Jaime Rogozinski: Why WallStreetBets Took Off

"I keep my money in crypto. It’s easier to store money there," says WSB's co-founder. Rogozinski will appear at CoinDesk's Consensus festival in June.

AccessTimeIconApr 28, 2022 at 4:32 p.m. UTC
Updated Apr 28, 2022 at 4:34 p.m. UTC
Layer 2

Jeff Wilser is the author of 7 books including Alexander Hamilton's Guide to Life, The Book of Joe: The Life, Wit, and (Sometimes Accidental) Wisdom of Joe Biden, and an Amazon Best Book of the Month in both Non-Fiction and Humor.

The man who founded WallStreetBets, Jaime Rogozinski, didn’t love trading stocks. At least not at first. In the mid-2000s, as a side hustle, Rogozinski could afford to plunk around $1,000 in shares of Google. It cost him a $30 commission to buy and a $30 commission to sell, meaning that fees gobbled up 6% of the trade. “I’m like, wow, this sucks,” says Rogozinski. “Clearly, it works if you have a ton of money but it doesn’t work if you have $1,000 bucks.”

This article is part of Road to Consensus, a series highlighting speakers and the big ideas they will discuss at Consensus 2022, CoinDesk's festival of the year June 9-12 in Austin, Texas. Learn more.

So he toyed with different trading strategies. A sample trade: In a low-probability bet, Rogozinski might go short on Microsoft (MSFT), risking $100 in the hopes of winning $1,000. These usually lost. But one day he shorted Microsoft, went to lunch, came back to his desk and saw that he won $2,000. “I was like, Oh [crap], I made a lot of money. What the hell?” It turns out that somebody had hacked the Twitter account for the Associated Press and sent out a false news story (literally fake news) that then-President Barack Obama was bombed in the White House. The markets tanked. Rogozinski’s Microsoft short – by pure chance – was a home run.

“Holy crap,” he thought at the time. Suddenly, his perspective changed. The traditional way of looking at stocks by “fundamentals” (such as profits and costs and revenue) seemed far less important – at least in the short term – than random events like a Twitter hack. How could he exploit this insight?

Rogozinski tried to find an online community where people talked about this kind of stuff. He couldn’t find one. So he went to Reddit and created WallStreetBets, choosing a name that acknowledged and even celebrated the risk. He was sick of everyone saying Wall Street is just like a casino and you shouldn’t trade stocks because it’s just like gambling. “Let’s go ahead and call it what it is,” Rogozinski says. “Let’s wear that on our sleeves.” The very name, in a sense, inoculates the forum: The aggressive risk is right there in the title. Caveat emptor.

Enter the era of “yolo trades,” trash talking and eventually, of course, the wild frenzy of GameStop (GME) and AMC (AMC) and a retail trading army that would cost hedge funds $1 billion a day. “It was a screwed-up system,” says Rogozinski, who viewed the forum as a way to stick up for the little guy.

Rogozinski left WallStreetBets in 2020 after a spat with moderators from spin-off chat rooms (“there were a handful of mods who were straight up white supremacists,” he told the Wall Street Journal), but now, from his home in Mexico City – where he lives with his wife and two young kids – he’s still railing against the machine. Rogozinski created a cheeky new fund to mimic House of Representatives Speaker Nancy Pelosi’s investments. He envisions creating a massive in-stadium event for the “eSports of day trading.” He happily doles out advice for newbie traders (“go out there and lose money”). And he explains why, even though he doesn’t use it for trading, “I keep my money in crypto.”

This interview has been condensed and lightly edited for clarity.

Let’s start with the early days. Why do you think WallStreetBets took off?

It turns out tons of people were in the same shoes that I was. A mindset of, “Hey, I got a job. I can take risks. Let's learn how to make money." And it created an outlet for the professional traders who had no outlet. They could come and literally just have fun and hang out.

These guys have cracked the market, to some extent, but they're still staring at their screen all day long and they're bored, and it's lonely. I then came to learn that if you're having fun while trading professionally, you're not doing it right. It's not meant to be fun.

Wait, I can’t tell if you’re joking or being serious? So trading shouldn’t be fun? Is the idea that you should be methodical like a robot, saying, “Here are my rules. Here are my parameters. Execute. Buy. Sell.”

That's exactly right. And all the people that fail typically fail not because of their game plan, but because of their inability to execute on that game plan. They'll change the game plan halfway through, for whatever reason, and emotions get in the way.

Advice for new traders?

Go out there and lose money. Like, go out there and trade. Just do stuff, click it. Don't worry about it. One of the things you’re going to learn is how to insulate yourself from the emotions. And sometimes the emotions of making a lot of money is just as, if not more, dangerous than losing money.

How so?

A lot of people – including myself, when I started – kind of get this high, right? Like you’re the king of the world. You win so much money that now you can afford to take more risk. You think, “It’s the house's money,” so you start getting reckless and you start chipping away at those profits.

And even if you just chip away at the profits, that's already bad because you’re screwing with your financial model. [The model depends on the profits of the winners offsetting the losses of the losers, so if you lose that profit the model no longer works.] Or in the worst-case scenario, you end up going on tilt. You just go crazy and you get desperate and you lose it all. So now you took your big win and wasted it, which means now you need to go and play catch-up, which is a really bad cycle.

SingleQuoteSingleQuote
The very name, in a sense, inoculates the forum: the aggressive risk is right there in the title.
SingleQuoteSingleQuote

What were some of the early trading strategies in the forum?

There was a news trader who would pay $20,000 a month to have, like, the newswire come to him before it actually appears in the news. And he had a bracelet that would alert him. So he'd run to his computer when there was breaking news, and he’d have 10 seconds to place some crazy trade. And he would just make stupid amounts of money. Occasionally, he’d put this little bot in our chat room so that we could see him. But it’s not as easy as it looks because having the news beforehand still requires a lot of thinking at break-neck speed.

What’s your trading like now? I know you can’t spill your secrets, but how would you describe your style, in general terms?

I don't have some super crazy secret to this thing. But the genre is technical analysis. I look at charts. I look at the prices. And occasionally, I'll draw a line and there. But I've learned to read the market based off of technical analysis.

What stocks or instruments do you trade?

Almost always I do it with Nasdaq futures. Sometimes I'll do SPY [the SPDR S&P 500 exchange-traded fund], but Nasdaq's a bit more volatile. And then, where there's money-making opportunities, I’ll trade with gold or with oil. And I dabble in [foreign exchange]. Forex is fun.

Got it. What can you tell us about your idea for an “eSports” version of trading?

It was this thing where I would rent out a stadium, and fill the stadium with people. And I'll have 10 contestants with computers. And we'll have traders like a Dave Portnoy [founder of Barstool Sports] and a Jim Cramer and a Morgan Stanley (MS) trader – and people from all walks of life and experience, and have a three-day “trade-off” with real money, live on the actual stock market.

It’d be a competition, where I’d pay the winner, like, a million-dollar prize. I’m giving them incentive for risk, which means you can get action, like with the World Series of Poker. This is high-stakes gambling in the stock market.

How does this not exist?!

At one point, I wanted to do it in Las Vegas. And you would have teams and competitions, like a sports event. And this is how you elicit change [to the financial trading systems]. It’s like, “We’re doing this because we can. And if you don’t like it, then fix it.”

That has always been my approach to Wall Street. It’s a screwed-up system. For years I was like, “This should be a really serious thing because it helps capitalism grow and companies can raise funds.” But it's gotten so far away from that. Let’s rein it back in by pushing it as extreme as we can, right? And then, people will have to change it.

What happened with the eSports thing?

By 2020, eventually I did get sponsors. And then the [whole] world closes down and coronavirus. But I’ve never let go of that dream. I’m going to do it. In fact, this is the reason why I wrote the book. [“WallStreetBets: How Boomers Made the World’s Biggest Casino for Millennials”]

I sucked at English class. Writing was not my thing. But I was so determined to make this thing [the esports tournament] happen that I’m like, what are the steps for me to accomplish this? And one of the steps was, “I need to present myself as the one that created WallStreetBets.” And I needed to present myself as a serious intellectual, not this clown that's doing these crazy things. I wanted to be a thought leader, someone serious. How do you do that? And I realize, you have to write a book. And I’m like, “Oh ..., all right.”

I have to say, a live, stadium-filled showcase of traders going head to head … as a trading nerd, I’d watch that.

I've never actually seen people trading live like that. And I've lived this for over a decade. And I've never had the opportunity to witness a trader either making or losing tons of money, in front of me, and see what he’s clicking on. Like, is he alt-tabbing to Twitter? Or is he just staring at stocks?

Where does crypto fit into your trading or investing?

Look, I keep my money in crypto. It’s easier to store money there. Moving money from the U.S. to Mexico is very difficult, but using crypto is really easy. I've had so many challenges with using banks with a lot of these things that I try to do, especially internationally. There are things I can do in two seconds with crypto. So it’s nicely diversified in a portfolio that I don’t feel like touching, ever.

So you’re bullish on crypto?

I own a lot of crypto but not because I'm bullish, but because it's more convenient to have my money there. My anticipation is that it [bitcoin] will go up, but I don't care how long it takes. And I also own a lot of crypto because I’m doing a ton of learning, like, “What do you mean you can make 8,000% API with staking a liquidity pool token? It's like, what the [heck] does that mean?"

Give us some predictions, for both crypto and Wall Street?

I'm hoping that crypto infects Wall Street such that you will have a lot of things on Wall Street that are borrowed from crypto.

SingleQuoteSingleQuote
People will occasionally make millions. Most of them will lose, and some of them will bounce around.
SingleQuoteSingleQuote

Such as?

These smart contracts that use variable ETFs, that have the ability to mix and match things on the fly. You now have [crypto] instruments that previously would take a lot of time, effort, and money to create. And you can create them on-the-fly for a wide range of really interesting financial uses.

Another prediction is that the lines [between Wall Street and crypto] will continue to get blurry. It’s not going to be, “You’re a crypto person and I’m a stock person.” When you go into your Robinhood (HOOD) account, you can buy dogecoin (DOGE) just as easily as you can buy whatever. And soon enough, you’d be able to open your Coinbase (COIN) and buy Apple (AAPL).

How about predictions for retail trading?

I see the retail – and the younger generation – continuing to have fun, continuing to make and break money. I've never pretended that the average retail person is profitable. And I don't think I ever will. I think most people go through a very similar journey to the one that I've gone through, with deviations to it. People will occasionally make millions. Most of them will lose, and some of them will bounce around.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Jeff Wilser is the author of 7 books including Alexander Hamilton's Guide to Life, The Book of Joe: The Life, Wit, and (Sometimes Accidental) Wisdom of Joe Biden, and an Amazon Best Book of the Month in both Non-Fiction and Humor.

CoinDesk - Unknown

Jeff Wilser is the author of 7 books including Alexander Hamilton's Guide to Life, The Book of Joe: The Life, Wit, and (Sometimes Accidental) Wisdom of Joe Biden, and an Amazon Best Book of the Month in both Non-Fiction and Humor.

Trending

1
CoinDesk - Unknown
Crypto Lender Celsius Cuts 150 Jobs Amid Restructuring: Report

Withdrawals are still paused and the company has hired restructuring experts as it faces a financial crisis.

CoinDesk - Unknown
2
CoinDesk - Unknown
Lending Platform Vauld Looks to Restructure Amid Crypto Downturn, Suspends Transactions

Vauld has seen withdrawals of around $198 million since June 12.

CoinDesk - Unknown
3
CoinDesk - Unknown
Solana DeFi Protocol Crema Loses $8.8M in Exploit

Crema Finance developers said they are coordinating with “relevant organizations” to gather more information.

CoinDesk - Unknown
4
CoinDesk - Unknown
Software Firm Meitu Lost Up to $52.3M in H1 Due to Slide in Crypto Prices

The app developer had bought 940.89 BTC and 31,000 ETH in spring of 2021.

CoinDesk - Unknown