For quite a while now people have asked me about uh, drsing, direct registration system or or registering your shares uh through computer share, and i have uh not commented on this for a while, and it's been asked repeatedly on live streams and stuff and uh. You know what i'm tired of people dropping f's in the chat and saying god dang it trey. You got to get your get your together, so here we are we're going to be talking about this guys, i'm going to trade trades where we can talk fast and don't give a question by saying i'm going to fight for five. So please we're gon na, say: they're gon na soap uh, let's get into it today.

Obviously we're gon na be discussing drs. Now the history behind drs is quite interesting. We're gon na walk you through uh sort of this entire thing and what i think makes the most sense, depending on what uh your goal is because i don't think this is a one. Shoe fits all situation uh, despite what some may say, uh, so we're gon na discuss that here today, drs this stands for the direct registration system and the concept quite simply put is it replaces a traditional stock certificate to authenticate ownerships.

If you were to go back in time, the history behind this is actually quite interesting. Uh back when the stock market existed without computers, so to speak, everything was sort of done on paper. This is coming directly from the computer share youtube. They explain sort of the concept behind this, so if you'd like to see this in better detail uh, this is the name of the video you can go check it out.

Please do uh, but but back when everything was done by hand by paper. Eventually, there was sort of a tipping point where the stock market couldn't keep up with how many transactions were taking place on any given day, and because of that, they had to find some sort of system that would uh sort of speed. Things up make things easier, which is a good thing and a bad thing. It's a good thing because it made the market a little bit faster.

It's a bad thing because obviously it opens up the door for a little bit corrupt, a little more, a little more corruption right uh whenever they sort of done on a computer, it's a little easier to click a button than it is to to rip off a Piece of paper: well, it was so bad, in fact, that uh they actually had an entire day dedicated during market days, uh to just catch up on paperwork. So you eventually get to a point now where computers were created and the dtc was created, there's a transition where they still used paper, but they were able to keep up with paper and eventually they wanted to move towards something known as dematerialization and dematerialization was the Complete shift and move away from paper in order to sort of speed up uh the rate at which the market works. Now this is great for market efficiency quote unquote, which is the idea that things can happen a little bit faster than maybe they could have before. However, there are obviously some problems at hand.

You move everything to computers and, as i mentioned uh you just open up the door to more corruption, more manipulation, the opportunity to make things seem uh better than what they may actually be. So something was created. What uh? What computer share created, uh, or i should say offers - is direct registration of your shares and there are some pros and cons to this, and i'm gon na explain sort of the concepts behind this right uh. One of the interesting things is that you own your shares and not the broker.

Now. What does this actually mean right? Well, when you buy a share on robin hood, god help you, if you have that broker, uh, think or swim: interactive brokers, uh moomoo, whatever whatever freaking uh platform you use, these shares are not technically owned by you, they're owned by the broker. The broker owes you basically an iou, they say hey when it's time for you to sell. We got you, but we own the shares by by uh technicality.

So to speak. That's not the case with with drs. You actually own. The shares here and we're gon na be problematic if the broker technically owns the shares, and you don't well, if a broker goes through bankruptcy, which is possible, it is entirely possible right, depending on how market conditions go.

I think robin hood's actually on the verge uh, may i add so and do what you got to do right, but if a broker goes to bankruptcy and they technically own your shares. Well, you may not actually get your money back for for all of your shares, which is certainly not the case if you own them, which is something that computer share makes available to you. Another thing that goes alongside this is lendability. Now lots of people know this, but if you don't uh, the stock market allows institutions, banks, brokers, market makers, essentially to uh lend your shares that the broker owns that they're spotting you if that makes sense.

So let's say that i own uh, a thousand shares of apple and i have blendability turned on, or maybe you don't even have the option to turn it off. What your broker can do is lend out 500 or 700 or 900, or the full position of your long position. If i own a thousand shares of apple, they can actually lend out all 1 000 shares of these uh to a different institution. Who can then go short on those shares, essentially meaning that your buying pressure was negated? In the end, it was worth nothing right, because, if you're letting out your shares well, it can be used as ammunition against you.

This is something that drs also solves direct registration of shares. Right you get the lendability taken away from the equation. You also have a cheaper and easier certificate than brokers, uh and or companies such as apple, giving you the certificate of your broker, giving you a certificate. Now why does this matter? This is more of an old-fashioned thing, uh, something that that people used to do back when the stock market moved a little bit slower is they would have certificates that they maybe frame and put on their wall uh of stock that they owned right? Because it's just it's, it's proud ownership.

You say: hey! I love this company. I support this company. I own this company and i want to have this piece of paper to show and authenticate that i own it, and this is an easier way to be able to do that. If you are kind of old school - and you do like to have that piece of paper hanging on your wall or sitting in your bed stand or whatever it may be, there is a drawback, though these are all pros right.

The con, quite simply put is low liquidity. Now, what do i mean by this right? Low liquidity means there's a slow transaction time, uh sort of the process behind how uh drs works. It's got a lot of mechanisms and stuff, and i'm gon na i'm gon na. Try to keep it as simple as i can, but here's the con in the most simple way that i can the biggest disadvantage of using drs is you can't sell your stock right away right, which is uh.

It can be viewed as a good thing or a bad thing, or maybe just neutral at the very least, depending on the type of investment or trade that you are making right, which is why my opinion on drs is not going to be black and white. I don't think it's a black and white answer. I think it is dependent on your individual situation. What you think is best for you and what your plan is uh so from here.

I want to add one last piece that is hypothetical, but uh could, on paper, be provable synthetics. Now, obviously, drs has the most interest because of gamestop gamestop and super stonk, and a bunch of really smart people essentially concluded that it was plausible that computer share would be able to prove that there were synthetic shares that circulated around see if every single share. That goes through computer share is authenticated. Well, then, they're, obviously not available for lending.

If they're not available for lending. You can assume that overall volume on any given day would go down uh, which would then translate to uh less shares being traded on any given day, which would then translate to eventually, if enough people bought in an idea of what's going on with shares. And if you were to on paper, get every single share registered to drs and nobody was selling and nobody was buying and you still saw volume on any given day. You could assume that there are more shares in existence than should be in existence, or you could, on paper, hypothetically speaking, register more than 100 of the flow of a company uh.

This is possible, but would require a very large amount of people to buy into this sort of concept on paper, hypothetically speaking, very possible right. I want to throw it in here because i think i agree with the idea and concept behind this being a provable thing with drs. What's it best, for, though, see this is the piece where i think it really is dependent - and this is my opinion - is long long term investing and why i say that is uh. You have very slow transaction time and you cannot react to volatility right now.

This is entirely dependent on how you're viewing amc or you're viewing gamestop or you're viewing any of the investments or trades that you may be in at any given time. But in a squeeze play quote unquote right, i could see sort of two scenarios playing out, and one of them is that you go through very short term periods of incredible volatility where the stock will go like this and whiplash back and forth, and eventually peak out Somewhere and it'll drop back down right well with drs, you would not be able to capitalize on a lot of this volatility. You'd be catching sort of the move after the fact, and if history's taught us anything it's that after the fact on these plays what you typically see is uh slow fades right where it just kind of moves around like this and slowly fades and slowly fades. You would be focused on this meat of the move which, if you're okay with, i think that that's an option for you, i really do, but you would not be able to capitalize on this amount of volatility.

This is scenario one and the other one. In my mind, quite simply put is, if you had complete quote-unquote assimilation right every single person that had a share of a company such as amc or gamestop, or any company on paper. If they did. What you could see is that the stock price would actually hold its move slightly, better problem being that, if you do have complete assimilation, that would require institutions and all retail and all market maker shares to be taken into consideration right, because there are long institutions.

There are long retail and there are long market makers right uh on paper, very possible uh, theoretically speaking very possible realistically be very difficult to accomplish right, and it would also require that every single person here uh obviously holds their shares, which is not really a decision That i can make right. I can't i can't tell people where to sell. I can't tell people where to buy uh, but if supply and demand works, sort of like this right where supply is down demand goes up. Hypothetically speaking, you could see a very, very large shift up in uh demand because of slow transaction times right.

You wouldn't be able to sell your stock right away uh. So there's there's option two. I find option one to be far more plausible because of the fear of this low liquidity and slow transaction time uh. I think this is a very big con.

I i really do. I think that this is something that uh may scare some people, because you might not have the time to react to a situation uh like you would like to so here's what i think makes the most sense. Low liquidity equals low reaction time uh. It allows ownership.

True ownership, which is actually very nice, and you can frame it uh if you'd like the uh, the certificate that you would get from computer share, uh, so to speak, uh two different people. I can see that uh for for drs right. What does it make sense for you? If you view a company like amc, gamestop bbbyy any of these uh basket memes, so to speak as something you could see yourself, holding for 5 10 fifteen years and you're not worried about trying to capture volatility right you're, not trying to capture squeeze uh you're, not Trying to uh meet x price target, because that would be very difficult to do uh with with drs and can shift very quickly with uh volatility right uh, then i think it makes sense for you to have drs. I really do i think that drs in that situation is not a necessarily bad thing.

Uh option. Two, though, is if you do care about volatility. You do care about timeliness, uh, that's obviously a very big crutch in uh drs and directly registering your shares or the direct registration system. Uh.

That's that's sort of the situation. That's what makes the most sense in my head myself. Personally, i'm not drs. I do care about timeliness.

I do care about being able to capture on volatility when that time does come uh, so it doesn't make sense for me, but if you were a long-term investor and i do plan on being a long-term investor right. But i am a technical sort of guy like watching how things move and i would like to capture obviously on volatility when that time comes uh. That's a that's an option right. So, at the end of the day, what i'd say to yourself and what i would recommend is do some critical thinking.

I i don't think this is something that makes sense for everybody, but i do think it does make sense for some uh if there are shares that you would like to hold, and maybe this is sort of the better way to put it. If there's shares that you would like to hold to support the company after the fact, during the fact and before the fact, drs makes a lot of sense, i really think it does it's something to show that you take pride in ownership and not necessarily something uh, That you're looking to flip quick because it's inconvenient to do so in that aspect uh. I would actually do that right. I'd set aside a portion of shares just to be able to say, hey, i own this company.

This is my way of supporting the company for the next 5 10 15 years. If that's, what i'd like to do? Uh, if you care about volatility and capturing volatility, it's very inconvenient uh, and that's that's really that there are pros and cons to it. You have to make the decision that's best for you uh. I thought i just had the the piece that people wanted to hear so uh, that's what i've got.

I hope that uh helped out some and i'll catch y'all. The next one appreciate you tuning in watch. All the taps, peace.