Jordan Belfort, the infamous stockbroker who inspired the hit 2013 film “The Wolf of Wall Street”, is hosting a new documentary for the Discovery + streaming service about the wild rise and fall of GameStop’s stock.
Discovery took notice when Belfert’s weight surfaced as the GameStop saga, telling news outlets that the “little man” could “play the same game” as the overlord of Wall Street. He also posted a video on YouTube in which he recreated a scene from Martin Scorsese’s Oscar-nominated “Wolf of Wall Street”, based on his 2007 memoir of the same name.
Belfort recently sat down with The Post to talk about meme stocks, how the Reddit rally was held and what investors should do now.
New York Post: You tweeted the video, which was very similar to the speech “The Wolf of Wall Street”, and it seemed that WalvetBets was urging people to hold on to their investment. How would you compare the Reddit crowd to merchants at your old firm, Stratton Oakmont?
Jordan Belfort: So that, that video was a joke. It was a funny thing. And just to be clear, I never invested in GameTop because I felt that if I put that kind of video, I’m investing, people might say I’m trying to do something. The comparisons are interesting as to what happened in Stratton because in some cases when I first saw the whole thing, I thought, oh, it’s like a pump and dump, right? I mean, it seemed very clear to me when it first started. But when I started digging into it, [I saw] They are not dumping. There is no dump on the pump. This is an oddity in the sense that it is a really strong emotional attachment to the stock and that they are actually ultra long-term players, and for many of them, it is not even about making money as much as making a point. I think they also want to make money. But this is very interesting. I have never seen anything like this before.
NYP: Why are hedge funds in panic now?
JB: Panic is not the right word, perhaps a scratch on their head. Some of them were probably nervous at the time that they were on the wrong side of it. This is because there is a fixed set of rules, such as how stocks operate. One of the most basic rules of all is that fundamentally matters fundamentally. At any given time, the stock can be very high or low and, like Warren Buffet, will use it as an opportunity. It is a value investment. This is the opposite of value investing. Now, it is like an investment, but it also has rules, and also when the stock flies away, it has to come back because people are about to get bail.
When your Uber driver is telling you that he is investing in the gametop and your haircut, you think it’s okay, it’s been out for a very long time and it’s almost over. But with this particular paradigm, it is a bit different because these people are not really selling. There is an emotional attachment and nervousness is that there is an unfamiliarity. Now what are the rules of this game? It is a matter of concern that big firms now have this kind of stuff.
NYP: At the time you portrayed the rally as a revolution, but what are the dangers for amateur investors?
JB: My message to all was – good for you, but be careful. I have always said that history would say that it probably would not end well. A stock that has a book value, pick a number, $ 10 a share and is trading at 20 times, there is no reason to believe that apart from sentiment, it is probably not going to end well. I think if you’re playing in this game, it’s more like gambling than investing and you really, really need to be careful. A lot of things deteriorate from looking at things like bitcoin, so they have this false sense of security, that things can go up and if they go back, they will always go back again. But Bitcoin is not a stock. It is a very different animal. And what drives bitcoin and what maintains it and comes back has nothing to do with stocks. I think my biggest concern would be that if everyone thinks that this is the easiest way to get rich, then cheating everyone is putting their money. It can be very ugly.
NYP: Do you think apps like Robin Hood are dangerous for amateur investors?
JB: I think, like most things, they are good and bad. The danger with Robin Hood is that it makes investors feel like it is almost a video game. Charlie Munger – you know, Warren Buffett’s partner – said he felt it was the worst thing in the world. They said, like, there is no free trade, that they are selling your information and your workflow, and nothing is free in this world. The best thing about Robin Hood is that you can trade immediately without any commission and the worst thing is that you can trade immediately without any commission. You know, it can go either way. If you are not disciplined, you can become a mandatory gambler on the platform. I did not agree with what I did. The way I handled the whole thing, I thought it was silly. But I think the truth will come to light as to why they suspended their ability to buy it. It seemed a bit strange to me.
NYP: People are trapped in the house during the epidemic for doing nothing. Do you think the epidemic has created the perfect storm for the Reddit rally or is it a coincidence?
JB: You are hitting all the points here. There is one thing in this documentary, a funny scene that we do that I use different objects to see what happened. This is such a small, a pinch. It is a devilish cocktail. Some of the parts of the cocktail take a billion people in a long run, and you give them nothing to do and then you put a phone in their hand with an app and you gamify it . You have the reality of a social chat room. Now, you have stopped the anger in Wall Street institutions. This is the perfect storm for something like this to happen. In this case the spark was a small squeeze. But it is much more than that. It is a bunch of things together that have done this.
NYP: Do short sellers deserve the criticality they are getting from the Walvetbets group?
JB: I think the biggest myth here for the average person is that they are indistinguishable from short sales and these are hyper-aggressive short funds that are literally betting and trying to get companies out of business. .
When a person is small every day, it is a healthy part of the market and it conducts the market function more smoothly. I don’t think the market can go without short sales. It would make no sense. But this is very different from when a large hedge fund does in-depth research on something and it invests on a small scale to a large scale. Because the problem is that in contrast to the long side, it is really expensive to live and short, relatively speaking. Therefore it is not enough for a short seller of that magnitude to be correct. They have to be right at the right time. So we are also massively low. They will actively work to overcome the immediate decline of stock. They will place negative articles with journalists. They will try to launch an investigation to get their friends so that this rumor is found. And this is the ugly side of shortening. So it is a very different thing than the usual shorting that people think of.
NYP: What would you say to the average fraudulent investor?
JB: The one thing you leave on yourself and shame on you is that if you don’t do that, you become financially literate. One of the great things about the Internet is that all the information that you need to at least understand what you are buying, why things are going on, why things go down, it is out. I know this is not the most exciting reed but the information is out. Educate yourself and know what you are investing in, why things go up, why they go down.
I always say, learn Warren Buffet-style, like real value. You should have more money [invested] Compared to the high flying deal of the day, especially when you start growing up. It does not matter if you are in your 20s. You lose it you make it back. But it starts changing with your 30s, and you build a family. Losing all your money is never good but at least the results are not as serious. I think you should look at it this way. This is a very healthy way. I think a lot is good as long as it is not restrained with other research and diversification.