The GameStop rise has come and gone.
Last week, shares for the retail video game store traded as high as $480… but over the past week the stock has plummeted over 80%.
Dan examines the situation and comes away with some key takeaways about free brokerage apps, like Robinhood, and who they truly serve.
Then Dan brings the perfect guest onto the show to discuss the situation, legendary trader and market wizard, Chris Camillo.
In 2007, Chris began his investing career by turning $20,000 into over $2 million, during a three-year period where you were lucky to make any gains in the market at all.
Today, Chris is an accomplished author, investor, and entrepreneur who has been featured in Jack Schwager’s book Unknown Market Wizards.
Chris’ trading style is pretty different than anything we’ve covered on the show before.
Chris explains how he uses social arbitrage investing to try to get out ahead of new trends and identify early shifts in popular movements.
Chris says he does almost 100% of his research and trading right from his phone, using social media sites like Twitter, Reddit, and Discord to find his ideas. That’s how Chris was able to see the covid crash coming ahead of time, and place a trade that made him a 7-figure windfall…
Dan and Chris sit down and discuss some of the biggest calls he’s gotten right, big opportunities he’s missed, and his advice for anyone getting into trading.
Listen to their conversation and much more on this week’s episode.
Interested in more from Stansberry Research? Check out the American Consequences podcast here: https://podfollow.com/americanconsequences
2:13 – Is Robinhood actually looking out for the little guy? Dan shares some surprising information about the trading app that is popular among millennials.
5:33 – This week, Dan shares three Shakespeare quotes as part of his quote of the week segment. Dan says he was reminded of current events when he saw these quotes featured in the 2005 film, V for Vendetta.
8:57 – On this week’s interview, Dan invites Chris Camillo onto the show. Chris is an American author, investor, and entrepreneur. In 2007, he began his investing career by investing $20,000 in the stock market and made over $2 million in returns over the next 3 years. Chris has also been featured in Jack Schwager’s book Unknown Market Wizards.
12:43 – Chris explains how he uses social arbitrage as his investment approach. “My whole investing methodology revolves around the early identification of change.”
19:55 – Dan marvels at the fact that one of Chris’ very first trades was a massive winner that made him a millionaire. Chris was so young he had to ask his older brother for help placing the trade.
24:52 – Chris says that One Up on Wall Street was one of the most influential books he read as a teenager. “Peter Lynch had a profound impact on me and my investing.”
31:03 – Where does Chris find half of his trading ideas? “Believe it or not, I get around half of my trades now from people in this Discord community, if you go to DumbMoney.TV, there’s a link to the Discord community in there…”
35:38 – Chris explains how his former company TickerTags combed social media to help him find trades… “So we can tell you if more or less people are talking about Nike shoes this back-to-school season than last season, and the year before…”
38:46 – Dan asks Chris, “Did you have any skin in the game with that GameStop mess?”… “Yeah I did…”
41:27 – Chris gives his thoughts on the GameStop/Robinhood situation… “I think the Robinhood thing was just the most frustrating thing I’ve ever witnessed. I think the way Vlad handled it, their CEO, was just extraordinarily poor. It could have been handled a lot better…”
46:07 – Chris spotted the covid crash well before it happened, “I was shorting the market heavily two weeks before it crashed, losing a lot of money on those short positions. And then of course it eventually crashed… and I made 7 figures in a week!”
51:10 – Chris shares a trade he missed last year that eats him up. “Do you realize out of like 6 or 7 publicly traded pet companies, they were all up like 3 to 6X?”
57:49 – Chris explains some advantages retail investors have over institutional investors. But Dan counters, “My fear is people will be listening to us talking and start making these snap judgements without knowing what the hell they’re doing…”
1:00:50 – Chris leaves the listeners with one final word of advice. “It would be patience… You’re not going to be a great investor overnight. I rarely see that. You have to spend time and learn…”
1:05:43 – On the mailbag this week, one listener writes in with some high praise for Dan and his opening rant. Another listener asks an insightful question about closed end funds like Sprott’s Physical Silver Trust (PSLV). And another listener has a question about the likely monetary expansion happening and its effect on inflation. Dan replies to these questions and more on this week’s episode.
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. Don't forget, Trish Regan is now a part of the Stansberry family. Check to her podcast, American Consequences With Trish Regan. The link will be in the description of this episodes. As for today, we will talk with market wizard Chris Camillo. Camillo is profiled in Jack Schwager's new book, Unknown Market Wizards. His trading style is different from anything we've ever discussed on this program.
And he's just a great guy. He's a fascinating, great, friendly guy. Lots of stuff in the mailbag this week. We heard from Ludvik H. who has an interesting question, interesting comment, about a previous episodes. And we have a couple of interesting questions about things like the U.S. dollar and inflation and the iShares Silver Trust and the Sprott Physical Silver Trust. And in my rant I'm going to talk about, one more time, GameStop. That and more right now on the Stansberry Investor Hour. OK. It looks like this GameStop thing is pretty much over. Even though the stock is still in the $90s as I speak to you, it started the year below $20. And the 52-week high is like 480-something.
So it went absolutely bananas, and now it's collapsed back below 100. So I think this episode is pretty much over. So what's. the big lesson? What did we really learn from this mess? What's the takeaway? Well, there's probably more than one, right? I think one of the biggest ones is that Robinhood was always kind of fake. And it's not even news, right? If you type "Robinhood sells order flow" into a search engine, you'll get articles that go back to 2019, right? They sell their order flow to big firms, big market-making firms. And firms like Citadel, the big hedge fund. Which means that they're selling retail investor, the little guy that they're supposed to be advocating for... they're selling their information to the rich guy so the rich guy can stick it to the little guy in the market.
And of course, I've got all the schadenfreude in the world, right? All the pleasure at others' misfortune that big hedge funds kind of got whacked a little bit by the short squeeze. I know Melvin Capital reported a 53% loss for the month of January. Ouch. But that's one of the big things that came out of this, is that this idea of Robin Hood... and they're called Robinhood, right? What's the legend of Robin Hood? He steals from the thieving, oppressive rich and gives to the oppressed poor. But that's not what this company is doing at all. They're taking information from the poor and giving it to the rich so they get richer.
So it's ridiculous. It's absolutely ridiculous. So from that, I take away Robinhood was always a sign of growing excess in the stock market. It was always a sign that people will believe a good story and think there's easy money in it for them. And it. just falls into the category of things that happen near big market tops. Now, I'm not predicting a market top. But would a big crash or a big decline over the next few years surprise me? Not one bit. And I don't care about the economic fundamentals. I know everything seems to be recovering. You know, manufacturing, housing. Some sources of employment. Not all of them. Mostly overall, it's kind of leveling out.
But you could say, "Hey, Dan. Look. The economy looks great. You're crazy to expect a market" – no, no, no, no, no, no. The market itself is a fundamental. Don't forget that. When the market drops, it wipes out the wealth effect. The market is one of the fundamentals. And the market has gotten way ahead of itself in my opinion. So that's why I'm bearish, and that's why I think this stuff with Robinhood and GameStop – it's just more of what you see at big market tops, right?
And ultimately, I love the thought of all these little guy investors sticking it to the big guys in this massive, short squeeze, right? The big guys, Citadel and all these funds... they're short GameStop. Melvin Capital was short GameStop because they think they're smarter than everybody. GameStop's a crappy business. They sold the only part of it that works – the AT&T stores. They sold those, what, a couple years ago or something. And so, it's crappy business. They're going to short it to zero. Yay for them. Whatever. But then they got blown completely out of the water, and I think GameStop was up like 1,600% in January is one thing that I read. Just crazy, right?
So that's – for me, that's still the takeaway. That was my takeaway last week, and that's my takeaway now. this is stuff that happens when people are too eager to take massive risk and think it's too easy to make money in the stock market. And I'll move right onto my quote of the week. And there's actually three of them. I was watching one of my favorite movies last night, V for Vendetta. And I highly recommend it. I won't talk about it. It's a good movie. But there's three Shakespeare quotes in there. And they're all very interesting. Here's the first one. "We're oft to blame in this. There's too much proved that with devotion's visage and pious action, we do sugar over the devil himself."
That’s Polonius speaking to Ophelia in Hamlet, right before Hamlet does his big, "To be or not to be," speech. And what it says is, we behave in a pious manner, and we appear to be a devout, honest, holy person or something – let's just say – all the while we sugar our actions and our outward appearance sugars over the devil himself, right? And that's Robinhood. We stand for the little guy. and really, it's just our pious... it's just pious action to give zero-percent commission, right? We sugar over the devil himself because you're selling your information to a Citadel.
Next comes a quote from Richard III. Richard III, I think, it's during Act I. He says, "Thus I clothe my naked villainy. With old, odd ends stolen out of holy writ. And seem a saint, when most I play the devil." Same thing. It's about masking your true identity to seem like, "Oh. You know, you're pious. You're clothed in old, odd ends. You're modest. You seem saintly," when really you're the devil. And finally, from Twelfth Night, "Conceal me what I am, and be my aid for such disguise as happily shall become the form of my intent." So in other words, I'm disguising myself in a way that tells you what I'm about.
And if you kind of invert what Robinhood is supposed to be about, right, Robinhood is supposed to be about "steal from the rich, give to the poor." It's about the opposite, right? The form of their intent is actually reversed, right? [Laughs] All right. I hope you get as much out of those quotes as I do. You know, you can look them up. I told you what plays they're from. The first one from Hamlet, the second from Richard III. The third one is from Twelfth Night. Sorry, didn't tell you that. All right. Now that we got that done, let's do it. Let's talk with Chris Camillo. [Music plays and stops] Nasdaq hit 13,000 for the first time in history. Bitcoin topped $40,000 just days after cracking $30,000. The words "mania," "euphoria," and "frenzy" are all over the financial press. But is there more to the story? You bet there is.
And my good friend and longtime colleague, Dr. Steve Sjuggerud – who first warned of the cash panic in 2015 – is now pounding the table about a dramatic financial event that has finally begun. Learn more absolutely free of charge by visiting 2021bullmarket.com. Again, 2021bullmarket.com. Check it out. [Music plays and stops] today's guest is Chris Camillo. I'm really excited to talk with him. He is an American author, investor, and entrepreneur. He's the founder and CEO of TickerTags, a social data intelligence company. He started his investor career in 2007. He invested $20,000 in the stock market and made more than $2 million in investment returns in the following three-year period. And he's also a bona fide market wizard. He is one of the subjects in Jack Schwager's book, Unknown Market Wizards. Chris Camillo, welcome to the program, sir.
Chris Camillo: How are you doing today? Nice to be on.
Dan Ferris: Yeah. Thanks for being here. So I'm excited to talk with you mostly because you're so different... you probably hear this all the time. Forgive me if it gets so tedious. But you're just so different from the typical, you know, both fundamental and technical traders that we talk with. And also, I have to tell you, Chris. I'd like to think I have a good nose for bullshit. And your story on your Dumb Money TV YouTube channel, there's a lot of talk about, you know, "You can do this too, and we're regular people who made a lot of money in the stock market" – like, I'm buying it all day long. Like, I love your Dumb Money TV show.
Chris Camillo: [Laughs] Thank you. I know. I kind of – it's so hard because I feel like the message we're putting out there is the same exact message that every con artist uses, right? Like, "Hey. I made all this money. You can do it too." And I don't want anything from you at all. I want nothing from you. I truly want to build a collaborative community where we can just kind of share. And my goal is... I have this crazy goal to, like, merge the investor class with the non-investor class so that there is no non-investor class, and we're all investing in – we kind of reduce the wealth gap. We kill the wealth gap. Because we can't kill the income gap, but we can reduce the wealth gap to nothing if everyone starts investing. And it's like to me, it's like it's a noble goal. But I totally understand from the outside it's kind of like, "All right. What are you selling me? Like, at what point do you try to get me into some scheme or some course? Or there's got to be a catch."
And it's been really hard the last few years battling that. It's hard. I've had to really kind of think about positioning and stuff. Because you're right. I am nothing like other investors. I could never – I would have no interest in being, you know, a fundamental investor. And the thought of being a technical investor and looking at stock charts, I just want to blow my brains out. I mean, I do everything on my iPhone. I mean, 100% all of my investment research and all my trading is on my iPhone that I'm also doing everything else in my life with from that phone. That's my screen. My screen is a four-inch screen, and it has been for 20-some-odd years. [Laughs] It wasn't that smaller on that before.
Dan Ferris: That's amazing. And what do you do on your iPhone? Like I was reading the Market Wizards interview. It says you do like four hours of analysis every night. What is – are you still doing that? What do you do every night for four hours?
Chris Camillo: Oh, yeah. Yeah. So, you know, what's so interesting is I can do what I need to do on my iPhone because all I do is just read social media, right? So, I mean, my whole investing methodology revolves around the early identification of change. So back before there was Facebook and Instagram and Twitter and Reddit and all this stuff – before that existed – I used to call the methodology "observational investing." And when I wrote that book Laughing at Wall Street – I think it was in 2010 is when I wrote it – it was all about observing more keenly the world around you. So looking at restaurants and looking at, "What are people shopping for? And what are people wearing? And how is culture changing?"
And now, you can be up 1,000 times more efficient by doing the same thing but by doing it on Instagram and Twitter and Facebook and Reddit and just literally reading about what people are talking about, what they're interested in, where the buzz is. Like, "Where products are selling out. What are people passionate about? What are people" – you're just reading into that world. You're observing, but you're observing it through these social channels. And quite honestly, the most efficient way to do that is on a phone. It's getting on Twitter and searching for key words and seeing, you know, "What kind of toys are people talking about? What kind of clothes are people talking about? What retailers are people talking about? What are they doing with their time? What movies are they watching? What type of food are they eating? You know, how is their behavior different today than it was last week or last month or last year?"
It's fun. It's like it's being a treasure hunter, right? Like, you probably read – I don't know if Jack talked about this in the chapter he did in his book. But before I was an investor, when I was a kid, I would – every Thursday, Friday, and Saturday morning, I would go to garage and estate sales. I would take public transportation around the city and try to identify sales in the newspaper that I thought would have mispriced items. You know, items that were mail-focused because a lot of those estate sales are run by women that don't tend to have a full appreciation... this is back in the late-'80s, early '90s of train sets and men's watches and old fans and just all things that are male-oriented. So I would try to find sales that have those items. I would buy them, and then I would resell them to dealers around the country. Because there was no eBay back then, right? So it's all about just identifying an opportunity and then connecting it, right, in a way that you can monetize that opportunity. So that's always kind of been – that's always kind of been my life before investing. So it's just been a natural transition for me.
Dan Ferris: Yeah. I have to say I admire the fact about you that was discussed in the Schwager book along with quite a bit of what you just said... that it sounded like – I mean, you're obviously a very bright guy. But it sounds like you maybe didn't exactly do great in school because they just weren't talking about things that you were interested in. And you've always been just who you are, and that's it. Unapologetically. I love it.
Chris Camillo: Yeah. Let's be specific about that. I graduated – I went to a very good school. I was really fortunate to have grown up in a wonderful neighborhood with one of the best public school districts in the country. But I graduated in the bottom 25% of my class. I mean, barely. [Laughs] I might have been in the bottom 10 or 15% of my class, right? And so, yeah. I just had zero interest in school. I guess the best word that people, adults, would use to describe me back then – I don't know if it was derogatory. But they called me a hustler. You know? I always hustling something. I had businesses. I had car detailing businesses.
I had just all kinds of things always going on. I kind of thought I was 40 years old at age 13 doing all this stuff, always wheeling and dealing. And at the time, I was trying to buy cars from the newspaper and resell them to car dealers and broker deals and just trying to figure out how I can wedge my way in and arbitrage opportunity. I don't know why – I don't know how that happened. I don't know what was wrong with me that at age 13 and 14, I was so obsessed with trying to arbitrage opportunity in the world. You know? But that's just always who I was. And I was terrible at school. I got a little better in college for a little while, at least. But yeah. It wasn't really my thing.
Dan Ferris: Did you graduate from college?
Chris Camillo: Yes. Yes. I did. I graduated from SMU in Dallas. And actually, for a very short period of time when I was in college, developed an interest – you know, I had an interest in investing back then. The methodology was a little bit different. I actually started off as a social trader without understanding what that meant when I was like 13, 14. But then, I figured, "I can't know what I'm doing. There has to be even a better way. Like, how do real investors invest?" And I just went on that path of trying everything – technical, fundamental, reading every investment book that's ever been written, right?
And just trying everything and losing my money. I was always an options investor, high-risk investor. But I did go to SMU. I graduated with a degree in finance. And I took a job in school, working as a mutual fund trader for Fidelity Investments. So I was in this experimental program where they took kids in school and got us licensed with our Series 6 and 63. And I was just a glorified quote-giver, right? People would call in. I wore a headset. And they would want mutual fund quotes. I just basically gave them mutual fund quotes all day long.
I would go to school, I would go work there all night, and it was a brutal, brutal job. But I thought it was the coolest thing in the world. And then, I just left... you know, I left the finance industry and never looked back. And it was... gosh, I don't know, 20-some-odd years before I reentered the industry in a completely different way with my company, TickerTags, after I had had massive success finding my own way as what I now call kind of a social arb investor. Which is, you know, kind of a thing I coined many years ago, and I'm so proud that people are starting to pick it up now, and it's becoming a thing. Which is just so cool to see.
Dan Ferris: You know, another different – since you mentioned your very own system that you developed over many years, another cool thing about you, Chris, that I got from the Schwager book is that – sure, you tried all these other things like read all those books and everything, and it all failed or whatever. But you really found the strategy that has made you a wealthy man at age 14 with your very first trade when you shorted Snapple.
Chris Camillo: Oh, totally.
Dan Ferris: [Laughs] That's so weird. Nobody does that.
Chris Camillo: Do you realize that that memory – probably because I thought about it and spoke about it so often – it is like stamped into my brain? I feel like I can just... I literally remember being there in the store. I remember the face of the clerk. I remember the fridge. I remember the conversations so vividly. And I just remember talking to my older brother about it. And he placed the trade for me. He was in the finance industry. He was a broker. He was an old-school, you know, 1980s... he was a broker. And you always look up to your older siblings, and I wanted to be like him. I said, "Hey. Is this bad for Snapple? Can I trade? Could you trade it for me?"
I remember handing him a bunch of stack of like $10 bills. I was like, "Here's all the money I have." It's like $300. And he placed the trade for me. And sure enough, it was like a triple. And in like a couple weeks, it was a triple. And, my, that was it. That was like... I was all-in at that point. I was like, "This is for me." And then, of course, I had a decade of terrible trades. Just absolutely miserable, terrible exploration trading. And I feel that that's something that every investor – or great investor, at least – kind of has to go through... that period of time when you're just experimenting and trying to figure out who you are and what works best for you.
And I've grown so much over the years. There was a period of time when I had what I thought was uber success in the – you know, the $20,000 to $2 million I thought was the most prolific thing that anybody had ever done in the stock market. You know? I was like, "Has anyone else ever done this?" Because as I was doing it, I just thought, "This is insane." I couldn't believe I was doing it. And at the time, I was such a jerk when it came to other investors. I was like, "Nothing else works. This is the only methodology that works." I was like, you know – I wrote my book. And I ripped on technical traders so hard. I hated technical traders. I thought they were all conmen. I was just like, "You guys are just worthless. Like, everything you do is like a circus show. Like, none of it works. Show me. Prove to me that it works."
And then, of course, later on you end up meeting all of these people, right? You realize that, "You know what? There actually is a way to be successful with technical trading. There is a way to be successful with fundamental trading over a long period." I mean, listen. It doesn’t matter what you do. The super successful people are always a very small percentage, right? So they're really hard to find. So it seems like it's not possible. But I've gotten – I don't know. I think I've wised up over the years. I realized that there are other people, and I've even met a few of them, that are just outstanding. And they do it in a very different way than me. So it's not for everyone. And listen. My style of investing is not for everyone. But I will say this. I think it's for most people. I think [laughs] what I do is more relatable to the general population than fundamental or technical investing.
I mean, if you take 100 people and you sit them down just randomly and you spend an hour with them explaining fundamental investing, you spend an hour explaining technical investing and you spend an hour explaining narrative-based social arb where you're essentially purely identifying change early and connecting the dots to investable opportunities. Like, I feel that probably 80 or 85 of 100 people are going to be like, "That's for – I could have fun doing that. I understand that. That makes sense to me." And that's something where I could see myself having an inherited advantage over the rest of the world or at least thinking that they can if they put an effort into it. So, you know, there are only so many people that like to stare at a Screen of charts all day long, right? And there are only so many people that want to dig into deep financials, right? Let's be honest.
Dan Ferris: Yeah. That's right. You remind me, actually... the one old-school investor you remind me of is Peter Lynch. Because he always talked about, you know, when you go to the grocery store pay attention. You know, what are you using? What is everyone using? What products do you like? What's new? What are other people talking about? And buy what you understand. You know? Invest in companies you understand.
Chris Camillo: Yeah.
Dan Ferris: And you sound really similar to that to me.
Chris Camillo: Yeah. So let me address that. Peter Lynch had a profound impact on me and my investing. I was a kid in my teens when I read his book, One Up On Wall Street. And it was the one thing that resonated with me. It was the one thing that made me realize that my style of investing had legitimacy to it, right? But Peter Lynch, if you remember – yes. He did believe that. But he was also an amazing fundamental investor. So he kind of mixed those worlds of fundamental and observational really well. And it worked so well for him for like 20-some-odd years. You know, what I do is – and it seems really crazy and odd to most people and I'm sure would seem odd to Peter Lynch as well.
Now, I've always wanted to meet him, and I've never gotten to meet him. But I would love to someday sit down with him. But I just basically do one piece of what Peter did. And I only focus on the observational piece of it. And my thesis is that if you can identify something that is meaningful enough, that is a real needle-mover for a company – meaning a shift in consumer behavior, a shift in culture, a shift in technology, a shift in government regulation – anything. Any type of major change. And you could connect the dots to a sector or a company that that change would have massive needle-moving impact. And you can determine that the rest of the investing public and institutional Wall Street hasn't fully appreciated that change or isn't even aware of it for some reason.
And you could also prove that there's nothing else happening during your trade window with that company or sector that's more important than that change, then that's all I care about. So at that point, I don't want to know what the stock is trading at. I don't want to look at a stock chart. I don't want to know anything about the management team. I don't want to know about the PE ratio. I don't want to know anything. All I want to know is how saturated that information is in the market, and I want to trade that.
And I always say – and it's this kind of people just think this is crazy for me. The ideal way for me to trade is to not even know what the stock price is when I'm entering or exiting the trade. Meaning if I could just look at the market and look at my news Feeds and look at all my information but not see a stock price and just buy that stock or sell it, short it based on the information I have and exit it when that... I say you have to enter – I invest when there's an information imbalance, and I exit the investment when we reach information parity.
OK. So if I can just keep it that pure, that's the ideal way for me to trade. Now, we all know that it's impossible to do that. I'm just a human rights guy. I can't ignore the price. It's very difficult for me to completely ignore it. So I get sucked in. But I know I should ignore it. So, like, I literally try to block out everything but what I'm doing. And it's pure. It's very... does it always work? No. But I think if I stick with that, that's when I've done best.
And I know you kind of touted the $20,000 and $2 million. And what's so crazy is that I generated like – I'm up to like $40, $50 million, $60 million. It's something like that right now. Last year, I generated $25 million in trading profits. And I think I've generated another $4 or $5 just this month. You know, a year ago I only had a $6 millon trading account. $6.5. It's because life. Like, I'm taking money out for taxes every year, and I'm taking money out for life. So that $6 million trading account was like – I don't know – $20 million in trading profits that is now $6 million, thanks to taxes and having kids and a wife and a house and all that good stuff. But last year was insane. I mean, last year was just absolutely insane for me.
Dan Ferris: Wow. I mean, that's just so cool. But here's the thing, though. I wonder. Other people say things like this. You know, they say, "You know, I think everybody could do this. Anybody could do this." The big thing with technical trading in the '70s, like... the turtle traders said, "We could teach anybody this. It's a system. It just works. Anybody can do it." But thy were saying the system was easy, and if you have the discipline you can just apply the system. But it doesn't sound to me like you're saying that. You're saying something different. You're saying, "This is what normal humans do anyway, and this is how normal humans look at the world anyway." You don't really need to learn a whole brand-new way of looking at the world, right?
Chris Camillo: No. It's totally intuitive. You're right. I mean, the methodology [laughs] is so simple. It's so simple. And yet, not easy.
Dan Ferris: Yeah.
Chris Camillo: Right? Like, it's simple but you have to believe in it. And so, like, what's so crazy is I always thought anybody can do it. But yet, no one did it. Like, no one was able – like, no one in my universe was able to do it. So what was amazing was, I finally – we got on YouTube. Me and my two best buddies got on YouTube about a year and a half ago when we started doing this show called Dumb Money. And then, we have a show called Dumb Money Live. And literally, it's YouTube Dumb Money Live. We do it almost every day. And we started to build – you know, our audience said, "Can we build a community to where we start doing this stuff?"
And said, "Yeah. Whatever." The they built a discord community. And literally, they just started social arb trading. So they've been doing what I do on their own, separate from me. Believe it or not, I get about half of my trades now from people in this Discord community. If you go to dumbmoney.tv, there's a link for the Discord community in there. But, like, these people – they're surfacing the trades for me. They're vetting them for me. We collaborate on them. But I have dozens and dozens of people that have been sending me their trading... like, I had one this morning. He's up 360% in the last year. This guy is so good. He really focuses on Google search charts, right? So, Google Trends. He's a real expert. He's become an expert at just dissecting search traffic of all these products and brands. And I just – it's happening.
And they call themselves social arbitrators. Like this is their thing, right? My dream has come to life, and it's happening. And let me tell you something. Some of these people will 100% be better than me [laughs] at doing what I do. They will 100... like, they're that good. They have the energy that I had 15 years ago that I've kind of lost a tiny of bit of that energy. And you know what? Quite honestly, having them kind of spurs that energy back in me, and I love it. But now, like, I have – there's 30,000 people in this Discord community. It's totally free. We just literally collaborate. We literally just collaborate on investment ideas, and we poke holes in each other's thesis.
And we make ourselves better investors. And there's been spinoff groups. Like, there's a spinoff social arb Discord community. You know, different mods and a slightly different way of going about it. I'm like, "Awesome." Like, I would love it if 10 years from now there are millions of people that are like, "How do you" – "Well, I'm a social arbitrator. I'm a social arb. I don't look at fundamentals. I don't look at" – and I only say that, not because I want everyone to invest this way. In fact, it works against me personally if they do. But I feel like this is the way that we onramp tens of millions of people into the investing world. Because this is something that anyone could do. If you're a janitor, if you're a doctor, a dentist, a lawyer. You could be anyone... a homemaker. I don't care what your profession is. You could do this, right? Like, you could literally do this.
Dan Ferris: That is so cool. But you're talking about the one guy who did Google trends. But you use your own TickerTag system, right? You don't use Google Trends. Tell me about that.
Chris Camillo: No. I use Google Trends quite a bit.
Dan Ferris: Oh, you do? OK.
Chris Camillo: Yeah. Yeah. So I use Google – I use everything. and by the way. TickerTags is a company... I sold that company years ago to Jefferies. Believe it or not, that is now the technology... the data technology in that has been folded into their tech platform, their institutional tech platform. I no longer had access to TickerTags – the company I built. Like, I don't have it anymore. It's frustrating. It is super frustrating. But believe it or not, I don't have it. But yes. TickerTags was the most exciting thing I think I had ever done. It was this – I was basically doing everything manually on Twitter. I was looking at Twitter and trying to measure acceleration and conversation around granular topics, right?
Like brands and products and things that people were interested in. And I said to my partner, my business partner – Jordan Mclain – that we had just sold the tech company. I said, "Would you be interested in starting a company with me that tapped into the Twitter fire hose? And we would curate thousands of word combinations that represented anything that could be meaningful to a publicly traded company. Like the name of each product that they sell, the name of the people that are executives there. Like the name of the town in China where they have factories. Like any word or word grouping that represents something that's associated with that company in any way or to the business they're in would be a tag that would sit in a tag library of that company.
And we would curate these tags. Maybe a Crowdsource. Maybe we'll build the team to curate them. And then, we're going to monitor how many times people use that word or combination of words when they're talking on social media. So we can tell you if more or less people are talking about Nike shoes this back-to-school season and last back-to-school season. Last year and the year before and the year before. And we could start to measure the volume of conversation and the acceleration of conversation around topics.
And wouldn't that be the world's most powerful social arb investment tool? And we did it. We did it. We actually had like 45 or 50 kids in a room – kind of like the Pandora Project, the Human Genome project, for financial tagging. [Laughs] And we came up to... eventually, we got up to almost a million-and-a-half word combinations. we were one of only three companies that had what they call decahose deal in finance with Twitter. We were licensing Twitter data. And we were – in real-time, we're measuring what the world was talking about. And we were selling that product to large hedge funds, quant funds and to some of the biggest investment banks on Wall Street. And we eventually sold it to Jefferies. So I no longer have it.
But I kind of am back to doing it manually again. So it's kind of sad. [Laughs] And at the same time, I don't have a whole – really any special tools that you don't have, right? Like, I have no more... like, I do subscribe to some data sets. You know, I subscribe to some web-trapping data that costs me $10,000 or $15,000 a year. But for the most part, just like anyone else with an iPhone in my hand searching Twitter for what people are talking about, looking on Instagram... I spend a lot of time on TikTok these days. You know, I did a video yesterday on Dumb Money on your YouTube channel about like a TikTok craze, like about this moissanite thing that people were like starting to shop for more ethically lab-mined diamond alternatives. So we're always looking for trends. We're looking for what people are talking about. And we just do it on – I did it on my iPhone. That's it.
Dan Ferris: I saw you change your Twitter handle to Moissanite Hands Camillo. What does that mean?
Chris Camillo: Yeah. I try to have fun with it. You know, the theme of yesterday's show was this moissanite company which, by the way, it's like a tiny, little investment. It's super high-risk. I don't ever invest in microcaps because they're such a – they're such a hot mess and so unpredictable. But I changed my name to Diamond Hands when the whole GameStop thing broke out on Wall Street. That's because Diamond Hands is someone that's going to stick to it till the end. I was just jokingly... and then, I changed it to Paper Hands. And now, we're doing this moissanite story. So I changed it to Moissanite Hands, which is the diamond alternative. So it's kind of an inter-Wall Street bet joke. But people that know us and our channel understand it.
Dan Ferris: I see. Little inside baseball. But did you have any skin in that game with all that GameStop mess?
Chris Camillo: Yeah, I did. So, you know, listen. Like I said. I try to identify change. And part of the change I look for is change in behavior. Sometimes that change in behavior is change in investor behavior. And that was the case with Wall Street bets. So when I identified it, I was a little late to the game. But, yes, I did invest in GameStop at $70. Sold a whole big chunk of it, I think, around $300 or north of $300 – maybe $330, $340. Bought quite a bit of AMC at $3, sold most of it around $15, some more of it around $13. I ultimately made, I think, $1.2 or $1.3 million on AMC – the AMC trade... donated the entire thing to my charitable foundation for pediatric charities.
I just literally put the whole stock, including what I paid for the AMC... I think I invested like $300,000 and turned it into like $1.5 million or something like that. So I donated that to... it's in the foundation to be donated. Yeah. I made a good chunk on GameStop. I did some other little ones that were kind of fun. I was up $300,000 in the silver trade before the CME tightened restrictions on silver margin, on margin. And that screwed up silver trades. So I think I'm a little positive there. But I’m pretty much out of all those trades now. But yeah. I was just measuring the volume of conversation around each of those things – GameStop, AMC, silver.
And as long as the volume of conversation was increasing, I was long. When the volume of conversation started to top out, I started to sell out. So it was that simple. So yeah. It was a massive, massive week for me. It was a really, really good trading week. It was hectic. I didn't sleep very much last week. [Laughs] But it was an interesting social experiment. And I'm glad, you know – I'm glad I could look back at it and be like, "Yeah. I traded it well." You know, I think the whole opinion on the Wall Street betters versus Wall Street... I think that's a really complex issue. And I think the Wall Street betters had some really valid arguments. I think a lot of it – some of it at least – was misconstrued. The Robinhood thing as well.
Like, the Robinhood thing was the most frustrating thing I've ever witnessed. I think the way Vlad handled it – their CEO – was just extraordinarily poor. It could've been handled a lot better. I don't think the situation was as bad as everyone deemed it to be. and a lot of that wasn't as transparent about it in the early part of shutting those stocks down. That said, the reality is that Robinhood is a startup, right? And, like, I'm going to invest in Robinhood. I have shares in Robinhood. And so, it was really torturous for me to watch this happen last week. But it is a startup, and they don't have the balance sheet that a Charles Schwab has. Or Fidelity, right? And so, there are risk factors in having an account with the Robinhood. And I think a lot of investors now understand. And you know what? For like 98% of investors, 99% of investors, it's probably not a big deal.
And also, Robinhood is now making changes – they raised $3 billion this weekend? You know, they're starting to make changes to be better, right? And I also think that if they're able to IPO and generate more liquidity, hopefully Robinhood will have a much stronger balance sheet a year from now and this won't be an issue. Because there are a lot of elements to Robinhood that are, quite honestly, fantastic. You know, the UI, the UX, is just so easy for someone to pick up and start trading and investing in just the easiest way. The onramp for Robinhood is spectacular. And, you know, I want them to be successful. Not because I’m a shareholder. But I think it's good for people, right? I think it's good for investors. And I hated that this whole thing happened, and I think it could've been handled way better.
Dan Ferris: Yeah. Yeah. I've seen some of the stuff with the CEO. And he keeps like... he's struggling with the newness of being in the spotlight. Just that alone. But Chris. I need to go back and ask you about something. You know, we talked about the $20,000, the $2 million thing. One of the things that kind of leaped off the page when I first read that was that you started in 2007 and has since produced more than $2 million investment returns in the following three-year period. I mean, the market peaked in October and bottomed in March 2009. So, like, a huge part of that period was eaten off by a bear market. So your strategy works in both directions, right?
Chris Camillo: Yeah. So you're the first person to... and I've had a lot of interviews in the last 10 years. And you're the first person to actually pick up on that. Usually, it's me calling that out because people are like, "Anybody can kill it in a bull market." I'm like, "Do you even understand that the first three-year period started – that was started before the crash?" OK? Like, that started before the crash. That's what... and so, what's interesting is, yes, I didn't have –that crash was tough. But I wasn't down I don't think. I think I was like even or slightly up during that period of that big market crash.
And, you know, my methodology is all about arb-ing change in a long and short, right? So you could be long and short. And I did go short into that period for some period of time, and that helped considerably. This last year, 2020, one of the things that I will never forget is I was very early on the pandemic trade. I was focused like a nut bag back in February on COVID and before people even knew what it was. Like, I was translating Chinese newspapers late at night through Google translation and like Chinese Blogs and stuff like that to try to figure out how real this thing was and how big it was getting and the impact it would have.
And I was buying – you know, I bought a freezer for my garage. Like, I'm not one of those people normally. But, like, I was in deep. I was in deep. I was shorting the market heavily two weeks before it crashed, losing a lot of money on those short positions. And then, of course, it eventually crashed when people woke up. And it was the biggest – quite honestly, it was the biggest thing that had ever happened to me financially. I made seven figures in a week, which had never happened before, back in – I think it was like early March of 2020. And it was like... still to this day, I will never forget it. I cannot figure out how no one else saw it. I don't want to say that no one else saw it. There were a few others.
But for the most part, in February no one was willing to put their money on that trade. It was not an expensive trade to make. The volatility was not there. There was no volatility. The options were cheap. Like, I bought massive puts and shorted massive amounts. Like, I had – I don't know. It was like something crazy like 25 or 30% of my life savings, everything, was in a combination in a put. S&P put. Like puts on Wynn casino and market puts on the SPY and just outright shorting SPY, right? Like, just outright.
And you always doubt yourself when you're the only person in the world or in the deep minority who thinks something insane is about to happen. And you're like, "Maybe I'm insane." [Laughs] You know? It's like, "Are you telling me that all the big" – and I had friends on Wall Street from my time at TickerTag that I will talk to regularly at big funds and at the banks. And I was talking to them, and they're like, "Yeah. We're not really – we'll see." They were aware of it. They were aware of it. They were not concerned. And we looked back, and virtually no hedge funds saw it coming, right? Like, they call got killed. They all got slaughtered with that Dow movement. You know? I'll never forget when the market dropped 2% – that first 2% drop. All the headlines were, "Buy the dip. All of them. CNBC. Buy the dip. This is the opportunity we've been waiting for."
And I'm watching that. I'm like, "There's a freaking pandemic coming. The world is about to change. Like, what is going on right now that I’m the only one seeing that" – like, "What is happening right now? This is either going to be a pinnacle moment in my life as a trader, or I'm going to realize that I'm just mentally insane. And I just... one or the other. And unfortunately for me, it was the former. But yeah. I had never made that kind of... you know, I took a very long time to turn – years to turn... it's a short amount of time to make 100 times your money. And realistically, I say $20K. I think my account had like $80,000-something in it. But I only took $20,000 of the $80,000-something to do this social arbitrating with, and the rest of it just kind of sat there. But yeah. It took years to get the ball rolling. And then to make all that – last year for me to turn $6-point-something into whatever it ended up being – like $30 at the end of... a $25 million – I just still don't know how I did it. I still can't believe I did it last year.
Dan Ferris: Well, apparently you did. You know, you get to keep the money even if you don't know how you did it. So that's cool. [Laughs]
Chris Camillo: No. I know how I did it. I actually did two... we forced ourselves to do two look-back episodes where it was, "How we turned this into this," and we actually went through all the trades. And there were 10 themes throughout the year. You know, we had the Great Outdoor theme, which is when I invested in all these outdoor stocks. We had the Peloton – Peloton was maybe the biggest investment of my life. Again, it's something that just the market did not believe. I think I made $4 million on Peloton last year off a relatively small investment in Peloton. But, you know, the election trade – it seems so obvious in retrospect, just the election trade. Like, all these Biden stocks. And everything was just so easy last year. You know? Like, I'll say investing is not easy – like, doing this is not really that easy.
But last year was easy. It was like a cake walk for the most part. It was like no matter what I did, I felt I was missing out on even bigger, obvious opportunities. Like, the one opportunity I missed out on last year that kills me are all the pet companies. I saw it. I knew it. But I was so distracted with all these other trades I was making, like the pet – do you realize that six or seven public-traded pet companies, they were all up 3 to 6X? Every last one of them. Like, I caught the bicycle trade, right? I made 7X – no. I'm sorry. I made 9X, I think, on my bicycle trade, right? The Canadian company-owned Schwinn and like Cannondale or something like that. But I completely missed the pet trade. And looking back, it could've been the easiest trade of a lifetime. Just the biggest no-brainer of a lifetime, the pet trade.
Dan Ferris: Right. Right.
Chris Camillo: But I missed it. You know? And that's all I'm thinking. I’m thinking, "I have the greatest year in history, and I'm still pissed off about missing that damn pet trade."
Dan Ferris: Yeah. Chris, you're like the one and only guy – I interview a new investor every single week. You're the one and only person who says that it was easy last year [laughs]. Like, nobody says anything remotely close to that. They're like, "You know, the worst year of my life. It was really hard," blah-blah-blah.
Chris Camillo: Well, I mean, as an investor. As an investor. Like, I'm just saying to trade the market. If you look at the trades, they were all hyper-obvious. There's nothing hard about realizing that everybody's buying bicycles, and everybody's getting pets. You know? Like, all that stuff... oh. The printer trade. I mean, I traded Hewlett Packard. "Oh, my gosh. The printers are sold out everywhere." I mean, you don’t have to be a Wall Street analyst to figure out the cheapest printer you can buy is $430. Because literally, every single printer in the world is sold out. Oh, my gosh. Guess what did well? Webcams.
How did we ever figure that one out? I mean, God. I'm an investing genius. I figured out that webcam demand was up in 2020. You know? Like, this is stuff that quite honestly... if you're stuck – and this is why I'm just so pro what I do – like in terms of being a social arb investor versus being a technical or a fundamental investor. If your head is stuck in financials or if your head is stuck in charts, you're not going to realize that everybody's buying webcams and it's right in front of you. Like, it's not that hard. Logitech, man. Buy Logitech, right? [Laughs]
Dan Ferris: There is one thing, Chris. There is one thing. One thing is, you might just be understating just a tad how utterly important it is to answer that one question that Howard marks... you know, the investor. He would ask is, "Who doesn’t know this?" Right? That's an important question. Because if everybody knows it, you're an information parity you might say, then there's no trade. And I think most people, they have a tougher time maybe than you do establishing, "How new is this trend?" If it's that they're writing about it in the Wall Street Journal, "Everybody's buying webcams," does everybody know or not?
Chris Camillo: I'll give you that. I will give you that. But there was a time – there's clearly a time in each of those trades when no one's talking about it, right? And I see no one maybe getting into it in a web board. You know? But for the most part, if you search for news for that stock and you search for anything that's being written about that stock or talked about, and there's virtually no mention of it, you got to go... you got to get into like a Reddit board or like someone's talking about it on some Discord channel. But for the most part, it's just not there. You know, every one of these trades had a moment in time before the masses saw it.
And I will agree with you it's – unless you're doing it regularly, it's hard to develop the confidence, the conviction, the "you can see something before everyone else sees it." And it's not because everyone else doesn’t see it. It's because other people have an issue connecting the dots as quickly, right? So sometimes, it's hours or days or weeks. But it's really about how quickly can I connect the dots to investable opportunity and just pull the trigger on it?" Because if the way that Wall Street firms think – and I know this now because I worked with them for years at TickerTags... is, they have a process, right?
They have a process they have to go through. They surface investments – and they're really slow to surface ideas, by the way. Really, really slow. But even when they surface ideas, they have to do their work. They have to do their research. They have to do their due diligence. They usually have to write it up. They have to present it. You know? Then they have to debate it. Then they have to look for sell-side research on it, right? There's just a lot of things that happen of them to build a thesis and then execute on that thesis.
Whereas, if you're a retail trader like myself, I can see something, make a snap judgement on it in an hour of research and say to myself, "You know what? I'm not done researching this yet, but my gut tells me I just got to get in this right now." Even if it's only 25% of what I ultimately will get in it, the trade. If I ultimately get a higher conviction after my research is complete. But you could make that trade in an hour. And, you know, there's not a ton of shops on Wall Street that have that kind of process flow. Where they could put big money to work that quickly based on this type of social analysis.
Dan Ferris: Right. So again. I just want the listener to understand Chris is obviously doing something very valuable in that hour. And most people can't make that snap judgement. I just don't believe they can. Maybe they can learn to, or maybe we're saying they're more intuitive about things than they realize. and if they would only just wake up to this thing that you've discovered, this social arbitrage, they would realize that what they know is more valuable. And if they had more conviction like you do, maybe, and just did the type of work that you do. You know, if, if, if, if, if.
Chris Camillo: Yeah.
Dan Ferris: But my fear is that people listen to us talking, and they'll start making these snap judgments without knowing what the hell they're doing.
Chris Camillo: Yeah. You need a community of – like, that's the thing. and if there's one piece of advice I'd give people, is – first of all, I'm not a financial advisor. Let's put tat out there right now. I always say that. I'm not a financial advisor. I don't give financial advice. I don't know what anyone's risk tolerance is. And I know mine's sky-high. But I will say I highly recommend – there's nothing in this for me. But I do this for the... I literally do this for the community. We have a community. Dumbmoney.tv has a link to our Discord community in there.
And we have 30,000 people that are there to collaborate. And you can go in the – we have something called the High Conviction Trade channel in our Discord work. Community members will write up a report. They'll write up a report, and they'll be like, "Here's my social arb report. Here's what I see. I did the work. What do you guys think?" And then, we have a channel called High Conviction Discussion where people will poke holes in those reports. And so, if you just start reading those... and after a while, you'll start to pick up on it. You'll start to gain confidence and conviction how this stuff works. And then, maybe someday you'll be the person writing the report in our Discord community, right?
So it's like , it's hard to do it alone. I did it alone. I was a loner in this world. Like, I didn't have any other social arbitrators. I had to struggle through this for a decade. But now, there are other people. So, like, you don't have to do it alone. You can just have fun with it and just spend a year learning. Not even trading. Just spend a year just watching and watching other people trading this stuff and getting a feel for what works and what doesn’t work. But I'll tell you this. It's fun. I mean, honestly this is not what most people think of when they think of investing. And I spend a lot of time kind of just with people in my community, in my world, my neighborhood, my friend group. They're all doing this. All my friends are doing this. Like, people that I do business with – like, everybody's doing this now. And they're having fun with it. And it doesn’t take long before they're coming up with things, servicing opportunities, that I don’t see. You know? That I don't see. And that's what's so cool.
Dan Ferris: That is very cool, Chris. We've actually been talking for a while here. And I hate to stop because I'm having a great time. I knew I would with you. I just liked you on Dumb Money.
Chris Camillo: It's been fun.
Dan Ferris: I knew it. So yeah. Maybe we'll definitely do this again sometime. But I do have a final question for you, though. And it's the same final question that I ask every guest that I interview. Every guest, same final question. You might've already answered it, but I'll ask anyway. If you could leave our listener with just one thought today, what would it be?
Chris Camillo: Well, it would be patience You know, I think I wrote a line in my book that said being a social arbitrator is like being a big wave surfer, right? So like these big wave surfers, they have like a weather radio next to their bed. And they listen to weather reports from around the world, right, of all these hot surf zones. And they will just sit there and patiently wait and wait and wait and wait for that perfect storm when the wind is right, the season's right, the break is right. Like, everything comes together. And then when it happens, they hop on a plane, and they go surf the biggest wave they've ever surfed.
And I thought that was so cool, because these guys just have the ultimate patience, right? And that's really what it's all about. I think you have to have patience in so many different areas of your life when it comes to investing, first of all, you're not going to be a great investor overnight. I rarely see that. You have to spend time and learn. And sometimes – so I hate to say it. Sometimes the best lessons are losing money. [Laughs] So, you know, better to start as soon as possible and start losing money. OK?
Start losing small amounts of money so that later on you're not losing big amounts of money. But have patience with yourself. You know, you'll figure out – and it might not be social arb investing. It might be fundamental or tactical trading. Whatever it is, all the guys and girls I've met that are great at this stuff – they've been at it for a long, long time. So figure out what works for you. Just do it. Just start with it. Learn, collaborate, get involved with whatever community makes sense for you online.
And it's a journey. If you're thinking of this as anything less than a 10-year journey to being a proficient investor that can generate outsized returns – obviously what I mean are returns that are going to exceed that of the market at large – otherwise, what's the point? Just throw your money in the SPY, right? If you're thinking... I'm not saying it can't happen in a year, because I'm seeing it happen in a lot of people after a year. But just go in it with the mindset it could be five to 10 years, right? And have fun with it. And then if it happens earlier, so be it. You know, good for you. That's even better. But I'll tell you this. This is the one hobby that pays you, right? To get proficient at it. [Laughs] Other hobbies just suck up money. This one is just as fun, and it actually can change your life financially. And I get letters from people every day – e-mails, notes, DMs – people where this has completely changed their life. So I would just say have patience and it will come.
Dan Ferris: Awesome. Great message. Thank you, Chris. Thanks for being here. Like I said. We're definitely going to invite you back, because I had a great time.
Chris Camillo: Well, it was fun. And I do appreciate it. And dumbmoney.tv is where you can find me and my two investing buddies and everything that we're doing and all of our channels and our Twitter accounts. @ChrisCamillo if you want to follow me on Twitter and YouTube and all that – it's all on dumbmoney.tv.
Dan Ferris: All right. Well, thanks, Chris. I had a great time. Thank you.
Chris Camillo: I really appreciate it. Have a great day.
Dan Ferris: Well, I am sure we will get many e-mails about that being one of our best interviews ever. Because [laughs] I know I had a great time, and I'm sure that it will come through. And I know you probably had a great time too. Wow. Great guy. That's all I have to say, man. That was awesome. All right. Let's do it. Let's take a look at the mailbag. [Music plays and stops] As a listener to this show, you know we don't talk politics. But there is a time and a place for it – on our American Consequences podcast with Trish Regan, the famed financial and political journalist. Each week, Trish breaks down the latest news from D.C. and around the world with some expert guests, including economist Stephen Moore, Senator Marsha Blackburn, and Ron Paul.
If you want to know how the latest political wheeling's and dealings can affect the economy, American Consequences is the podcast for you. Check it out at americcanconsequences.com/podcast. [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 [email protected] I read as many e-mails as time allows, and I respond to as many as possible. Got some good ones this week. But look. I'm only human.
So I have to start with Tabish R. Tabish R. says, "Hi, Dan. Thanks for your show, man. I don't have any question, but I just wrote for some feedback. I listen to your last week's episode after having just finished Howard Marks' book, Mastering the Market Cycle. In your opening rant, you summarized the positioning in the current cycle so eloquently. It completely resonated the message of the book. I'm not sure which benefited me more – your 10-minute summary or the book. Thanks for doing the show, Dan. As a retail investor, my only source of sensible summary of current financial affairs is your show. Plus, I try to read as many of your books as I can to increase my knowledge. Thanks again. I look forward to your episode. Regards, Tabish R." Hey. Look, man. You humble me, Tabish. You really do. But thank you so much. You know, I'm only human. So when I get a message like that, I'm going to indulge, and I'm going to feel good about it for a few minutes and tell the whole world. OK.
Next comes Michael E. Michael E. says, "Hi, Dan. Your weekly podcasts are outstanding. In the Stansberry Digest from Thursday, January 28, silver stock analyst Garret Goggin makes the following statement: 'If everyone buys some silver, the iShares Silver Trust, SLV, and Sprott Physical Silver Trust – PSLV exchange-traded funds – will be forced to go into the market and buy silver.' I own PSLV, and it is a closed-end fund, not an ETF. My understanding is, that closed-end funds have a fixed number of shares outstanding to trade like stocks. Unlike open and mutual funds in ETFs, closed-end funds don’t actively sell or redeem shares. Is there a scenario that would force the Sprott physical silver trust to go into the market and buy physical silver? Thank you. Best regards, Michael E."
So the way the Sprott Physical Silver Trust goes is that when new money comes into it, they have to go into the market and buy physical silver. You know? They can periodically – what happens is, they periodically have an opportunity to sell new shares of the trust. And all the money goes into physical silver. That's just how it works. So if there's greater demand for silver, rather than just letting people continue the amount of shares outstanding, they say, "Well, there's greater demand for silver. We can sell more of these shares into the market and buy more silver with it." It's just how it works. Garret Goggin's statement – I didn't read that Stansberry Digest. But, you know, he's either just explaining how these things work, or he's implying that they will benefit buying them is as good as buying an ounce of silver because they'll benefit from a rise in the price of silver. I'm not really sure where we're headed here with this question or what it's about. But this is really just the mechanics of how these funds work. That's it. Thanks for the question.
Joan D. is next. Joan D. says, "Dear, Dan. I enjoy Stansberry Investor Hour. Thanks for all your hard work. Here's my question Why is it that, in all the Stansberry material I read, I almost never see reference to or recommendation for preferred share stocks? One exception would be the Retirement Millionaire recommendation for JPS – Nuveen-quality Preferred Income Fund. Two, I should think that now with interest rates so low and so many corporate bonds ranking at or near jump bond level would be a great time for income investors to take advantage of preferred stocks. Is there some inherent problem with preferred stocks? Are these somehow considered outside of Stansberry's bailiwick – too boring? What gives? Thanks for keeping us informed. Blessings. Joan D."
So, Joan, there is something that I believe keeps them outside of our bailiwick. Like a majority of cases, I'll just say. Now, I looked up the ticker symbol for the one you're talking about, the preferred securities income fund. It's not an actual preferred stock. It's a fund of them. And that makes sense to me because it's got a $2 billion market cap roughly, and it trades average volume almost 500,000 shares a day. So it's plenty large and liquid enough for Doc Eifrig to recommend in his newsletter. However, if you look at most of the preferred stocks out there, many of them that I've seen – many of them – they trade a few thousand shares a day. Like 10,000 or 20,000 shares would be a lot, and that's just not enough. You see?
So there's a problem there. If we recommend a stock that trades 1,000 shares a day and it's one of these preferred stocks... like, the preferred stocks, they don't move much, right? Because they have a yield, and the yield moves around based on what's happening in income securities, right? So it would be weird and kind of awkward if we recommend one of these thinly traded preferred stocks, and the thing shot up like a rocket and doubled to $50 – you know, most of them are at par $25 – and then crashed. You know? That would just be insane. So we can't do it. They're too small, too illiquid. Most of them... overwhelming majority.
Good question. I know a guy who only buys those. He's been buying those – he's one of the fellows at the VALUEx Vail conference that we used to go to every year when people got together and talked face-to-face about investing at conferences. And he's been saying, "We only own preferred shares," in his fund that he manages – for like three years. So it's an interesting question. Next and second-to-last, looks like this week, Edwin L. M.
And Edwin has some things on his mind. He wrote a previous e-mail, and I think I might've answered the e-mail. I don't remember talking about it on the show, but I remember his e-mail. He says, "Good morning, Dan. I just listened to last week's episode with Peter Brant. And as always, it was loaded with great content. As a beginning trader in the 4X market, I am learning really quickly how little I actually know. The question that I was asking in my earlier e-mail pertains to the idea that, as U.S. traveler's exchange newly printed stimulus checks for other country's currency than those newly printed USD may sit in the foreign country for several months until they either get exchanged for U.S. Treasury notes or recirculated into the U.S. financial system via any number of ways. Let's say that the Fed hits the 2% inflation rate domestically, and now we have all those extra" – in quotes – "dollars entering the U.S. financial system.?"
"Would there be enough of these extra dollars coming back in the U.S. that it would push us to 3 or 4% inflation or maybe even higher due to any number of other factors occurring in tandem with these dollars coming back? Or is this such a small part of whether dollars will be spent that it is really insignificant? Also, I have heard several opinions on the so-called silver squeeze and would value your input on the matter. Could it create $300 to $400-per-ounce silver? Will they eventually start taking the 100-ounce bars off the exchanges and melt them down to create bullion rounds to meet the demand? If so, what impact could that have on all the paper floating around that cannot be redeemed for physical silver because the physical silver does not exist in the quantities that are traded via paper? I hope this clarifies my earlier e-mail. Keep up the great work. Sincerely, Edwin L. M."
The second question first. Could it create $300 to $400-per-ounce silver. Maybe. I have no idea. It's like $24, $25 as we speak. It looks to me, though, like that was a pretty short thing. You know, silver shot up and actually hit $30, and now we're back down around $24 or something. And if you look at a chart, it's like there's a gap up and then we've sort of roundtripped and covered the gap. So maybe this is a breakout to a new higher level. That's the way I'm personally playing it. As we speak, I increased my call option position on silver. I won't get into it at all. But, you know, just elongated call option. I think that this price movement signals possibly a higher level. It could possibly be an overall bullish thing for the longer term out – maybe a year or so.
And that's all I'll say. As far as all the other stuff with the 100-ounce bars being melted down, I'm not going to guess about what happens behind the scenes. And you don't need to. You really don't. And I don't see 100-ounce bars being taken and melted down to create bullion rounds I don't understand why that would happen. Anyway. It would seem to me that if there's not enough metal to cover the paper trading that you'd have to melt something down to create the 100-ounce bars [laughs] or just produce more silver from mines. But your other thing about the U.S. dollar sitting overseas... could it come back to the U.S. and push inflation to 3 or 4% inflation? Maybe.
But don’t get into trying to predict this stuff. Yeah. The U.S. dollar is the world's reserve currency. It's 60% of foreign exchange reserves. That's all you need to know. If people start not wanting the U.S. dollar and that dollar goes from 60 to 50 without a big change in the overall level of currency, it can be a problem. So yeah. You can see inflation. It could happen any number of ways. Prepare for inflation. You want to predict all this stuff? You're smarter than me. Person who gets into this and tries to predict what you're trying to suggest here... you're smarter than me. I don't know how to do that. I hope that helps. [Laughs]
Last this week is Ludvik H. Ludvik is a very thoughtful and very frequent correspondent. Sometimes he writes two or three e-mails a week. Sorry, Ludvik. I can't do them all, but I'll do this one because I do like your ideas. He says, "Hi, Dan. Let me make a point on the private company point." Now, just so you all know he's talking about our brief discussion in a previous mailbag about private companies like Twitter and Facebook doing what they want with their platforms. And I was saying the government shouldn't get involved, but I think they're really bad actors, nonetheless.
So Ludvik says, "Let me make a point on the private company point. Does a private company have the right to determine what to sell, slash, who to sell to? Can Walmart simply say, 'You need to dress up as a KKK member to be allowed to shop in this store'? It's an absurd example. I know. I'm a Libertarian. I have nothing in favor or against other points. I read arguments of those who oppose me. But there is a point you're missing. It is extremely difficult to start a new social media. For quite some time. I preached Trump should simply leave Twitter. Go for Gab or whatever social network that allows him. He will bring the mass of supporters with him."
"But let's look at what is needed. Let's say Trump will move on with the Trump social network. You need the social network, the host, the payment system behind it, the distribution. The problem is not the social network. It is all payment processing firms were not processing payments to Trump. Amazon cancelled hosting contracts. Google and Apple took apps out of the App Store. This is what should happen. Yes, I'm a Jew. And so, I know the KKK will not be happy with me. But I have no problem with the KKK restaurant. I'll not oppose such a restaurant. What is a chance I get a proper service and a nice experience I doubt it. Well, let the KKK people have fun. I'll do as well and everyone happy. What I think should happen is that we discuss all this. It is the combination. This is what worries me. Best regards, me, Ludvik H."
So yeah. I mean, I agree. There should be – we should allow such things as a KKK-themed restaurant, as horrible as it sounds. You don't like it? Don't go there. Don’t spend your money there. And boycott and advocate for boycott and, you know, protests. Gather peacefully in protests, peacefully outside. You know? Do all that. That's why we have those. That's why we do those things, right? But as far as – I see your point, Ludvik, about social media. And I take that point. OK? I do. Facebook and Twitter and – of course, Facebook owns Instagram. You know, these guys – for the time being, they're it. Those are your choices. They have a lock on social media, right?
So, yes, you can start a competing platform. But look what they did to Parler. It's really hard. It's hard to compete with a heavily entrenched, market-dominating, super well and largely internally financed incumbent, right? Internally financed, meaning they make so much money they don't know what to do with it. So it's a good point. But still. You and I are on the same page, right? We're still libertarian about this. You can't get the government involved. And I'm going to leave it there. But I hear you about the dominance of social media. And that's why I think you should use your freedom of speech and do what I did and say, "Yes. It's wrong to get the government involved. But, yes, they suck. They suck big time. And what they're doing is wrong, wrong, wrong all day long."
Even if it's their right to do it, right? Just because something is your right to do it, just because something is legal, doesn’t mean it isn't crappy, right? It doesn't mean you're not a jerk. Zuckerberg, Jack... who else? Just Zuckerberg and Jack really are the big social media CEOs. You guys suck. What you're doing is wrong. All right. There. I used my bully pulpit. That's what I can do. All right? That's another mailbag, and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. Let's try a new challenge this week.
If you're listening to this episode and enjoy it, Send someone else a link to the podcast so that we can continue to grow. Anyone you know who might also enjoy this show, just tell them to check it out on their podcast app or at investorhour.com. And if you want to hear more from Stansberry Research, check out americanconsequences.com/podcast. Do me a favor. Subscribe to our show on iTunes, Google Play or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. You can also follow us on Facebook and Instagram. Our handle is @InvestorHour. Also, follow us on Twitter. Our handle there is @Investor_Hour. If you have a guest you want me to interview, drop us a note at [email protected] Till next week. I’m Dan Ferris. Thanks for listening.
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