1 00:00:03,080 --> 00:00:07,400 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:10,880 --> 00:00:13,280 Speaker 2: Hello and welcome to the Money Stuff Podcast. You're a 3 00:00:13,280 --> 00:00:17,120 Speaker 2: weekly podcast where we talk about stuff related to money. 4 00:00:18,520 --> 00:00:20,720 Speaker 2: I'm Matt Levine and I write the Money Stuff column 5 00:00:20,760 --> 00:00:21,720 Speaker 2: for Bloomberg Opinion. 6 00:00:22,160 --> 00:00:24,599 Speaker 1: And I'm Katie Greifeld, a reporter for Bloomberg News and 7 00:00:24,600 --> 00:00:26,040 Speaker 1: an anchor for Bloomberg Television. 8 00:00:27,480 --> 00:00:29,680 Speaker 2: Happy New Year, Katie, Happy. 9 00:00:29,400 --> 00:00:32,519 Speaker 1: New Year, Matt Levine, twenty twenty five. It's going to 10 00:00:32,600 --> 00:00:34,120 Speaker 1: be great when we're recording. 11 00:00:33,840 --> 00:00:36,280 Speaker 2: Great already. Yeah, and can you believe the news and 12 00:00:36,320 --> 00:00:37,159 Speaker 2: financial markets? 13 00:00:37,240 --> 00:00:41,279 Speaker 1: Jeez, Louise, it's amazing to see what's already happens in 14 00:00:41,320 --> 00:00:44,279 Speaker 1: these first few seconds. Honestly, of twenty twenty five. 15 00:00:44,320 --> 00:00:46,120 Speaker 2: It's been it's been a while. I wouldn't miss it. 16 00:00:46,159 --> 00:00:47,880 Speaker 2: We're recording this on my December ninetheen. 17 00:00:48,080 --> 00:00:52,360 Speaker 1: It is December nineteenth. It is three oh two pm. 18 00:00:51,960 --> 00:00:55,240 Speaker 2: So we have powerful skills of pronuncication. What are you 19 00:00:55,280 --> 00:00:57,640 Speaker 2: talking about today or in the future, Katie. 20 00:00:57,440 --> 00:01:04,600 Speaker 1: Mail bag, let's dive right in. This is a question 21 00:01:04,720 --> 00:01:07,240 Speaker 1: from Mitch. Mitch wants to know how we were each 22 00:01:07,440 --> 00:01:11,000 Speaker 1: introduced to the world of finance. And I appreciate Mitch 23 00:01:11,080 --> 00:01:14,520 Speaker 1: because we both wanted questions about ourselves and we'll get 24 00:01:14,520 --> 00:01:17,360 Speaker 1: to some like more substantive questions. But what a nice 25 00:01:17,920 --> 00:01:20,959 Speaker 1: first question of twenty twenty five, Matt, how are you 26 00:01:21,000 --> 00:01:22,280 Speaker 1: introduced to the world of finance? 27 00:01:22,720 --> 00:01:24,560 Speaker 2: I don't know. I have like two answers. So I 28 00:01:24,600 --> 00:01:27,160 Speaker 2: was a classics manager in college. I was like the 29 00:01:27,200 --> 00:01:30,080 Speaker 2: most unworldly person, Like I did not do job interviewing 30 00:01:30,400 --> 00:01:32,120 Speaker 2: my senior year of college and I graduated. I was like, 31 00:01:32,160 --> 00:01:34,000 Speaker 2: oh my god, I need a job. I did. I 32 00:01:34,040 --> 00:01:36,400 Speaker 2: interviewed her like one kind of job, which is McKenzie 33 00:01:36,440 --> 00:01:37,920 Speaker 2: like sent me a letter being like you should interview 34 00:01:37,920 --> 00:01:40,399 Speaker 2: at McKenzie And so I did you know, the like 35 00:01:40,600 --> 00:01:43,039 Speaker 2: on campus first try and interview at mckensey. But of course, 36 00:01:43,120 --> 00:01:45,600 Speaker 2: like I wasn't prepared and I was terrible. So I 37 00:01:45,640 --> 00:01:48,360 Speaker 2: had like an incredibly unworldly college experience. And then I 38 00:01:48,440 --> 00:01:50,480 Speaker 2: actually taught high school a lotin for a year after. 39 00:01:50,680 --> 00:01:51,120 Speaker 1: I love that. 40 00:01:51,400 --> 00:01:53,360 Speaker 2: It was great. It was really fun. But it turns 41 00:01:53,400 --> 00:01:56,240 Speaker 2: out that a classics manager really suits you for one thing, 42 00:01:56,240 --> 00:01:58,600 Speaker 2: which is going to law school. And so I went 43 00:01:58,640 --> 00:02:02,040 Speaker 2: to law school. Law school. I was like, I'll be 44 00:02:02,080 --> 00:02:04,760 Speaker 2: like a constitutional law professor, right, But then I went 45 00:02:05,000 --> 00:02:07,160 Speaker 2: and like con social law is kind of dumb, and 46 00:02:07,200 --> 00:02:09,239 Speaker 2: like contracts are really interesting, and so I was like 47 00:02:09,400 --> 00:02:11,760 Speaker 2: I like contracts, and so then what do you do 48 00:02:11,760 --> 00:02:13,280 Speaker 2: with that? Well, you go, like, you know, you have 49 00:02:13,360 --> 00:02:15,359 Speaker 2: like a summer associate job as an M and A lawyer, 50 00:02:15,400 --> 00:02:17,160 Speaker 2: because like they write contracts, why not you know, I 51 00:02:17,160 --> 00:02:19,320 Speaker 2: was getting like very unworldly. I applied to all the 52 00:02:19,400 --> 00:02:20,919 Speaker 2: law firms and I was like, I want to get 53 00:02:20,919 --> 00:02:22,440 Speaker 2: a job at these law firms. I don't know anything 54 00:02:22,440 --> 00:02:25,440 Speaker 2: about M and A. And then they all hired me 55 00:02:25,480 --> 00:02:28,080 Speaker 2: because like they don't care. And then I went and 56 00:02:28,120 --> 00:02:29,519 Speaker 2: worked in an M and A law firm. I was 57 00:02:29,560 --> 00:02:31,480 Speaker 2: like I love this, it's great. And then I, like, 58 00:02:31,520 --> 00:02:32,880 Speaker 2: you know, I went from there and I was an 59 00:02:33,000 --> 00:02:36,239 Speaker 2: MNI layer for a brief period and an investment banker 60 00:02:36,240 --> 00:02:37,200 Speaker 2: for a longer period. 61 00:02:37,240 --> 00:02:39,560 Speaker 1: And so was that one answer too, because you said 62 00:02:39,560 --> 00:02:40,480 Speaker 1: there was one answer. 63 00:02:40,520 --> 00:02:42,760 Speaker 2: Okay, that's like the sort of real, sort of direct 64 00:02:42,760 --> 00:02:45,560 Speaker 2: path answer. I will say, though, like the other answer 65 00:02:45,639 --> 00:02:48,400 Speaker 2: is that when I was like in middle school high school, 66 00:02:48,639 --> 00:02:50,880 Speaker 2: I did read Liar's Poker. I don't know why, but 67 00:02:51,000 --> 00:02:53,200 Speaker 2: I liked it. And I read The Barbarians at the Gate, 68 00:02:53,240 --> 00:02:56,120 Speaker 2: which is even more fun and wait, edit that out. 69 00:02:59,040 --> 00:03:02,960 Speaker 1: Michael Lewis listens, Fine, you're saying nice things. Keep that in. 70 00:03:03,840 --> 00:03:06,560 Speaker 2: I thought, this is really cool, and like there was 71 00:03:06,600 --> 00:03:09,000 Speaker 2: probably like a period in like I don't know, high school, 72 00:03:09,080 --> 00:03:11,200 Speaker 2: junior high school where I was like I want to 73 00:03:11,320 --> 00:03:14,800 Speaker 2: do high finance M and A and that totally faded 74 00:03:14,960 --> 00:03:18,560 Speaker 2: and it was not on my radar in college or whatever. 75 00:03:18,840 --> 00:03:20,880 Speaker 2: But at some point I like rediscovered it and like 76 00:03:20,960 --> 00:03:22,040 Speaker 2: I was an M and A layer. I was like, 77 00:03:22,040 --> 00:03:24,280 Speaker 2: oh yeah, I remember like liking this stuff as a kid, 78 00:03:24,960 --> 00:03:27,440 Speaker 2: and so there was something latent in me like that 79 00:03:27,600 --> 00:03:30,160 Speaker 2: was like I want to do finance stuff, and like 80 00:03:30,200 --> 00:03:32,440 Speaker 2: it came out of me eventually, even though I tried 81 00:03:32,440 --> 00:03:35,080 Speaker 2: to tamp it down by majoring in Greek poetry in college. 82 00:03:35,200 --> 00:03:38,320 Speaker 1: You can't deny who you are seriously anyway. 83 00:03:38,760 --> 00:03:39,920 Speaker 2: So what's your story? 84 00:03:40,440 --> 00:03:44,360 Speaker 1: So I feel like it's not what people typically expect. 85 00:03:44,640 --> 00:03:48,280 Speaker 1: My dad, who's listening right now, was the CEO of 86 00:03:48,480 --> 00:03:52,160 Speaker 1: Nastac for a long time. He took over when I 87 00:03:52,360 --> 00:03:55,680 Speaker 1: was in fourth grade, and he stopped being CEO of 88 00:03:55,760 --> 00:03:58,960 Speaker 1: NASAK after I started Bloomberg, so it was a long time. 89 00:03:59,480 --> 00:04:05,160 Speaker 1: We never talked about business or finance or the market 90 00:04:05,240 --> 00:04:07,640 Speaker 1: or like stock exchanges. So I ended up at Bloomberg, 91 00:04:07,880 --> 00:04:11,160 Speaker 1: and I think people, especially outside sources, expected me to 92 00:04:11,360 --> 00:04:13,280 Speaker 1: know a lot more than I did, and I did not. 93 00:04:13,840 --> 00:04:18,400 Speaker 2: I talked. 94 00:04:17,800 --> 00:04:19,600 Speaker 1: No. I actually I went to the market side a lot. 95 00:04:19,760 --> 00:04:22,200 Speaker 1: There's pictures of me, like in my goth phase, like 96 00:04:23,520 --> 00:04:26,440 Speaker 1: at like a closing like at a closing bell ceremony 97 00:04:26,600 --> 00:04:30,039 Speaker 1: and stuff, which is really sweet. Yeah, I'll show no 98 00:04:30,040 --> 00:04:31,760 Speaker 1: one else can see it, because like it was a 99 00:04:31,760 --> 00:04:37,039 Speaker 1: pain painful, awkward phase. I talked my dad about how 100 00:04:37,080 --> 00:04:38,640 Speaker 1: I was going to answer this question, and he was like, 101 00:04:38,680 --> 00:04:40,880 Speaker 1: make sure they know we talked, like we did talk, 102 00:04:41,000 --> 00:04:42,839 Speaker 1: just not about anything else. My dad is one of 103 00:04:42,839 --> 00:04:47,880 Speaker 1: my closest friends. I got into this world from a 104 00:04:47,960 --> 00:04:52,039 Speaker 1: journalist first perspective, Like I was the editor of my 105 00:04:52,120 --> 00:04:56,560 Speaker 1: college newspaper, and then I went to Columbia for journalism 106 00:04:56,720 --> 00:04:59,279 Speaker 1: grad school, and then I applied for an internship at 107 00:04:59,320 --> 00:05:03,200 Speaker 1: Bloomberg because I was thinking where might I make the 108 00:05:03,240 --> 00:05:05,800 Speaker 1: most money as a journalist, and I was like, probably 109 00:05:05,920 --> 00:05:08,240 Speaker 1: reporting on money. And then I ended up at Bloomberg 110 00:05:08,440 --> 00:05:12,240 Speaker 1: and here I am, here you are, Yeah, but it 111 00:05:12,279 --> 00:05:16,400 Speaker 1: definitely was through writing. I consider myself a writer first, 112 00:05:16,400 --> 00:05:18,080 Speaker 1: and then a markets person, and here. 113 00:05:17,960 --> 00:05:20,839 Speaker 2: I am a podcaster first, right. 114 00:05:20,760 --> 00:05:26,760 Speaker 1: For sure, podcaster above all else, and then somewhere in there. Anyway, 115 00:05:26,800 --> 00:05:31,800 Speaker 1: that was a fun first question mail bag mail Bag. 116 00:05:32,600 --> 00:05:37,000 Speaker 1: Seth wants to know why doesn't the government insider trade? 117 00:05:37,760 --> 00:05:40,840 Speaker 1: And then Seth goes through his logic. The government gathers 118 00:05:40,880 --> 00:05:44,360 Speaker 1: and releases a lot of market moving information. This information 119 00:05:44,480 --> 00:05:47,560 Speaker 1: is worth a lot of money in theory belongs to 120 00:05:47,600 --> 00:05:50,880 Speaker 1: the American taxpayer, does it The government should establish a 121 00:05:50,880 --> 00:05:53,560 Speaker 1: department of insider Trading which gets early access to all 122 00:05:53,600 --> 00:05:55,520 Speaker 1: this information and is able to trade on it in 123 00:05:55,640 --> 00:05:59,040 Speaker 1: order to raise revenue for the government. But why would 124 00:05:59,080 --> 00:06:02,159 Speaker 1: anyone ever take the other side of the government. 125 00:06:01,760 --> 00:06:04,599 Speaker 2: Then, Right, that's one good objection to this. 126 00:06:04,800 --> 00:06:05,560 Speaker 1: Yeah, Like. 127 00:06:07,560 --> 00:06:09,719 Speaker 2: One good objection to it is it wouldn't really work 128 00:06:09,800 --> 00:06:12,159 Speaker 2: that well, yeah, no, it kind of would, right, Like 129 00:06:12,200 --> 00:06:15,320 Speaker 2: if you had economic data you could buy or sell 130 00:06:15,600 --> 00:06:17,640 Speaker 2: SMP in tax funds or whatever, right, and like there's 131 00:06:17,760 --> 00:06:19,360 Speaker 2: enough of a market for that that like you could 132 00:06:19,360 --> 00:06:22,200 Speaker 2: probably sneak in some trading. Yeah, I do think the 133 00:06:22,240 --> 00:06:27,240 Speaker 2: main answer is that this is a tax, right, anything 134 00:06:27,240 --> 00:06:29,720 Speaker 2: the government does to raise revenue from people who are 135 00:06:29,720 --> 00:06:32,760 Speaker 2: not the government is a tax classically, like inflation is 136 00:06:32,800 --> 00:06:34,360 Speaker 2: a tax, right, Like, one way for the government to 137 00:06:34,400 --> 00:06:37,680 Speaker 2: raise revenue is to like never impose any taxes and 138 00:06:37,720 --> 00:06:40,600 Speaker 2: just print currency to pay for all of its stuff. 139 00:06:40,680 --> 00:06:44,040 Speaker 2: And the reason governments don't do that is because inflation 140 00:06:44,120 --> 00:06:48,160 Speaker 2: is also a tax, and it is a worse constructed 141 00:06:48,240 --> 00:06:50,880 Speaker 2: tax than like a progressive tax system. I think that's 142 00:06:50,880 --> 00:06:54,599 Speaker 2: something similar here, where it's like if you raise money 143 00:06:54,640 --> 00:06:58,080 Speaker 2: for the government by trading against counterparties, one, it's like 144 00:06:58,120 --> 00:07:01,160 Speaker 2: an unfair tax, right, like you're taking them from people, 145 00:07:01,240 --> 00:07:03,680 Speaker 2: you know, retirement savers rather than like the broad tax base. 146 00:07:03,839 --> 00:07:06,400 Speaker 2: But then too, your like undermining the capital markets to 147 00:07:07,240 --> 00:07:09,800 Speaker 2: raise these taxes, and so like you're making the overall 148 00:07:09,800 --> 00:07:12,880 Speaker 2: financial system worse to raise revenue for the government. Like 149 00:07:12,920 --> 00:07:14,680 Speaker 2: you can raise revenue for the government in a more 150 00:07:14,720 --> 00:07:16,800 Speaker 2: neutral way by like, you know, imposing taxes. So I 151 00:07:16,840 --> 00:07:18,240 Speaker 2: think that's true of like a lot of stuff like this. 152 00:07:18,400 --> 00:07:20,600 Speaker 2: Like there's like a well known trade in like fixed 153 00:07:20,640 --> 00:07:24,400 Speaker 2: and come arbitrage, which is like you buy off the 154 00:07:24,440 --> 00:07:26,760 Speaker 2: run treasuries which tend to trade at a slight discount 155 00:07:26,760 --> 00:07:28,280 Speaker 2: to on the run treasures, and you sell the on 156 00:07:28,320 --> 00:07:30,520 Speaker 2: the run and they eventually converge because they eventually both 157 00:07:30,560 --> 00:07:33,160 Speaker 2: become off the run. And I've often wondered, like, why 158 00:07:33,200 --> 00:07:34,800 Speaker 2: doesn't the government just buy all the off the runs 159 00:07:34,800 --> 00:07:36,800 Speaker 2: and like issue new on the runs to fund it, 160 00:07:36,880 --> 00:07:39,280 Speaker 2: because like they could clip that spread too. I think 161 00:07:39,280 --> 00:07:41,280 Speaker 2: it's the same kind of answer, which is, like, why 162 00:07:41,360 --> 00:07:42,800 Speaker 2: would they make that money at the expense of the 163 00:07:42,800 --> 00:07:45,240 Speaker 2: financial markets instead of just imposing broad taxes. 164 00:07:45,440 --> 00:08:02,080 Speaker 1: Well, great questions stuff comes from Max. Why is it 165 00:08:02,240 --> 00:08:05,560 Speaker 1: so difficult for small retail investors to get diversified exposure 166 00:08:05,680 --> 00:08:08,120 Speaker 1: for real estate despite the fact that real estate is 167 00:08:08,160 --> 00:08:11,600 Speaker 1: such a large part of many people's assets. For example, 168 00:08:12,000 --> 00:08:14,240 Speaker 1: even as a broke college student, I can very easily 169 00:08:14,240 --> 00:08:17,440 Speaker 1: invest in a diversified collection of stocks in almost any industry. 170 00:08:17,480 --> 00:08:20,520 Speaker 1: I like, why aren't there ETFs, thank you, Max, that are, 171 00:08:20,600 --> 00:08:23,840 Speaker 1: for example, a bunch of residential properties in a particular city. 172 00:08:24,040 --> 00:08:26,840 Speaker 1: I would expect these kinds of products to be very 173 00:08:26,840 --> 00:08:29,800 Speaker 1: popular for homeowners to hedge their own homes and whatnot. 174 00:08:30,360 --> 00:08:33,760 Speaker 1: There's definitely some intrepid etf issuers out there that agree 175 00:08:33,760 --> 00:08:37,120 Speaker 1: with you and are working on it. Are there probably? Yeah, 176 00:08:38,480 --> 00:08:44,920 Speaker 1: not on the record about author I mean just ah, yes, 177 00:08:44,960 --> 00:08:48,839 Speaker 1: the sanctity of this small room with the micros, not 178 00:08:49,000 --> 00:08:53,319 Speaker 1: like particular city ETFs. But people are trying to figure 179 00:08:53,320 --> 00:08:58,160 Speaker 1: out how to fit private assets in general largely into ETFs. 180 00:08:59,120 --> 00:09:02,200 Speaker 2: Like private assets, right, assets are one thing. Houses are differently. 181 00:09:02,440 --> 00:09:03,360 Speaker 1: I know, there's like two. 182 00:09:03,200 --> 00:09:05,120 Speaker 2: Answers to question. One is like, why can't I buy 183 00:09:05,120 --> 00:09:07,280 Speaker 2: a diverst fied real estate portfolio? And the other is 184 00:09:07,280 --> 00:09:08,880 Speaker 2: why can't I sell a share of my house? 185 00:09:08,960 --> 00:09:09,160 Speaker 1: Right? 186 00:09:09,360 --> 00:09:12,040 Speaker 2: The diverse wide real estate portfolio is a thing that 187 00:09:12,040 --> 00:09:14,680 Speaker 2: people have been working on for decades, and there didn't 188 00:09:14,760 --> 00:09:17,040 Speaker 2: used to be reats. A READ is a real estate 189 00:09:17,040 --> 00:09:17,600 Speaker 2: investment trust. 190 00:09:17,679 --> 00:09:17,800 Speaker 1: Right. 191 00:09:17,800 --> 00:09:20,880 Speaker 2: It's like a pool of real estate assets that you 192 00:09:20,920 --> 00:09:24,080 Speaker 2: can buy a share in. Right, And that's like a 193 00:09:24,160 --> 00:09:26,640 Speaker 2: relatively new that's like like the seventies or eighties is 194 00:09:26,679 --> 00:09:29,920 Speaker 2: relatively new technology that people developed in order to allow 195 00:09:30,360 --> 00:09:33,280 Speaker 2: retail investors on the stock exchange to buy exposure to 196 00:09:33,320 --> 00:09:36,720 Speaker 2: real estate. Now most roads are not single family homes, right. 197 00:09:37,160 --> 00:09:39,480 Speaker 2: One thing that is happening is that like single family 198 00:09:39,480 --> 00:09:42,360 Speaker 2: homes have become like a real investor asset class, right, 199 00:09:42,360 --> 00:09:45,040 Speaker 2: Like you know, like big asset managers now own a 200 00:09:45,080 --> 00:09:47,400 Speaker 2: lot of single family homes and rent them out to 201 00:09:47,440 --> 00:09:50,000 Speaker 2: people to live in them. And I think that doesn't 202 00:09:50,040 --> 00:09:52,280 Speaker 2: really exist in like read or ETF form yet, but 203 00:09:52,280 --> 00:09:55,440 Speaker 2: then yeah, you could spin that out like sell stakes 204 00:09:55,480 --> 00:09:57,800 Speaker 2: in your like single family home portfolio, and like, I 205 00:09:57,840 --> 00:10:00,959 Speaker 2: don't know, I'd imagine in like five years if investor 206 00:10:01,040 --> 00:10:03,080 Speaker 2: owned single family homes are a big deal, like someone 207 00:10:03,120 --> 00:10:04,880 Speaker 2: will have a reate of them, so that you can 208 00:10:04,920 --> 00:10:08,240 Speaker 2: buy diversified exposure to single family homes. What you can't 209 00:10:08,240 --> 00:10:13,560 Speaker 2: buy is diversified exposure to owner occupied single family homes 210 00:10:13,679 --> 00:10:15,920 Speaker 2: because the owners occupy them and so they're not selling 211 00:10:15,960 --> 00:10:18,320 Speaker 2: a stake. And like that's a thing that people have 212 00:10:18,400 --> 00:10:21,080 Speaker 2: thought about for a long time too. And like financial 213 00:10:21,080 --> 00:10:24,600 Speaker 2: engineers love the idea of like, okay, you own house, 214 00:10:25,280 --> 00:10:27,280 Speaker 2: you sell ten percent of your home equity to me, 215 00:10:27,480 --> 00:10:28,719 Speaker 2: and I put it in a pot and I sell 216 00:10:28,720 --> 00:10:32,920 Speaker 2: it to investors, right because like for you, you get 217 00:10:33,120 --> 00:10:36,160 Speaker 2: some form of like hedging your house pass exposure and 218 00:10:36,240 --> 00:10:40,680 Speaker 2: you get cash that is arguably not debt, has like 219 00:10:40,720 --> 00:10:43,960 Speaker 2: somewhat more attractive properties than debt perhaps, And for me, 220 00:10:44,200 --> 00:10:46,160 Speaker 2: I get exposure to your house and then if I 221 00:10:46,200 --> 00:10:47,720 Speaker 2: pool that with a bunch of other houses, then I've 222 00:10:47,920 --> 00:10:52,120 Speaker 2: created something like an investable fund of owner occupied homes 223 00:10:52,120 --> 00:10:54,400 Speaker 2: and like, that's a cool product. A lot of people 224 00:10:54,400 --> 00:10:56,320 Speaker 2: would like to swap where it's like, if you have 225 00:10:56,360 --> 00:10:58,760 Speaker 2: one hundred thousand dollars of equity in your house, you 226 00:10:58,800 --> 00:11:00,960 Speaker 2: would perhaps rather have fifty one thousand dollars of equity 227 00:11:00,960 --> 00:11:03,920 Speaker 2: in your house and fifty thousand dollars of like diversified 228 00:11:04,400 --> 00:11:06,600 Speaker 2: home equity like across the country or whatever, so that 229 00:11:06,640 --> 00:11:09,960 Speaker 2: you're not as invested in your single house. People try 230 00:11:09,960 --> 00:11:12,360 Speaker 2: that all the time. And I wrote about a company 231 00:11:12,360 --> 00:11:15,240 Speaker 2: called Point in twenty sixteen. I was doing something like this. 232 00:11:15,480 --> 00:11:18,920 Speaker 2: I think it's hard in part because, like startup founders 233 00:11:18,960 --> 00:11:22,439 Speaker 2: and money stuff podcast listeners love this idea, many normal 234 00:11:22,480 --> 00:11:24,880 Speaker 2: people may not be that interested in it, and so like, 235 00:11:24,960 --> 00:11:28,360 Speaker 2: you can't necessarily get a huge diversified pool of people 236 00:11:28,440 --> 00:11:30,080 Speaker 2: who are like, oh yeah, I want to like go 237 00:11:30,120 --> 00:11:32,559 Speaker 2: through the headwreich of like signing a contract to sell 238 00:11:32,640 --> 00:11:34,440 Speaker 2: ten percent of my home equity. You also have like 239 00:11:34,440 --> 00:11:37,400 Speaker 2: weird dynamics where you know, a mortgage you pay back 240 00:11:37,400 --> 00:11:41,160 Speaker 2: every month until it's paid off, home equity whatever, you know, 241 00:11:41,240 --> 00:11:43,720 Speaker 2: selling a portion of your home equity, how does the 242 00:11:43,760 --> 00:11:46,720 Speaker 2: buyer monetize it? I think the answer is like they 243 00:11:46,760 --> 00:11:49,120 Speaker 2: wait until you sell the house, like that could be 244 00:11:49,120 --> 00:11:52,319 Speaker 2: a long time, or it's like not an obviously cash 245 00:11:52,320 --> 00:11:54,480 Speaker 2: flowing outset if it's owner archiped real estate. And so 246 00:11:54,520 --> 00:11:57,240 Speaker 2: it's like a weirder dynamic of like how the market 247 00:11:57,280 --> 00:12:01,560 Speaker 2: would work, but people do keep trying it. And also 248 00:12:01,600 --> 00:12:02,800 Speaker 2: the other thing I should say is people try to 249 00:12:02,840 --> 00:12:04,840 Speaker 2: make derivative products. There's like a case sholl or derivative 250 00:12:04,840 --> 00:12:07,040 Speaker 2: products at some point where it's like based on some 251 00:12:07,120 --> 00:12:09,760 Speaker 2: like observed index and like you have futures contracts side 252 00:12:09,800 --> 00:12:12,200 Speaker 2: to the index. Because people really like the idea of 253 00:12:12,200 --> 00:12:15,640 Speaker 2: being able to buy diversify a single family home exposure. 254 00:12:15,840 --> 00:12:18,000 Speaker 2: And I feel like no one has really corracked it yet, 255 00:12:18,040 --> 00:12:19,120 Speaker 2: but people. 256 00:12:18,880 --> 00:12:20,760 Speaker 1: Are gonna keep working on They're going to keep working on. 257 00:12:21,320 --> 00:12:23,120 Speaker 2: The thing I always I also compare it to is 258 00:12:23,200 --> 00:12:26,440 Speaker 2: the other like form of equity that people want to 259 00:12:26,440 --> 00:12:31,280 Speaker 2: buy is like human equity, Like people want go on. 260 00:12:31,679 --> 00:12:35,560 Speaker 2: So this is like you know, college students, MBA students, 261 00:12:35,640 --> 00:12:38,320 Speaker 2: minor league baseball players, Like there are people who will 262 00:12:38,320 --> 00:12:40,480 Speaker 2: come to them and say, sell me ten percent of 263 00:12:40,480 --> 00:12:42,520 Speaker 2: your future earnings or like you know, your future earnings 264 00:12:42,559 --> 00:12:44,720 Speaker 2: over the next ten years or whatever, and I'll give 265 00:12:44,720 --> 00:12:46,959 Speaker 2: you a pile of cash today, and I will sell 266 00:12:47,000 --> 00:12:49,760 Speaker 2: your future earnings to some investor class And like people 267 00:12:49,760 --> 00:12:51,840 Speaker 2: do this like NBA students or like the NBA students 268 00:12:51,880 --> 00:12:54,280 Speaker 2: pool and with minor league baseball players too. You get 269 00:12:54,280 --> 00:12:57,360 Speaker 2: like ten players and you pool yourselves and then like 270 00:12:57,480 --> 00:12:58,800 Speaker 2: one of you makes it big, then he writes a 271 00:12:58,840 --> 00:13:00,400 Speaker 2: check to the other nine, and so you have like 272 00:13:00,440 --> 00:13:02,559 Speaker 2: a sort of like diverseifaication benefit. 273 00:13:02,679 --> 00:13:04,160 Speaker 1: That's crazy. I've never heard of this. 274 00:13:04,440 --> 00:13:06,480 Speaker 2: Oh, people love it. It's not a huge business. It's 275 00:13:06,480 --> 00:13:08,640 Speaker 2: like a thing that people are constantly per forming startups 276 00:13:08,679 --> 00:13:11,160 Speaker 2: to do because like it's a great abstract idea and 277 00:13:11,160 --> 00:13:12,960 Speaker 2: then like in practice it's like, oh it's a mass, 278 00:13:13,160 --> 00:13:15,520 Speaker 2: but like there is more progress being made on those 279 00:13:15,800 --> 00:13:18,720 Speaker 2: than on the house stuff. The house stuff seems really hard. 280 00:13:18,840 --> 00:13:23,560 Speaker 1: Thank you for the thought provoking question, Max mail Bag 281 00:13:23,840 --> 00:13:28,040 Speaker 1: mail Bag, let's move on to Kevin. All men so far, 282 00:13:28,120 --> 00:13:30,320 Speaker 1: but we do have a woman coming up, so stay tuned. 283 00:13:30,559 --> 00:13:33,680 Speaker 1: But Kevin asks you talk a lot about how analysts 284 00:13:33,720 --> 00:13:36,679 Speaker 1: think it's worth talking to management, getting on calls, et cetera. 285 00:13:37,000 --> 00:13:40,240 Speaker 1: Even though management can't share MNPI because they think they 286 00:13:40,320 --> 00:13:43,320 Speaker 1: can glean something from body language that helps them evaluate 287 00:13:43,320 --> 00:13:46,520 Speaker 1: the company. Do any short sellers do the same too, Like, 288 00:13:46,559 --> 00:13:48,120 Speaker 1: what if you had a big short position and then 289 00:13:48,160 --> 00:13:51,040 Speaker 1: gain some info from management to body language that made 290 00:13:51,040 --> 00:13:53,480 Speaker 1: you rethink the short It would be good for the 291 00:13:53,520 --> 00:13:55,280 Speaker 1: company too if they were able to convince a short 292 00:13:55,280 --> 00:13:57,280 Speaker 1: seller to cover I just think it's funny to imagine 293 00:13:57,320 --> 00:13:59,840 Speaker 1: that conversation, Hey, we sold three million of your shares 294 00:13:59,880 --> 00:14:02,240 Speaker 1: in the market because we think you're bad at your jobs. 295 00:14:02,440 --> 00:14:04,199 Speaker 1: Could you meet with us to help us figure out 296 00:14:04,200 --> 00:14:07,319 Speaker 1: if that's still true? I love this question. I also 297 00:14:07,679 --> 00:14:11,160 Speaker 1: love to imagine, like how dramatic your body language would 298 00:14:11,240 --> 00:14:12,280 Speaker 1: have to be too? 299 00:14:12,840 --> 00:14:13,400 Speaker 2: Sorry about that. 300 00:14:13,480 --> 00:14:15,360 Speaker 1: I feel like we've talked about this before. 301 00:14:15,400 --> 00:14:16,760 Speaker 2: The body language stuff in general. 302 00:14:16,920 --> 00:14:19,520 Speaker 1: Yeah, and short sellers, well. 303 00:14:19,520 --> 00:14:22,280 Speaker 2: The body language. I feel like body language is a euphemism. Yeah, 304 00:14:22,320 --> 00:14:23,960 Speaker 2: Because the idea is like, right, you're going to meet 305 00:14:24,000 --> 00:14:26,840 Speaker 2: with management of a company that you might invest in, 306 00:14:27,240 --> 00:14:29,040 Speaker 2: and like, you have a meeting and you walk out 307 00:14:29,080 --> 00:14:30,920 Speaker 2: of the meeting and you like learn something and you 308 00:14:30,960 --> 00:14:32,600 Speaker 2: go buy the stock or sell the stock or whatever, 309 00:14:33,080 --> 00:14:35,760 Speaker 2: and the law says that management is not allowed to 310 00:14:35,760 --> 00:14:38,360 Speaker 2: give you a material non public information that isn't already public? 311 00:14:38,400 --> 00:14:38,920 Speaker 1: Can they wink? 312 00:14:39,200 --> 00:14:41,080 Speaker 2: And it's like what happened in that meeting? And like, 313 00:14:41,120 --> 00:14:43,040 Speaker 2: oh if they read the body language, and it's like, no, 314 00:14:43,240 --> 00:14:45,360 Speaker 2: they like said something that like doesn't quite rise to 315 00:14:45,360 --> 00:14:48,360 Speaker 2: the level of disclosure, but like is useful to you, 316 00:14:48,840 --> 00:14:50,400 Speaker 2: and like what you know about the company and how 317 00:14:50,440 --> 00:14:52,040 Speaker 2: you like build your model and how you think about 318 00:14:52,040 --> 00:14:54,960 Speaker 2: the management. So you've you've been given like information and 319 00:14:55,000 --> 00:14:56,640 Speaker 2: like people say body language because then it's like, oh, 320 00:14:56,680 --> 00:14:58,720 Speaker 2: they didn't disclose anything. It's just the body language, right, 321 00:14:59,200 --> 00:15:00,640 Speaker 2: So I think it's a youth wasn't. 322 00:15:00,440 --> 00:15:04,040 Speaker 1: But in any case, maybe they raised their eyebrows suggestively 323 00:15:04,240 --> 00:15:04,640 Speaker 1: when they. 324 00:15:04,520 --> 00:15:06,400 Speaker 2: Were you know, you were like, how do I think 325 00:15:06,440 --> 00:15:08,480 Speaker 2: about this line item in the model? And they're like, oh, well, 326 00:15:08,480 --> 00:15:10,880 Speaker 2: this is everything about that's not material enough to disclose. 327 00:15:10,920 --> 00:15:11,920 Speaker 2: But it's like you've learned. 328 00:15:11,680 --> 00:15:14,480 Speaker 1: Something, right, A smirk snuck onto nobody. 329 00:15:14,560 --> 00:15:17,640 Speaker 2: Language is all fake, except I will say one of 330 00:15:17,640 --> 00:15:20,600 Speaker 2: my favorite stories ever is because I've been writing about 331 00:15:20,600 --> 00:15:22,160 Speaker 2: this for a long time, this idea that like management 332 00:15:22,240 --> 00:15:24,480 Speaker 2: is giving you something useful, and I couldn't possibly not 333 00:15:24,480 --> 00:15:26,440 Speaker 2: be giving you something useful. That's why they have these 334 00:15:26,480 --> 00:15:29,680 Speaker 2: meanings and there's this great paper. These like academics got 335 00:15:29,800 --> 00:15:32,400 Speaker 2: a lot of access to Aberdeen the like yeah UK 336 00:15:32,520 --> 00:15:33,560 Speaker 2: long only asset measure. 337 00:15:33,880 --> 00:15:35,360 Speaker 1: Didn't they take the bellels out of their name. 338 00:15:35,640 --> 00:15:37,320 Speaker 2: I think this was before they took the vowels up 339 00:15:37,320 --> 00:15:40,720 Speaker 2: and now it's Aberden. But so Aberdin or Aberdeen like 340 00:15:40,880 --> 00:15:43,320 Speaker 2: had a bunch of meanings with management, and like these 341 00:15:43,400 --> 00:15:45,480 Speaker 2: academics studied like how they learned, like what they learned, 342 00:15:45,520 --> 00:15:47,640 Speaker 2: and like how they traded, and like basically they got 343 00:15:47,720 --> 00:15:50,720 Speaker 2: useful information from these managintinings. But the academics also had 344 00:15:50,760 --> 00:15:53,560 Speaker 2: access to like their notes from the meetings. There's one 345 00:15:53,600 --> 00:15:56,960 Speaker 2: where they met with the chairman of this company and 346 00:15:57,200 --> 00:15:59,680 Speaker 2: the analyst came back and wrote a note that included 347 00:15:59,720 --> 00:16:03,320 Speaker 2: saying he was looking unfeasibly tanned for this time of year. 348 00:16:03,360 --> 00:16:05,520 Speaker 2: It was like in January or whatever. Yeah, and so 349 00:16:05,880 --> 00:16:07,640 Speaker 2: if you're like the chairman of this company is looking 350 00:16:07,720 --> 00:16:10,640 Speaker 2: unfeasibly tanned, yeah, that's a short, right, Like you sell 351 00:16:10,680 --> 00:16:12,040 Speaker 2: that stuck. And so they did, in fact on the 352 00:16:12,080 --> 00:16:13,400 Speaker 2: stock and it did actually turn out to be a 353 00:16:13,400 --> 00:16:14,200 Speaker 2: well time trade. 354 00:16:14,240 --> 00:16:15,200 Speaker 1: That is so funny. 355 00:16:15,240 --> 00:16:17,320 Speaker 2: It's the only case I know of like true body 356 00:16:17,400 --> 00:16:23,000 Speaker 2: language or body coloring being useful financial information, but anyway, 357 00:16:23,120 --> 00:16:26,440 Speaker 2: they're basically a long investor. Do short sellers meet with 358 00:16:26,480 --> 00:16:29,000 Speaker 2: management to like get talked out of their shorts? Like, 359 00:16:29,000 --> 00:16:31,120 Speaker 2: I think it probably happens. There are probably some companies, 360 00:16:31,200 --> 00:16:33,720 Speaker 2: Like I think most like activist short sellers are interested 361 00:16:33,760 --> 00:16:36,440 Speaker 2: in hearing the company's perspective before they put a lot 362 00:16:36,480 --> 00:16:39,080 Speaker 2: of money into betting against the company. And I think 363 00:16:39,120 --> 00:16:41,200 Speaker 2: it's a mixed bag. You know, how often they're going 364 00:16:41,240 --> 00:16:43,800 Speaker 2: to contact them, and in general, my impression is that 365 00:16:43,840 --> 00:16:46,080 Speaker 2: managements don't like short sellers and so I don't always 366 00:16:46,120 --> 00:16:47,880 Speaker 2: meet with them, But I bet it happens. You know, 367 00:16:47,880 --> 00:16:50,120 Speaker 2: It's funny, Like I feel like I'm aware of Tesla 368 00:16:50,200 --> 00:16:52,120 Speaker 2: short sellers who have like turned around and become like 369 00:16:52,200 --> 00:16:54,520 Speaker 2: huge dust the bulls, And I assume that is not 370 00:16:55,040 --> 00:16:57,800 Speaker 2: from like a friendly meeting with Elon Musk where he 371 00:16:57,880 --> 00:17:00,400 Speaker 2: like explains his thinking and they come away per suaded. 372 00:17:00,720 --> 00:17:03,080 Speaker 2: But like, you know, somehow they like you know, get 373 00:17:03,160 --> 00:17:05,560 Speaker 2: enough of a vibe from them that they change their minds. 374 00:17:05,800 --> 00:17:07,240 Speaker 2: But no, I think it happens. I think I think 375 00:17:07,240 --> 00:17:09,000 Speaker 2: there's like a range of things, and like you see 376 00:17:09,640 --> 00:17:11,520 Speaker 2: a lot of the noisiest short sellers and a lot 377 00:17:11,600 --> 00:17:15,160 Speaker 2: of the most anti short seller managers being very vocal 378 00:17:15,200 --> 00:17:18,080 Speaker 2: about hating each other. But I think, you know, there's 379 00:17:18,119 --> 00:17:19,840 Speaker 2: a wider range, and particularly like you know, a lot 380 00:17:19,880 --> 00:17:23,360 Speaker 2: of people who are short companies are like multi strategy 381 00:17:23,400 --> 00:17:26,400 Speaker 2: hedge funds who are just making relative value bets where 382 00:17:26,400 --> 00:17:28,240 Speaker 2: they don't hate the company. They're just like have to 383 00:17:28,240 --> 00:17:30,239 Speaker 2: be factor neutral or whatever. And I think a lot 384 00:17:30,240 --> 00:17:32,440 Speaker 2: of those people do in fact meet with the companies 385 00:17:32,760 --> 00:17:35,639 Speaker 2: and have kind of rational discussions and will sometimes be 386 00:17:35,680 --> 00:17:39,159 Speaker 2: long and sometimes be short, and do not put a 387 00:17:39,200 --> 00:17:42,120 Speaker 2: lot of like personal animals into it. On either side. 388 00:17:42,640 --> 00:17:44,600 Speaker 1: Well, for my own amusement, I'm going to pretend that 389 00:17:44,640 --> 00:17:46,400 Speaker 1: body language is real. 390 00:17:46,800 --> 00:17:49,120 Speaker 2: No, it's real. There's the one guy with ten Yeah, 391 00:17:49,320 --> 00:17:52,719 Speaker 2: that's true. But I think there's some amount of like 392 00:17:52,960 --> 00:17:58,080 Speaker 2: to the extent you're evaluating managements like quality. Yeah, getting 393 00:17:58,119 --> 00:17:59,880 Speaker 2: a sense of how they talk and how they look 394 00:18:00,119 --> 00:18:01,480 Speaker 2: you in the eye and shake your hand or whatever 395 00:18:01,560 --> 00:18:03,600 Speaker 2: is maybe like a little bit useful. But I think 396 00:18:03,600 --> 00:18:06,119 Speaker 2: the body lineage is super oerrated, and that's mostly they 397 00:18:06,119 --> 00:18:08,720 Speaker 2: have substance of discussions that they just all agree they 398 00:18:08,760 --> 00:18:09,840 Speaker 2: don't have to disclose. 399 00:18:23,160 --> 00:18:26,360 Speaker 1: Douglas has some questions. He has some questions. We're only 400 00:18:26,359 --> 00:18:28,439 Speaker 1: going to answer one of them. 401 00:18:29,080 --> 00:18:32,040 Speaker 2: Douglas asks, since there are more words than letters and 402 00:18:32,119 --> 00:18:35,280 Speaker 2: more sentences than words, is there any logical limit to 403 00:18:35,320 --> 00:18:36,399 Speaker 2: the number of ETFs. 404 00:18:37,480 --> 00:18:39,040 Speaker 1: I love this question. 405 00:18:39,320 --> 00:18:41,359 Speaker 2: Wait, I don't get it. I feel like ETFs are 406 00:18:41,400 --> 00:18:44,240 Speaker 2: limited by the number of letters, right, I mean you've 407 00:18:44,240 --> 00:18:44,879 Speaker 2: written about that. 408 00:18:44,920 --> 00:18:48,280 Speaker 1: Tickers are, Yeah, so I don't think there's any limit 409 00:18:48,320 --> 00:18:50,919 Speaker 1: to the number of utfs. But there are limits to 410 00:18:51,000 --> 00:18:56,080 Speaker 1: tickers because a ticker, right, you need a ticker. US 411 00:18:56,080 --> 00:18:58,879 Speaker 1: exchanges have a four character limit. 412 00:18:59,200 --> 00:18:59,920 Speaker 2: I didn't realize that. 413 00:19:01,440 --> 00:19:05,160 Speaker 1: No, it's four. I mean there are some like weird exceptions. 414 00:19:05,760 --> 00:19:07,679 Speaker 1: The only one I can think of actually is Google, 415 00:19:07,920 --> 00:19:10,960 Speaker 1: which is g O O g L. I don't quite 416 00:19:10,960 --> 00:19:14,000 Speaker 1: know the lore behind that, so maybe, yeah, I know, 417 00:19:14,160 --> 00:19:16,879 Speaker 1: But like, why is it five and no other stock 418 00:19:16,960 --> 00:19:17,760 Speaker 1: is think about it? 419 00:19:17,960 --> 00:19:21,480 Speaker 2: The other four character that have share classes that are five? 420 00:19:21,480 --> 00:19:21,800 Speaker 2: I don't know. 421 00:19:22,000 --> 00:19:27,800 Speaker 1: I don't think so anyway. Anyway, Generally speaking, generally speaking, 422 00:19:27,960 --> 00:19:31,720 Speaker 1: four character limit and no numbers. And that's different than 423 00:19:31,760 --> 00:19:36,240 Speaker 1: Europe and Asia, which can have more than four characters, 424 00:19:36,280 --> 00:19:38,960 Speaker 1: and can also, at least in Asia allow numbers I 425 00:19:38,960 --> 00:19:42,320 Speaker 1: think actually Europe too also allows numbers, and I've written 426 00:19:42,320 --> 00:19:48,600 Speaker 1: about maybe there could be a ticker shortage when it comes, 427 00:19:48,680 --> 00:19:52,040 Speaker 1: especially to the world of leverage single stock ETFs, because 428 00:19:52,040 --> 00:19:55,320 Speaker 1: your ticker is already a derivative of an existing ticker, 429 00:19:55,680 --> 00:19:59,000 Speaker 1: and then you only have, however, many letters to work 430 00:19:59,000 --> 00:20:03,520 Speaker 1: with month three like MST. Yeah, MST something which is 431 00:20:03,680 --> 00:20:04,480 Speaker 1: which is difficult. 432 00:20:04,520 --> 00:20:10,320 Speaker 2: I have asked said the micro strategy mstrs. 433 00:20:09,080 --> 00:20:12,359 Speaker 1: Monster MicroStrategy, Nazak and II. I've asked them about it. 434 00:20:12,400 --> 00:20:14,960 Speaker 1: They've both told me they're not concerned. Currently in the 435 00:20:15,040 --> 00:20:19,399 Speaker 1: US there's like thirty nine hundred listed ETFs, which is 436 00:20:19,440 --> 00:20:21,280 Speaker 1: a lot. I am excited for the day when there's 437 00:20:21,359 --> 00:20:26,320 Speaker 1: more US listed ETFs and there are US publicly listed stocks. 438 00:20:26,440 --> 00:20:28,959 Speaker 1: We're not quite at that point, but we'll see. I 439 00:20:29,000 --> 00:20:31,840 Speaker 1: just love this question, and I love Douglas's phrasing. It 440 00:20:31,880 --> 00:20:35,560 Speaker 1: sounds like a riddle. Matt's textings, No, I'm. 441 00:20:35,400 --> 00:20:39,440 Speaker 2: There are proxtimately four hundred and fifty thousand logically possible. 442 00:20:39,080 --> 00:20:42,240 Speaker 1: Tickers something like that. Actually, when I wrote this story, 443 00:20:42,280 --> 00:20:47,160 Speaker 1: we talked through the math. Yeah, but if you knock 444 00:20:47,200 --> 00:20:51,399 Speaker 1: out two of those characters, three of those characters in 445 00:20:51,400 --> 00:20:55,760 Speaker 1: some cases, then obviously your universe shrinks dramatically because you're. 446 00:20:55,640 --> 00:20:59,840 Speaker 2: Talking rightly, like, yeah, yeah, I feel like I've said 447 00:20:59,840 --> 00:21:01,760 Speaker 2: this on the show before. Like you could imagine a 448 00:21:01,760 --> 00:21:05,840 Speaker 2: world where like the ets become like a like universal 449 00:21:06,160 --> 00:21:09,000 Speaker 2: format for products. Right, Anyone who's like, oh, I want 450 00:21:09,000 --> 00:21:11,520 Speaker 2: to do like, you know, call options on micro strategy, 451 00:21:11,680 --> 00:21:12,880 Speaker 2: be like, oh, do an need app for it? Right? 452 00:21:13,280 --> 00:21:15,240 Speaker 2: In that world, you would need to kind of revise 453 00:21:15,280 --> 00:21:17,200 Speaker 2: the ticker system, right, Like you need to have some 454 00:21:17,240 --> 00:21:20,320 Speaker 2: sort of like mstr slash and then I have like 455 00:21:20,440 --> 00:21:23,439 Speaker 2: a descriptive for new characters. You need to have a 456 00:21:23,480 --> 00:21:26,560 Speaker 2: more organized system than just like pick four letters. Yeah, 457 00:21:26,600 --> 00:21:28,400 Speaker 2: but we're probably not there yet. 458 00:21:28,400 --> 00:21:29,040 Speaker 1: But I don't know. 459 00:21:29,119 --> 00:21:31,760 Speaker 2: Maybe in five years will there be some sort of 460 00:21:31,880 --> 00:21:35,440 Speaker 2: like more complex ticker system to accommodate those just absolute 461 00:21:35,680 --> 00:21:36,240 Speaker 2: tour endo. 462 00:21:36,119 --> 00:21:38,879 Speaker 1: Et aps Like maybe I can't wait, I don't know, 463 00:21:39,200 --> 00:21:41,880 Speaker 1: you say four to five years, perhaps in the year 464 00:21:41,880 --> 00:21:44,280 Speaker 1: of twenty twenty five. Anything could happen this year? 465 00:21:44,480 --> 00:21:46,800 Speaker 2: Yeah, right, it's been it's been a wild year so far. 466 00:21:48,640 --> 00:21:53,879 Speaker 1: Mail Bag mail Bag, Kristen has a question. I'm going 467 00:21:53,920 --> 00:21:56,320 Speaker 1: to read it to you. Kristin says that my sister 468 00:21:56,359 --> 00:21:59,080 Speaker 1: in law was recently talking about the Martha Stewart documentary 469 00:21:59,080 --> 00:22:01,320 Speaker 1: out a few months ago. She was convinced that have 470 00:22:01,359 --> 00:22:03,520 Speaker 1: you seen that round? No, and now I'm gonna watch it. 471 00:22:03,640 --> 00:22:04,360 Speaker 1: Have you seen it? 472 00:22:04,800 --> 00:22:06,840 Speaker 2: I've seen like ten minutes of it. I've not seen it. 473 00:22:06,960 --> 00:22:08,399 Speaker 2: And then Kristen has not seen it as far as 474 00:22:08,440 --> 00:22:12,840 Speaker 2: I can. So we're talking about we're like fourth hand 475 00:22:13,080 --> 00:22:15,600 Speaker 2: as the documentary. This is Kristen's sister in law. 476 00:22:15,920 --> 00:22:19,160 Speaker 1: Yeah, Kristen's sister in law watched the documentary about Martha Stewart, 477 00:22:19,480 --> 00:22:22,800 Speaker 1: and Kristen's sister in law was convinced that everybody just 478 00:22:22,880 --> 00:22:25,800 Speaker 1: ganged up on Martha and that Martha didn't do anything 479 00:22:25,840 --> 00:22:29,040 Speaker 1: wrong because she didn't know it wasn't allowed the insider trading. 480 00:22:29,440 --> 00:22:33,399 Speaker 1: I personally, this is Kristen talking. Kristen personally has not 481 00:22:33,520 --> 00:22:35,679 Speaker 1: kept up with any of that news and has not 482 00:22:35,720 --> 00:22:39,119 Speaker 1: watched the documentary. But Kristen's instinct was that punishment for 483 00:22:39,160 --> 00:22:41,600 Speaker 1: insider trading doesn't require the defendant to be aware of 484 00:22:41,640 --> 00:22:45,800 Speaker 1: the insider trading rules. Was kristin correct or incorrect? I 485 00:22:45,840 --> 00:22:48,520 Speaker 1: know that's an interesting question. I mean does intent matter? 486 00:22:49,200 --> 00:22:52,120 Speaker 2: No? I mean, like intent often matters in like market 487 00:22:52,200 --> 00:22:56,400 Speaker 2: monipulation and stuff. But yeah, in insider trading, the rules are, 488 00:22:56,680 --> 00:22:57,800 Speaker 2: first of all, you don't have to know that it's 489 00:22:57,800 --> 00:22:59,119 Speaker 2: illegal to insider trade, right. 490 00:22:59,240 --> 00:22:59,840 Speaker 1: Yeah. 491 00:23:00,119 --> 00:23:02,240 Speaker 2: In general, ignorance of the law is no excuse, right, 492 00:23:02,280 --> 00:23:04,160 Speaker 2: So if you didn't know it was illegal to insider trade, 493 00:23:04,160 --> 00:23:06,200 Speaker 2: you can't be like, oh, I thought it was fine, right. 494 00:23:06,320 --> 00:23:08,760 Speaker 2: People do that, by the way, Yeah, like you know, 495 00:23:08,840 --> 00:23:10,439 Speaker 2: now you've found on the insider trading case that I 496 00:23:10,440 --> 00:23:12,320 Speaker 2: write about, it's like they're like googling how not to 497 00:23:12,320 --> 00:23:14,560 Speaker 2: get caught insider trading, and then ten persons they're like, what, 498 00:23:14,680 --> 00:23:18,520 Speaker 2: I had no idea. But there's also like another mind 499 00:23:18,520 --> 00:23:20,240 Speaker 2: side question, which is, let's say you were going to 500 00:23:20,240 --> 00:23:22,159 Speaker 2: sell the stock anyway, okay, and then you got some 501 00:23:22,200 --> 00:23:25,000 Speaker 2: bad news. Can you still sell the stock? No? I 502 00:23:25,040 --> 00:23:27,400 Speaker 2: think the SEC's rule is that if you're in possession 503 00:23:27,440 --> 00:23:30,199 Speaker 2: of material on public information, that counts as selling. On 504 00:23:30,240 --> 00:23:32,840 Speaker 2: the basis of material in public information, it seemed pretty 505 00:23:32,840 --> 00:23:36,119 Speaker 2: well established, so yeah, like even if you would have 506 00:23:36,119 --> 00:23:38,720 Speaker 2: sold it anywhere, that doesn't help you. I will say 507 00:23:38,720 --> 00:23:41,160 Speaker 2: that the Martha Stewart case is more complicated than that. 508 00:23:41,280 --> 00:23:45,280 Speaker 2: Like Martha Stewart didn't like get an insider stock tip, 509 00:23:45,400 --> 00:23:48,679 Speaker 2: like her broker got apparently insider stock tip, and then 510 00:23:48,640 --> 00:23:50,359 Speaker 2: the broker's like, hey, I think we should sell that stock, 511 00:23:50,359 --> 00:23:54,760 Speaker 2: and she's like, sure, go ahead, And so arguably, you know, 512 00:23:54,800 --> 00:23:56,560 Speaker 2: it's a little more complicated than that. But I think, 513 00:23:56,680 --> 00:24:00,119 Speaker 2: like my impression and a lot of people's impression of 514 00:24:00,160 --> 00:24:03,240 Speaker 2: the Stewart probably wasn't really guilty of insider trading because 515 00:24:03,280 --> 00:24:05,080 Speaker 2: she didn't know that she was getting a material, not 516 00:24:05,160 --> 00:24:07,159 Speaker 2: public tip. She had no reason to think she was 517 00:24:07,160 --> 00:24:09,960 Speaker 2: getting an illegal tip. And iif you're broker's in charger 518 00:24:10,000 --> 00:24:12,080 Speaker 2: of account, you're not making decisions. That's a little hard 519 00:24:12,080 --> 00:24:14,159 Speaker 2: to accuse you of insider trading. What is relevant is 520 00:24:14,200 --> 00:24:16,560 Speaker 2: that she wasn't connected of insider trading. I don't think 521 00:24:16,640 --> 00:24:17,919 Speaker 2: she was charged with inside of trading. 522 00:24:18,080 --> 00:24:20,200 Speaker 1: I haven't watched the documentary, so this is all. 523 00:24:20,119 --> 00:24:22,359 Speaker 2: I have been either, but I'm familiar with this. 524 00:24:22,640 --> 00:24:24,160 Speaker 1: You took a browse of no. 525 00:24:24,240 --> 00:24:26,040 Speaker 2: I mean I used to, like honestly, like when I 526 00:24:26,040 --> 00:24:27,640 Speaker 2: started at a law firm, it was the law froom 527 00:24:27,680 --> 00:24:30,560 Speaker 2: that like represented Martha Stewart, Like I had nothing to 528 00:24:30,600 --> 00:24:32,040 Speaker 2: do with the case, and she wasn't think they weren't 529 00:24:32,119 --> 00:24:34,679 Speaker 2: her lawyers on the trail. But like we all had 530 00:24:34,720 --> 00:24:35,960 Speaker 2: a various what. 531 00:24:35,600 --> 00:24:39,600 Speaker 1: What year did this happen? Because I was pretty young 532 00:24:39,800 --> 00:24:42,320 Speaker 1: and I wasn't really paying attention. It happened before I 533 00:24:42,440 --> 00:24:43,880 Speaker 1: got there two thousand and four. 534 00:24:44,000 --> 00:24:45,960 Speaker 2: Oh well, so right before I got there. So she 535 00:24:46,080 --> 00:24:48,280 Speaker 2: was in charge of inside of trading. What happened is 536 00:24:48,320 --> 00:24:51,560 Speaker 2: that the insider and her broker got investigated by the SEC, 537 00:24:51,640 --> 00:24:53,200 Speaker 2: and the SEC saw that she like got a call 538 00:24:53,200 --> 00:24:55,679 Speaker 2: from the broker and then he sold her stock, and 539 00:24:55,720 --> 00:24:57,480 Speaker 2: so they went to her and they said, did you 540 00:24:57,560 --> 00:25:00,199 Speaker 2: get a hot insider tip to sell that stock? And 541 00:25:00,280 --> 00:25:02,600 Speaker 2: she said, actually, what happened is that I put in 542 00:25:02,800 --> 00:25:04,840 Speaker 2: a stop loss order saying that, like, if the stock 543 00:25:04,840 --> 00:25:07,359 Speaker 2: goes below sixty dollars, you should sell it. And my 544 00:25:07,359 --> 00:25:09,320 Speaker 2: broker called to say that it was below sixty dollars, 545 00:25:09,320 --> 00:25:12,480 Speaker 2: so I sold it, and that wasn't true. Apparently she 546 00:25:12,520 --> 00:25:14,520 Speaker 2: didn't have a stop loss order, and so she was 547 00:25:14,640 --> 00:25:17,960 Speaker 2: convicted of lying to the investigators, which is its own 548 00:25:18,000 --> 00:25:20,000 Speaker 2: separate crime. But like I think a lot of people 549 00:25:20,040 --> 00:25:23,879 Speaker 2: think she was kind of ill treated because she was 550 00:25:23,960 --> 00:25:26,000 Speaker 2: lying to know about something that wasn't actually a crime, 551 00:25:26,040 --> 00:25:27,879 Speaker 2: and so they shouldn't have been investigating here. 552 00:25:27,800 --> 00:25:30,600 Speaker 1: So I don't know, it is wild that she served time, 553 00:25:30,880 --> 00:25:32,000 Speaker 1: like she went to prison. 554 00:25:32,240 --> 00:25:34,600 Speaker 2: Yeah, I have not watched the documentary, but my wife 555 00:25:34,680 --> 00:25:37,360 Speaker 2: was watched a documentary and we've talked about it. It's interesting, 556 00:25:37,440 --> 00:25:41,119 Speaker 2: Like I think you think now of like Martha Stewart, 557 00:25:41,200 --> 00:25:44,680 Speaker 2: the character she is now has awesome It was awesome 558 00:25:44,880 --> 00:25:47,640 Speaker 2: and very famous. Yeah, like very beloved and like friends 559 00:25:47,680 --> 00:25:50,320 Speaker 2: with Snoop Dogg. You think about that character and like 560 00:25:50,600 --> 00:25:52,560 Speaker 2: going to prison for five months or whatever is like 561 00:25:52,600 --> 00:25:54,480 Speaker 2: the big part of that character, right, Like you sort 562 00:25:54,520 --> 00:25:56,360 Speaker 2: of think like her time in prison has like been 563 00:25:56,359 --> 00:25:58,439 Speaker 2: good for her brand, but if you look back at 564 00:25:58,480 --> 00:26:01,199 Speaker 2: like what actually happened, like it was a huge catastrophe 565 00:26:01,200 --> 00:26:02,639 Speaker 2: for her, Like she had a big company that like 566 00:26:02,680 --> 00:26:06,719 Speaker 2: basically like went away because she was convicted of not 567 00:26:06,800 --> 00:26:09,359 Speaker 2: insider trading and sent to prisident. So it was actually 568 00:26:09,359 --> 00:26:12,840 Speaker 2: like really a sort of quite harsh result for something that, 569 00:26:13,280 --> 00:26:15,280 Speaker 2: first of all, in the scheme of things, was not 570 00:26:15,359 --> 00:26:17,119 Speaker 2: that much money, Like she didn't make a huge profit 571 00:26:17,160 --> 00:26:19,560 Speaker 2: and like she probably didn't insider trade. She probably didn't 572 00:26:19,560 --> 00:26:21,840 Speaker 2: know that she was trading on inside information. Yeah, it's 573 00:26:21,880 --> 00:26:24,280 Speaker 2: her workers, like saw this time. She like, fine, but 574 00:26:24,440 --> 00:26:25,680 Speaker 2: she lied to the investigators. 575 00:26:25,680 --> 00:26:30,120 Speaker 1: And you do a crime, question mark, you do the time. 576 00:26:31,920 --> 00:26:34,560 Speaker 2: No. The actually cliche is the cover up is always 577 00:26:34,560 --> 00:26:35,200 Speaker 2: worse than the crime. 578 00:26:35,200 --> 00:26:37,560 Speaker 1: Oh my god, true true here I should have said 579 00:26:37,560 --> 00:26:40,600 Speaker 1: that Martha Stewart, though, I mean an inspiring story of 580 00:26:40,680 --> 00:26:44,680 Speaker 1: rebuilding oneself. Great energy to take into twenty twenty five. 581 00:26:47,720 --> 00:26:49,200 Speaker 2: And that was The Money Stuff Podcast. 582 00:26:49,359 --> 00:26:51,359 Speaker 1: I'm Matt Levian and I'm Katie Greifeld. 583 00:26:51,720 --> 00:26:53,760 Speaker 2: You can find my work by subscribing to The Money 584 00:26:53,760 --> 00:26:56,160 Speaker 2: Stuff newsletter on Bloomberg dot com, and. 585 00:26:56,080 --> 00:26:58,600 Speaker 1: You can find me on Bloomberg TV every day on 586 00:26:58,760 --> 00:27:01,560 Speaker 1: Open Interest between nine to eleven am Eastern. 587 00:27:01,800 --> 00:27:03,520 Speaker 2: We'd love to hear from you. You can send an 588 00:27:03,520 --> 00:27:06,639 Speaker 2: email to you Moneypod at Bloomberg dot net, ask us 589 00:27:06,680 --> 00:27:08,200 Speaker 2: a question and we might answer it on air. 590 00:27:08,720 --> 00:27:10,879 Speaker 1: You can also subscribe to our show wherever you're listening 591 00:27:10,960 --> 00:27:13,000 Speaker 1: right now and leave us a review. It helps more 592 00:27:13,000 --> 00:27:13,920 Speaker 1: people find the show. 593 00:27:14,560 --> 00:27:17,760 Speaker 2: The Money Stuff Podcast is produced by Anamasarakus and Moses 594 00:27:17,800 --> 00:27:18,159 Speaker 2: on On. 595 00:27:18,480 --> 00:27:20,960 Speaker 1: Our theme music was composed by Blake Maples. 596 00:27:20,800 --> 00:27:23,080 Speaker 2: Brandon Francis Nudimas our executive. 597 00:27:22,680 --> 00:27:25,480 Speaker 1: Producer and Stage Bauman is Bloomberg's head of Podcasts. 598 00:27:25,720 --> 00:27:28,040 Speaker 2: Thanks for listening to the Money Stuff Podcast. 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