you subpoenaed the emails, you would find lots of these sponsors, maybe the Chamaths of the world, and people like Chamath who are emailing each other.
All these things that we’ve talked about meme stocks, bitcoin, SPACs, I like the way that they work in theory.
I would feel totally differently about SPACs if the SPAC sponsors were out there saying, look, we want to give you an early opportunity to get in now, but here are really all of the issues and problems and conflicts and everything else, that are involved in a very easy to digest way.
But most of them, unfortunately, even though they in the terms of service, don’t understand that there’s this payment for order flow issue that effectively some of the money that they could be making effectively is getting paid out to other financial firms and that’s how Robinhood is getting paid.
We talked about dumping cases when foreign companies were arguably dumping products in the United States at lower prices.
There were certain evidence that was presented, I was a believer at one point, I do remember thinking it was an ecosystem and actually that the ecosystem mattered.
I don’t think Apple is a monopoly in the way it’s being argued in the construct of the Epic case clearly.
It’s what you did to either become a monopoly or to, quote unquote, maintain the monopoly, as you just said.
Epic sued Apple, because Apple was charging this 30% tax on payments in its App Store.
I thought that there were other companies that could probably bring a stronger case, because most of Epic’s market, if you will, doesn’t even exist on the phone, that’s not where the majority of the people that are even playing Fortnite.
I also think it’s very hard, even in a more broadly to claim that the App Store unto itself is monopolistic in so far as it’s very hard to say that Walmart is a monopoly.
If you have your own store, what you sell in it, you typically don’t have to open up your store to others.
They bring you in at 5% and then 12 months later, they jack the price on you, right? That would be a problem because you built a product for a specific thing and then they’ve changed the terms on you.
It’s a little bit if you were an auto maker and an auto supply maker, you said that we’re looking for steering wheels for this car and you will make the steering wheel for this car.
After the Baby Bells, after the bells are broken up, this is in the, I believe the late 70s, early 80s, there was a fascinating case, where there were third party companies that may telephones, the physical telephones and they weren’t allowed to connect into the Baby Bells networks.
I’m not sure what the solution would be, because I do think that the reason why you buy an iPhone, the reason I buy an iPhone is because I like it the way it is.
Now, you’re going to break all your group messages if you go Android and it’ll appear as a snot green bubble.
Also the whole reason why they’re so adamant about this stuff, is because they realize people are going to hang onto their phones for longer.
The question is if there was a lower price, where would the value go? That’s the other question, by the way, I think, which is to say, would that value really gets spread out? Would it just go to those other companies? Is that a better answer anyway? I don’t know the answer.
Now you’ve got me in a very tough one, because I’m a total free speech believer and you know I think people should be able to say whatever they want.
Do you remember, and I got to go back and look, the result, there was a case against American Express because they had terms of service for merchants that were not allowed to say, you couldn’t offer a better price.
I think some of the things that we’ve read over the years around what’s happened with some of the third party merchants and building product effectively to compete with them and using some of that data.
And part of that is because the other element of this, and this is the thing that I do believe, even though I know we think there’s no competition.
And so if you go look at the top 20 largest companies in America, 30 years ago, and you look at the top 20 large companies in America today, they’re pretty much all different.
I’m one of those believers and, I can’t claim to have made up this phrase, it might have been Jason Calacanis or someone, who said, betting against Elon is like betting against humanity.
I think the fact that both of them are in it is going to make it even more exciting, because you never bet against a billionaire’s ego.
I think taxes are actually part of that democracy, and the fact that it isn’t fair, the fact that everybody knows it isn’t fair and that it’s been this unfair, I think unless it does get fixed in self, not just for the sense of fairness.
I think that there has to be at some point, look, I’m a believer in increasing the step up basis at the end of life, I think a lifetime of not paying taxes is enough.
And I very unpopularly would probably tax great philanthropy, meaning most philanthropists, including Warren Buffet or Bill Gates effectively are transferring shares, typically founder shares into either their foundations or to their charity, which means that those shares, which have created enormous value and wealth, if you will, will never be taxed, ever, when they’re sold by the charity.
I like that, because essentially, if you’re not taxing that money, it’s going to philanthropy.
But it does strike me as unfair — talking about that ProPublica story — that all these billionaires are paying less tax than Big Technology, just seems crazy.
After this podcast you won’t be struggling to make it, I know that.
Alex is the founder of Big Technology, an independent publication that covers the inner workings of Amazon, Apple, Facebook, Google, and Microsoft.