- 1 year ago
Jaime Rogozinski, founder of WallStreetBets and Chief Strategy Officer of Wire Network, breaks down market volatility and options trading.
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00:00Jamie Rogozinski is the CSO at WIRE Network, also the founder of WallStreetBets, the one and only
00:06joining us here for the conversation here at the New York Stock Exchange. Thanks a lot for joining
00:10us. Thanks a lot for having me here. And we happen to be having this conversation on a day when we
00:14are not very far off somehow from the all-time highs in the S&P 500. What are the bigger trends
00:20either in equities or the financial markets that you're following most closely these days? I am,
00:24exactly. But we're at all-time highs is a thing that you should be used to saying by now. In fact,
00:28anybody who's ever followed the stock market since it started, I don't know, 100 years ago.
00:32Zoom out, Dow Jones, you barely see the Great Depression. All-time high is what it was meant
00:37to do when they designed the thing. So yes, get used to saying that. You recently wrote this on
00:42Twitter, and I like this a lot. The world may be complicated, but the market's message is simple.
00:47When in doubt, buy the dip, mean the recovery, trust the hopium. What has most surprised you
00:53from market reaction we've seen as of late? Well, look, I mean, here's the thing. You have
00:57multiple participants in the markets. The time horizon is forever Warren Buffett, and the HFTs
01:04that don't even have, like, feelings and have microseconds to, like, do whatever it is they
01:08want to do, and then everywhere in between. So these fluctuations are only really affecting the
01:13people that are within the timeframes of the fluctuations. The fact is the market's going to
01:17go up, right? There's a scary world war. The world World War III has been the most popular word
01:23for the past, like, five years, I think, right? Because the Russia, the Ukraine, the thing,
01:28right? And then the stock, and then it goes back up, and sell the news, and buy the whatever,
01:32you know? And so it's like, if you're into actually getting better prices, like I said,
01:37as long as population keeps growing, that math, like, just boils down to number go up, which means,
01:43in the long run, you don't care whether it's small time fluctuations if you're investing. If you're
01:48trading, then, yeah, watch the news, wait for, like, the scary thing, you know, end of the world,
01:52then you buy the dip, and then everything turns out to be all right, and then you make some quick
01:57money, right? You can get back out, and then that was a quick overnighter, so.
02:01Where have you seen members of the Wall Street bet community as of late most gravitate to,
02:05and kind of the names that you're seeing on that subreddit pop up more often than others?
02:10You know, there's always just, like, all the things that are recognizable, I was having this
02:14conversation with the guy last name, things with the ticker symbol, like, stocks,
02:17that they can physically relate to, right? You know, which ones are going on right now? I haven't
02:23checked as of, like, the last week, but if you date back in the past, like, I don't know, whatever,
02:28decade or so, it's always been a thing that they use. So, AMD was the chip that they liked because
02:34of the gaming, right? Like, the NVIDIA AI was too, like, it wasn't quite the hype, right? But now AI is
02:40a little more tangible, so the NVIDIA makes a Tesla because of Elon Musk. He's the most relatable
02:44character. It's like they're picking the stock based off of relatability, not off of, like,
02:50discounted cash flow analysis. It's just, like, I like the thing, I shall purchase the thing,
02:56and I am going to support it with my money. You've also tweeted a lot about meme coins,
03:01specifically, and you've made this observation, a lot of others have, while there's a lot of
03:06institutional investors, maybe people in the traditional old school Wall Street lane,
03:10they're very dismissive of the meme coin space. And right as soon as you dismiss it, you get a new
03:14meme coin that could pop 500% or so in the course of just the next few days. And I wonder, what do
03:19you see actively in the meme coin community that maybe other investors should pay a little bit more
03:23attention to? Investors shouldn't pay attention to it because meme coins are, they are but a gateway
03:30drug for risk-hungry individuals that are looking to make 500% in a matter of hours. The lifespan of the
03:38average meme coin, like the pump, you know, the pump fun ones that are four hours is how long it
03:43lives. But the thrill is fun. So is going to a casino and hitting the jackpot, right? So because
03:49of its ease of use and its meme ability and its gamification of it, and its potential to make
03:55money, because oftentimes you can buy a meme coin and you will actually be up, right? And that's where
04:01the thrill is. And then the ones that lose money are the ones that think it's going to keep going up
04:04and then they don't sell. But at some point, right, the game is like, what point do I sell? They sell
04:08early. That entertainment ability, just like going to the casino is an expenditure, right? For me to go
04:14and have a good time, get free drinks, get to know people, maybe I'll make money, maybe I won't. That's
04:18what meme coins are. It's but a funnel to more serious. So I wouldn't tell investors to go to
04:25meme coins because investors invest, right? They're all automatically looking for a lower P, sorry, like
04:29Sharpie ratio. They're looking for like a, you know, a little bit more of a lower down, drawdown.
04:33They're looking for stability, a longer term, whatever it might be. But don't know, like
04:37meme coins are not where it's at. Meme coins are a great way to get more participants in the market.
04:41And the reason why that's relevant to traders and investors is because the convergence of Wall
04:46Street with crypto, right? The lines are blurred already. I think that they're already gone to a large
04:52capacity. There are instruments that are trading on, like co-trading on both already. So the more
04:58participants that join the market because of the gateway drug pump fund, like, you know, Chase,
05:04will eventually work their way into traditional finance or other instruments, right? That you have,
05:09you have instruments that look very much like, let's call polymarket. Polymarket is a gambling,
05:15sorry, it's an event, like, sorry, it's a, it's a betting thing on events. You bet on events. So who's
05:19going to win the thing, right? Chicago Merkle's Dial Exchange already has event contracts, right?
05:24Like, tradable instruments that are regulated, which quite literally are about binary outcome
05:28jiggum thingies that they purchase and they go up and down in value based off of the market
05:33sentiment. That is no, that is like a regulated polymarket. So you're already seeing the same
05:38behavior, the same activity. So they should welcome the existence of this gamification because
05:43there's more people that are, they're participating, adding liquidity, price discovery, and I'll shut up
05:48now because I can keep going. No, I like it, but I'm glad you mentioned polymarket. I think the event
05:51contract space is really fascinating. Obviously they've been battling out with regulators,
05:55the calcium polymarkets of the world. They got a lot of conversation here in New York City this
05:59week as everyone was tracking the polymarket odds on that binary choice between Andrew Cuomo and Zoran
06:05Mamdani. And although overall it appeared as if Cuomo was the winner, you did have these spikes ahead
06:09of the, of the primary vote where it showed Zoran was actually going to come out on top. How closely do
06:15you follow that space and what's your current thinking on the event contract space given it,
06:19it is kind of newer and it is tends to be an election tide phenomenon that gets a lot of
06:24chatter. Let's, let's stick to elections since you use that word. I call you up and I say,
06:28who are you going to vote for? What are your motivations at that point? I don't care who you,
06:32what your answer is. Your motivations are, get me off the phone or maybe I'll tell you the truth,
06:37but I'm embarrassed or maybe whatever, or I'm late to work. And it's a question and an answer.
06:42However, if you all of a sudden find a place where you put money, right? Some of the most like
06:46educated people on this college sports game, like they know more about the sport that this player
06:50married, got injured, whatever, last night, broke up with his girlfriend. They are just
06:53putting their money where their mouth is. So as far as an ability to do polling or being able to
06:59predict the future, poly markets or event contracts are actually a better way to forecast. It is not,
07:06to me, it's not so much of a gambling tool as it is an information gathering. I spoke to somebody
07:11that works high up at Polymarket recently. They said they did a study as far as how many of their
07:16average bets turn out to pay off based off of the odds, 93% of the time. In other words,
07:22Polymarket has the ability to predict the future with 93% accuracy. So I think Polymarket deserves
07:28a separate category outside of the, let's take a bet and say that that is an instrument that can be
07:34used for information, which produces a productive, like byproducts, just like a, like externality.
07:41If you talk about what the benefit to society is of trading stocks, it's price discovery.
07:45Whereas people put in work to learn, to try and figure out a tendency to say, Hey, look,
07:50I looked at satellite imagery and Walmart doesn't have as many trucks coming in. And so that tells me
07:54that there's a thing that's going to happen. And then that humans can then use that for productive
07:58purposes. If information is a, is a commodity of sorts. So like, you know, you can't really
08:03price it, but the fact that you're producing information is a productive activity. Polymarket
08:09belongs in the price discovery department and they do it better than the ones that are simply looking
08:15for volatility profile for standard deviation. It does mean reversing prices. Like they don't do
08:20mean reversion with Polymarket. This guy's going to win. I'm not expecting this thing to, you know,
08:25like go outside of its normal behavior. So I am fascinated by it. I am going to have,
08:30uh, keep a close eye on it because I believe its role or similar markets or, or, or, or instruments
08:36like that are, are, uh, have not properly been placed where they belong. Once they're outside of
08:44the gambling category and they're in the information collection category, then all of a sudden, I think,
08:49uh, we'll, we'll, we'll see, we'll see a lot of benefit all over the place.
08:54Yeah. We mentioned crypto a little while ago in our, uh, conversation, Bitcoin right back
08:58about the one Oh seven level or so. I wonder kind of personally, do you sit there with hopes
09:03or expectations of things like a year end target or how do you kind of track and think about something
09:07like Bitcoin pricing? So, so I got into crypto late, right? Uh, I, I was on the traditional finance
09:14side of things and, uh, I hear cryptocurrencies. I have Bitcoin, Ethereum, Solana, crypto. They all
09:20use elliptic curve technology to do prime numbers, to do their thing. All right, great. Took me a while
09:25to understand. There is a very, very, very strong difference, not just cultural, but technological
09:30and, and otherwise, but Bitcoin and the rest. There's a reason why there are separate conferences
09:34for it specifically with Bitcoin. There is very little thought that needs to go into my analysis.
09:41It's going to go off. If somebody says to me, what should I invest in? And I don't feel,
09:45and I don't have time, Bitcoin. It will go up because of reasons that, uh, we'll exceed,
09:51like, you know, I'll exceed our time limit for this interview. Uh, that is the surest bet ever.
09:57If you can stomach volatility, it'll go down 20%, up 20%, whatever. You guarantee you buy it,
10:03you store it, you leave it. It, it will go up. The other ones have more nuance to them.
10:07Yeah. Let me ask you about your work at, uh, at wire and network specifically,
10:11and how are you envisioning kind of the transformation of the communities that you've built in other
10:15places, uh, much more tied to the crypto space? And what should people know about wire network?
10:20If they're familiar with you and maybe they're not quite as familiar yet with your work at wire.
10:26So here's the thing that I, uh, so I love, I love a lot about crypto. Ever since I got into it,
10:29I've discovered that there are some very sophisticated financial instruments from variable
10:33leverage DTFs, which like, uh, uh, mitigate the volatility decay associated with them. They have
10:39these perpetual futures, which makes sense because you don't really need to deliver SMP 500s,
10:44you know, you know, just, uh, so there's a lot of, uh, automated market maker structure,
10:49a lot of things about crypto that are blowing my mind that I'm very attracted to, but there's
10:53a problem with crypto in that it is tribal, not competitive, but tribal in the technologically
10:59imposed manner. Solana, Ethereum, these ecosystems, they all fight for each other's liquidity.
11:03Within the ecosystem, it's a zero sum game. However, all these different technologies outside of just
11:09money, if they could collaborate, cooperate, speak seamlessly in a native manner, right?
11:15Without needing to have, uh, um, just user friction to, to, to interact between chains,
11:21it would be a, uh, it could be exploited to the next level. So wire network is a,
11:27an abstraction, unsellable, unsexy math formula that I quite frankly don't fully understand,
11:33but I do understand what the outcome is. I don't understand the underlying if I pop the hood,
11:38but the outcome is this native trustless interoperable infrastructure by which you can buy
11:44fart coin with Bitcoin in one shot without having to go, look, if I want mix, I live in Mexico. If I
11:49want to buy the Canadian dollar, I got to take two hops. There is no Canadian, like there's no CAD,
11:54MXN pair. I got to go CAD. I got to go MXN, USD, USD to CAD, right? This technology in blockchain,
12:01not only allows you to do it in one hop, it allows the actual communication between these things
12:05natively and trustless, like I said, without, without a risk and attack vector. So that's the
12:09thing about wire. And the reason why that's relevant to me, I'll use GameStop since, uh, you know,
12:14I guess wall street bets and, and, and, and this is, uh, you know, some of what I'm known for
12:18GameStop, it was a moment that I won't rehash, but these, the, um, the, the, the, the motto,
12:25the thesis that the, the, the overall feeling was together strong. We all get together,
12:29we can get something accomplished. But now let's take it to crypto. If you go to crypto,
12:33you'll see that if, if I tweet by the GameStop meme coin, not tokenized stocks or synthetic
12:38anything, the pump supply and demand and whatever it might be, I will have 18 communities that get
12:43angry at me because I didn't specify whether it was Solana or Ethereum or base. I'm like,
12:47you guys picked the wrong meme to fight over. You understand together strong means you're actually
12:52going to be better if you're on the same team. Wire network allows these guys to all hold hands
12:57together, pull whatever money they have in whatever it is. They don't have to switch money
13:02to something new. They don't have to mint on a different layer. They get to keep it on whatever
13:06it is and whatever monetary value it's assigned, they can now all of a sudden be together strong.
13:11So wire network permits that technology to happen. And that all of a sudden opens the gates for a lot
13:17of really ambitious things that I'm looking forward to doing involving the, uh, what do we call it?
13:23Like an upgrade to WallStreetBets, right? So there is, there is a lot of changes over the past five
13:28years and obviously crypto is a big change. I'm sure it's being felt everywhere. If I could say
13:34WallStreetBets 3.0, right? I would almost imply that it's strictly crypto. So I'll stick away from
13:40that one, but it's about to get a facelift whereby it's relevant and is able to spot tremendous amount of
13:46arbitrage opportunity, expand outside of WallStreet, right? WallStreet reminds us that it was called
13:52WallStreet because it used to have a wall to keep, I forget the settlers or whatever. This was
13:57exclusive to America. This is now a worldwide economy. WallStreet should turn into everybody
14:04from around the world. Crypto permits that. And therefore the size and the ability to collaborate,
14:12to communicate, to, uh, corroborate, to transact is just, I, I, I, I, I struggle to envision the
14:21possibilities, but I'm going to set up the sandbox and we're going to see what happens.
14:24Oh, we're all looking forward to it. Jamie, I kept a lot of your time here today. Welcome
14:28back to New York. It's great to talk with you as always. Thanks for being here.
14:30Thanks for being here. Appreciate it.
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