(Kitco News)Â -A new type of exchange-traded product (ETP) is being launched, one that allows investors with a stake to partake in the asset selection process. At the helm of this new project is Jaime Rogozinski, founder of the WallStreetBets (WSB) subreddit group.
ETPs are going to be basket of assets, and this can be stocks, it can be crypto currencies or different protocol projects, it can be stocks from other countries, precious metals, energies, you can put ETFs inside ETPsâ€¦assets that have a trackable price can be put in place, Rogozinski told Michelle Makori, editor-in-chief of Kitco News.
Rogozinski said that the track record of the WSB community has been very good when it comes to selecting stocks.
Were combining that with the power of community. Weve seen, time and time again, that the community is collectively really good at this game. There was a study that came outâ€¦they took all the picks on WallStreetBets, and tracked that against the performance of the index. This was before GameStop. And it turns out, they consistently beat the index, he said.
What makes this ETP unique is that it follows the decentralized autonomous organization (DAO) model, in which there is no one centralized owner, or fund manager; anyone who is invested can become part of the selection process.
People go in, they purchase these tokens, these WallStreetBets tokens, which you can actually now buy, and with those tokens, they represent shares of a company, or voting rights, he said. Whats cool about it is that this decentralized organization starts almost behaving like a hedge fund, [and] actually gets the benefits of a hedge fund as well. These ETPs have this small percentage fee built into them just like ETFs do, and money that gets generated from these fees goes into a treasury wallet, which those same token holders can decide what to do with it. They can pay themselves a dividend, buy a Superbowl commercial, whatever, he said.
Rogozinskis ETP idea comes as a new meme stock ETF, the Roundhill MEME exchange-traded fund, has just been introduced.
Rogozinski founded the WSB subreddit group in 2012 as a forum for traders and investors to discuss and share ideas on stocks. The threads in the group provided the catalyst for the short squeezes of AMC (NYSE: AMC) and GameStop (NYSE: GME) earlier this year, spawning internet memes around trending, or popular stocks.
However, Rogozinski is no longer an active moderator on WSB after having been removed in April in 2020. The details of this removal will be discussed in an upcoming movie. Anecdotes from his tenure as a moderator of the forum are shared in his book WallStreetBets: How Boomers Made the Worlds Biggest Casino for Millennials.
The idea of buying widely popularized stocks, or those that have been memed online, spawned the meme stock movement.
The group itself has grown to over 10 million members online as a result of this movement, growing concurrently with the popularity of low-cost trading platforms like Robinhood.
Rogozinski said that the group has evolved into much more than an internet forum.
WallStreetBets has become so much more than just a forum itself. Im so happy to see what happens when Im there and when Im not there. GameStop is this big event that got the attention of the news around the world, but theres been other events in the past decade, none of which was me actually telling the users to do it, it was users that come together and they come up with these brilliant ideas, sometimes its memes and its funny, sometimes its cheat codes, and sometimes its GameStop, he said. Its a community driven thing. I continue to watch what theyre doing, continue to be proud of the community but it lives in so many places now.
Mostly traded by retail investors, meme stocks are high publicized stocks on internet discussion boards and forums, like WallStreetBets, and are traded simply because there is a buzz; in most cases, there is little regard to valuations, business models, or even a basic understanding of what the company does.
As a result, meme stocks have been highly volatile this year, with GameStop, the posterchild of the meme stock movement, climbing from $17 a share in January, 2021 to $325 at the height of the squeeze in late January, before falling back down to $40 two weeks later. The stock now trades at $204 a share.
The short squeezes on these meme stocks have often seen institutional investors take the short side of the trades, and have pitted both groups against each other on internet forums. Meme stocks have therefore been lauded as the peoples stocks. Â
For Rogozinskis top pick for the next big meme stock, as well as his outlook for Bitcoin and cryptocurrencies, watch the video above. Follow Michelle Makori on Twitter: @MichelleMakori.