WEBVTT - Cool and Fun for Capital Markets Nerds: Tayvis, MSTR, IPO 0:00:02.720 --> 0:00:08.880 Bloomberg Audio Studios, Podcasts, radio news. So here we are. 0:00:08.960 --> 0:00:12.319 I guess around the clock. It's been approximately six months 0:00:12.400 --> 0:00:14.160 since we recorded a podcast together. 0:00:14.360 --> 0:00:15.400 Right, It's good to see. 0:00:15.640 --> 0:00:18.760 It's nice to see you. You look crested, you got 0:00:18.760 --> 0:00:21.040 a haircut, you're clean shaven, you have a tan. 0:00:21.239 --> 0:00:24.960 Yeah. Yeah, yeah, it was nice. I missed the podcast, 0:00:25.040 --> 0:00:25.560 of course. 0:00:25.400 --> 0:00:27.319 But it was nice being making you're so full of it. 0:00:27.520 --> 0:00:33.159 Yeah. Yeah, we're both like being incredibly insincere. Yeah, here 0:00:33.159 --> 0:00:33.400 we are. 0:00:33.640 --> 0:00:36.040 Yeah, I will say it was nice to you know, 0:00:36.159 --> 0:00:38.360 roll into Thursday the last two weeks and been like 0:00:38.400 --> 0:00:40.880 oh my god, and then have been like, oh wait, no, 0:00:41.000 --> 0:00:43.400 everything's fine. I don't have to record anything right now. 0:00:43.920 --> 0:00:49.440 I share that feeling. And also this Thursday was not 0:00:49.720 --> 0:00:50.080 like that. 0:00:50.400 --> 0:00:52.360 Yeah. We should set up a Patreon. 0:00:53.840 --> 0:00:56.760 Hello, and welcome to the Money Stuff Podcast. You're a 0:00:56.760 --> 0:01:00.880 weekly podcast where we talk about stuff related to money. 0:01:01.520 --> 0:01:03.680 I'm Matt Levine and I write the Moneys Doff com 0:01:03.760 --> 0:01:04.679 for Bloomberg Opinion. 0:01:05.280 --> 0:01:08.080 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:01:08.120 --> 0:01:09.759 an anchor for Bloomberg Television. 0:01:10.800 --> 0:01:12.080 Yeah, Taylor shows, gotting engaged. 0:01:12.160 --> 0:01:17.440 Yeah, biggest financial market news of the week. Pretty surprising, 0:01:17.640 --> 0:01:20.640 but not to at least one person named Romantic Paul. 0:01:20.760 --> 0:01:23.800 You know, several people sent me this thing, is it right? 0:01:23.840 --> 0:01:26.199 So like a guy made a well time you assume 0:01:26.200 --> 0:01:29.920 it's a man. Yeah, a user with the account named 0:01:30.000 --> 0:01:33.320 Romantic Paul made a well time trade on polymarket on 0:01:33.600 --> 0:01:41.920 Taylors just getting engaged. Basically, like that contract was trading 0:01:41.959 --> 0:01:44.520 it like twenty five percent, and then it spiked up 0:01:44.520 --> 0:01:47.360 to like like forty percent like the day before she 0:01:47.400 --> 0:01:50.360 got engaged. Yeah, and several people sent that to me, 0:01:50.520 --> 0:01:52.560 and it's like, you know, like people were interested in 0:01:52.600 --> 0:01:56.840 that stuff, but like that was a contract with a 0:01:56.880 --> 0:02:00.680 couple one hundred thousand dollars of that's outstanding. Yeah, And 0:02:00.760 --> 0:02:04.160 Rheumatic Paul seems to admit on the order of three 0:02:04.240 --> 0:02:07.480 thousand dollars on this wall time trade. So was it 0:02:07.560 --> 0:02:10.280 the biggest financial market use of Oh no. 0:02:10.280 --> 0:02:13.040 I'm just talking about the magnitude of tailor Swift getting. 0:02:12.720 --> 0:02:14.840 Engaged, right right, scenting. 0:02:14.680 --> 0:02:16.840 Ripples across all financial. 0:02:16.520 --> 0:02:18.200 Okay, you're saying, like Treasury is sold off. 0:02:18.280 --> 0:02:23.600 Yeah, yeah, you didn't need a haven asset in that scenario. 0:02:23.800 --> 0:02:24.600 America's back. 0:02:24.680 --> 0:02:27.640 Hey, you saw your tweet like you're bearish and Taylor 0:02:27.680 --> 0:02:28.919 Swift got engaged in your. 0:02:28.760 --> 0:02:31.760 Bears, You're parish, Taylor Swift gone engaged in your bears. 0:02:31.800 --> 0:02:34.320 Just a risk one moment. Yeah, soa, I'm sorry, I 0:02:34.320 --> 0:02:36.200 take it back. I was just talking about the narrow No, 0:02:36.400 --> 0:02:38.760 that's so many things. It's like submission markets, like you 0:02:38.800 --> 0:02:41.760 can specifically bet on or had a specific thing, but 0:02:41.800 --> 0:02:44.440 then like those things often have brought her financial market 0:02:44.440 --> 0:02:46.920 implications and so like you can you can structure your 0:02:46.919 --> 0:02:49.280 tailor Swift trade by like, I don't know ing the 0:02:49.360 --> 0:02:49.680 S and P. 0:02:49.919 --> 0:02:53.360 I have to say, I am surprised that it was 0:02:53.400 --> 0:02:55.799 only about twenty five percent odds. I wish I had 0:02:55.880 --> 0:02:58.080 known that it was trading that cheap. 0:02:58.160 --> 0:02:59.720 Yeah, it was like it was she gets engaged by 0:02:59.760 --> 0:03:02.919 the end of this year. Yeah, that seems cheap. 0:03:02.720 --> 0:03:05.560 It does, I mean, especially right now when she's engaged 0:03:06.560 --> 0:03:10.680 after this. For sure, I knew you raised the point 0:03:10.800 --> 0:03:14.840 that she got engaged two weeks ago, so theoretically someone 0:03:15.040 --> 0:03:18.120 probably knew. So maybe there was an element of insider 0:03:18.160 --> 0:03:18.639 trading here. 0:03:18.800 --> 0:03:21.200 Yeah, although again, like you know the amount of money 0:03:21.200 --> 0:03:23.240 that you could make insider trading on the Taylor sw 0:03:23.240 --> 0:03:27.280 with engagement news is in the like single digit thousands of. 0:03:27.240 --> 0:03:31.799 Dollars single digit thousands. Yeah, what if you uh? Can 0:03:31.840 --> 0:03:32.760 you lover these bets? 0:03:32.960 --> 0:03:35.360 The problem is finding people to bet against yours a. 0:03:35.520 --> 0:03:38.880 It's a prediction market, and to bet on yes, you 0:03:38.920 --> 0:03:40.520 have to find people who are willing to bet on now. 0:03:40.560 --> 0:03:42.200 And you know the number of people who wanted to 0:03:42.200 --> 0:03:44.640 put millions of dollars into betting that Taylor's with won't 0:03:44.680 --> 0:03:47.200 get engaged against the highly motivated buyer. 0:03:47.920 --> 0:03:52.640 That's true. I guess if you knew for sure, you'd 0:03:52.640 --> 0:03:54.160 probably just sell to a tabloid. 0:03:54.200 --> 0:03:57.280 But right, right, right, or like you can make a 0:03:57.320 --> 0:03:59.240 lot more, just like be friends with Taylor Swift just 0:03:59.240 --> 0:04:00.280 seems like a lucid. 0:04:00.520 --> 0:04:04.840 Yeah, there's a few things that point to this being 0:04:05.200 --> 0:04:07.800 not insider trading or a person who didn't know for sure. 0:04:08.240 --> 0:04:10.880 We were just joking. In hindsight, of course it seems obvious. 0:04:10.920 --> 0:04:17.760 But also they got engaged theoretically right after they podcasts. 0:04:17.800 --> 0:04:21.120 Actually the Kelsey brother It's funny how that happens. Maybe 0:04:21.120 --> 0:04:23.599 I'll go repropose to my husband after this. But anyway, 0:04:24.440 --> 0:04:28.200 Taylor Swift, sorry, this is for the Swifties out there. 0:04:28.320 --> 0:04:31.760 She hasn't done an interview like that with a previous 0:04:31.839 --> 0:04:34.920 romantic partner of that scale. I mean this, you. 0:04:35.160 --> 0:04:37.720 Dated a podcaster before. Maybe I'm wrong, I probably I know. 0:04:37.760 --> 0:04:40.960 But she's dated other famous people where theoretically they could 0:04:40.960 --> 0:04:46.200 have done a joint appearance like that. They didn't, I know, 0:04:46.200 --> 0:04:47.800 but they could have found a podcast to go on, 0:04:47.920 --> 0:04:50.080 is what I'm saying. Like, she hasn't like sat in 0:04:50.160 --> 0:04:53.840 an interview or done anything like that with previous partners. 0:04:53.880 --> 0:04:57.920 So you could watch the New Heights episode, which millions 0:04:57.960 --> 0:05:00.599 of people did, be like, oh wow, these two people 0:05:01.040 --> 0:05:03.800 clearly like each other, and that was the. 0:05:04.120 --> 0:05:06.479 Really love that. Like you're like, no, you had to 0:05:06.600 --> 0:05:09.119 know they're getting engaged because they podcasted together. 0:05:09.200 --> 0:05:12.320 Well no, it was also a video podcast, which video podcast, 0:05:12.360 --> 0:05:14.520 by the way, we should probably do more of anyway, 0:05:14.560 --> 0:05:17.880 you could really read their body language. But probably maybe 0:05:18.160 --> 0:05:20.000 if you want to give romantic Paul the benefit of 0:05:20.000 --> 0:05:22.400 the doubt, he saw that podcast was like, oh shoot, 0:05:22.440 --> 0:05:25.599 these are two people who genuinely like each other, and 0:05:25.640 --> 0:05:28.440 that that was that they'd get engaged sometime this year. 0:05:28.680 --> 0:05:33.000 It's only August. Yeah, yeah, and they're thirty five years old. 0:05:33.240 --> 0:05:35.400 Yeah. You make good points thank you. I really I 0:05:35.400 --> 0:05:38.239 don't mean to suggest that Romantic Paul was insider trading 0:05:38.680 --> 0:05:40.200 to make three thousand dollars. 0:05:39.880 --> 0:05:41.479 On tellers thirty five hundred. 0:05:41.640 --> 0:05:44.080 Prediction markets are so weird and interesting and so like 0:05:44.960 --> 0:05:48.520 growing in importance and strange ways. And I think, you know, 0:05:48.960 --> 0:05:53.839 the contours of insider trading around prediction markets are very strange. 0:05:54.200 --> 0:05:54.640 Yeah. 0:05:54.720 --> 0:05:57.000 I think of it mostly in connection with sports betting, 0:05:57.080 --> 0:05:59.440 right because and this is not a sports bet, it's 0:05:59.480 --> 0:06:04.120 sports that as a sports figure, but I have written 0:06:04.160 --> 0:06:07.800 a lot about and we've talked about how prediction markets 0:06:08.160 --> 0:06:12.760 are an interestingly important way to make sports bets because 0:06:14.240 --> 0:06:19.080 it seems like right now CFTC regulated commodities futures markets 0:06:19.120 --> 0:06:22.640 like CALCI are a way to make sports bets that 0:06:22.960 --> 0:06:26.159 are not subject to state regulation, so you can like 0:06:26.400 --> 0:06:30.440 you know, ignore state gambling laws and get better tax 0:06:30.480 --> 0:06:33.160 treatment than actual gambling because right now, gambling losses are 0:06:33.200 --> 0:06:37.680 not fully deductible in your taxes, but commodity trading losses 0:06:37.720 --> 0:06:42.920 are probably fully deductible. So the prediction markets, that particularly Calshie, 0:06:42.920 --> 0:06:45.720 are having a real moment for like becoming the sports 0:06:45.760 --> 0:06:49.920 gambling platform. And you know, this week I wrote about 0:06:50.040 --> 0:06:52.960 robinhood is pursuing Nevada regulators so that they can be 0:06:53.000 --> 0:06:56.479 allowed to offer sports gambling. Robinhoo wouldn't say this, but 0:06:56.600 --> 0:06:58.479 I would say, so they can be allowed to offer 0:06:58.520 --> 0:07:00.520 sports gambling on their stock trading app, which is like, 0:07:00.600 --> 0:07:02.760 you know, kind of amazing, but like just like sort 0:07:02.800 --> 0:07:06.880 of where things are heading. And prediction markets are beloved 0:07:06.880 --> 0:07:11.480 by like economists and like libertarian weirdos because like in theory, 0:07:11.520 --> 0:07:13.240 if you had a prediction market and everything, then you 0:07:13.240 --> 0:07:15.880 could like predict everything and like the world would be 0:07:15.880 --> 0:07:18.920 better informed because markets would push prices to their correct place. 0:07:19.800 --> 0:07:22.720 And there's a lot of skepticism about that because like, 0:07:22.760 --> 0:07:24.440 in fact, people don't want to bet on all sorts 0:07:24.480 --> 0:07:27.960 of nonsense, and like the big problem with prediction markets 0:07:27.960 --> 0:07:32.640 has always been like outside of like the US presidential election, 0:07:33.240 --> 0:07:36.240 it's hard to find a lot of people who are 0:07:36.280 --> 0:07:39.920 really into betting on prediction markets because it doesn't sort 0:07:39.920 --> 0:07:43.280 of serve any savings purpose and it's not a natural 0:07:43.320 --> 0:07:48.120 home for gamblers, and so the volumes on prediction markets 0:07:48.120 --> 0:07:50.720 are kind of small, and you can have your doubts 0:07:50.760 --> 0:07:53.400 about how predictive the prices are. You know, again, outside 0:07:53.440 --> 0:07:57.760 of like the US presidential election, and when prediction markets 0:07:57.760 --> 0:08:02.200 get into the sports gambling game changes that dynamic entirely. 0:08:02.280 --> 0:08:02.440 Right. 0:08:02.440 --> 0:08:05.640 It means that like, if you look at Calshi and 0:08:05.720 --> 0:08:08.560 you think this is the future of sports betting because 0:08:08.600 --> 0:08:11.720 it has a better regulatory and tax treatment than the 0:08:11.760 --> 0:08:14.800 sports books that are doing billions of dollars of bets, 0:08:15.640 --> 0:08:18.960 then you're thinking Calshi is going to offer people campbells 0:08:18.960 --> 0:08:21.520 that they want and that they come back to every day, right, 0:08:21.560 --> 0:08:27.440 because sports are constantly happening, and so then all of 0:08:27.480 --> 0:08:29.560 the ancillary stuff, all of the stuff like betting on 0:08:29.560 --> 0:08:31.880 Taylor Swift's baby is like just more appealing because more 0:08:31.920 --> 0:08:34.920 people have Calshie accounts and more people are you know, 0:08:35.080 --> 0:08:38.920 betting there anyway, so they'll bet on when you know, 0:08:39.080 --> 0:08:41.280 when the when the wedding will happen, and yeah, you. 0:08:41.240 --> 0:08:44.640 Know, the network effects will kick in, Yeah. 0:08:44.400 --> 0:08:46.680 The network, so you know people will betting on everything, 0:08:46.760 --> 0:08:51.400 and then you know, you'll have a CFTC regulated licensed 0:08:51.760 --> 0:08:54.960 US Commodities Exchange for sports betting. And then then what 0:08:55.080 --> 0:08:58.240 happens when people start, you know, making insider bets on 0:08:58.280 --> 0:08:59.960 sports or on Taylor Swifts And. 0:09:00.520 --> 0:09:04.040 I should know this, but have DraftKings and FANDUL like, 0:09:04.080 --> 0:09:07.600 have they tried to offer stock betting on their platforms? 0:09:07.840 --> 0:09:10.240 Yeah, a little bit. It's funny Flutter, which is like the. 0:09:10.160 --> 0:09:12.120 Parent company a fandel right, a FANDL. 0:09:12.200 --> 0:09:14.640 Yeah, they're working on some sort of partnership with CME 0:09:14.880 --> 0:09:20.840 to offer essentially sports book bets on yeah, financial outcome, 0:09:20.920 --> 0:09:22.160 you know, like, well the s and PB up or 0:09:22.200 --> 0:09:25.760 down today, Because yeah, for one thing, if you're a 0:09:25.760 --> 0:09:29.120 gambling platform, offering people more bets is just more appealing, right, 0:09:29.240 --> 0:09:31.000 just give them you have more touch points. And then 0:09:31.000 --> 0:09:33.920 for another thing, if you're a gambling platform and you 0:09:33.960 --> 0:09:35.920 look at what Calshi is doing, you have to think 0:09:36.320 --> 0:09:40.520 maybe we should be in the futures trading business rather 0:09:40.559 --> 0:09:42.840 than the sports book business because it's the same business 0:09:43.480 --> 0:09:45.520 and it gets better tax and regulatory treatment. 0:09:45.840 --> 0:09:47.880 Man, that's pretty wild. 0:09:48.040 --> 0:09:51.560 Yeah, there's just like a lot of conversions between gambling 0:09:51.600 --> 0:09:54.160 and financial markets. 0:09:54.280 --> 0:09:57.920 Parallels here to private markets becoming the public market. 0:09:58.080 --> 0:10:01.720 Yeah, the betting markets are becoming the the financial markets. 0:10:01.760 --> 0:10:05.760 Yeah, all of the then diagrams are just turning into circles. 0:10:06.000 --> 0:10:09.480 Before we leave this topic talking about whether or not 0:10:09.520 --> 0:10:12.199 this is insider trading or if it could be insider trading. 0:10:12.559 --> 0:10:18.080 You wrote that if Romantic Paul is Travis Kelcey, that's fine. 0:10:19.559 --> 0:10:20.400 Is that fine? 0:10:22.280 --> 0:10:25.360 This is not legal advice go on. This is going 0:10:25.440 --> 0:10:27.600 to depend a little bit on like the specific terms 0:10:27.600 --> 0:10:30.880 of service of the platform, right, I mean, polymarket has 0:10:30.960 --> 0:10:34.360 kind of vague terms of service. But if you think 0:10:34.400 --> 0:10:36.600 about and this is not it, you have to see 0:10:36.600 --> 0:10:39.360 regulated exchange. But if you think about the future that 0:10:39.400 --> 0:10:43.520 will live in where all betting takes place on commodity, 0:10:45.440 --> 0:10:50.480 then the way commodities insider trading rules work is if 0:10:50.520 --> 0:10:55.839 you misappropriate information from someone else, then that's illegal. That's 0:10:55.840 --> 0:10:58.880 illegal insider trading. But if you own the information, it's 0:10:58.920 --> 0:11:01.240 harder to say that you're insider trading. So if you're 0:11:01.240 --> 0:11:03.720 an oil company and you drill a lot of oil 0:11:03.760 --> 0:11:05.680 and like you know, you're well as a bust, and 0:11:06.160 --> 0:11:08.400 you think, oh, that's going to push up oil prices, 0:11:08.559 --> 0:11:12.280 you're allowed to buy oil features because the point of 0:11:12.440 --> 0:11:16.199 oil futures is to allow actual oil producers and consumers 0:11:16.240 --> 0:11:19.960 to sort of hedge their actual production into bad And 0:11:20.000 --> 0:11:22.160 so of course you're trading an inside information about your 0:11:22.200 --> 0:11:25.920 own behavior. Right, if you're like a trader at an 0:11:25.960 --> 0:11:28.679 oil company and you're front running your company by buying 0:11:28.679 --> 0:11:31.240 futures for your own account. That's illegal insider trading. And 0:11:31.240 --> 0:11:33.439 there are cases, right, there are cases of people who 0:11:33.440 --> 0:11:36.360 are front running, who are misappropriating information get in trouble 0:11:36.360 --> 0:11:39.400 for commodities insider trading, but just the owners of the commodity, 0:11:39.559 --> 0:11:42.040 the commodity producers that are allowed to trade on their 0:11:42.040 --> 0:11:44.840 own information. So I don't know where that leaves you 0:11:44.920 --> 0:11:48.360 when your commodity is like will Taylor Swift and Travis 0:11:48.400 --> 0:11:49.840 Kelsey get well re engage? 0:11:50.240 --> 0:11:51.920 Will I propose to Tailor Swift? 0:11:52.000 --> 0:11:54.000 Right? But I think it kind of leaves you like, yeah, 0:11:54.000 --> 0:11:55.560 go ahead and trade on that. Again, there's like no 0:11:55.640 --> 0:11:56.240 money here, right. 0:11:56.320 --> 0:11:58.680 There also is a risk I was going to say, 0:11:58.679 --> 0:12:01.120 because he didn't know that she was going to say yes, 0:12:02.360 --> 0:12:04.679 but whatever, yeah. 0:12:05.679 --> 0:12:06.319 Rarely. 0:12:07.960 --> 0:12:10.960 Also she had already said yes by the time. But 0:12:11.040 --> 0:12:13.720 I was thinking more of the example of he's the 0:12:13.760 --> 0:12:16.319 CEO of a company and he knew that earnings were 0:12:16.320 --> 0:12:17.760 going to be good, but they hadn't. 0:12:17.880 --> 0:12:21.240 That's not the CEO's information, that's the company's information. And 0:12:21.240 --> 0:12:23.080 by the way, companies can't really inside or trade their 0:12:23.120 --> 0:12:25.480 stock like in stocks, the rules are kind of different. 0:12:25.520 --> 0:12:28.760 Like in stocks, companies have a fiduciarated a shareholders and 0:12:28.760 --> 0:12:30.360 they can't really inside or trade their stocks. But in 0:12:30.400 --> 0:12:31.520 commodities that's a little bit. 0:12:31.720 --> 0:12:37.840 We're talking about commodities, not stocks. Notes like tailors engagement. 0:12:37.960 --> 0:12:41.800 Congratulations Taylor Swift from your friends at the Money Stuff podcast. 0:12:41.960 --> 0:12:44.840 Come on, yeah, come on, it worked out really well 0:12:44.960 --> 0:13:01.720 your last podcast appearance. Do you want to talk about 0:13:01.920 --> 0:13:04.160 Michael Saylor? Yeah, this is a guy that we don't 0:13:04.160 --> 0:13:08.960 about sometimes and his company strategy not micro strategy strategy. Yeah, 0:13:09.000 --> 0:13:11.320 it's premium is collapsing before our eyes. 0:13:11.480 --> 0:13:14.440 I know, I feel a little bad about that somehow. 0:13:14.600 --> 0:13:16.720 I don't know why I cause that no, but like 0:13:17.840 --> 0:13:20.520 I've like made fun of this premium for years and years, 0:13:20.559 --> 0:13:22.720 and now it's collapsing before our eyes. And I'm like, 0:13:23.240 --> 0:13:25.240 you know, I don't wish all on anyone. I want 0:13:25.320 --> 0:13:28.640 them to keep running this ridiculous strategy for as long 0:13:28.679 --> 0:13:29.120 as they can. 0:13:29.280 --> 0:13:33.920 Strategy strategy, strategy. I mean it's been kind of depressed 0:13:33.960 --> 0:13:37.720 for a while. Yeah, the premium. 0:13:37.800 --> 0:13:41.000 Yeah, well they love, they love. Like you have to 0:13:41.040 --> 0:13:43.079 like sort of put a lot of signs around things 0:13:43.080 --> 0:13:45.560 like this, because like strategy businesses like they buy it a bitcoin. 0:13:45.760 --> 0:13:48.120 There's stock trades that like twice they're net asset value. 0:13:48.280 --> 0:13:50.960 They sell more stock to buy more bitcoin. Then the 0:13:51.160 --> 0:13:53.120 net asset value goes up. The stock goes up by 0:13:53.160 --> 0:13:55.959 two times as much, and it's a like perpetual flywheel. 0:13:56.000 --> 0:13:58.480 But now instead of two times, it's like one point five. 0:13:58.360 --> 0:13:59.920 Ish times and one point four. 0:14:00.640 --> 0:14:04.560 Yeah. So it's like this trade is a magical money 0:14:04.559 --> 0:14:07.240 printing machine. When you can sell stock at a big 0:14:07.280 --> 0:14:10.640 premium to your net asset value, and it's like a 0:14:10.720 --> 0:14:12.840 terrible disaster. If you can sell stock at a discount 0:14:12.840 --> 0:14:15.080 to your net asset value, as you come down, it's 0:14:15.080 --> 0:14:16.120 like less and less fun. 0:14:16.400 --> 0:14:16.880 Yeah. 0:14:16.920 --> 0:14:18.800 So they actually, I think they put out guidance that 0:14:18.800 --> 0:14:21.240 they would not sell stock at less than two point 0:14:21.280 --> 0:14:24.600 five times in that asset value, and then when the 0:14:24.640 --> 0:14:27.720 premium went below two times, they were like, well, never mind, 0:14:27.760 --> 0:14:30.240 we'll just keep selling stock at you know, whatever we 0:14:30.320 --> 0:14:30.680 can get. 0:14:30.960 --> 0:14:33.600 Yeah. So I have to say, I don't really understand 0:14:33.640 --> 0:14:35.240 why they did that, because. 0:14:36.880 --> 0:14:40.200 It's at one time it's a good trade, I know, 0:14:40.280 --> 0:14:43.080 but you can like sell you know, at a premium. 0:14:43.160 --> 0:14:45.080 You should sell at a premium, I know, But Okay, 0:14:45.080 --> 0:14:46.240 they pluged to they. 0:14:46.120 --> 0:14:48.400 Said they wouldn't, but like you know, that was when things. 0:14:48.240 --> 0:14:52.760 Like they were already below and half when they said that. 0:14:52.840 --> 0:14:56.000 Okay, but like the other reason okay, so sorry, and 0:14:56.040 --> 0:14:56.520 there was a. 0:14:56.480 --> 0:14:59.200 Two week span there, like they said they wouldn't do this, 0:14:59.240 --> 0:15:01.080 two weeks later they did, and they were already below 0:15:01.080 --> 0:15:01.800 two and a half times. 0:15:01.920 --> 0:15:03.680 Yeah, okay. So there's two questions, right, One is why 0:15:03.720 --> 0:15:06.200 would you sell stock at below two point five times 0:15:06.360 --> 0:15:08.320 net asset value? And the answer is because if you 0:15:08.400 --> 0:15:10.520 can sell stock at any view into net asset value, 0:15:10.640 --> 0:15:12.360 it's a good trade, right, it's a creative to your 0:15:12.360 --> 0:15:15.280 shareholders to sell stock for more than it's worth. And 0:15:15.280 --> 0:15:17.080 then the other question is why did they say they. 0:15:16.960 --> 0:15:19.400 Wouldn't sell That's what I don't understand. 0:15:19.480 --> 0:15:23.920 Okay, So there's two answers to that. One is the 0:15:23.960 --> 0:15:26.360 whole game here is like investor confidence. Right, So if 0:15:26.360 --> 0:15:28.320 you can say, oh, it's always going to be at 0:15:28.360 --> 0:15:30.840 a premium, then investors will like your stock and the 0:15:30.880 --> 0:15:32.800 stock will go up and will be at a bigger premium. Right. 0:15:33.320 --> 0:15:35.520 So one thing is you just have to like tell 0:15:35.560 --> 0:15:37.400 people what they want to hear, because you're you're in 0:15:37.440 --> 0:15:39.800 the business of selling them stock at a premium. But 0:15:39.880 --> 0:15:41.840 then the other reason is that they're not exclusively in 0:15:41.840 --> 0:15:45.360 the business of selling stock. They have gotten really into 0:15:45.400 --> 0:15:49.520 doing weird capital markets trades that I love as a 0:15:49.520 --> 0:15:52.640 former weird capital markets banker. And so they've found all 0:15:52.680 --> 0:15:56.560 sorts of like straight preferred stock deals to do, which 0:15:56.600 --> 0:15:59.680 is like, companies don't do big straight preferred stock deals. 0:15:59.680 --> 0:16:01.840 That's not the thing. Like straight preferred stock is not 0:16:02.160 --> 0:16:04.640 a real instrument outside of like financials and a few 0:16:04.640 --> 0:16:07.080 other weird places. And they were like, we're gonna sell 0:16:07.120 --> 0:16:11.080 billions of dollars of preferred stock because essentially it's like 0:16:11.600 --> 0:16:16.479 borrowing money perpetually at call it nine percent ten percent interest, 0:16:17.240 --> 0:16:19.160 so by bitcoin. And if you think bitcoin will always 0:16:19.200 --> 0:16:21.680 go up by fifty percent a year, then borrowing at 0:16:21.720 --> 0:16:23.920 ten percent to buy bitcoin that yields fifty percent is 0:16:23.960 --> 0:16:25.680 a great deal. Yeah, And so they've been doing a 0:16:25.720 --> 0:16:28.000 lot of preferred stock deals. And I think when they 0:16:28.040 --> 0:16:31.360 said we're not going to sell stock below two point 0:16:31.360 --> 0:16:36.400 five x, they thought, we'll just to fix income financing 0:16:36.520 --> 0:16:39.640 to keep buying more bitcoins. And then the market for 0:16:39.720 --> 0:16:40.360 that's softened. 0:16:40.640 --> 0:16:41.720 Yeah, just like it's such. 0:16:41.560 --> 0:16:44.000 A weird market, Like people don't need billions of dollars 0:16:44.040 --> 0:16:47.200 of preferred stock of a tech company that bitcoin, and 0:16:47.280 --> 0:16:49.080 so when that market collaps, they're like, we still need 0:16:49.120 --> 0:16:50.880 to buy more bitcoin, so there's longing stock again. 0:16:51.200 --> 0:16:56.240 Yeah, it's funny. Who would be the typical buyer of preferreds? 0:16:56.640 --> 0:16:58.240 I have never really known that. I mean, it's like 0:16:58.280 --> 0:17:01.040 it's like income oriented. You know, if you're retiree and 0:17:01.040 --> 0:17:03.720 you can get nine percent yield, that's great, you know. 0:17:03.960 --> 0:17:07.680 Yeah, well apparently there's not enough of those people because 0:17:07.680 --> 0:17:10.159 they're recent of dollars with like you know, like that 0:17:10.320 --> 0:17:11.000 credit profile. 0:17:11.080 --> 0:17:12.840 Yeah, it's weird, weird trade. 0:17:12.960 --> 0:17:15.920 Their most recent sale raise just about like forty seven 0:17:15.960 --> 0:17:16.680 million dollars. 0:17:17.000 --> 0:17:19.000 And the stuff they're doing is I mean, for me, 0:17:19.119 --> 0:17:21.080 I love it, Like the most recent thing is there. 0:17:21.520 --> 0:17:23.399 You're not buying enough of it, have. 0:17:23.560 --> 0:17:25.480 Bought any of it, But like it's a floating rate 0:17:25.520 --> 0:17:27.920 preferred that the rate floats with, just like their feelings. 0:17:28.160 --> 0:17:30.000 The rate floats with. I want to keep it to 0:17:30.160 --> 0:17:32.760 trading at par, and so the rate will float at 0:17:32.760 --> 0:17:35.000 whatever makes it trade at par, which is like essentially 0:17:35.080 --> 0:17:38.440 floating with their own credit, which is a truly insane 0:17:39.160 --> 0:17:41.240 instrument that no one has ever done before. That like 0:17:41.280 --> 0:17:43.239 Michael Sayler is like, I'm going to do this, and 0:17:43.280 --> 0:17:45.400 so I shouldn't say no one's ever done it before. 0:17:45.440 --> 0:17:49.600 It's kind of auction ary preferred. But it's very strange 0:17:50.040 --> 0:17:54.840 and very cool and fun for capital markets nerds, but 0:17:54.840 --> 0:17:56.879 like they're not buy billions of dollars stop. 0:17:57.080 --> 0:17:58.199 Yeah. Yeah. 0:17:58.320 --> 0:17:59.840 And also, by the way, when I say something is 0:18:00.119 --> 0:18:01.719 and fun, that means I would not buy it. 0:18:02.480 --> 0:18:06.400 Yes, Okay, that's a necessary disclosure. There's also the question 0:18:06.480 --> 0:18:09.240 of why the premium is collapsing. I mean, taking a 0:18:09.280 --> 0:18:12.919 look at Bloomberg News coverage, it would one of the 0:18:12.920 --> 0:18:16.760 reasons pointed to go Ahead is that there's just so 0:18:16.800 --> 0:18:21.880 many cryptotature companies. How much is that truly deluding demand 0:18:21.960 --> 0:18:22.719 for strategy? 0:18:23.960 --> 0:18:26.200 So one thing that's interesting is, like, you know, people 0:18:26.280 --> 0:18:29.720 thought that the premium would collapse when spot bitcoin ets 0:18:29.800 --> 0:18:32.560 became a big thing, and it didn't really, Yeah, And 0:18:32.600 --> 0:18:34.680 I think the reason for that is, like they really 0:18:34.680 --> 0:18:36.960 are two different trades, right. The spot bitcoin ETF is 0:18:36.960 --> 0:18:39.960 like you can buy bitcoin and you want exposure to bitcoin, 0:18:40.000 --> 0:18:43.200 so you buy bitcoin. Micro strategy trade is you can 0:18:43.200 --> 0:18:45.600 buy stock at a premium so that they can sell 0:18:45.640 --> 0:18:48.000 more stock at a premium so they can accumulate more bitcoin. Like, 0:18:48.000 --> 0:18:50.439 you're really just betting on this is a company that 0:18:50.480 --> 0:18:52.680 can sell stock at a premium to buy assets. Right, 0:18:53.040 --> 0:18:58.840 that's the bet, And that bet is very circular and strange. 0:18:58.920 --> 0:19:01.200 But it was hard to find, right, it's not it's 0:19:01.240 --> 0:19:03.840 not replicated with a bitcoin etaf right, Like, that's just 0:19:04.160 --> 0:19:07.440 that's just the bet on bitcoin strategies, on selling train exposure. 0:19:07.800 --> 0:19:09.480 But now you can find that bet anywhere. There's like 0:19:09.560 --> 0:19:11.320 hundreds of companies they're like, oh, we've got a way 0:19:11.320 --> 0:19:14.800 to sell's talk at a premium. And some of the 0:19:14.800 --> 0:19:17.639 people who are gambling on the generic concept of like 0:19:17.720 --> 0:19:19.440 ability to sell stalk at a premium to buy a 0:19:19.440 --> 0:19:21.879 crypto or you know, doing it with other crypto companies 0:19:21.880 --> 0:19:24.760 that have higher premiums or lower premiums. Yeah, there are 0:19:24.840 --> 0:19:27.320 more flavors of that bet, and there are only so 0:19:27.400 --> 0:19:28.800 many people who want that bet. 0:19:28.960 --> 0:19:29.440 That's true. 0:19:29.480 --> 0:19:31.800 So I think that's part of why the premium is 0:19:31.840 --> 0:19:34.879 not doing it as well. But also just like I 0:19:35.000 --> 0:19:37.480 really think that this is the sort of thing where 0:19:37.520 --> 0:19:39.199