WEBVTT - Modular Cat Trees: A Mailbag Episode 0:00:03.120 --> 0:00:09.440 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:10.400 --> 0:00:13.440 Hello and welcome to The Money Stuff Podcast, your weekly 0:00:13.480 --> 0:00:17.080 podcast where we talk about stuff related to money. I'm 0:00:17.120 --> 0:00:19.119 Matt Levin and I are at the Money Stuff column 0:00:19.200 --> 0:00:20.120 for Bloomberg Opinion. 0:00:20.239 --> 0:00:22.720 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:00:22.760 --> 0:00:24.360 an anchor for Bloomberg Television. 0:00:25.000 --> 0:00:28.560 Katy, we traveled into the future. Yes, five minutes ago. 0:00:28.840 --> 0:00:32.519 We're recording a money Stuff episode for I'm going to 0:00:32.600 --> 0:00:34.880 say September. 0:00:34.440 --> 0:00:37.640 Thirteenth, possible Friday the thirteenth, the thirteenth. 0:00:37.360 --> 0:00:38.240 And now. 0:00:39.960 --> 0:00:42.680 Still before Friday the thirteenth, we're recording an episode for 0:00:42.720 --> 0:00:44.839 I'm going to guess Friday the twentieth. 0:00:44.960 --> 0:00:48.000 You're so right, Yeah, yeah, seven days to thirteen, you 0:00:48.080 --> 0:00:49.080 get twenty all. 0:00:49.120 --> 0:00:50.480 Right, So here we are. 0:00:51.560 --> 0:00:53.040 We asked for questions. 0:00:52.920 --> 0:00:53.760 From eight days ago. 0:00:54.000 --> 0:00:56.280 Yeah, we asked you for questions, and boy did you 0:00:56.320 --> 0:00:58.920 deliver our inbox flooded. 0:00:59.360 --> 0:01:00.640 We haven't delivered yet. 0:01:00.760 --> 0:01:02.320 Well, no, we haven't delivered. 0:01:02.040 --> 0:01:02.480 But you did. 0:01:02.680 --> 0:01:07.680 Singing mail Bag, mail Bag. It's our first real mail bag. 0:01:07.480 --> 0:01:09.679 Episode, first all mail bag episode. 0:01:09.800 --> 0:01:15.120 Yeah, so let's dive right in. A writer who asked 0:01:15.120 --> 0:01:19.760 to stay anonymous asks why are private markets the new 0:01:19.800 --> 0:01:23.560 public markets? And is it bad that private markets are 0:01:23.600 --> 0:01:26.720 the new public markets. It's a topic we explore frequently, 0:01:27.200 --> 0:01:28.960 and I guess we should talk about whether or not 0:01:29.160 --> 0:01:30.520 it's like a good development. 0:01:31.080 --> 0:01:33.200 I feel like my like Poddot answer on this is, 0:01:33.200 --> 0:01:36.560 like why are the new public markets? Because there's so 0:01:36.640 --> 0:01:39.560 much money in private markets to that, like, if you 0:01:39.600 --> 0:01:41.440 wanted to raise a lot of money, you went to 0:01:41.520 --> 0:01:44.960 the public markets because like the best way to reach 0:01:45.000 --> 0:01:48.280 people was to like advertise broadly. But now like there 0:01:48.280 --> 0:01:50.680 are a lot of rich people. Financial markets are very 0:01:50.720 --> 0:01:52.840 globalized so that you can call the rich people in 0:01:52.840 --> 0:01:55.240 Saudi Arabia instead of having to like get the rich 0:01:55.240 --> 0:01:58.760 people in America. And technology is such that it's like 0:01:58.960 --> 0:02:01.440 pretty easy to care emphasis all the people with a 0:02:01.480 --> 0:02:05.520 lot of money, and so it is much less necessary 0:02:05.600 --> 0:02:07.640 to go out to public markets to raise a lot 0:02:07.680 --> 0:02:11.240 of money because like it is relatively straightforward to access 0:02:11.360 --> 0:02:14.679 giant pools of money in the private markets. And other 0:02:14.760 --> 0:02:16.920 than the money, like private markets are a lot easier, Right, 0:02:16.960 --> 0:02:19.320 It's like you don't have the same disclosure rules, you 0:02:19.320 --> 0:02:21.840 don't have the same like governance rules, you don't have 0:02:21.880 --> 0:02:24.760 the same getting sued by shareholders. It's a lot easier 0:02:24.800 --> 0:02:26.960 to stay private in many ways. And if you can 0:02:27.040 --> 0:02:29.640 access as much money as like you know, open Ai 0:02:29.840 --> 0:02:33.520 or SpaceX can access in the private markets, then they 0:02:33.560 --> 0:02:36.560 sort of become the default place. And then our questioner 0:02:36.600 --> 0:02:39.320 also asks, is it bad that private markets in the 0:02:39.320 --> 0:02:42.040 new public markets? I mean, the standard story is that 0:02:42.440 --> 0:02:44.920 the point of public markets is in part to like 0:02:45.040 --> 0:02:47.080 allocate capital of the best uses or whatever, but it's 0:02:47.080 --> 0:02:48.600 also in part, like, there are a lot of people 0:02:48.960 --> 0:02:52.440 who have like retirement savings, and you'd like them to 0:02:52.680 --> 0:02:55.919 have adequate retirement savings. True, and like you know, this 0:02:55.960 --> 0:02:58.240 block market is a way to invest in like the 0:02:58.280 --> 0:03:02.840 growth of the economy. Right, you can stakes in big companies, 0:03:02.919 --> 0:03:05.400 and as the economy grows, the value of your stakes 0:03:05.440 --> 0:03:07.720 grows and you end up more than keeping pace with 0:03:07.800 --> 0:03:09.600 inflation and have a lot of money to retire on. 0:03:10.360 --> 0:03:16.360 And if all of the cool, fast growing, innovative small 0:03:16.400 --> 0:03:19.360 companies that will become large are in the private markets 0:03:19.680 --> 0:03:22.600 and the public markets are just for kind of older, 0:03:23.080 --> 0:03:26.600 more stable companies that are no longer growing dynamically, then 0:03:26.639 --> 0:03:30.920 that's worse for retirements for ordinary people, because only essentially 0:03:31.000 --> 0:03:34.440 rich people and like institutions can access the fast growing companies, 0:03:34.760 --> 0:03:37.800 and people say this, you know, Jake Clayton, when you 0:03:37.800 --> 0:03:39.640 around the SEC was fun of saying things like this. 0:03:39.800 --> 0:03:43.080 People sometimes then make the further leap of like, therefore 0:03:43.120 --> 0:03:47.240 we should let retail investors have more access to private investments. 0:03:47.520 --> 0:03:50.000 But like, perhaps they're an ETF from Apollo. 0:03:50.720 --> 0:03:53.520 Sure a nice callback to eight days. 0:03:53.320 --> 0:03:56.640 Ago too, roughly minutes. 0:03:56.400 --> 0:03:58.560 Ago time as a flat circle. 0:03:59.080 --> 0:04:00.760 It's a concept, the concept, but. 0:04:00.720 --> 0:04:04.720 The problem is that like if you give retail investors 0:04:04.800 --> 0:04:06.720 access to private like there's no such thing as private 0:04:06.760 --> 0:04:09.640 markets or like a public market. It's like you can 0:04:09.640 --> 0:04:11.720 buy all the stocks on the public market because they 0:04:11.760 --> 0:04:14.400 just trade publicly. The private market there's no market, right, 0:04:14.440 --> 0:04:17.640 It's just like you can invest in SpaceX if Elon 0:04:17.720 --> 0:04:19.800 Musk likes you, you can invest in open Ai if 0:04:19.800 --> 0:04:22.960 open Ai calls you. If they don't call you, you 0:04:23.000 --> 0:04:25.760 can invest in a different private company. But like if 0:04:25.760 --> 0:04:29.080 you're just like a random person, the private company opportunities 0:04:29.080 --> 0:04:31.559 that you get are not as good as the ones 0:04:31.600 --> 0:04:34.360 that you know, Warren Buffet gets or whatever. And so 0:04:35.080 --> 0:04:38.240 the problem of like ordinary retail investors not having access 0:04:38.279 --> 0:04:40.760 to like the best private market investments is not sold 0:04:40.760 --> 0:04:43.560 by giving them access to the worst private market investments. 0:04:43.160 --> 0:04:45.800 Right, it's made worse. Well, the follow up question that 0:04:45.839 --> 0:04:49.679 someone DM me about is can companies just stay private forever? 0:04:49.720 --> 0:04:51.680 I mean the answer in a lot of cases is yes. 0:04:51.720 --> 0:04:54.560 But I mean do you think about open ai, what 0:04:54.680 --> 0:04:59.920 it has? One hundred and fifty billion dollar valuations? Spacexi, 0:05:00.200 --> 0:05:03.000 forget what they're at. But if you're in that position, 0:05:03.600 --> 0:05:05.160 is there any pressure to go public? 0:05:05.720 --> 0:05:07.719 I mean, companies stay private forever? Right? I mean, yeah, 0:05:07.800 --> 0:05:11.880 Coke Industries has been private for decades or whatever. Everyone 0:05:11.880 --> 0:05:14.839 in this room is gesturing at the room or to 0:05:14.960 --> 0:05:19.279 suggest another private company that exists. Yeah, you know, like 0:05:19.320 --> 0:05:22.280 the big names are like open Ai, SpaceX, and Stripe. Yeah, 0:05:22.400 --> 0:05:28.000 like these big, like Silicon Valley venture funded tech companies. 0:05:28.839 --> 0:05:32.760 There is an expectation among your venture capital investors and 0:05:32.839 --> 0:05:35.200 among your employees that they'll be able to cash out 0:05:35.240 --> 0:05:37.400 their stock, right, Like they bought stock or they got 0:05:37.400 --> 0:05:39.840 paid in stock, and they want to cash out. And 0:05:39.880 --> 0:05:42.039 the ordinary way to cash out is you do an 0:05:42.080 --> 0:05:44.719 IPO and then they can sell their stock. Those companies 0:05:44.720 --> 0:05:46.200 have found a way to avoid that, which is they 0:05:46.240 --> 0:05:48.919 do tender offers. They raise money from new investors and 0:05:48.920 --> 0:05:51.440 they use it to buy back the old investors. It's 0:05:51.440 --> 0:05:54.000 not as good, it's not as nice for the investors. 0:05:54.240 --> 0:05:57.279 It's more complicated. It's more work and like more managerial 0:05:57.360 --> 0:06:00.359 attention possibly than just letting stock trade on the open market, 0:06:00.640 --> 0:06:03.560 but you avoid magorial attention to other things like disclosure. 0:06:04.480 --> 0:06:06.520 I don't know. I mean, my vet is like these 0:06:06.560 --> 0:06:09.640 companies probably could they have it forever. I think they 0:06:09.680 --> 0:06:12.760 have some pressure to make it easier to sell. But 0:06:13.120 --> 0:06:16.560 you know, like if you're an open AI employee and 0:06:16.920 --> 0:06:19.640 you want to sell your ten million dollars of stock 0:06:20.480 --> 0:06:23.080 and the company says, we're not going to go public, 0:06:23.080 --> 0:06:24.600 but we'll do a tender, and like it'll be a 0:06:24.640 --> 0:06:26.960 little bit of administratively annoying, but you'll probably get your 0:06:26.960 --> 0:06:30.719 ten million dollars. That's fine because you like you you 0:06:30.800 --> 0:06:33.640 got so much money from like working at this hot startup. 0:06:33.680 --> 0:06:37.080 Right if in ten years they're not growing fast, you know, 0:06:37.160 --> 0:06:40.000 it's like more administratively annoying to not go public. But yeah, 0:06:40.040 --> 0:06:43.120 you get a lot of runway if you are a 0:06:43.160 --> 0:06:45.960 hot startup and there's so much money in the private 0:06:45.960 --> 0:06:47.919 markets to let you cash out early. Investors. 0:06:51.960 --> 0:06:54.560 Well, we've gotten through one question. Great, so let's move 0:06:54.600 --> 0:06:58.600 swiftly along here. Jeff writes, howdy, you've spent a lot 0:06:58.600 --> 0:07:02.279 of time talking about regulatory finds. For example, the SEC 0:07:02.279 --> 0:07:05.120 collected almost four hundred million dollars in twenty twenty three 0:07:05.440 --> 0:07:09.200 as a result of off channel business communications. My question 0:07:09.320 --> 0:07:12.600 is where does that money go. The off channel communications 0:07:12.640 --> 0:07:16.160 example isn't necessarily harming anyone in particular, so I don't 0:07:16.200 --> 0:07:19.920 imagine it gets paid out as restitution to victims. 0:07:20.120 --> 0:07:23.040 Right off channel communication that means like people texting about 0:07:23.040 --> 0:07:25.960 work on their cell phones, which as SCC's big inforce 0:07:26.000 --> 0:07:28.120 and parity. I write a lot about the SEC being 0:07:28.160 --> 0:07:30.640 like a machine for generating fines, right and like the 0:07:30.640 --> 0:07:32.600 cell phone stuff is such a good way to generate 0:07:32.680 --> 0:07:35.880 fines because every single bank has employees who have texted 0:07:35.920 --> 0:07:38.360 about work, and so you can find all of the 0:07:38.400 --> 0:07:42.400 bank's you know, nine figure sums the answer to the question. 0:07:42.480 --> 0:07:46.280 So the SEC is funded by fees that it charges 0:07:46.320 --> 0:07:49.320 for registration of securities. The SEC has a budget, then 0:07:49.400 --> 0:07:52.040 goes to Congress for its budget, but then the government 0:07:52.040 --> 0:07:54.480 doesn't pay for it like the securities industry pays for it, 0:07:54.520 --> 0:07:57.200 like companies registering securities pay for it, so the sec 0:07:57.400 --> 0:08:00.360 is like free to the government sort of. And it 0:08:00.680 --> 0:08:02.640 last year had like a budget of like two billion 0:08:02.680 --> 0:08:06.040 dollars like employees and stuff, and it collected about five 0:08:06.080 --> 0:08:10.000 billion dollars in fines. She's like pretty good return on capital. 0:08:10.840 --> 0:08:13.280 Most of that I think is like what is referred 0:08:13.320 --> 0:08:16.920 to as discorg min which means like you made money 0:08:16.920 --> 0:08:18.880 illicitly and you have to give it back. Some of 0:08:18.880 --> 0:08:21.360 that is going to be discord to victims, right, Like 0:08:21.640 --> 0:08:23.360 a lot of that is like you stole money and 0:08:23.400 --> 0:08:24.840 you have to give the money back that you stole. 0:08:25.240 --> 0:08:27.160 But there is like a lot of money left over 0:08:27.160 --> 0:08:29.960 for the sec A lot of that goes I think 0:08:29.960 --> 0:08:32.520 they paid out like nine hundred million dollars through victims, 0:08:33.040 --> 0:08:36.360 and they paid at six hundred million dollars the whistleblowers. Nice, 0:08:36.480 --> 0:08:37.400 they pay a commission. 0:08:37.600 --> 0:08:39.120 Not a bad business all these. 0:08:39.000 --> 0:08:41.319 Fines, right, Like you know, six hundred million divided by 0:08:41.320 --> 0:08:43.120 five billion is like you know, they pay like like 0:08:43.160 --> 0:08:45.920 twelve percent fees to the whistleblowers who bring them the fines, 0:08:46.440 --> 0:08:48.040 and then the rest just goes to the treasury, just 0:08:48.040 --> 0:08:50.480 goes back to the U. S. Government. It's a revenue 0:08:50.520 --> 0:08:52.720 source for the US government. I don't know that the 0:08:52.760 --> 0:08:55.319 SEC thinks of itself that way. I think they must 0:08:55.360 --> 0:08:58.559 think of themselves you have a higher yeah, protecting investors 0:08:58.600 --> 0:09:01.040 and like upholding the rule of law, whatever. But I 0:09:01.120 --> 0:09:03.000 like to think of them as doing a certain amount 0:09:03.040 --> 0:09:06.079 of like you know, revenue maximization, and they're good of it. 0:09:06.280 --> 0:09:20.000 Good for them. 0:09:20.360 --> 0:09:22.280 We have a question for me, so I'm. 0:09:22.120 --> 0:09:25.760 Going to read this question, okay. Paul asks Katie what 0:09:25.880 --> 0:09:28.120 is the value of writing a big story as Katy 0:09:28.120 --> 0:09:28.840 did last week? 0:09:28.920 --> 0:09:31.000 Last week, which is actually weeks ago. 0:09:31.640 --> 0:09:35.360 Katie wrote a big story about single stock single stock 0:09:37.559 --> 0:09:41.080 she got so many questions about, and a big story 0:09:41.080 --> 0:09:43.200 at least one that is widely circulated and cited in 0:09:43.200 --> 0:09:46.560 financial media. It was cited by such luminaries as the 0:09:46.679 --> 0:09:48.680 Money Stuff Newsletter, True and. 0:09:48.920 --> 0:09:53.400 Cliffs really just the two institutions care about the most. 0:09:53.520 --> 0:09:56.120 Anyway, what was the How did you feel about that? Well? 0:09:56.160 --> 0:09:59.120 First off, I am glad that we got so many 0:09:59.200 --> 0:10:02.720 questions about average details. Yes, because we end up talking 0:10:02.760 --> 0:10:04.680 about ETFs A loted on this podcast, and I feel 0:10:04.720 --> 0:10:06.160 like that is a lot of my influence. So I'm 0:10:06.200 --> 0:10:08.200 glad that people are somewhat interested, right, It. 0:10:08.160 --> 0:10:10.680 Would be a shame if everyone's like, like one note 0:10:10.720 --> 0:10:11.760 is less ets. 0:10:11.559 --> 0:10:15.480 Yes, please stop talking. I think it's pretty human. It's 0:10:15.559 --> 0:10:17.960 fun to see the hit count on an article that 0:10:18.600 --> 0:10:21.560 is widely circulated. It's also nice when people talk about 0:10:21.559 --> 0:10:24.240 the thing that you wrote about, because usually when I 0:10:24.320 --> 0:10:26.720 pitch an article on a topic that I find cool 0:10:26.800 --> 0:10:28.680 and then people read it a lot and talk about 0:10:28.720 --> 0:10:30.439 it a lot and tweet about it and also think 0:10:30.480 --> 0:10:35.559 it's cool, that is gratifying. And also just when you 0:10:35.600 --> 0:10:38.720 write an article that has an impact, it tends to 0:10:38.760 --> 0:10:41.360 open up communication to people that you would like to 0:10:41.400 --> 0:10:43.920 talk about, who you would think are interesting, so you 0:10:43.920 --> 0:10:46.280 get more inbound from interesting people. 0:10:46.640 --> 0:10:49.560 So I always find it like super gratifying when I 0:10:49.360 --> 0:10:51.760 am right about a thing where I'm like, this is 0:10:52.040 --> 0:10:54.560 ridiculous in our care and of interest only to me, 0:10:54.960 --> 0:10:56.719 and then like that gets me the best feedback and 0:10:56.800 --> 0:10:59.520 be like, oh I love this. Right, it's really satisfying 0:10:59.520 --> 0:11:01.360 that I got like there are people like me out there, 0:11:01.400 --> 0:11:02.319 you know, Yeah, it. 0:11:02.320 --> 0:11:05.840 Is really nice. And also I mean I can see 0:11:05.880 --> 0:11:10.160 my hits, so like it's instant gratification for something that 0:11:11.120 --> 0:11:13.920 you know if you write that story. I mean, it 0:11:13.920 --> 0:11:15.800 didn't take me too long, but I probably worked on 0:11:15.840 --> 0:11:17.120 it for like a week and a half and then 0:11:17.360 --> 0:11:20.440 just got the instant gratification always feels good. Yeah, yeah, 0:11:22.520 --> 0:11:26.960 you don't mean you read spikes on the terminal every 0:11:27.000 --> 0:11:29.960 single day that you publish. I read spiking is when 0:11:30.000 --> 0:11:31.480 you get a certain amount of spikes and a certain 0:11:31.480 --> 0:11:35.240 amount of time. And Matt always reads spikes, so we 0:11:35.320 --> 0:11:44.240 have a rea. I have read spike alerts, So, Justin writes, 0:11:44.640 --> 0:11:47.319 both Icon and Acman have been living rent free in 0:11:47.400 --> 0:11:50.080 my mind lately thanks to Matt's columns, And it made 0:11:50.080 --> 0:11:53.160 me think about how it would be funny if Acman 0:11:53.559 --> 0:11:56.880 took an activist position on i EP. Given the history 0:11:56.920 --> 0:12:00.000 of public feuds between the two and the recent precipitous 0:12:00.200 --> 0:12:03.800 fall of that stocks price, could this actually play out? 0:12:04.080 --> 0:12:07.000 That would be amazing. I go back and I watched 0:12:07.040 --> 0:12:09.200 that CNBC cliff. 0:12:09.240 --> 0:12:11.520 It's like the most famous piece of financial television ever. 0:12:11.880 --> 0:12:14.559 Probably watch it once a month. It's just so good 0:12:14.600 --> 0:12:17.520 just to remind myself, like, what who is on? 0:12:17.720 --> 0:12:20.120 Is it? Akman was on and I kind of called the. 0:12:20.080 --> 0:12:22.800 Inner Vice versas I think Akman was on an Icon 0:12:22.880 --> 0:12:25.160 called it and they just let it run. 0:12:25.320 --> 0:12:27.160 I definitely said that I want to be friends with 0:12:27.160 --> 0:12:30.520 with you, Bill, I wouldn't And I wait, you say 0:12:31.040 --> 0:12:33.360 you'd like to be friends so that we could invest together, 0:12:33.400 --> 0:12:34.400 cal I have no interest. 0:12:34.679 --> 0:12:35.920 Do you think I want to invest with you? 0:12:36.040 --> 0:12:38.640 Okay, let's fees. Would you let me move on? 0:12:39.200 --> 0:12:40.160 Earth, Let's move on. 0:12:41.160 --> 0:12:42.640 This is like ten years This is like more than 0:12:42.679 --> 0:12:43.199 ten years ago. 0:12:43.280 --> 0:12:45.719 I know, but I watched it to remind myself. What 0:12:45.840 --> 0:12:47.560 like peak financial television looks like. 0:12:47.640 --> 0:12:52.679 The greatest fight financial television ever. It's so good. I 0:12:52.720 --> 0:12:53.680 don't think they've like. 0:12:54.120 --> 0:12:58.600 Any they have like, yeah, they've appeared on stage together. 0:12:59.200 --> 0:13:04.920 They're friends, but let's for the purposes podcast together would 0:13:05.120 --> 0:13:08.720 not be so good. Can we just give up our seats. 0:13:08.520 --> 0:13:11.880 To be icon show? Yeah, we'll just leave them alone 0:13:11.920 --> 0:13:13.160 in this box of a room. 0:13:14.160 --> 0:13:15.040 That would be so good. 0:13:15.320 --> 0:13:15.520 Yeah. 0:13:15.960 --> 0:13:18.520 But failing that, iep is I kind of Enterprises, which 0:13:18.520 --> 0:13:21.480 is Carla CON's probably traded company, which has had a 0:13:21.600 --> 0:13:25.160 precipitous fall because a short cellar accused it of being 0:13:25.200 --> 0:13:27.520 a Ponzi's game, and it like lost a lot of 0:13:27.559 --> 0:13:31.120 its bibe. The answer is no, Acman can't really do 0:13:31.280 --> 0:13:34.240 much activism in IEP just because Carla Kon owns eighty 0:13:34.280 --> 0:13:37.959 five percent of it, and so that's not much activism do. 0:13:38.320 --> 0:13:41.319 Now he had margined a lot of that stock and 0:13:41.600 --> 0:13:44.240 had his bank seased and sold his stock, then there 0:13:44.320 --> 0:13:46.600 might be something there, but that would be a bigger 0:13:46.640 --> 0:13:49.000 problem for him than that just Bill Ackman being in 0:13:49.040 --> 0:13:52.360 the stock. But the real answer is question is no, 0:13:52.559 --> 0:13:55.640 Acman can't do that, but the reverse is possible. True, 0:13:55.840 --> 0:13:59.320 And in fact, Elliott built an activist steak in Bill 0:13:59.400 --> 0:14:03.559 Ackman's European public vehicle in like twenty seventeen, which like 0:14:03.800 --> 0:14:05.320 he has talked about, Like I think. 0:14:05.400 --> 0:14:08.880 He revealed it on a podcast this podcast with Carl 0:14:10.240 --> 0:14:12.520 not this podcast. I think it was Lux Friedman. 0:14:12.720 --> 0:14:15.000 Yeah, And so like it's a little unclear exactly what 0:14:15.120 --> 0:14:17.240 happened because it's just like his version of the story 0:14:17.320 --> 0:14:19.720 and like they didn't actually do any activism because I 0:14:19.760 --> 0:14:22.120 think basically they were building a stake and like, yeah, 0:14:22.360 --> 0:14:24.920 Akan was able to head them off, but I don't know. 0:14:25.000 --> 0:14:28.120 I was looking idly through the filing for Pershing Square USA, 0:14:28.560 --> 0:14:30.240 and it sort of looked like there were in that 0:14:30.400 --> 0:14:33.240 many anti activist protections. So if he does end up 0:14:33.280 --> 0:14:37.440 taking that thing public. God Will wants the bar against 0:14:37.480 --> 0:14:39.520 his iep' stot to try something. It'd be fun. 0:14:39.760 --> 0:14:45.680 I mean, my fantasy lineup is psh IPOs trades it 0:14:45.720 --> 0:14:49.240 a discount. Boas Wysteine does activism. 0:14:49.120 --> 0:14:53.360 Right, But I think and Black are they're friends their friends. 0:14:53.400 --> 0:14:56.800 I know, Well that's the thing, like, is Boas morally obligated. 0:14:56.920 --> 0:14:59.960 To do close unfund activism wherever the opportunity for Maybe 0:15:00.200 --> 0:15:00.680 maybe he is. 0:15:00.840 --> 0:15:01.520 That's what I'm saying. 0:15:03.320 --> 0:15:04.280 I have a podcast with them. 0:15:04.600 --> 0:15:11.160 Yes, yes, Jeff. I wonder if he said the same, Jeff. 0:15:11.760 --> 0:15:15.600 Jeff asks, So, whether I'm in the long or short 0:15:16.040 --> 0:15:19.640 micro strategy leverage gtfs, I'm guaranteed to lose money over 0:15:19.680 --> 0:15:22.640 the long term. Is it possible to borrow these shares 0:15:22.720 --> 0:15:25.640 to short them? And isn't this a guaranteed money maker? 0:15:26.240 --> 0:15:27.920 No, you're not guaranteed to lose money. 0:15:29.480 --> 0:15:33.160 You tell him, Jeff, what do you It happens. 0:15:32.840 --> 0:15:35.160 To be the case that this micro strategy ETF that 0:15:35.320 --> 0:15:37.760 Katie wrote about low of these two weeks ago, it's 0:15:37.800 --> 0:15:40.520 like a triple levered ETF. That micro strategy was up 0:15:40.560 --> 0:15:43.440 a lot over the year, and the ETF was down 0:15:43.480 --> 0:15:45.440 a lot. Because the way the math works is that 0:15:45.520 --> 0:15:48.600 if you leverage a vital stock enough, then even though 0:15:48.640 --> 0:15:51.840 the stock goes up, your triple levered stock can go down. 0:15:52.400 --> 0:15:54.560 But that just you know, was kind of bad luck. 0:15:54.680 --> 0:15:57.040 And in fact, lots of other triple leverty ETFs, including 0:15:57.040 --> 0:15:59.000 the in video one, like go up when the stock 0:15:59.040 --> 0:16:01.040 goes up, like normally goes up, and the stock goes up, 0:16:01.080 --> 0:16:02.640 and it has to be things have to go pretty 0:16:02.640 --> 0:16:04.360 wrong for it to go down when the stock goes up. 0:16:05.080 --> 0:16:08.160 But then we also got a question from then, if 0:16:08.200 --> 0:16:10.680 a leverage single stock fund produces worse long term returns 0:16:11.080 --> 0:16:13.480 than the volatile underlying stock, then would you get better 0:16:13.560 --> 0:16:15.680 returns than the underlying stock if the fund gave you 0:16:15.800 --> 0:16:17.920 less than one hundred percent of the stock's daily returns 0:16:18.320 --> 0:16:20.680 e g. A fund that gives you fifty percent of 0:16:20.720 --> 0:16:23.000 the daily return of micro Strategy. I think the answer 0:16:23.080 --> 0:16:23.400 is yes. 0:16:23.640 --> 0:16:24.480 That's really interesting. 0:16:24.560 --> 0:16:27.120 I think if you you can create that yourself, right, 0:16:27.560 --> 0:16:30.520 you create that by like taking one hundred dollars and 0:16:30.600 --> 0:16:33.240 putting fifty dollars of it into micro Strategy stock and 0:16:33.400 --> 0:16:37.680 just keeping the other fifty dollars in cash, and then 0:16:37.720 --> 0:16:40.200 you have half as much volatile as micro strategy, and 0:16:40.280 --> 0:16:42.360 then the key is you keep it fifty to fifty. 0:16:42.560 --> 0:16:45.280 You rebalance each day. So if micro strategy goes down, 0:16:45.560 --> 0:16:47.880 so you have like forty five dollars of micro strategy, 0:16:48.400 --> 0:16:51.440 then you rebalance. You put two to fifty into micro strategy, 0:16:51.680 --> 0:16:53.280 so now you have forty seven to fifty of cash 0:16:53.480 --> 0:16:56.160 forty seven to fifty of micro strategy. Micro strategy goes up, 0:16:56.200 --> 0:16:59.040 on the other end, you sell micro strategy and keep 0:16:59.120 --> 0:17:02.000 some cash. So each day you always start fifty to fifty. 0:17:02.840 --> 0:17:06.440 And what that strategy is is just buying low and 0:17:06.520 --> 0:17:09.879 selling high. Right, It's you're sort of assuming that micro 0:17:09.960 --> 0:17:14.000 strategy will be like more volatile than directional, like it'll 0:17:14.040 --> 0:17:17.359 bounce around a lot without going anywhere. And if that's true, 0:17:17.880 --> 0:17:20.520 then each time it goes down, you'll buy. Each time 0:17:20.560 --> 0:17:22.480 it goes up, you'll sell, and you'll make money over 0:17:22.520 --> 0:17:26.120 the long term. That happens to work sometimes, but it's 0:17:26.240 --> 0:17:27.800 just a guess on what the stock will look like. 0:17:27.840 --> 0:17:29.679 If the stock is very volatile that doesn't go anywhere, 0:17:29.680 --> 0:17:31.560 that'll make money. But if the stock goes up a lot, 0:17:31.560 --> 0:17:32.919 you'll be sad that you did that instead of. 0:17:32.960 --> 0:17:36.000 Just buying the stock, Well, might as well launch it. 0:17:36.680 --> 0:17:38.080 You don't even need to have you just need to 0:17:39.280 --> 0:17:40.120 I mean fine. 0:17:42.720 --> 0:17:50.159 This week, you mean this week last week? What are 0:17:50.240 --> 0:17:53.600 your favorite types of stock malfeasance? Is that how I 0:17:53.640 --> 0:17:59.160 see malfeasance? To cover? Short cellar witch hunts, no shorts. 0:18:02.200 --> 0:18:07.080 That was one sentence, short cellar witch hunts, gnarly bankruptcies, 0:18:08.480 --> 0:18:10.600 insurance fraud, question mark which one? 0:18:11.359 --> 0:18:14.320 Well, I always love clever ones, right, I love the 0:18:14.400 --> 0:18:15.760 Spotify or you're talking. 0:18:15.600 --> 0:18:17.520 Nah, that's about you mean the one that we covered 0:18:17.560 --> 0:18:18.480 last week last week? 0:18:18.560 --> 0:18:23.080 Yeah, the Spotify one from last week last I love 0:18:23.200 --> 0:18:27.480 clever ones. I love things that like use leverage. So like, 0:18:27.840 --> 0:18:30.680 there's some really good insurance frauds where like the thing 0:18:30.760 --> 0:18:34.359 to notice about insurance is like, this is true of 0:18:34.359 --> 0:18:36.080 a bank too, and it's maybe more intuitive with the bank. 0:18:36.119 --> 0:18:38.600 A bank is like a pot of a billion dollars 0:18:39.480 --> 0:18:41.680 with like one hundred million dollars of equity, right, like 0:18:42.240 --> 0:18:45.119 a bank. You can buy control of a bank by 0:18:45.160 --> 0:18:47.320 buying its stock, and the stock is just a tiny 0:18:47.400 --> 0:18:49.320 fraction of the value of money in the bank. Right. 0:18:49.400 --> 0:18:52.120 The bank is mostly leverage, and so if you buy 0:18:52.160 --> 0:18:54.280 a bank stock, you control all that money in the 0:18:54.320 --> 0:18:56.320 bank and then you can give it to yourself. And 0:18:56.440 --> 0:18:58.960 of course, of course, of course banking and regulation, I 0:18:59.040 --> 0:19:01.760 mean banking and insurance, there's regulation to stop you from 0:19:01.800 --> 0:19:04.760 doing that extremely obvious straight but people find ways, mostly 0:19:04.800 --> 0:19:07.240 an insurance sometimes in banking too, but like insurance, you 0:19:07.320 --> 0:19:09.520 buy this little insurance company. It has this big pot 0:19:09.560 --> 0:19:12.640 of premiums that it's written and like money that it controls, 0:19:12.680 --> 0:19:14.840 and then you give that money to yourself. Yeah, and 0:19:15.000 --> 0:19:17.080 it's great, It's very clever. The other thing I really 0:19:17.160 --> 0:19:19.119 like to write about is Evan writing about it a 0:19:19.160 --> 0:19:22.200 lot recently. It is fake takeover offers, because you think 0:19:23.000 --> 0:19:25.240 it's like the stereotype of fake takeover offers, which is 0:19:25.320 --> 0:19:27.639 that it's like you buy a stock, you put out 0:19:27.680 --> 0:19:29.760 a fake press relief saying that you're buying the company, 0:19:29.960 --> 0:19:31.920 the stock goes up, you sell the stock, you make money. 0:19:32.200 --> 0:19:33.520 And in fact, there are a lot of cases like that. 0:19:33.640 --> 0:19:35.560 In almost every case they don't make money because they 0:19:35.640 --> 0:19:37.760