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Before WallStreetBets: A history of online message boards and 'stonks'

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The r/WallStreetBets community on Reddit appears to be the modern reincarnation of online message boards of years’ past. Sites like Silicon Investing, Raging Bull, and this one — Yahoo Finance — served as open forums for investors to anonymously float ideas during the dot-com bubble that popped in 2000.

Video Transcript

ADAM SHAPIRO: So instead of riding the GameStop roller coaster, perhaps you want to learn more about the history of WallStreetBets and other online messaging boards. Brian Cheung is going to school us on that, Brian.

BRIAN CHEUNG: Well, Adam, it seems like everyone's interested in this new phenomenon of WallStreetBets and Reddit. But we have to remember that it wasn't much long ago that we saw something very similar with the advent of the internet around the dot-com bubble. There were many types of message boards. I'm going to take you down memory lane, things like ragingbull.com, siliconinvestor.com, this website, yahoofinance.com. These are all message boards where people floated investment ideas at the time.

Now, consider an example of a company called Zitel. This was a company that a lot of people on siliconinvestor.com and the Motley Fool had tried to pump on the promise that this was a tech company that was going to deliver a cure to the Y2K bug, you remember, whether or not computers were going to explode when the calendar turned from 1999 to 2000. Here's an example of one post that was on siliconinvestor.com in 1996.

It read, "at the end, the people who don't like that--" which refers to the people that were trying to pump the stock of Zitel-- "are, A, the shorts and, two, those who are not long. For those of us who are long-- I have a few shares 19-- let the good times roll." Again, this is coming from 1996.

But you can see how the views of this are very similar to what we're seeing in the WallStreetBets sub Reddit. Very interesting to see how this is all kind of coming back into vogue almost 20 years later. When you look back at Yahoo Finance message boards, though, we see cautionary tales of the types of misinformation, though, that can come from this, one example being the Whole Foods CEO John Mackey. He was using a pseudonym at the time on Yahoo Finance message boards, complimenting not only how he personally looked, but also trying to talk down his rival, which was Wild Oats. The FTC and the SEC ended up investigating that, but a very cautionary tale that shows just how interestingly history tends to repeat itself, Seana, Adam.

SEANA SMITH: Well, Brian, I'm curious to get your take on this because when we talk about the misinformation and the fraud, like what you were just mentioning there, that begs the question, then, what's going to happen as a result of this? And Fed Chair Jay Powell was asked about this last week. He kind of brushed it off, didn't really give an answer.

But I know you're closely following [AUDIO OUT] Fed is going to look like in the Biden administration. What it's going to look like-- what the Treasury Department's going to look like under Janet Yellen. So what do you think, I guess, could potentially happen as a result of this?

BRIAN CHEUNG: Yeah. And obviously we've already heard the news, breaking headlines, from the likes of Jay Powell, again, at the Federal Reserve saying, I don't want to comment on this type of thing, and rightfully so. The Federal Reserve doesn't necessarily have purview over the regulation of information in the securities markets. Instead, that responsibility is going to fall on a name that's probably lesser known to the average person, especially the person that might have been following this story over the past few weeks, and that's Gary Gensler. He's the Biden pick for the top of the Securities and Exchange Commission.

He has not been confirmed yet. He does need to go through the Senate confirmation process. But he's someone that formerly headed the CFTC. And he will be undergoing a hearing at some point in the Senate Finance Committee. That is likely going to be taking on a strong tenor of what he's going to do at the head of the SEC within the context of what we were seeing in the stock market last week and into this week.

That's going to be very much a large question. Is he going to require types of regulatory disclosures from people on WallStreetBets? Is he going to require more disclosure and transparency from the market makers, the high-frequency traders, like Citadel that are involved in this, the brokerages themselves? There are so many different types of questions. But I think he is going to be a real fixture when it comes to who is going to be guiding the policy over the next four years.

ADAM SHAPIRO: Brian, appreciate the update. You are always welcome to take us down memory lane. But if you ever go back to the 1990s, you are forbidden to remind us of the Macarena. We're going to--

BRIAN CHEUNG: OK. [LAUGHS]