Brendan McDermid / Reuters
Chamath Palihapitiya told CNBC on Wednesday that the recent madness of trading due to WallStreetBets from Reddit shows that retail investors can do the same quality analysis as hedge fund managers who have an edge. ‘
The billionaire investor is seeing a “setback against the settlement” of retail investors, many of whom have seen their parents lose money during the financial crisis while saving large institutions on Wall Street.
Palihapitiya said the 2.7 million users on WallStreetBets are just as important to the market as any hedge fund. And some Redditors do “incredible fundamental commitment”, even better than professional analysts.
He also laments the lack of transparency in hedge funds maximizing profits with prime brokers, and calls for ‘idea dinners’ in the Hamptons where a number of executives meet behind closed doors and draft investment ideas.
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Investors on WallStreetBets are braver than executives, Palihapitiya said, because they discuss their ideas in public and are not afraid to admit losses.
‘It takes an enormous amount of confidence in the system to be so transparent, to talk about things and then for each individual to set up their own thoughts and to do things, whether it’s for sale or for to sell. And I think that what it is proves that this retail phenomenon is here to stay, ‘he added.
He predicted that retail refinement would fetch institutional refinement, but first, hedge funds should be forced to disclose the details of their transactions, as investors on WallStreetBets do.
“My point in all this, if you want to make the system better and healthier, you have to force more transparency on the institutional side,” Palihapitiya said.
“Why is it that someone who runs a hedge fund is basically allowed to claim to be market neutral but exploited? They take a $ 10 billion fund and their main brokers allow them to have a hundred billion dollar exposure. industry – who thinks that is fair? ‘says the investor.
“This is not fair to the retail investor, because if it inflates and there is a hundred billion dollar hole in a fund, which by the way is exactly what happened in 2008, the government can ban them, and who is the government “of us,” he added.