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#Wallstreetbets#GameStop (#GME stock) and AMC stock short squeezes being halted on #Robinhood is a generational #stockmarket story and #Chamath Palihapitiya has a lot to say about it. Actually, so does #JimCramer from #MadMoney on CNBC. Jim #Cramer also shares his insights on market mechanics and past market manipulations. Let's see what shakes out!
This is Ticker Symbol: You, the channel that invests in you. In this episode, we're going to find out who's really behind the whole GameStop short squeeze.
The only thing I'm concerned about is that there are inevitably going to be people who get hurt. Not I'm not talking about hedge fund managers. I'm not talking about them. I'm talking about the people who follow people into the trade who think that this stock is going to continue to go up because that's what they've been conditioned to think when the pandemic we do because all stocks go up, apparently.
Wow. It sounds like CNBC really cares about us. Thank goodness we have such a big channel looking out for the little guys.
Idea dinners. That concept has existed for decades on Wall Street, where people get together in closed rooms, behind closed doors and usher around names of companies and they coalesce and decide to cooperate together. The guys on Wall Street Bets just do it in the public, completely transparent, in my opinion, that takes a lot more courage.
Wait a minute. So people from multiple hedge funds would get together behind closed doors and have fancy dinners while discussing which stocks they would collectively invest billions of dollars in together. Seems legit, but somebody from retail is going to eventually be the, to use your words, bag holder in this situation, are they not? And do you think it's it's responsible for you and some other big names who tweeted about it yesterday and to get involved yourself, knowing that you guys are considered the pied pipers, that people are going to follow you into these trades and someone is ultimately going to get hurt after you and others are long gone.
Yeah Chamath! How can you and Elon Musk be so irresponsible? Now, let me say that I actually really like most of Scott Wapner's interviews on CNBC, he makes a lot of good points most of the time, and he's not afraid to dig his heels in when he thinks there's a serious conversation to be had. But one thing's been bugging me lately. Why do so many smart and influential youtubers say such bad things about CNBC? After all, they're just trying to protect us, aren't they?
For example, here's what Gali over at Hyper Change has to say about his experience behind the scenes as a guest on CNBC. He said this on his most recent live stream when talking about this GameStop short squeeze.
CNBC, like just to give you a little insight, I've gone on it twice. I've been invited. This is like the fifth time because they invite you. And I've even gotten to the floor of the Wall Street Stock Exchange like a couple of years ago.
They invite you and then it's like, oh, Tesla stock's going up right now. Like, it's not going to get many clicks to have you on the show. Like, they only want me looking like a new when Tesla is down as much as possible to get on the show. And then I'm like, this guy is like, you know, I got my notes, like, I've got my own. But to the stock exchange, like in the middle of the day, got dressed up like I'm ready to do it, told on my homies to get in and like two seconds before I go on the show, they're like, bro, like Tesla stock's not down enough to make this a good click.
So you're out. And it's like literally the entire script of CNBC is what will get the most clicks based on the most wowed stop. It has nothing to do with the best news, nothing to do with who's actually putting out good analysis. It's literally click bait. Gali Russell is an informed retail investor who has really great interviews of his own with great guests on his show, and he offers good deep dives into disruptive stocks like Tesla and other great innovators.
That doesn't make any sense. Why is he so against CNBC? They're both just trying to protect us from losing money. What's the deal?
Actually, I'm a bit dismissive of this. I'm not dismissive of the populist movement or this and that or whatever.
I love how he says I'm not dismissive of this movement or whatever. I don't think he could have been any more dismissive if he tried.
But it's just going to be a moment. We're going to move on. We're not going to be thinking about this a whole heck of a lot. I suspect there's going to be some regulation. I suspect there's been dramatic collusion.
There we go. At least he's willing to admit that there's serious collusion going on behind the scenes between all of these big hedge funds, just like Chamath was saying when he was talking about those idea dinners. See, CNBC is exposing the real bad guys here.
And I think that if this discordant thing could just be the start, you know, Reddit CEO is going to be on, I think, Squawk and friends tomorrow morning. Let's see what happens. You know, if there's some sort of collusion that's detected by the FCC or something and they shut down Wall Street Bets.
Wait, what? Wall Street bets? I thought we were talking about billion dollar hedge fund managers getting together behind closed doors and figuring out how to collectively move the market in their favor.
Where do you think GameStop would go if they shut down Wall Street Bets? It would go right back to twenty bucks or so because the game is up at that point. You know, so to me, this is no different than what we've seen in a lot of different parts of social media being manipulated, disinformation being weaponized. That's what's happened.
This information being weaponized? I bet that's going to get CNBC a lot of clicks.
And the next time you see somebody appear on CNBS. And by the way, guys, for the few of you haven't figured it out already, that's where the name comes from. It's not a slip of the tongue. You'll understand that maybe they have ulterior motives. Maybe the information they're presenting their thesis isn't, in fact, based in reality, it's based in a need or desire to move the stock price one way or the other. Case in point, Gordon Johnson, nobody on Earth could possibly be that short on gray matter and have a legitimate price target on Tesla's stock of like eighty seven dollars in today's (…) Nobody's that dumb.
However, if somebody maybe has a short position and will benefit enormously financially, maybe they'll feel comfortable to go out on TV and make a fool of themselves and self immolate regurgitating garbage being mocked on YouTube by people like me because they don't care if they look like a moron or sound like one. As long as the stock moves in the way they need it to move, they'll make money.
I feel it's my job as a content creator to provide you information through the best sources that I can find and then add context and value where I can with my personal opinion. So how do I reconcile the fact that one half of my sources, these excellent YouTube content creators, feel so negatively about the other half of my sources? CNBC and which side should we listen to? Thank goodness I know who we can have clear all of this up.
Here's Jim Cramer on his latest episode of Mad Money.
My mission is simple: to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Cramer. Welcome to Mad Money, I don't make friends. I'm just trying to help you make some money. My job is not just to entertain, but to educate and put in context.
His mission is simple: to make you money. He's here to level the playing field for all investors. There's always a bull market somewhere and he promises to help you find it. Welcome to Cramerica. He's just trying to help you make some money. His job is not just to entertain, but to educate and put things in context. Wow. I'm sure glad he's on our side. In case you didn't know, a long time ago, Jim Cramer managed his own hedge fund called Cramer and Co.
later renamed Cramer and Berkowitz. He's also the co-founder of TheStreet.com, a widely influential publication about the stock market. And now, of course, he's the host of Mad Money on CNBC. I think it's awesome that CNBC has such an accomplished champion looking out for the little guys.
No one cared who I was until I put on the mask.
If I pull that off, then you die?
It would be extremely painful.
You're a big guy.
Welcome to Wall Street Confidential. I'm Aaron Task, joined again by Jim Cramer. Jim, welcome. Good to see you. Thanks for being here. The economic data out today. I want to talk about something else first. Again, today, we have the misdirection from the futures, the futures pointing up market.
And as of right now, stocks are down again. Is this just because it's the holiday period that we're seeing?
You know, a lot of times when I was short at my hedge fund and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn't take much money. Similarly, if or if I were long and I would want to make things a little bit rosy, I would go in and take a bunch of stocks and make sure that they are higher and maybe commit five million in capital to do it.
And I could affect it. What you're seeing now is maybe it probably is bigger market now, maybe 10 million in capital to knock the stuff down. But it's a fun game and it's a lucrative game and you can move it up and then fade it. That's what often creates a very negative feel. So let's say you take a longer term view intraday and you say, listen, I'm going to boost the futures and then when the real sellers come in, real market comes in, they're going to knock it down.
That's going to create a negative, negative view. That's a strategy very worth doing when you're valued on a day to day basis. And I would encourage anyone who's in the hedge fund game to do it because it's legal and it is a very quick way to make money and very satisfying. By the way, no one else in the world would ever admit that, but I do care.
That's right. And you can say that here.
I can't I'm not going to say it on TV.
Well, I don't really know. There's so many more hedge funds today than when you were managing your head. Right. Do you think that that does that exacerbate the moves or does it make…
Well, the hedge funds are positioned long, short, OK, not just long with mutual funds. So it's really vital these next six days because of your payday, you've really got to control the market. You can't let it lift when you get a Research In Motion. It's really important to use a lot of your firepower to knock that down because it's the fulcrum of the market today. So let's say our I was sure what I would do is I would hit a lot of guys with RIM.
Now, you can't foment that's a violation. You can't foment you can't create yourself an impression that the stock's down, but you do it anyway because the SEC understand it. So, I mean, that's the only sense that I would say that's illegal. But a hedge fund that's not up a lot really has to do a lot now to save itself. So this is different from what I was talking about at the beginning where I would be buying the Qs and stuff.
This is actually just completely illegal.
So what Jim Cramer is talking about there is being a hedge fund manager at the end of the fiscal quarter and at the end of the fiscal year and needing to move the market to meet his performance goals in the next six days, which is the last six days of 2006 when this interview is taking place.
This is actually just blatantly illegal. But when you have six days and your company may be in doubt because you're down, I think it's really important to foment. If I were one of these guys from an impression that Research In Motion isn't any good because Research In Motion is the key. So, you know, you would you would hit this guy and that guy when you would see an offering. When you see a guy's bidding, he'd wipe out that guy very quickly.
The what I used to do was called if I wanted to go higher, I would taking, taking, taking bid. And if I wanted to go or I hit and offer, hit and offer, hit and offer. And I could get a stock like RIM for maybe that might cost me fifteen, twenty million any to knock RIM down. But it would be fabulous because it would beleaguer all the moron longs who are also keen on Research In Motion.
So I would start today with what we're seeing. That's you know, again, when your company's in in survival mode, it's really important to defeat Research in Motion and get the pazhanis to the world. People talking about it as if there's something wrong with RIM. Then you call the journal and you get the Bozo report and Research In Motion and you would feed that palm's got a killer. It's going to give away. These are all the things you must do on a day like today.
And if you're not doing it, maybe you should be in the game.
So Cramer is basically saying that you need to get RIM, Research in Motion, which is the company that makes Blackberries to move the way you want it to at the end of the quarter so you can buy low and meet your performance goals, even if the ways to do it are illegal. And if you're not OK with that as a hedge fund manager, maybe you shouldn't be in this game in the first place.
Another stock that a lot of people are focused on right now seems to be Apple.
Yeah, Apple is very important to spread the rumor that both Verizon and Bell and ATT decided they don't like the phone. It's very easy one to do because it's also you want to spread the rumor that it's not going to be ready for Macworld. And this is very easy because the people who write about Apple want that story. And you can claim that it's credible because you spoke to someone at Apple because Apple is and doesn't. Right.
They're not going to comment.
And so it's really an ideal short. And I would again, if I were short Apple, I would be working very hard today to get that in the way. You would do that. I should pick up the phone. You call six trading desk and say, listen, I just got off the phone with my contact in Verizon. The reason he has already said was we're not we're a lucky dog house, we're Samsung house, we're Motorola's. There's no room for Apple.
They want too much. We're not going to let them in. This is not we're not going to let them do what they did to music. And, you know, I think that's a very effective way to keep a stock. Right. I might also, by the way, because the stock at 80, 40, a little bit of capley go back in January 80 puts. That makes it look like there's going to be something going on.
So maybe, you know, give Morgan an order to buy a thousand puts and you go position limit with you know use a head firm that doesn't know what that could still maybe go to UBS for puts and you just kind of create an image that there's going to be news next week and that's going to frighten everybody. Then they will go out and say let's put by UBS, then they call Pazhani and you have to use those guys and say, listen, you know, I see a big buyer puts it.
I'm told that it's like it's S.A.C.. You would do that, too. And these are all of what's really going on under the market that you don't see.
Nobody else talks about.
What's important when you're in that hedge fund mode is to not do anything remotely truthful because the truth is so against your view.
That it's important to create a new truth, to develop a fiction.
Why don't we listen to that again?
And these are all of what's really going on under the market that you don't see.
Nobody else talks about.
What's important when you're in that hedge fund mode is to not do anything remotely truthful because the truth is so against your view.
That it's important to create a new truth, to develop a fiction. And the fiction is developed by almost anybody who's down like two percent, up six percent here. You can't take any chances. You can't have the market up any more than it is if you're up six, because starting Jan 2, you'll have all your money come out.
So what would you do if you're in that situation and you feel like you're desperate, is that you would do these actions?
So you're talking about the mechanics of the market.
Mechanics of the market is so much more important than the fundamentals.
So you're talking about the mechanics of the market.
So much more important than fundamentals.
OK, well, but in terms of the fundamentals, even writing about how you feel…
Who cares about the fundamentals? Research in Motion just blew out the quarter. But look what people can do. I mean, that's a fabulous thing. It's a great thing about the market. This has nothing to do with the actual stocks. Right.
Now, look, over maybe two weeks from now, the buyers will come to their senses and realize that everything that they heard was a lie. But then again, Fannie Mae lied about their earnings for six billion dollars. So it's just an fiction infection. And I think it's important for people to recognize that the way that the market really works is to is to have that nexus of hit the brokerage houses with a series of orders that can push it down, then leak it to the press and then get it on CNBC. That's also very important.
The way that the market really works is by mechanics and the underlying stocks don't matter, the things you need to do all happen behind the scenes and the best thing you can do is strike fear when you want it, greed when you want it, and make sure that you get your story on CNBC.
And then you have a kind of a vicious cycle down. It's a pretty good game and it can be played. You pay four percent or two.
Right. And then you get long before Macworld in the expectation that the person is going to be all right.
And then you go about you to use the other side.
You know, there's a case where I would say the January 80 puts can be justified because after I've got the stock down, you can buy a lot of common and then play it right into Macworld, where they'll probably introduce the iPhone and Verizon is going to take it.
OK, well, maybe the fundamentals don't matter, but let's talk about the fact.
What Wall Street Confidential is. Yes. Is is not giving you the party line. Oh, here's the bottom line, by the way, the I spoke to Apple, the phone. I hear the phones are good and Verizon might take it. As a matter of fact, the Research In Motion sellers, they I don't think they know what they're talking about, you know, but even when the cell market, cell phone market you think is available in the form of the cell phone market, frankly, is is that these guys are killing each other.
You know, someone has to take a dive, Motorola, Nokia, have to get in a room and just fix price. They've been reluctant to do that because of the various Justice departments and because they…
And it's illegal, right?
Well, that hasn't stopped a lot of other companies. This is true. This seems to be a case where they seem to be directly worried about the authorities. It's almost as if they have a lawyer that matters, unlike, say, the Bristol-Myers lawyers. And, you know, what eventually happens is the shareholders demand that you get phony lawyers and you sit in the room and they'll help you soon.
Real quick. The Fed the numbers out today weaker than expected.
So the Fed has obviously got to cut. But again, you call you call the various guys who cover the bonds and you say to ignore the bond action. What's really happened is the Fed is very frightened about managing up the number that they're really frightened about. The Fed is actually desperate to try to figure out how quickly they have to cut without looking like dopes that they that they raise
Because they've been talking about they're worried about inflation.
You don't want to you don't want to raise in May and then cut and in January like Mexico, for heaven's sake.
I mean, this is like a distinguished group of people who went to really good schools.
These are smart guys, but they don't want to look like dopes.
But when we were talking earlier the week, you said you think it would be some sort of crisis, possibly Ford being a trigger.
Well, you know, Ford went and did all that. You know, they pledged all this investment banking to all these guys. So now that they're very reluctant to say negative things, it makes it much tougher for the Ford story to play out. I mean, the amount of business that Ford has to do for me be the big client of 2007. So if I were in the corporate finance room, I would say, listen to the research guy.
I said, listen, you know, I spoke with Mulally. I actually have the inside. The plan works. So then you're the research guy and say, oh man, what do I do. It's bonus time. I'm not going to be a total idiot. Spitzer's going to Albany. Let's get back in the game.
I think that's important.
Is it possible? Because a year ago at this time, a lot of people are saying GM's about to go bankrupt. And of course, the stock's up 50 percent.
Well, they're out there for GM. The difference between Ford and GM was the balance sheet was never really turned up. Wasn't that bad? Ford balance sheet's pathetic. And you know that because they're willing to screw over the common for the bonds. That's kind of if it weren't Ford, if this were Quokka, we'd be saying I was desperate, you know, but no, it's Ford, but it's an American.
I like Ford. You know, I owned a Ford once.
And this is our country.
Well, that's right.
And Jim Cramer.
Again, you know what I'm trying to go for in the Wall Street confidential. And I'm not saying you're send me I have to talk about what it's like at my hedge fund, OK, because and what other hedge funds do, because the difference is, is that if this is an intraday show and you need to know what's going what I know is going on,
This is an intraday show and you need to know what's going on. It's not about the fundamentals of each stock. It's about the stories that get made at these idea dinners and get passed around from hedge fund to hedge fund behind the scenes, driving up and down prices when people with big wallets want to buy a lot.
No, we step back. Research In Motion was a real blowout quarter. It was a really good quarter and I was quite surprised how strong the margins were. It looks like the other guys have really dropped out. It's a terrific story. Should it be up six? Yeah, I think so. But, you know, look where we are. It's Friday. You got five more days to make your quarter. Can you really risk having RIM up this much?
I don't think you can.
OK, and they're not. And if I'm correct, you're off next week.
Yes, I am.
And I'm as well. So we'll be back in 2007.
I'm hoping that we get that we finish the year at twelve sixty because that's at twelve thousand four hundred and sixty. Because that's what I said at the beginning. There was no yesterday we came in and we were twenty points away from where I predicted, you know, I want to nail it.
Do you have a forecast for 2007?
Yeah, but I'm not going to come back. It's over a series of five days and people have to go.
Check it out on money.com. And Jim, thanks very much for being here. I'm Aaron Task. Stay tuned for more of the street.comTV. Don't miss a second of Mad Money, follow @jimcramer on Twitter, have a question, tweet Cramer, #madtweets, send Jim an email to [email protected] or give us a call at 1-800-743-CNBC.
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