🎙 "Wall Street Bets Taught Me to Have Faith in the Collective Intelligence:" WSB Founder Jaime Rogozinski

In this week’s episode, I interview Jaime Rogozinski, founder of Wall Street Bets, the famous Reddit trading group which earlier this year organized to push up the price of heavily shorted stocks like Gamestop and AMC to create a short squeeze, which had the double benefit of amplifying the group’s gains and screwing over big hedge funds. Jaime goes over what led him to create the subreddit back in 2012 and how it grew into several thousands and then millions of members.

He also talked about the rift that happened between him and other moderators, which ultimately forced Jaime to leave the group last year, before the whole Gamestop frenzy happened. It was surreal for him to watch how the group he created and helped grow was suddenly all over the news and moving markets. Out of all the mixed emotions he felt, pride was the strongest, he said.

He started Wall Street Bets to make money, but also because he believed the financial system was broken and so-called retail traders should have a chance against the big guys. A lot of those sentiments mirror ideals that fuel the cryptocurrency community and so it’s only natural that after his exit from Wall Street Bets, he has found his way into crypto.

Jaime has again started a group, but this time it’s a token-based DAO. This new group, called Wall Street Bets Dapp, also revolves around trading, but it will trade tokenized stocks and funds. Still, he says, he learned from the original Wall Street Bets that the community will know what’s best, so he plans to get out of the way and let it happen.

The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau.

🎙Listen to the interview in this week’s podcast episode here:

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Jaime Rogozinski: So I started Wall Street Bets in 2012. At the time I was really looking for a place to put my disposable income. So I was looking for higher risk, higher return type investments or trades or gambles or whatever we want to call it. And I did have my traditional Roth IRA retirement plan, but I also wanted to see if I could accelerate that at all. And so then I started looking online, looking for places to talk about these higher risks and I couldn't find them. So I just created Wall Street Bets.

“...so then I started looking online, looking for places to talk about these higher risks and I couldn't find them. So I just created Wall Street Bets.”

Camila Russo: And were you a full-time investor or was your full-time job something completely different?

JR: No, no, I was a complete novice. Like I knew what stocks were and I understood the concept behind them, and I'd already dabbled in them a little bit, back in the day when I first bought stocks in the early 2000s, it was super expensive. I had to go through my bank and pay like $30 to buy and then $30 to sell. And it was a real laborious effort. But I am a really hands-on learner, so I figured, well, I see a lot of people talking about the stock market. You know, the stocks had just finished their crash from 2008, 2009. And I couldn't help myself but thinking, well, that would have been a really good time to buy, they're going back up, and why not get involved with this and figure it out.

So I was really looking to learn, and I was hoping to find other people that were willing to be in my shoes and learn with me and people that were willing to come and teach. I had been in finance at the time. I was working at the Inter-American Development Bank, working in risk management of all things. So I had experience in finance, but I came to learn that the things that you learn about finance in school, or at a bank or whatever doesn't really have anything to do with the stock market. It can, right? If you want to go in and do a fundamental valuation of a company, if you want to do all these math things you can.

“...I had experience in finance, but I came to learn that the things that you learn about finance in school, or at a bank or whatever doesn't really have anything to do with the stock market.”

But you're also able to just look at a chart or find a stock that you like and just buy it, you know, it's as much, or as little as you want to put into it. You have these crazy fluctuations that happen in the stock market sometimes for no reason, sometimes for an irrelevant reason, sometimes for a relevant, but indirect reason and it has nothing to do with this company's discounted cash flow analysis, right. It has to do with a tweet from Donald Trump. That's when you start realizing that formal experience in finance doesn't have to be relevant to the stock market.

Frontrunning Economists

CR: And isn't it also a bit about just having fun and gambling? Some of it is just that, right? Because if you want to be a hundred percent rational, I think the recommended route is to put your money in an ETF with an exposure to the S&P or a few other index funds and just buy and hold. There's so much evidence that points to stock pickers rarely beating the overall market. But I think all of the millions of people trading on Robinhood and joining these subreddits, they're looking to just have fun and, and be a part of a community, right? There's something else besides just purely investing.

…

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