WALL STREET LOSSES! - The TRUTH Behind GameStop, WallStreetBets & Robinhood | Kevin O'Leary

Everybody had just completely discounted. Thought it didn't matter, and the Robin Hood investors, "Ah, we don't care about them; they're too young, they have no money." Well, that's not how it is. I can't stand the arrogance of sophisticated Wall Street investors. What a load of crap that is! Those guys just got blown up.

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Okay, going out for a cruise. Um, great time to talk about the economy. I'm on your bike; why not? But before I go into the sunshine here in Miami, I got to put on a little SPF. Listen, it's really important. I use the AM from Tiege Hanley. Why? Because it's SPF 20; keeps the dome from getting damaged. You don't want to damage the dome. The dome of desire has to stay in perfect shape, so a little AM SPF 20, that's what I'm talking about.

Um, very nice. Then, of course, safety first—got to put on the helmet here. Also, I'm a fashionista, so I want to look good. And then, of course, need some shades because we're in Miami, right? That's what I'm talking about.

All right, so, uh, you ready to cruise? All right, we're gonna take a cruise here. Let's go.

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You think of, you know, your basic company in America. Let's say 50% of its sales go through retail. I'm talking about consumer goods and services, which is about 65% of the economy. So, 50% go through retailers like Walmart, Target, Bed Bath & Beyond; that kind of thing. And then you got about another 40% going through Amazon. That's how big Amazon's becoming.

When you sell it through a retailer like Walmart, you make about 50 cents on the dollar. You sell it through Amazon, you do a little better; you make about 60 cents on the dollar. However, you don't have the benefit of getting the customer's name—that's the big thing about Amazon. And then most companies have 10% from their own websites to consumers.

Okay, you got that? Now, here's what happens. Retail shuts down last March. The companies that made it all did one thing very successfully. They basically went online. They set up their own website, so they standardized on Shopify. Then they standardized on DocuSign. Then maybe for security, they standardized on CrowdStrike.

Basically, they were using technologies like Wix.com to enhance their whole platform—their video, their product support, pictures, stories, animation, graphics, all that stuff. They were basically doing this because they wanted to entice people to buy direct from them. And those companies, they went up in value like crazy, even in the middle of a pandemic. Look at what happened to Zoom stock or Shopify stock. You get it? But they were empowering America to go digital; that's exactly what was occurring.

Now, think about it this way: Instead of selling something through Walmart or Target or Bed Bath & Beyond, where you made 50 cents in the dollar, you're now shifting your sales direct to consumer. Will you make a hundred cents on the dollar? So, people say to me, "Why is the market exploding? Why is it going up in value?"

Well, the market senses a new America—a digital 2.0 America; an America where it's very productive and where a lot of products are being sold direct to consumers at very high gross margins. That is something brand new, really new, and very interesting. And so it's not just small companies; big companies are doing the same thing.

Nike, 50% of its sales, direct consumer all around the world. This is a global phenomenon that's occurring. It's amazing what's happening. And as a result, we've accelerated the digitization of our economy. But while that was happening, something else was occurring that's incredibly cool too.

Social media kept getting more and more powerful—storytelling, more and more powerful; animation, graphics, video, you name it—became more and more important to any company who are trying to figure out how to tell their story. Something happened recently that really shocked everybody. You know, people keep talking about sophisticated investors on Wall Street; the little guy doesn't know what's going on. Not anymore.

Here's what happened: You know, the crowd, basically led by Reddit and Wall Street Bets, which everybody had just completely discounted thought it didn't matter. And the Robin Hood investors, "Ah, we don't care about them; they're too young, they have no money." Well, that's not how it is.

They ganged up and went after hedge funds who had done big short bets on companies like Start Engine and AMC and American Airlines. And guess what? They became the new force on Wall Street. The little guy crushed the hedge funds. It forced them to lose billions of dollars on their balance sheets as they were caught with their pants down, as all these tiny players were mashed together like a flock of swallows and became really powerful.

Now, who's the sophisticated investor on Wall Street? It's the little guy. And now, if you're a guy that's shorting stocks or a hedge fund manager, think you're so sophisticated and using all the AI technology and black boxes and algorithms and all that crap, if you get targeted, you get screwed. And that's what's happening.

The crowd roams at night looking for opportunities in the markets and strikes in the morning. And you see it happen every day, and it's a new force that's not going away. It's power to the people, baby, and I love it. I think it really democratizes the market. You know what I really, really like about it more than anything else? Financial literacy.

It used to be—and you know we've got 100 million Americans that do not have anything put aside for their retirement because they were never taught how to do that in high school. And everybody's saying, "Well, you know, we teach them sex education, geography, math, reading." Yeah, we do all that, but why don't we teach some financial literacy?

Well, along comes Robinhood, a platform where you can have 200 bucks and invest it and start to learn the ways of the market and how to put money aside and how to invest and how to buy a stock and how to sell one. That's financial literacy, and millions and millions and millions of people started opening those accounts. And Wall Street never cared about them because they didn't want an account with 200 bucks in it; they couldn't make any money off you. They want a hundred thousand, two hundred thousand minimum.

Well, Robinhood said, "Hey, for everybody else, we're your platform." And bingo! It becomes a massive force in the market. Incredible! Also, very good. So in a matter of just 36 months, 16 million plus accounts with power to change the market direction. Do I love this stuff? Oh yeah, I totally love it!

I can't stand the arrogance of sophisticated Wall Street investors. What a load of crap that is! Those guys just got blown up by who? Twenty-five year olds! How cool is that? You gotta just love that.

So what's really going on is the democratization of the entire global stock market. You know, and the way to really make this fair for everybody, big or small, is total transparency. If you're short the stock, and maybe make the rule 5% of the float, you gotta post it. And then everybody that's cruising around looking for you is gonna find you.

It'll make you think twice before doing that, good or bad; it's transparent. That's what matters. But the power of the little guy now has been proven. And the way you prove power on Wall Street is money. When you force a firm to lose billions of dollars, you've got power, baby! That's exactly what you've got. And that's exactly what happened. Millions of small guys ganged up on the big guys and wiped them out.

I still get a kick out of it; I think it's just fantastic. This is really the power of social media and why we should protect it. It just shows you: It gives power to everybody. It's democracy; it's a voice; it's a chance to shine, even if you're a single candle. That's what the whole deal is about. And together, it's a bright light. That's the whole deal right there.

Let me give you some investing tips I've learned over a long period of time. It's very simple. You know what happens in the market when you get a crazy week like last week, when the market goes up 10%, down 10%? You never know when that's going to happen. So you have to stay invested all the time. Because last year, during the crazy pandemic period, the majority of the returns came in just 19 days. You just didn't know which 19.

So if you're trying to time the market by buying and selling in the ups and downs, it's really hard to make dough. Really hard. There's nothing wrong with day trading; that's fun. But you gotta take a portion of your profits and put them aside.

And I was involved in an app called Beanstocks to help people do that. It's not day trading; it's long-term investing. But listen, you've got to take a little powder, keep it dry. You take 10% of your profits every time you trade, stick it into Beanstocks. Download it, check it out. I tell all the day traders, "You guys have power, but you've got to take care of yourself long-term. Take 10% of your winnings, park them aside for yourself; let it grow in the market over the time."

Between now and 40 years from now, when you retire, you’ll have over a million bucks if you just park a hundred dollars aside each week. Most day traders can handle that. If you liked that video, where did you see my next one? Don't forget to click right over here and subscribe.