caroline: from new york, i'm caroline hyde. we are fresh off gamestop earnings. we'll focus in on the push and pull's of the markets and retail trading. a crowd of investors supporting meme stocks and others preferring fundamentals. retail sending companies like gamestop to ever new heights.

now the warning is getting louder from wall street, the relentless run-up in stocks that we've seen. we will dip into whether by the dip actually works. taylor: so far we could call it the lack of earnings. second-quarter quarter net sales come in better at 1.1 billion versus estimates of 1.2 billion. because of the second quarter adjusted loss per share up $.76. that was a little bit wider than what analysts were looking at and maybe a loss per share of $.67. so all in all of bit of a disappointment. maybe some of the disappointment is they scoured the press release, but it's one page long. >> it's pretty much a bare-bones

release, as you said. overall mixed results. the company said they invested in the long-term growth initiative that included expanding their product catalog, that something we've heard them talk about since march. so the real focus will be what happens on the call, will they take analyst questions and will the new ceo who comes from amazon be able to drive home a message that they are ready to compete with e-commerce competitors like amazon.com. romaine: it's still an interesting earnings statement for a company worth -- with $15 billion market cap. we've heard from both the chairman of the company as well as other companies that fell into meme stock status, this idea that there talking to a different class of investors who are maybe focus a little more on narratives and don't get too bogged down with some of the

nuts and bolts of cash flow and things like that. i'm wondering is that still the case, or people still trading the stock more based on those hopes and dreams and less the nuts and bolts of fundamentals? >> i think it is. if you look at retail flows, we haven't seen much selling of gamestop. we've seeing -- we're seeing a little bit of buying but the retail base still hasn't bought into that buy-and-hold mentality. one of my favorite quotes i saw after results came said the stock is 90% psychology/momentum and 10% fundamentals. and that is really exactly what is happening with the stock. you look at the 900 plus returns we've seen this year. caroline: talk about the fundamentals, inherently this is a company that's facing gaming streaming and going online,

purchasing games the way we used to. >> if you have a new playstation or xbox you are downloading content and games directly to your system. they are going to broaden their offering across pc gaming, across computers, including mobile gaming, trying to bring gaming to tv's indirectly. so it's going to be an interesting dance the company will have to make to continue to advance this idea, this theory that they're going to come into the 21st century and come into a very stream hagy -- stream heavy ecosystem versus the heyday where you would go there to buy the latest and greatest madden or other videogame. caroline: the man who is all over these meme stocks. romaine: you can look up the ownership percentages in the

typical stock like boeing or apple, it's like 80%. for gamestop it's less than 50%. that tells you that most of this right now is owned by individual investors. caroline: you remember when it was 140%. now it is only 11%. taylor: they were successful in shaking up some of the institutions -- i don't have much to say. i'm on reddit, i'm just trying to figure out the next stock. so here we are. caroline: i next guest writes about the world of crypto.

that is next. this is bloomberg. ♪

romaine: today we are focused on the push and pull in the market primarily between the big investors. a phrase that popped up yesterday from the mouth of el salvador's president. caroline: let me just take a birdseye perspective. a president of a country getting onto social media, what a brave new world. romaine: that would never

happen. [laughter] caroline: even though it was the turbulence of bringing bitcoin to the masses in el salvador, but he then made a profit. taylor: i was reading research saying you would've thought how does the retail investor respond, do they sell crypto? from a presidents mouth to a retail investors robinhood account, we will say that conversation maybe for the next segment. our guest joins us to discuss. it is really interesting, given your commentary in the bloomberg

opinion column about how some of this regulation was really built. i think we will get to our guest in the minute -- in a minute, but this brings up a really important point and one that i know we will bring up, regulation was built for bond and equities. romaine: he points out in his column that the regulatory system was built to protect companies versus the intermediaries through that process. and what about investors who skip the intermediaries, where they sit in that regulatory process? caroline: what was so interesting when it came to crypto, everyone was exuberant and helpful, a man who understood crypto.

he wants to protect and ensure that people won't be exposed to fraud in any way per head -- anyway. romaine: i thought it was interesting, there was a story on the bloomberg terminal about getting tough on crypto and how it surprised a lot of people. he really hasn't laid out fully, release publicly, what is strategy will be with regard not just to dealing with crypto but to retail investors and protecting them. he is supposed to be on capitol hill week where we may hear a little more about it. but just trying to read into some of his comments he made in the private sector and trying to piece together what that means for him. taylor: caroline, you nail this every time.

in response to the sec, i think we will be doing that soon enough. we will have much more after the break. this is bloomberg. ♪

taylor: we want to get back to talking about some of the paths for nontraditional stocks and bonds. our guest joins us to discuss. talk to us about a world that was built for bonds and equities. how do you introduce enough fts, crypto, you name it. how does it work? >> i think it's going to be very tricky because the regulations that relate to markets were

written in the 1930's. in those days, as you said, people were buying stocks and bonds. you're talking about companies trying to raise money and the intermediaries like brokers, exchanges, advisors, funds that are delivering those stocks and bonds to investors. now you are in a whole new world and it seems to be a new age because you have ledgers with crypto's, anyone can really create an investment product. so that line between the created product and consumer has become completely blurred. not only that come but it can be done anywhere in the world. it's hard to see how regulators are going to be able to squeeze that into the current framework they're working with. romaine: but there's a question of why they need to. you are basically a historian to a certain extent. you go back to the creation of the sec and other regulatory agencies that oversee the financial world.

that wasn't necessarily born out of rampant fraud, it was born really out of control. nir: i think that is true, to some extent. and it coincides with the development of markets. people were buying stocks and bonds long before these regulations came along. then you had the 1929 crash. there are more recent examples. we had the.com bust in the 2000s, and the 2008 financial crisis. so the question we have before us is, there will be a moment like that for technology. it is still in the state of becoming, but it some point there will be a moment. is there another way, and i suggest in my column that the other way is trying to bolster investor education rather than trying to protect them. caroline: we need schooling,

perhaps we understand how political systems are born, we understand history, but we have no idea perhaps what a mortgage really means and how you should be involving yourself to invest in shares. is it something that should be federally mandated in some way? nir: i think it definitely should and there is a historical reason for all of that also. 100 years ago or whatever it was, the world of investors was a lot smaller than it is today. people did not have access to markets the way they do now. markets have largely been democratized down through fractional shares and commission free trades and all that. so now we have a situation where almost everyone can be an investor, no matter how much money they have.

so it does present, as you say, the challenge and the opportunity to try to educate the broader public about what investing responsibly means and how to manage money responsibly. the regulators i think should lead the way, but beyond that i do think that curriculum in schools would be smart. we should teach people before they graduate from high school how to manage their own affairs financially. romaine: i do have to circle back here. we talk about ledgers and crypto and nft, there's a whole cohort of investors involved in that who don't want that regulation. the lack of regulation is a big part of the appeal for investors. nir: that's really the design, it's a way to democratize markets. to put it outside the currency of regulators. that's really the trick, how do you protect investors when you can't really rein in the nuts

and bolts of this burgeoning technology. it seems to me that the only realistic way you can do that is to go to investors directly and say these are the things you need to be aware of and these are the ways you need to govern yourself, in a world where there is basically borderless markets. caroline: some of the argument isn't from these new innovations , it's about allowing everyone to take part in financial investments, to not just have $100,000 in the bank to be able to play and make money. it's about financial inclusion in some shape or form. romaine: absolutely, so i guess we will see which side wins out. it's always great to get your thoughts, and i want to keep the conversation going. i turn to our next guest. there was a great paper that came out about two months ago that looked at the by the dip

mentality. some investors decide to look at and see whether it actually pays off. we want to bring in one of those professors right now. he is with the stevens institute of technology. thanks for being here. the title of your paper gets kind of complicated for people who aren't knee-deep in this type of financial research. effectively what you did was look at various strategies and map them out -- map them out over certain periods of time. i'm curious, first of all, as to why you decided to do this. >> it started as two events that triggered the actual exploration of buying the dip. i co-arthur and i on a regular

basis -- what he does is allocate funds to his diversified portfolio. within what actually happens on a daily basis, it drops by 1% or 2% and he decides to allocate more wealth. i was teaching remotely last semester, and one of the students follows wall street and he wrote in the zoom chat, basically it made me think about buy the dip. caroline: so that's white came into your lexicon and why you

had to investigated. cutting to the chase for us, should you buy the dip, or should you invest for the long term? >> one way you can think about it is strategic allocation. the question is how efficient it is. let's think about from institutional investors, active management versus passive management. we know that active management usually outperforms. does it really outperform a passive fund? we applied it not for specific stocks or cryptocurrency, but we actually applied it to us by etf. on one hand, if your objective is to maximize wealth, you should go with a passive

investment strategy. but nonetheless, what actually was interesting is, if you buy the dip, you might be able to not get the 10%, you might get 8%, but at the same time he gives you lower volatility. so to some extent it's more like a psychology that you can actually feel better about the swings of your portfolio. eventually the objective to maximize your well i would say follow the passive, regular investment strategy. taylor: instead of timing the market, an old adage that we follow. as you are thinking about a portfolio and the risk, how do you build asset allocation with a buy the dip strategy on the stock? >> one day -- one way is you want to have a consistent policy.

first of all you need to measure the dip. we use different specifications. some of them might enhance wealth, but the problem is how can you actually determine that before the fact? that is where my research comes into how to determine the specification and this can be very challenging, even though were dealing with a spy etf as the main investment fund. romaine: does this apply primarily to u.s.-based equities, or have you found any replication among other asset classes or non-us asset classes? >> that's a great point. the spy by itself keeps adding funds, and there's a lot of

implications when it comes to monetary policy that affect these assets. we say the same thing about for instance bitcoin or other markets. at the same time, what we are actually doing is building a dashboard. so investors -- i will eventually upload it to my website and you can test and see how it actually works. caroline: we will check it out, let us know when it goes live. the cfa getting a little bit of love and appreciation. taylor: a little bit of risk management, little bit of asset allocation, not timing the market. we could do this all day long.

romaine would win that challenge. caroline: who doesn't want to see romaine in tights? this is bloomberg.

>> from the heart over innovation, money, and power collide. in silicon valley and beyond, this is "bloomberg technology," with emily chang. [no