Ep 11: Can I own GameStop Stock in my Roth IRA or Solo(k)

Mark and Mat explain how Main Street and Wall Street have been pitted against each other in trading GameStop stock and why a Roth IRA or Roth 401k (tax-free) should be used when making large gains in an investment.

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Mark Kohler: earth-shatteringWelcome, everybody, to another episode of the directed IRA podcast, where we’re going to be covering today some news breaking, earth shattering, mind-blowing topics. You’re going to love it. My name is Mark Kohler and I’ve got my amazing co-host with me, the one and only Mat Sorensen.

 Mat Sorensen: And today’s topics a little different from what you might expect on the directed IRA podcast. But it’s a major topic in the news right now. Kind of a phenomenon and the phenomenon. Phenomenon. Yeah, yeah. John Travolta. That’s good. Yeah. In the financial world right now. And Mark Kohler was on Fox News, of course, breaking this down. And so we wrangled him in to do the same on the directed IRA podcast today.

 Mark Kohler: Well, thank you. Yeah, well, I’ve got a face for podcasting, so Fox News had to do a lot of makeup to get me.

 Mat Sorensen: There’s a lot of lighting and tricks, but they’ve got it down. Yeah. You know, Roger Ailes, Fox News.

 Mark Kohler: Yeah, I know. They’re like, can we bring in the David Blaine crew from Vegas? We’ve got to pull some magic here, so let’s get them in here. OK, now here’s the tongue twister Mat, see if you can say this five times really fast. Can I buy GameStop stock with my Roth IRA?

 Mat Sorensen: Okay, stop, stop, stop, stop, stop, stop, stop, stop. Yeah, yeah.

 Mat Sorensen: So if you haven’t been following the news, GameStop has had some major trading activity. Let’s just say that I’ll let Mark break that down on the stock. And it brings out some important principles we want to talk about with investing and using a Roth IRA and some of the common principles that are really important to self-directing. So even if you’re like guys, I don’t give a crap about stock, I’m not going to buy GameStop or any other stock because we’re going to teach some principles on why that you could apply to any investment really and when you would want to get in the Roth IRA.

 Mark Kohler: Absolutely. And I think the news regarding this trading activity is really exciting. And you’re going to find out a little bit more about if you don’t know already, my perspective on Main Street versus Wall Street. So I’ll probably get a little nasty my crew says that I need to up the security at my home. But the biggest takeaway, I’m going to just spoiler alert. Here’s the big takeaway that we want all of you to have in your back of your mind as we talked about this if you have an investment stock or otherwise. That has an outside chance of extreme growth, you know, it’s kind of a wild card, you know, you’ve got five grand, a thousand depending on how wealthy you are, throw away money to you might be 10 grand someone else it might be a thousand. Someone else, it might be a hundred grand, whatever that is, whatever that number is of, you know, I could risk it. I’m going to throw a thousand bucks at GameStop or I’m going to throw a thousand dollars in Bitcoin, whatever that long shot is. The principle here is do it in your Roth IRA period. You shouldn’t even have to think twice about that. This is money that if it hits big, I don’t want you paying tax and now you’ve just frickin shot a huge injection into your Roth IRA to do some big things.

 Mat Sorensen: Yeah, and that was what our clients that were doing crypto a few years ago did. They came to us and they kind of hit the first run up on crypto and we’re like, crap, I’m going to pay a lot of tax and realizing these profits. And so they a lot of them went to Roth IRAs and now on the second run up in crypto, that’s all building up and it’s going to come out tax-free and a Roth IRA. And that’s the key point on the Roth IRA. For those that aren’t familiar, when you have money grow in and come out of a Roth IRA, it comes out tax-free. You pay no tax and you can’t pull it out until you hit fifty-nine and a half to retirement. This is long term wealth building. But like Mark said, if you’re going to hit home run, if you’re using a traditional IRA, you’re going to pay tax on the way out as you pull the money out. If you’re using no retirement account at all using personal funds, you’re going to pay tax. When you sell that and realize that game immediately, you know, the IRS, you’re going to be stroking them a big check for being a partner in your great investment. And Roth IRA is the way to do it and keep all the money tax free.

 Mark Kohler: Yeah, and I like Mat last example that if you do it in your own name. You’ve got another target on your back because of this project or this investment that you’re thinking has an outside chance of exponential growth, you’re going to catapult yourself into the highest tax bracket. And now the Joe Biden administration and the Democratic controlled Congress is saying, if you’re in this top tax bracket, we want to add a few more percent on there and forget capital gains. You’re going to pay at even marginal rates for your big gains if you’re in this high bracket. So the rest of your life, you may not be in this crazy top bracket, but for this one deal, you might. And so you’ve got to think, wow, if this really does hit, what does that what am I going to have to pay next April? Yeah. Which, you know, the average person doesn’t think about because they don’t they’re not hitting these grand slam home runs every year.

 Mat Sorensen: So why were you on Fox News? What the heck is going on with Gamestop for those that don’t know what it is yet, bring us up to speed.

 Mark Kohler: And we’re going to we’re going to talk about Robin Hood. We’re going to talk about TD Ameritrade, Schwab. We’re going to talk about the SEC and FTC. There’s a lot of players in this mix right now, we’re going to talk about hedge funds. I love that Jim Cramer on Mad Money address this three days ago. So let’s get some things off the table. No one has done anything illegal. There have been no indictments, there’s been no accusations of someone doing something illegal, illegal, but there’s a lot of rhetoric and if you’re not familiar with that term, it just means rumor mill. You know, a lot of people trying to just throw out a lot of chatter, a lot of.

 Mat Sorensen: A lot of I’m putting my fingers together like talking, you know, a lot of talk, a lot of times, you know, OK, now let’s just get to know it all person in our family, that is. Yeah. You know, that thinks they know it all that that’s rhetoric.

 Mark Kohler: Ok, so let me give you the facts and then this sets the stage for this crazy January, which is true. Nothing like this has happened in the history of Wall Street trading. So this is very, very interesting. And again, there’s a play, there’s a principle. There’s something we can all learn from this, especially in Self-directing and Roth trading. So hang tight. We’re going to bring it all together and put a nice little bow around it. OK, so what happened was and I’m going to help define terms Mat you help me out as I define terms here so that everybody can kind of get used to this. This is a little tricky. I’ve got my producer in here, Jack, to that. I need his help on some of the terms I use. All right. Back in 2019, remember those days when you the only person you saw wearing a mask was a surgeon in an operating room? Or if you were traveling through Asia, there might be someone with a little umbrella and a mask. That was it. I mean, you would never this is 2019. We’re back into parades, concerts. Oh. To have those days back. Well, some guy named handled DFB. Now, I’m not going to say what that stands for because it’s this is a PG-13 show, but he’s just kind of a little guy that’s on Reddit. I don’t know if you knew that Mat it’s kind of a litigious handle. But he said back on Reddit, he’s been doing this for years. You know, everybody keeps thinking there’s some conspiracy against Wall Street. There’s not this guy back in 2019 who spent $59,000. And he was many would call this kind of a penny stock strategy in this realm. He was looking at GameStop, which we’ll call from now on GME. That’s that’s the trading symbol for GameStop. So he’s looking at it and he goes, you know what, I think the stock’s going to go up. People are buying more video games. It’s only getting bigger and better. And so he did what is called a put. He paid the big money. $55,000, approximately. Pardon, Jack. What was that? It was a call. It was a call. OK, a call. Sorry not to put. He put down he paid for this call that 16 months from now in January of 2021, which is where we’re at now, he said I have the right to buy this stock for eight bucks. That’s what he paid for it because he thought it was going to run up in value. And if it was worth thirty bucks in January of 2021, he could buy it for eight and triple his money, quadruple his money. You know, that’s his that’s what that strategy is called. So he puts this call down and he’s going to and he’s paid for it. All right. We turn the corner into a 2020 covid-19 hits countries turned upside down along with the entire world. And these big hedge funds who do this every freakin day decide to short the stock. They’re going to bet that GME is going to go down because they’re thinking all these brick and mortar stores, GameStop is on life support anyway. And when everybody staying at home and no one’s going to go to the brick and mortar store of GameStop and buy a video game they’re just going to download online. Hedge fund says, you know what? We think this is going to go down. And they’re thinking, yeah, not a big deal. You know, we’re not this is common for them to do. And they’re like. It’s going to work out great for us.

 Mark Kohler: Now, I want you to think back to the movie The Big Short. If you don’t know what a short is and some you like to watch PG friendly shows, make sure you watch this edited. But The Big Short is a movie that talks about the 2008 crash. Now, in that crash, it was the same principle. The people that made big money said we’re going to short the housing market. We think the housing market’s going to crash. And that’s a really exciting show that represents real lives of people. It’s quite accurate of how when the housing market crashed, there was some hedge fund managers that made billions because no one thought the housing market was going to crash.

 Mark Kohler: Well, take us to the middle of 2020 some hedge funds. And this is what Jim Cramer said on Mad Money, too. He’s like, hey, that was a huge bet. They threw down $55M. That GME is going to go down, it’s going to crash. And I won’t explain the principle of a short, but essentially they’re betting it’s going to go down. And if it goes down, they make the difference based on that, the price that they exercise the short at. And they were in a position to make billions, which they do all the time. They gamble all the time, hedge funds. This is why those managers have four homes, one in Aspen, in Bermuda and whatever. And so they’re doing this all the time. And what happens this is interesting. Mat unbeknownst to this investor that started in 2019 and the hedge funds in the summer of 2020, approximately, I’m trying to give you the Reader’s Digest version. GameStop says, you know what, we’ve got to react. They brought on a new board member, did some shuffling in there with their officers, changed their strategic plan, and GameStop went all online and they started selling videos online, downloading online.

 Mark Kohler: And they responded really strategically. And guess what? They showed some minor profit. They showed a good fourth quarter. I’ll leave it at that. They showed like they were on life. They weren’t on life support. They were there were alive and well. Well, what happened to the stock? Well, just a few weeks ago, in early January, after fourth-quarter comes out.

 Mark Kohler: Gamestop stock goes up, so this guy DFB, that 16 months earlier said, I’m going to bet that the stock’s going to be more than eight dollars, Wins his bet. So he cashed in in early January and made close to $40 million just in the last few weeks. Now, I know some of you that are even closer to the dates and the facts and the dollars are probably getting pissed right now. Guys, I’m telling a story here for a principal and I’m just giving you the the basics of this. So he makes 40 plus million dollars big money and he goes back to Reddit because I gotta tell my buddies and this guy it’s not a major player on Reddit. It’s not Reddit fault. They don’t know what’s going on. They don’t care. And so in this little group on Reddit, he says, guess what, I just made 40 million dollars everybody on Reddit like, excuse me, what was that you made forty million dollars. What you do? And he goes, I can put a put or call sorry, Jack, on this stock 16 months ago and I’m making big money now. He had no intention of screwing over hedge funds who now with the run up in stock. Are losing billions, he had no intention of doing that, he just wanted to make some money on his gamble, which hedge funds do, too. They do this all the time. Well, all the people on Reddit are like, oh, my gosh, defeated this. I’m in, I’m buying. And because it’s such a cheap stock, there’s kids out there getting their stimulus check for 600 bucks. I’ll buy two or three shares for 600 bucks. What the hell? What I got to lose. It was fun money, which goes back to our principal in a minute. They’re like they were like, I can lose 600 bucks, I’ll give it a shot. So they buy the stock while the stock goes up. Every dollar it goes up, the hedge funds lose more because in a short situation, the people that they borrowed the stock from to get the short, they’ve got to buy the stock back and give it back if they call it. And so in this little trick that some you can study up on in a short, the hedge funds lost. All right. Now Mat in summary, let me say this. What are the hedge funds doing, the freaking out? Every analyst that they own, every market they control, every platform that they can create a message on. They’re saying this is dangerous. The market, the populous shouldn’t be able to control the stock market like this. This is terrible. This is this is illegal. They manipulate. No, they’re not.

 Mark Kohler: They just joined the same freaking game you’ve been playing and you’re making billions. And heaven forbid, Main Street figured out a way to do this and jumped on board. And what’s sad to me, in summary, on a political note and some you may completely disagree with me, is I’m pissed that Ameritrade, Schwabe and then RobinHood this morning said you can’t trade it anymore. We’re freezing it. And Jack, didn’t you say Jack close to almost all platforms have said you can’t even buy GME right now because they’re trying to stop the bleeding for these hedge funds. And I’m just praying and I’m hoping all of those that own GMEs stock right now don’t sell. Make him sweat, make Wall Street pay to buy that share, let the price stay strong. And this is exactly what happened in the Big Short. You know, this is Michael from the office, played that role in the movie, said I’m going to hold out until they finally said, OK, we’ll buy.

 Mark Kohler: So anyway, Mat, it’s I think it’s really interesting to play between Main Street and Wall Street. And I’m sick of the chatter out there saying that someone did something illegal and the average investor shouldn’t be allowed to do this when they’re playing the same darn game the hedge funds have been playing for years. There you go.

 Mat Sorensen: Yeah, I. Any commentary on that. Yeah. Any commentary. Well, this is this might be a little face-off here I guess, or what do they call it. Crossfire. You know. Yeah. Yeah. Here’s my problem with it. I think you’re a fool for buying GameStop GameStop stock right now. OK, fair enough. Because you’re paying way more than it’s worth. Like the valuation of the company right now is like 16 billion or something. Right now, the market cap, no one in hell would pay that much money for GameStop. No one would nobody would come buy it for that. So we’ve got this artificial value built up in here. That’s all just on histeria. Now, you could say the same thing for crypto. I get that. That is crypto worth. It’s only worth what people think it is. But at the end of the day, a stock is it’s like, well, do I really want to own GameStop? Like, think about this. When are you going to sell? You have to realize your profit at some point. Are you going to hold out for 10 years? You can hold out for five for one, you’re going to last another day a week. I don’t know. And so I worry of people buying in right now, like just for me, I mean, I would never buy it. It’s ridiculously overpriced and the business isn’t, even if it is trying to turn the corner. It might be worth eight, 10 bucks a share. I have no idea, you know. So what’s going to happen here? My fear is. Main Street’s going to lose. Because they’re on the wrong side of it, the company’s not worth that if if Wall Street was pumping it up. And because and and making an artificial value to benefit themselves. Main Street could win because they’d be on the right side of it, but in the end, I just think the fundamentals are going to win. And the retail investors are going to be like, why the hell do I own this? And now and I just worry that people are going to get wiped out. So. Right, I’ve got my counter, my one concern.

 Mark Kohler: OK, here’s my counter to that. Warren Buffett, that’s Warren Buffett speech from his last shareholder meeting in Oklahoma. OK, is it Oklahoma? Nebraska. Where is he? Is it Omaha? Omaha, Nebraska? No. Oracle of Omaha. Yeah. Yeah, that’s right. So you just you just took pieces off of Warren Buffett’s last speech. I totally get it.

 Mat Sorensen: Great minds think alike.

 Mark Kohler: No, no, no. Hold it. Here’s my counterargument. We’re talking about two different games. I hate to use the gambling poker table example. So I’m I’m not I don’t because I but in. But in some ways,

 Mat Sorensen: Maybe that’s the problem with this run up is anyone who expects to make money on Main Street right now, there’s got to be a day they’re going to get out to realize their profit.

 Mark Kohler: Yeah, but here’s my point. Hear me out. Hear me out. We’re talking about two different games. Game one, let’s just call it Warren Buffett game. OK, Warren Buffett game is my game is buy good quality stocks that show a market cap a value that’s legitimate. There’s good there’s a future for this company I’m going to buy and hold for the long term. Great. That’s cool. I’m on board. Ok, but then there’s this other game. Some days you wake up and say, I got my money over there. That’s cool game. But today I’m feeling a little fun. You know what I might do with the hedge funds do hedge funds play that game? They play the Warren Buffett game, but they also play the the gambling game. I hate to call it that, but it is it’s a gamble. You’re saying hedge funds.

 Mat Sorensen: They’ll trade on trends, they’ll trade on things happening and they’ll trade on trends.

 Mark Kohler: They do shorts and calls all the time. Now, are they buying for value when they’re doing that? No, they are not. They’re buying.

 Mat Sorensen: That’s not true. Well, you know, if they’re going to do.

 Mark Kohler: You don’t think they’re buying on speculation of what they think that thing’s going to do? It’s going to go down or it’s going to go up.

Mat Sorensen: An option is just a way to it’s a strategy to execute your investment belief. It’s not. So like if you say, all right, like the example, you gave a call. If you’re like, well, I think the company value is going to change. Hmm. I understand the fundamentals of this business. I think it’s overpriced, underpriced. And you use an option to that’s just a strategy that executes your idea. You’re underlying basis is still like I think the stock is undervalued or overvalued based on the fundamentals of the business.

 Mark Kohler: Ok, now what I’m getting at is. Yeah, I hear you. I hear you. But what I’m saying is that perspective is different than the buy and hold on value. There are two different mindsets I’m going to go out and buy for value. Well, what sort of well am I buy on speculation? I’m going to speculate. It might go up or down. Some guy a 16 months ago thought it was going to go up eight months ago or 12 months ago. A hedge fund thought it was going to go down and they both gambled one won now because it went up maybe based on speculation. I think of all the dotcoms. We had a dotcom run up, you know, fifteen, twenty years ago. And there’s still dotcoms up out there not making money, but people think they’re worth more. Elon Musk has got a very ambitious goal with innovation in Tesla’s stock is very, very strong. But is it actually producing that profit right now? No, but some people think it will. So here’s my point. We’ve got a third party in the mix, the bandwagon the populace has shown up and said, you know what, yeah, I’m going to play in this game. Is that bad? I’m going to play the game that we’re going to squeeze the hedge funds. And I think the value is going to stay up not because of their profit or market, but because of the the dynamics of the stock market. You can’t tell me hedge funds don’t trade on dynamics. I don’t know.

 Mat Sorensen: Yeah, I just I’m just mark my words because we’re recording this. And even today, GameStop is down 33%, which is huge in one day of trading. Is Wall Street’s going to win because it’s just not sustainable. The value of the stock is not supported by the fundamentals of the business. 

Mark Kohler: Oh, is a stock going to go down. I agree it will. It won’t go back.

 Mat Sorensen: So if I’m a retail investor, I can decide when am I going to get out at once. It’s I heard someone give an analogy on something recently about it’s kind of like, you know, there’s fire in the movie theater and there’s one exit and everybody’s crowding to run out of there. But like some people are going to get burned because they’re not going to make it out. And it’s all about, you know, how close are you to the door, I guess when the fire hits. And I and that’s so that’s my worry for the retail investor. Now, I want to. I thought, too, when you’re describing that is. From the big short, one of the remember the characters in there that are these young hedge fund traders and they kind of make their own hedge fund and they try to go to all these hedge funds to, like, get it into a nice party. CDOs. Yeah, like Brad Pitt helped them here. You know, one of them kind of helped them get in in the door. But where they made their money in the first place is their hedge fund was based on trading against news. You remember that? Yeah. So what they were doing is if a company had some, like, lawsuit or negative news, their stock would go boom. And but they were like, but wait a second, is that news really that bad or is this just hype? And so their whole strategy on how they made money was to bet against the news. So when those companies would go down because of bad news, they go buy them once they bottomed out and they would wait for them to come back within three to six months because they’re like this will blow over. Everyone will remember the fundamentals are cool and the stock value is going to go back to where it should be. And that was like their investment thesis, where they went from like two kids with 100 grand to have them, like, I think they were, you know, the tens of millions of dollars in their fund that they then put in in the big short betting against the housing market. But, yeah, that’s kind of what’s going on now, I think is like people are trading on news, you know. Yeah, OK. And I think I think that’s the the danger is. 

Mark Kohler: I am now OK now for some of you that are sick of our political and strategic commentary. We’ll move on. Here’s all. But here’s the big takeaway, and this is why I told Mat, I think this was a really good show to have today. First point, are we suggesting that anybody go out and speculate based on news or playing at this dangerous game? Are you close enough to the door to get out when the fire really approaches? That’s a very dangerous world to play. But again, some of you may say, you know what, I’ll throw a little bit of my portfolio at that. I’ll take a little bit of my money and say, OK, maybe there’s a run up here based on rhetoric or the news or just public fervor. And that’s up to every individual to decide how much and if they even want to play in that game. But here’s the takeaway. If you’re right and you play it carefully and people do all day long, some of the best hedge fund managers are good at playing on this news concept, whether it’s a call or a short or put or this or that. So. I’m just saying, do it in your Roth IRA. This is the concept that I think is really powerful that people miss. I’ve asked like multiple people that did buy game stop stock as a did you buy it in your Roth? No. Well, if there was such a chance for run up, why didn’t you? Well, I didn’t think to. And so this to me, this show today is a call to action. This is a wake up call for many of you out there that missed the Bitcoin run up in your Roth and did it with your own money. And you did it with some throwaway money. You thought you knew it was speculative. But we need to be thinking about a Roth more often. And that’s my takeaway Mat. I don’t know, bringing us back full circle. I yeah.

 Mat Sorensen: And I think for many of our Self-directed clients that are doing real estate or investing in the things that they know they can, you know, they’re using their Roth and they’re hitting home runs off like machine pitch, you know, or a coach pitch. You know, it’s pretty easy. They line them up and they can nail them and they make great returns in their Roth IRA. So now these are like, you know. Randy Johnson fastballs, I don’t know if I remember him, I’m in Arizona since the first pitcher. I thought maybe Nolan Ryan, maybe a little more.

 Mark Kohler: Yeah, yeah, OK.

 Mat Sorensen: Like these are tough to hit. And so you had to be careful. We don’t want you to lose your Roth and kind of that, you know, that money you set aside there. But yeah, take a measured risk for something that could be a major home run and a long shot like this. You could be very strategic from a tax standpoint and using and using the Roth. And the same thing could be said for crypto right now.

 Mark Kohler: Ok, now let’s talk how to for a moment. What’s interesting, because just on another political note, when Robin Hood put on the brakes today, it’s been another massive piece of news because Robin Hood was really the the champion of the millennial. Robin Hood said, we want to get outside of Wall Street. We want to give you a platform to buy and sell stock. We want to make it affordable. And they went after the millennials. No one disagrees. Right? You’re good with that. I was wrong. They don’t have they don’t have a Roth platform, which is very interesting. So I’ve never been a huge fan of Robin Hood if you’re going to do that, I like just going to a TD Ameritrade or a Schwab online account with an app. You can have quite a bit of flexibility. There’s others out there, Scottrade or whatever, not paid by anyone to say anything. But you can find a fairly affordable online app to buy and sell stock in a Roth account. Robin Hood, Robin Hood did not offer that. But what’s interesting today is Robin Hood. Robin Hood turned on their base. They said no more buying. Why? Did someone do anything illegal? No, you’re trying to stop the the marketplace from correcting this. Hedge funds have lost billions before this over is over, they will lose billions. Well, maybe they learned their lesson. You know, maybe they shouldn’t be shorting this much money on on a project like this. And this is they got greedy, just like the housing market crash, because covid was a weird thing and I think they were smart. Sure. There’s going to be some brick and mortar stores are going to go down in value. But to bet the ammount’s they did again, even Cramer on Mad Money was saying that was a concern. And so I think like. Yeah.

 Mat Sorensen: Yeah, go ahead. I think people using shorts to to bet against companies, you know, they’re it’s tough because they’re trying to make money and they’re putting their their money and betting against something. I just hate that even if it is a big company is publicly traded, I just hate like betting against something, you know, like maybe there’s a company that, you know, ethically agree with. You like to bet against but, but I just hate that concept. You know, Herbalife was another big company recently that that went through a big shorts that had major billionaire hedge funds bet against them and short them, I mean, those those people lost in the short and one of the investors came out of them like, well, what did I learn? I learned people hate short sellers. People just hate it when you bet against them. And even if it’s a business you don’t really love. And I think that’s kind of the people for GameStop. And the genesis of it is they’re like, I used this company as a kid, I bought my video games there or whatever, and it’s like I don’t want someone betting against it to shut it down and basically hope it wipes out so they can make money. It’s just kind of it’s kind of a terrible business or investment way to make money and investing. Right. Betting against someone hoping that a company fails.

 Mark Kohler: Yeah, it’s it’s really sad. And so but if we’re going to allow that institution to exist and let’s let the market control it, if you’re going to get stung, you get stung. I don’t need Robin Hood getting in there and playing referee. We have free trade for a reason and so on. But again, OK, so on the how to do this set up a Roth account. A lot of people don’t realize you can have multiple Roth accounts. You can take a regular traditional IRA that you’ve been sitting on for a while and go, you know, it is time to convert this to a Roth. You can do it with any level of income. Calculate what your tax hit might be on the on the conversion. But just think about this. If I had a thousand dollars in a traditional IRA and I woke up and said, you know what, I saw this. I was the first one to see this on Reddit. I’m going to go out and buy that GameStop stock. I’m going to go do it. I got a thousand dollars. I’m risk it, I’ll risk it. I’ll play in that crazy market. OK, cool. Take that account, convert it to a Roth, pay the tax on the thousand dollars, buy your gamestop stock, make 10. Pay no tax, see, it just takes an extra step and we have that platform, at directed IRA, you can open a traditional convert to Roth, you can have a Roth, you can trade if you so desire. We want to see you use your Roth in creative ways, buying companies with value, making good, sensible choices and not day trading. You know, that’s not our platform. But while you got some money sitting there, why not, you know, if you want to throw some money at it. So.

 Mat Sorensen: Yeah, yeah. And all of our accounts are Self-directed at Directed IRA. So you decide what the heck you want to invest into, whether it’s a real estate deal, a private company, a private loan, crypto, GameStop, you know, if you can still trade it right now. So and that’s, you know, I think how by removing all those restrictions, that’s how you can be successful in investing and you can invest in what you know and what you want then. And so we do have that brokerage option here, but not as a day trading option, like Mark said. Yes.

 Mark Kohler: Well, I don’t know. I just it maybe it’s a little shorter podcast today, but yeah,

 Mat Sorensen: I think I’m just this is such a curious, interesting topic. What’s happened here? I’m just I’m interested to see where the news goes next on it, you know? Yeah. And there’s just never been anything like this. And it is cool that it’s pit Wall Street versus Main Street retail investor versus hedge fund. I just fear my predictions will come true that Main Street’s going to lose. 

Mark Kohler: Well, yeah, yeah, yeah. No, I wanted to say this to maybe in closing too, is that I want to agree with you that when you start betting. And let’s say, for example, what’s happening out there to a lot of this populous type movement and figured out let’s go out and find which companies these big hedge funds have shorted, let’s just go to like AMC has been in the news, some other stock symbols. And so this populist group is saying, OK, let’s team up, find out who these companies are that the hedge funds are betting against and let’s run them up. OK, not a good idea because when you start playing against these massive institutions, you’re betting against the House. And I agree with Mat you will lose if you try to play at their game. But if you see a stock that you think will legitimately go up and there’s some people shorting it and you want to fight it out, but you have some sensible reason rather than just fighting, I think I think there’s a there’s a play there. I don’t know.

Mat Sorensen: Yeah, I agree. You’d have to look and say, all right, I really believe this company shouldn’t be shorted. I really believe that those you know, I really want to own this stock. I think it’s valuable. I’m the price I’m going to buy it for right now. I really want to own it for that. I think that’s the mentality people need to go into when they’re betting against Wall Street, because I think at the end of the day, there’s too many people on Wall Street. You know, Wall Street will eat itself. They don’t care. One hedge fund will go kill another, that they don’t care. There’s no agency there.

 Mark Kohler: It’s like watching the Discovery Channel. And you’re not seeing the gazelle get eaten by the tiger. That’s Wall Street.

 Mat Sorensen: Yeah, yeah. I mean, it’s a jungle out there. You know, there’s a lot of killers. They’re going to they’re really they’re just going to they’re just going to go where they can make money. I don’t care if it’s their, you know, their best friend’s hedge fund or whatever. They’re going to other moms. Yeah. Yeah. So so they’re going to go where they think they can make money. And what what’s going to happen is if people are making bets simply based on news and hype. Frankly, there’s going to be hedge funds hoping there’s people out there continuing to do this. Why? Because they can beat him. If you want to make money, there’s always got to be someone on the other end of it. And don’t be the dumb person on Main Street. It’s on the other end of this because you’ve gotten hyped into something that’s that’s just my fear. Yeah, yeah.

 Mark Kohler: And again, if it’s fun money and you got 500 bucks to throw at a cryptocurrency, there’s a cryptocurrency coming out every week. Right. So someone’s got the coolest next coin. Well, OK, I’m cool with that. You want to play that game, just don’t bet your retirement on it that the fun money on it don’t don’t go. Yeah, yeah.

 Mat Sorensen: This has been such a high trending topic, which is why we’re hitting it. But we can wrap up here too. But I it’s funny what I was going to propose we did on this podcast today was due diligence when making investments with your self-directed IRA.

 Mat Sorensen: That was your take on this is like I’m like, let’s just do this one. It’s all right, because that whole chapter on due diligence and a ten-point checklist, we’ll do that in the next podcast.

 Mark Kohler: Yeah. Ok, here’s my due diligence.

 Mat Sorensen: You OK to give an update too and what the heck went GameStop if you’re not getting it? And every I mean, my phone, it’s like the top trending news item on my phone. It’s on TV when I walk out, it’s on CNBC out here. It’s on everything.

 Mark Kohler: Yeah. So here’s my due diligence checklist. OK, what’s Facebook saying about it. Did someone tweet recently about it? If it was Trump is still in office, I would have said to Trump tweet on this, OK, and and then the big tell is what’s going to be on TMZ tonight? Because I watch the news, you know. Extra Extra So, yeah, you can see where Mat and I really complement each other on this podcast. I’m just playing around. OK, well, everybody, thanks for being with us today. I think it was kind of a fun topic. And I’ve I’ve learned a lot about the inner workings about Wall Street again. And I forgot the principles of the Big Short. I mean, it really is kind of unique. It’s a whole other world there on Madison Avenue. And you got to think about it so well. We’ll see you next week. And I guess we’ll be doing due diligence when you invest. Womp, womp, womp.

 Mat Sorensen: No, I’m just it sounds boring, but I think I mean, I say this this ten point checklist Mark and I actually made this this is back in the day. We did a webinar podcast and we really like huddled for a couple hours. I’m like, what are the ten things as lawyers when we’re helping someone analyze an investment? Not for like just for like due diligence purposes. How do you do due diligence on an alternative investment, in particular real estate deal, a private company investment, a private loan? And that which is these are those are the core things people buy with a Self-directed IRA here. That’s how I created that. So I stole that. And I’ve made it a chapter in my book, Chapter sixteen.

 Mark Kohler: There you go. Well, thanks, everybody. We’ll see you next week.


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