WEBVTT - Matt Levine on Money and Stuff 0:00:02.000 --> 0:00:05.960 This is Master's in Business with very rid holds on 0:00:06.200 --> 0:00:07.320 Bloomberg Radio. 0:00:08.440 --> 0:00:11.639 This week on the podcast, I have an extra special guest. 0:00:12.039 --> 0:00:16.360 Matt Levine, writes the Money Stuff daily newsletter for Bloomberg. 0:00:16.960 --> 0:00:21.720 Matt has become this fascinating character in the world of 0:00:21.920 --> 0:00:26.560 Wall Street research and analysis and commentary. He brings an 0:00:26.680 --> 0:00:30.080 unusual background as both an m and a attorney and 0:00:30.160 --> 0:00:33.280 a derivative specialist at two of the best firms in 0:00:33.320 --> 0:00:37.040 the world for those spaces, and so he has this 0:00:37.240 --> 0:00:43.640 unique way of taking these very complicated, sophisticated ideas and 0:00:43.760 --> 0:00:50.320 making them both accessible and amusing to both finance professionals 0:00:50.400 --> 0:00:56.720 and lay people. Nobody in the world writes about markets, finance, derivatives, 0:00:56.840 --> 0:00:59.880 hedge funds, you name it, the way Matt does, and 0:01:00.000 --> 0:01:02.880 and it's why he has such an amazing following. Over 0:01:02.920 --> 0:01:07.240 three hundred thousand people get his daily missive. I found 0:01:07.240 --> 0:01:09.560 this conversation to be really intriguing, and I think you 0:01:09.640 --> 0:01:13.920 will as well. With no further ado, my conversation with 0:01:14.160 --> 0:01:16.520 Money Stuffs, Matt Levine. 0:01:16.640 --> 0:01:18.800 Thanks for having me. I walked all the way across 0:01:18.800 --> 0:01:19.960 this floor to get here. 0:01:19.840 --> 0:01:23.319 Not easy right to not easy to get to the broadcast. 0:01:22.959 --> 0:01:24.880 Weirdly, I went upstairs and then came downstairs. 0:01:24.880 --> 0:01:28.000 That's right, So let's talk. This is really the only 0:01:28.200 --> 0:01:30.319 kind of odd question I'm going to ask, and everything 0:01:30.319 --> 0:01:33.640 else is all very career oriented, so hopefully this isn't 0:01:33.680 --> 0:01:37.680 too embarrassing. But let's ask this. So you're undergrad at Harvard, 0:01:37.680 --> 0:01:42.000 where you majored in classics, and you list your activities 0:01:42.080 --> 0:01:47.040 as quad whiffle ball and tequila Tuesday, which doesn't strike 0:01:47.120 --> 0:01:50.600 me as you take it very seriously. You were valed 0:01:50.640 --> 0:01:54.360 victorian Harvard. You never mentioned your Ivy League education. 0:01:56.240 --> 0:01:59.960 You're quoting my LinkedIn, which probably my proud of social media, 0:02:00.080 --> 0:02:03.680 since is my LinkedIn is I would like to think 0:02:03.880 --> 0:02:06.840 a little bit funny, And yes I was. I was. 0:02:07.480 --> 0:02:11.200 I was, I believe, the co commissioner of quadwiffle wall very, 0:02:11.639 --> 0:02:16.560 which is neither like prestigious, neither prestigious nor nor athletic 0:02:16.680 --> 0:02:18.200 nor organizationally impressive. 0:02:19.200 --> 0:02:21.320 But I had to dig that up. I had to 0:02:21.360 --> 0:02:23.119 dig up that you evalid Victorian. 0:02:23.440 --> 0:02:26.520 I wasn't really Validictori, you were not. I didn't give 0:02:26.520 --> 0:02:27.040 a speech. 0:02:27.240 --> 0:02:31.560 I like, okay, so you you were. You just didn't 0:02:31.639 --> 0:02:32.200 accept the. 0:02:32.360 --> 0:02:34.639 No, no, no, there's there's not a thing called valedictoria and 0:02:34.840 --> 0:02:35.919 I want a prize. 0:02:35.639 --> 0:02:38.240 For So where where is this coming from? You? Not 0:02:38.280 --> 0:02:39.640 the first time you've heard no. 0:02:39.520 --> 0:02:41.639 No, no, I did win a prize for having the 0:02:41.720 --> 0:02:45.000 highest GPI. So there's like a technical sense, but not 0:02:45.080 --> 0:02:48.800 the most technical sets. That was not the validatory Yeah, editory. 0:02:48.520 --> 0:02:50.799 I never hear you talk about the Ivy League. You 0:02:50.840 --> 0:02:53.360 go to law school at Yale. It's almost as if 0:02:53.720 --> 0:02:57.480 you're embarrassed by the whole bruhaha around the IVS. 0:02:59.040 --> 0:03:03.000 Uh. I don't know, it's like a little embarrassing to say. 0:03:03.200 --> 0:03:06.000 That you, Well, the old joke is right. 0:03:06.240 --> 0:03:08.320 How do you tell someone however, they'll tell you. 0:03:08.440 --> 0:03:11.320 They'll tell you, But you're the exception to that rule. 0:03:11.480 --> 0:03:12.840 There are a lot of exceptions, but I do I 0:03:12.880 --> 0:03:15.720 will say that like in my in my column, I 0:03:15.840 --> 0:03:19.080 fairly regularly have occasion to disclose that I worked at 0:03:19.080 --> 0:03:21.440 Goldban because I'm often writing about Goldman and it feels 0:03:21.480 --> 0:03:25.280 like somehow dishonest not to mention that I worked at Golvin. 0:03:25.360 --> 0:03:26.800 So I get a lot of my bragging in that 0:03:26.840 --> 0:03:28.959 way because because it used to be and it's less 0:03:29.000 --> 0:03:30.600 true now, it used to be that like there is 0:03:30.639 --> 0:03:32.400 a lot of like you could be like, oh, I 0:03:32.400 --> 0:03:34.400 worked at Golvin. I was like, oh, you worked at Goldvin. 0:03:34.639 --> 0:03:37.000 Now like that's a little tarnished, but there's still some good. 0:03:36.880 --> 0:03:39.200 All right. So you go to Yale law school, you're 0:03:39.240 --> 0:03:42.680 on the Law of You given your current career as 0:03:42.720 --> 0:03:45.080 a writer, did you did you publish a lore of 0:03:45.080 --> 0:03:45.600 you artcle? 0:03:46.480 --> 0:03:48.400 You know? I did? I published it what it's called 0:03:48.400 --> 0:03:51.200 the Comments, like a very short one about this great 0:03:51.240 --> 0:03:54.320 tax law case with this guy who like won the 0:03:54.360 --> 0:03:57.280 lottery and then wanted to get his lottery winnings treated 0:03:57.320 --> 0:03:59.800 as capital gains. He lost, But I thought that was 0:03:59.800 --> 0:04:02.360 so funny, and then it had nothing to do with 0:04:02.600 --> 0:04:05.000 like anything I did for the next like seven years 0:04:05.040 --> 0:04:07.840 after law school. But it's like, you know, like it 0:04:07.880 --> 0:04:10.040 could have been a money stuff section, Like it was 0:04:10.040 --> 0:04:11.000 pretty close to what I. 0:04:10.920 --> 0:04:13.960 Do now very much. So, so we'll skip you teaching 0:04:14.040 --> 0:04:16.800 Latin because my brain can't wrap my head around. 0:04:16.480 --> 0:04:20.480 That that was fun. It's pretty bad. 0:04:19.880 --> 0:04:22.960 So you say, I know, I'll become an M and 0:04:23.000 --> 0:04:27.560 a attorney at Walktail Lipton, perhaps the most infamous M 0:04:27.640 --> 0:04:28.640 and a law shop. 0:04:29.520 --> 0:04:31.719 Yeah, I mean, like the normal thing to do with 0:04:31.760 --> 0:04:34.719 a classics degree is conclude that you should not continue 0:04:34.760 --> 0:04:36.839 to be a class assistan and therefore go to law school. 0:04:37.000 --> 0:04:39.760 So that was pretty pretty straight forward decision. But yeah, 0:04:39.760 --> 0:04:43.200 then I went to walked out afterwards because it seemed 0:04:43.240 --> 0:04:47.159 like because like, you know, you're you're a law student, 0:04:47.160 --> 0:04:49.680 you don't know what a law firm is. And then 0:04:49.760 --> 0:04:52.719 like you can spend your second year summer at a 0:04:52.760 --> 0:04:55.040 law firm, and if you spend your second year summer 0:04:55.080 --> 0:04:56.560 at most law firms, they take you out to fancy 0:04:56.640 --> 0:04:58.599 lunches at the end of the summer, not knowing what 0:04:58.640 --> 0:05:00.200 a law firm is. But if you go to walk tell, 0:05:00.200 --> 0:05:01.440 they just put you to work, and so you end 0:05:01.440 --> 0:05:02.760 the summer knowing what a lot from us. And I 0:05:02.800 --> 0:05:03.960 was like, I might as well find out. 0:05:04.640 --> 0:05:08.440 So I imagine it's endless hours focused on minutia. 0:05:08.800 --> 0:05:12.280 What was your experience, Like, there's some of that, but 0:05:12.320 --> 0:05:16.160 like you have to like like, yeah, you're like writing 0:05:16.240 --> 0:05:18.680 merger agreements and then the other side is marking up 0:05:18.680 --> 0:05:22.120 the merger agreement, and like you're arguing over commas and stuff, 0:05:22.240 --> 0:05:23.920 and I love that. I thought that was really fun. 0:05:23.960 --> 0:05:25.680 So I was very interested in that stuff. But there's 0:05:25.720 --> 0:05:28.240 also a lot of like at way Tel. You know, 0:05:28.279 --> 0:05:30.640 I was at Wachtel in two thousand and five to 0:05:30.640 --> 0:05:34.039 two thousand and seven, so really mirror the peak of 0:05:34.080 --> 0:05:36.880 a big merger's boom. And so I saw a lot 0:05:36.880 --> 0:05:40.160 of deals and it was very much you know, I 0:05:40.200 --> 0:05:41.880 read Barbarians at the Gate when I was like in 0:05:41.920 --> 0:05:44.279 high school or whatever, and I was like, this seems cool. 0:05:44.680 --> 0:05:46.600 And then you had to an MNA law fram being 0:05:46.600 --> 0:05:50.080 like I'm gonna do like like MNA stuff, and like 0:05:50.240 --> 0:05:52.080 it really did. I tell people like there's this time 0:05:52.080 --> 0:05:54.359 when we you know, we had like two sets of 0:05:54.400 --> 0:05:57.400 bidders for some company, Like I'm in conference rooms on 0:05:57.400 --> 0:06:02.200 different floors and they'd be like, you know, uh uh, 0:06:02.800 --> 0:06:04.960 they'd be like, this is our final effert, but don't 0:06:04.960 --> 0:06:06.400 shop to the other side. And we're like, h We'll 0:06:06.400 --> 0:06:09.080 go to the bathroom, shop to the other side. It's real, 0:06:09.160 --> 0:06:11.480 like you know, like the sort of like high drama 0:06:11.600 --> 0:06:15.600 of of of like the highest drama in finances and 0:06:15.680 --> 0:06:18.599 like big ticket M and A and as a junior 0:06:18.680 --> 0:06:20.400 m and a lawyer like I was, you know, doing 0:06:20.400 --> 0:06:22.160 a lot of marketing up mergergrounds, but I was also 0:06:22.240 --> 0:06:24.120 like kind of exposed to the highdrama like I was 0:06:24.120 --> 0:06:25.640 in like these board meetings I was in, like I 0:06:25.720 --> 0:06:26.839 got to see a lot of cool stuff. 0:06:27.000 --> 0:06:30.840 So how do you how do you shift from m 0:06:30.880 --> 0:06:34.120 and a legal work to structuring derivatives at Goldman? 0:06:35.120 --> 0:06:38.360 Uh So I worked in this very weird desk at 0:06:38.360 --> 0:06:43.080 Goldman that uh it was corporate equity derivatives. And so 0:06:43.960 --> 0:06:50.680 the thing we were doing was sort of solving like 0:06:50.800 --> 0:06:56.200 often securities law or tax or accounting problems for people 0:06:56.320 --> 0:06:59.080 with like derivatives. So like a component of it was 0:06:59.120 --> 0:07:01.320 like the standard deriv his math right, and so like 0:07:01.440 --> 0:07:02.840 you know, I got there and I learned through it 0:07:02.920 --> 0:07:05.000 as math right. But a component of it was also 0:07:05.120 --> 0:07:08.440 like thinking through all these like legal and regulatory and 0:07:08.520 --> 0:07:11.440 quasi legal regimes, like the you know, like the counting standards. 0:07:11.840 --> 0:07:14.720 And I said that everyone on that desk was a 0:07:14.720 --> 0:07:16.200 good lawyer. Some of us had a lot of degrees, 0:07:16.240 --> 0:07:17.680 but like the other people, the people who didn't have 0:07:17.680 --> 0:07:19.680 a lot agrees, who just like were Goldman lifers, were 0:07:19.720 --> 0:07:21.960 like would have been really good lawyers because it was 0:07:21.960 --> 0:07:26.880 a very like, you know sort of there was a 0:07:26.920 --> 0:07:29.320 practice that was like spotting issues and sort of thinking 0:07:29.360 --> 0:07:31.680 through rules and thinking like how we could get through 0:07:31.680 --> 0:07:33.840 the rules in a way that advantage us. In addition 0:07:33.880 --> 0:07:35.800 to like sort of standard financi stuff. 0:07:35.600 --> 0:07:39.760 Seems very legalistic. What led you to leap from Walcktail Goldman? 0:07:40.000 --> 0:07:42.120 Was it the hours? Really? 0:07:42.400 --> 0:07:44.040 I tell people I'm the only person who went to 0:07:44.080 --> 0:07:45.640 Goldman for the hours. 0:07:45.640 --> 0:07:49.520 I was for lowering your billable work week. 0:07:49.800 --> 0:07:51.920 Yeah, I was working. I loved walktaut. I thought it 0:07:51.960 --> 0:07:54.800 was really fascinating and interesting. But it was you know, 0:07:55.400 --> 0:07:58.080 it's like notoriously the hardest working law firm, and this 0:07:58.200 --> 0:08:00.320 was in like a big m and a boom, and 0:08:00.360 --> 0:08:02.200 so I was just working all the time. And I 0:08:02.240 --> 0:08:03.960 got a call from a guy who actually had left, 0:08:03.960 --> 0:08:06.160 walked out and gone to Goldman, and he said, do 0:08:06.160 --> 0:08:08.440 you want a job here? And I said, is it 0:08:08.480 --> 0:08:10.040 better than this job? And he said, it's a little 0:08:10.080 --> 0:08:11.720 better than this job. And I was like, walk me 0:08:11.760 --> 0:08:13.600 through your week, and he like walked me through. I 0:08:13.600 --> 0:08:15.200 was like, yeah, that's a little better than this job. 0:08:15.240 --> 0:08:16.320 So I left for the hours. 0:08:16.720 --> 0:08:18.840 So you stay at Goldman for a couple of years. 0:08:19.480 --> 0:08:21.720 For four years, the longest I've been at a job 0:08:21.800 --> 0:08:22.480 until this job. 0:08:22.920 --> 0:08:29.000 So you're there right into the teeth of the financial crisis. 0:08:29.440 --> 0:08:29.960 What was that. 0:08:30.120 --> 0:08:33.320 Like I was just telling someone a friend is going 0:08:33.400 --> 0:08:36.920 to Sonoma for a vacation, and I was like, I remember, 0:08:37.559 --> 0:08:40.240 I like woke up in Napa. I took this vacation 0:08:40.360 --> 0:08:43.000 where you know, I was worried I wouldn't be able 0:08:43.040 --> 0:08:44.720 to go because with this deal going, and I wrote 0:08:44.720 --> 0:08:47.280 this long memo to people being like, this is what's 0:08:47.280 --> 0:08:49.200 going to happen if the deal goes because I was 0:08:49.200 --> 0:08:51.200 trying to be a responsible citizen at the desk, and 0:08:51.200 --> 0:08:52.679 then by the time I got to Napa, I was like, 0:08:52.679 --> 0:08:54.000 I don't think this deal is going to go. And 0:08:54.040 --> 0:08:58.160 then I woke up in lehmanhead filed, and you know 0:08:58.240 --> 0:09:00.880 it's like this is a cliche and in finance says this, 0:09:00.920 --> 0:09:03.280 but like I remember walking around the day Lehman had 0:09:03.280 --> 0:09:07.360 filed in Napa looking at people who are being normal 0:09:07.600 --> 0:09:11.120 and thinking, how are you not freaking out? Because like 0:09:11.200 --> 0:09:14.520 I was freaking out, you know I was. It seemed 0:09:14.559 --> 0:09:17.520 like the end of the world. But no, it's wild. 0:09:17.920 --> 0:09:20.520 I Like the thing that I think back on now 0:09:20.600 --> 0:09:25.040 a lot is what did I do because there was 0:09:26.080 --> 0:09:27.960 you know, we had this we had this spreadsheet of 0:09:27.960 --> 0:09:31.160 just like every deal that that like one thing. One 0:09:31.200 --> 0:09:33.000 aspect of what I did in my job was convertible 0:09:33.040 --> 0:09:35.079 bond underwriting, and so I had the spadsheet of every 0:09:35.160 --> 0:09:38.079 convertible bond deal that we or anyone else in the 0:09:38.120 --> 0:09:41.520 market did. And it stopped in like September of two 0:09:41.559 --> 0:09:43.640 thousand and eight, and it restarted in I want to say, 0:09:43.679 --> 0:09:45.440 March of two thousand and nine, but like only a 0:09:45.440 --> 0:09:50.360 little bit. And so for six months there were no deals, 0:09:50.360 --> 0:09:52.640 Like we did not like print any revenue, We did 0:09:52.640 --> 0:09:55.160 not do any deals. And I don't like, I didn't 0:09:55.160 --> 0:09:56.960 take six months off, Like I came into the office 0:09:56.960 --> 0:09:58.719 every day, I didn't leave early. I didn't like take 0:09:58.800 --> 0:10:00.720 long lunches. I don't know what I was doing for 0:10:00.800 --> 0:10:02.840 six months. I think it was just like sort of 0:10:02.840 --> 0:10:06.160 walking around panicking, but like you know, like scraping sticks 0:10:06.160 --> 0:10:08.280 together and like trying to find deals to do. But 0:10:08.400 --> 0:10:10.079 like we didn't do anything, Like we could have just 0:10:10.120 --> 0:10:11.840 taken the six months off. And I think back on 0:10:11.840 --> 0:10:14.080 that time and think, you know, it wouldn't have been 0:10:14.160 --> 0:10:16.760 nice if we're just not gone to work, But no, 0:10:16.840 --> 0:10:18.360 it was. It was a scary time, and it was 0:10:18.400 --> 0:10:21.360 you know, there were there were like a number of layoffs. 0:10:21.400 --> 0:10:23.240 You know, there were a couple of rounds of layoffs, 0:10:23.280 --> 0:10:25.320 and you know, within my first two years at goldbun 0:10:25.559 --> 0:10:27.040 and I didn't get laid off, and I was like, oh, okay, 0:10:27.040 --> 0:10:28.280 I'm probably safe for a while. 0:10:28.920 --> 0:10:31.400 You said about that job, I felt both that the 0:10:31.600 --> 0:10:34.400 job was bad and I was bad at it. 0:10:35.240 --> 0:10:39.120 Over time, I mean, I I liked, I like learned 0:10:39.160 --> 0:10:41.640 a lot from that job, and it's like really helped 0:10:41.679 --> 0:10:45.240 me to what I do today because it really touched 0:10:45.240 --> 0:10:47.599 on a lot of elements of the bank. You know. 0:10:47.640 --> 0:10:49.520 It was all this like structuring and like tax and 0:10:49.600 --> 0:10:53.480 legal and accounting stuff. It was derivatives math. It was 0:10:53.520 --> 0:10:55.439 like working with the traders on like risk management. It 0:10:55.480 --> 0:10:57.600 was underwriting, you know, it was like doing investment banking 0:10:57.640 --> 0:11:01.000 and underwriting public offerings. It was dealing with like the 0:11:01.120 --> 0:11:03.240 sort of guts of the bank and like new product 0:11:03.280 --> 0:11:06.720 development and capital and balance sheet. So I learned a lot, 0:11:06.840 --> 0:11:08.720 but like early on, I was really learning a lot 0:11:08.760 --> 0:11:11.319 because I was sort of like building stuff and learning 0:11:11.360 --> 0:11:14.920 how to like build you know, like learning how to 0:11:15.040 --> 0:11:19.000 use Excel and just like sort of just kind of 0:11:19.040 --> 0:11:21.319 like figuring out all this stuff. And then over time 0:11:22.240 --> 0:11:24.320 the job more says you get more senior into just 0:11:24.360 --> 0:11:27.920 like getting on planes and flying around and giving market 0:11:27.960 --> 0:11:32.120 updates to corporate treasures, and that I found less fulfilling. 0:11:32.160 --> 0:11:34.199 I was learning less and I was bad at that, 0:11:34.240 --> 0:11:35.839 Like I was good at the like sitting in the 0:11:35.920 --> 0:11:37.760 lab during up to Rhotis, I was okay with that, 0:11:37.840 --> 0:11:40.040 but like I was bad at the like getting on 0:11:40.120 --> 0:11:42.680 planes and sweet talking corporate treasures, and so over time 0:11:43.600 --> 0:11:45.640 it was a less and less good fit for me. 0:11:45.920 --> 0:11:48.880 So what inspired the pivot to writing. 0:11:50.640 --> 0:11:52.480 I don't have a good answer. I like could always 0:11:52.559 --> 0:11:55.880 vaguely imagined myself as a writer without doing anything about it, 0:11:56.280 --> 0:12:00.400 and I really I didn't want to be a corporate 0:12:00.400 --> 0:12:03.240 equity to ride as a banker anymore. And you know, 0:12:03.600 --> 0:12:05.320 in general, when you have jobs like these, it's very 0:12:05.320 --> 0:12:06.960 hard to find a new job because you're working all 0:12:07.000 --> 0:12:09.440 the time. And so my plan was actually to quit 0:12:10.240 --> 0:12:13.400 and not do anything and figure out what my next 0:12:13.400 --> 0:12:15.360 step was. And I like went to my very nice 0:12:15.360 --> 0:12:17.360 boss and I was like, I'm quitting, and he said, 0:12:17.360 --> 0:12:18.640 what are you going to do it? And I was like, nothing, 0:12:18.640 --> 0:12:20.360 I'm going to figure out my next step. And he's like, well, 0:12:20.360 --> 0:12:22.480 don't quit now, like take some time off and figure out, 0:12:22.480 --> 0:12:25.120 and you know, it's very sweet, like like sort of 0:12:25.480 --> 0:12:28.720 thoughtful response. And then he was like, we'll give you 0:12:28.880 --> 0:12:30.640 a bunch of time off, but for now, go back 0:12:30.640 --> 0:12:31.760 to your desk. And so I went back to my 0:12:31.800 --> 0:12:33.760 desk and I worked for like three more weeks, and 0:12:33.800 --> 0:12:37.120 then I saw the deal breaker, the great like comedic 0:12:37.160 --> 0:12:39.599 financial blog was hiring, and so I shot it in 0:12:39.600 --> 0:12:41.600 an application and they hired me, and I was like, Okay, 0:12:41.600 --> 0:12:44.680 I'm gone. But there was really very little thought to it. 0:12:44.720 --> 0:12:47.160 You know. I had not been like blogging on the side, 0:12:47.240 --> 0:12:50.040 or like practicing at night or anything like that. It's 0:12:50.040 --> 0:12:51.520 just like I had this vague itch that I was 0:12:51.520 --> 0:12:53.400 going to be a writer. I was at a point 0:12:53.440 --> 0:12:56.760 in my life where I was very willing to gamble, 0:12:56.920 --> 0:12:59.920 you know. I was, I didn't have kids. I had 0:13:00.120 --> 0:13:01.960 saved a bunch of money at Goldman in part because 0:13:01.960 --> 0:13:03.480 I really did think I was going to take time 0:13:03.520 --> 0:13:05.360 off and figure out what my next thing was. And 0:13:05.400 --> 0:13:08.240 so it felt like a fairly lowist time to take 0:13:08.280 --> 0:13:10.880 a gamble on something that would pay a lot less 0:13:10.960 --> 0:13:13.120 and uh, and that I didn't know that i'd be 0:13:13.160 --> 0:13:14.360 good at, you know, but I figure i'd give it 0:13:14.360 --> 0:13:14.720 a shot. 0:13:14.880 --> 0:13:18.360 So making a lot of money at an investment bank 0:13:19.000 --> 0:13:23.120 that you leave to take a much lower paid job 0:13:23.679 --> 0:13:27.480 as a writer sounds a little parallel to Michael Lewis 0:13:27.480 --> 0:13:32.760 and Salomon Brothers. Ever, think about that as as someone 0:13:33.000 --> 0:13:34.520 who blaze that trail before you. 0:13:34.800 --> 0:13:37.640 Oh, of course, I mean I wouldn't like go around 0:13:37.720 --> 0:13:39.800 saying that because like, you know what, you know what 0:13:39.800 --> 0:13:42.880 I mean, like, yeah, eleven, You're not gonna leave Goldman 0:13:42.880 --> 0:13:44.560 and be like I'm going to go be Michael Lewis, right, 0:13:44.559 --> 0:13:47.679 because like that's a little that's a little implausible. But no, 0:13:47.840 --> 0:13:49.280 I mean, of course, like and I don't think I 0:13:49.280 --> 0:13:50.720 even thought about it at the time. I just like 0:13:50.920 --> 0:13:52.719 it's just like in the background of what you think of, 0:13:52.880 --> 0:13:55.640 like how you perceive the possibilities of like the financial 0:13:55.679 --> 0:13:59.640 writing world. But yeah, no, I actually talked. I was 0:13:59.640 --> 0:14:02.240 on his pod the other week and I talked about that, 0:14:02.480 --> 0:14:04.920 you know, we talked about that exact point. Yeah, in 0:14:04.960 --> 0:14:07.080 some ways there were parallels between his career. 0:14:07.280 --> 0:14:10.600 Really really intriguing. So let's talk about some of your 0:14:10.640 --> 0:14:14.000 favorite subjects. Everything is securities, fraud. 0:14:14.280 --> 0:14:17.080 Explain if a bad thing happens at a public company 0:14:17.160 --> 0:14:19.960 public company, does a bad thing. This is ceo sexually 0:14:19.960 --> 0:14:23.320 harassed to someone. If the company gets hacked, if it's polluting. 0:14:23.680 --> 0:14:26.640 Usually what happens is like the stock drops, and when 0:14:26.640 --> 0:14:29.520 the stock drops, the shareholders and sometimes even the sec 0:14:29.840 --> 0:14:33.240 will sue the company saying, essentially, you didn't tell us 0:14:33.240 --> 0:14:35.440 about this bad thing, and then when it came out, 0:14:35.520 --> 0:14:38.480 the stock drop, so we bought the stock before at 0:14:38.480 --> 0:14:41.400 this inflated price because we were deceived. You were lying 0:14:41.400 --> 0:14:43.720 to us. You were saying that you had a code 0:14:43.720 --> 0:14:46.040 of ethics, but then your CEO is sexually asking people, 0:14:46.120 --> 0:14:49.400 or you were saying that you like were careful at 0:14:49.400 --> 0:14:52.200 the environment, but you were like dumping pollution, or you 0:14:52.200 --> 0:14:54.600 were saying that you like used good passwords, but used 0:14:54.600 --> 0:14:57.480 bad passwords and you got hacked. Right, So, anytime like 0:14:57.520 --> 0:15:00.320 a bad thing happens and the stock goes down, there 0:15:00.320 --> 0:15:03.359 will be a lawsuit of over securities, fraud and interesting 0:15:03.720 --> 0:15:08.120 because like often the bad thing has like diffuse victims 0:15:08.240 --> 0:15:11.000 or unclear victims, or it's unclear how to quantify the harm. So, 0:15:11.040 --> 0:15:13.400 like you have a sexual harassment scandal, there will be 0:15:13.760 --> 0:15:16.120 some number of people at the company who are victims 0:15:16.120 --> 0:15:18.520 of that, and they will have different stories if they 0:15:18.520 --> 0:15:20.560 were to sue, you need a lawyer to kind of 0:15:20.640 --> 0:15:22.800 get all of their stories. And then like the company 0:15:22.840 --> 0:15:24.600 would say, well, these stories are different, and like you know, 0:15:24.720 --> 0:15:27.320 will argue them separately, and like how do you quantify 0:15:27.400 --> 0:15:29.720 their damages? And it's it's kind of a mess. Whereas 0:15:29.800 --> 0:15:32.680 if the stock goes down by a billion dollars, then 0:15:32.720 --> 0:15:35.160 like some securities lawyer will say, well, the shareholders lost 0:15:35.200 --> 0:15:37.360 a billion dollars, will bring a very straightforward class action 0:15:37.400 --> 0:15:39.320 on you half the shaholders. And so you see these 0:15:39.360 --> 0:15:42.880 cases where like the company pays a big securities settlement 0:15:43.120 --> 0:15:45.960 because like it's not that like the shareholders of the 0:15:46.000 --> 0:15:49.440 company are the most direct or the most harmed to 0:15:49.520 --> 0:15:52.080 victims of whatever the bad thing is, But they're the 0:15:52.120 --> 0:15:55.560 easiest victims, right, They're the easiest victims for a plaintiffs 0:15:55.600 --> 0:15:58.080 lawyer to like round up, file a class action on 0:15:58.120 --> 0:16:01.200 behalf of quantify their damages, settle it for ten cents 0:16:01.240 --> 0:16:04.320 on the dollar. And so it's just like a fascinating 0:16:04.400 --> 0:16:06.480 development in American securities law, where like there are so 0:16:06.600 --> 0:16:10.640 many bad things get litigated as securities fraud because it's 0:16:10.680 --> 0:16:12.120 like an easy way to litigate. 0:16:11.800 --> 0:16:16.240 It and let's do the related topic, is everything insider trading? 0:16:16.400 --> 0:16:19.600 Because if you're selling stock as an insider and there's 0:16:19.640 --> 0:16:23.400 some everything is securities fraud going on, seems that that 0:16:23.480 --> 0:16:25.600 would naturally follow one follow the other. 0:16:25.680 --> 0:16:27.120 Yeah, and I've read about that. Yeah, I mean, like 0:16:27.160 --> 0:16:30.480 you can. Definitely it is unusual for like a CEO 0:16:30.560 --> 0:16:34.440 to like get arrested for selling stock while he was, 0:16:34.480 --> 0:16:36.360 you know, doing sexual harassment or whatever, but like it's 0:16:36.360 --> 0:16:38.880 not unheard of, and there are private lawsuits that do 0:16:39.040 --> 0:16:41.320 sort of express exactly that theory that everything is also 0:16:41.360 --> 0:16:42.080 insider trading. 0:16:42.880 --> 0:16:46.840 So you wrote a lot about all the meme stocks. 0:16:46.840 --> 0:16:48.880 What was your biggest takeaway from that era. 0:16:49.280 --> 0:16:53.400 I was struck by, like the ability of retail investors 0:16:53.400 --> 0:16:56.680 collectively to move stock wises right, Like I was not 0:16:56.720 --> 0:16:58.840 expecting that, I was. I mean, I think people confidently 0:16:58.840 --> 0:17:00.920 declared it on Reddit and I was like, sure, but 0:17:00.960 --> 0:17:04.080 it's retail. And then like, in fact, these stocks went 0:17:04.160 --> 0:17:07.760 up and stayed up for very long periods through like 0:17:07.800 --> 0:17:11.359 the actions of retail investors and like people creating gamma 0:17:11.400 --> 0:17:14.000 squeezes by buying options, And I was like, yeah, sure, 0:17:14.000 --> 0:17:15.560 like that works in theory, that's not really gonna work, 0:17:15.560 --> 0:17:17.399 and they kind of did work. The other takeaway that 0:17:17.400 --> 0:17:19.439 I think is interesting is like just from the corporate 0:17:19.440 --> 0:17:23.040 finance side, I think like there are some companies where 0:17:23.040 --> 0:17:25.680 they were like, we're going to make our investor relations 0:17:25.680 --> 0:17:29.119 and corporate finance strategy be about retail investors. And I 0:17:29.160 --> 0:17:31.120 think that that was never a thing that people did 0:17:31.480 --> 0:17:34.600 for you know, the last like twenty or thirty years, 0:17:34.880 --> 0:17:37.320 because you know, everyone sort of understood that the money 0:17:37.359 --> 0:17:39.320 was in was in institutional investors, and like there's not 0:17:39.359 --> 0:17:43.080 an efficient way to reach and like rely on retail 0:17:43.119 --> 0:17:46.000 investors for funding. And in the meme slack craze, AMC 0:17:46.240 --> 0:17:48.479 very early on was like, oh yeah, we can do that, 0:17:48.520 --> 0:17:50.719 Like we can we can raise money, we can do 0:17:50.800 --> 0:17:53.480 tons of at the market offerings to retail investors. We 0:17:53.520 --> 0:17:56.400 can offer popcorn to our shareholders to keep our stock 0:17:56.440 --> 0:17:59.119 price up, and we can like really, you know, do 0:17:59.240 --> 0:18:02.240 our financing in rehail markets by being a memestock. And 0:18:02.280 --> 0:18:05.800 I think like the way to do memestock investor relations 0:18:05.840 --> 0:18:07.480 like had to be kind of invented on the fly, 0:18:07.760 --> 0:18:09.919 and it's fascinating the way people did it now. I 0:18:09.920 --> 0:18:12.200 don't think it's like permanent, right if you're a CEO. 0:18:12.280 --> 0:18:14.600 Now you can't be like, let's become a memestock and 0:18:14.600 --> 0:18:16.480 rely on retail investors because I think it's like it's 0:18:16.520 --> 0:18:19.320 always been a crapshoot, and you know, it's much less 0:18:19.800 --> 0:18:21.440 common than it was two years ago. But I think 0:18:21.440 --> 0:18:23.200 it was like a fascinating like lesson from that. 0:18:23.640 --> 0:18:26.280 And some of these companies managed when the stock price 0:18:26.320 --> 0:18:29.880 went went meteoric. We're able to do secondaries, We're able 0:18:29.920 --> 0:18:32.520 to do refinancings. They took me full advantage. 0:18:32.640 --> 0:18:36.640 AMC, like you know, was like recapitalized, like filing going 0:18:36.640 --> 0:18:38.959 concern warnings like we're going to go bankrupty, you know, 0:18:39.160 --> 0:18:41.199 we run movie theaters in a pandemic. We have all 0:18:41.200 --> 0:18:43.600 this debt. And then they just refinanced their debt and 0:18:43.640 --> 0:18:45.600 like and you know, bought a lot of it down 0:18:45.600 --> 0:18:48.200 because they could sell stock at very high prices. They 0:18:48.200 --> 0:18:50.679 had an asset that was not you know, that was 0:18:50.720 --> 0:18:54.080 a very untraditional you know, like we have this ability 0:18:54.119 --> 0:18:57.560 to tap retail investors to refinance, and they played it 0:18:57.600 --> 0:18:58.480 really fascinatingly. 0:18:58.600 --> 0:19:01.280 Yeah, and it seems like it was clearly not the 0:19:01.320 --> 0:19:03.600 sort of thing buy and hold investors want to play with. 0:19:04.440 --> 0:19:06.760 Off the highs. Most of these stocks are down. The 0:19:07.160 --> 0:19:10.640 meme stocks are down seventy eighty ninety plus percent. They've 0:19:10.680 --> 0:19:12.520 all gotten taken a big hit. 0:19:12.800 --> 0:19:14.760 Yeah, I mean it was. It lasted much longer than 0:19:14.800 --> 0:19:16.280 I expected, but it didn't last forever. 0:19:16.600 --> 0:19:20.160 Let's talk about another subject that you come back to regularly, 0:19:20.600 --> 0:19:25.560 which is the philosophy of active versus passive investing. It 0:19:25.760 --> 0:19:31.080 seems like active managers, who have been underperforming according to 0:19:31.160 --> 0:19:36.320 the academics for a long time, are constantly throwing novel 0:19:36.400 --> 0:19:40.720 new theories at the passive worlds, trying to take them 0:19:40.760 --> 0:19:43.560 down a notch. You cover this on a regular basis, 0:19:43.600 --> 0:19:45.040 tell us a little bit about that space. 0:19:45.560 --> 0:19:48.280 So my favorite part of it is not really about 0:19:48.320 --> 0:19:51.800 active passive. My favorite part is right now, is this 0:19:51.920 --> 0:19:56.320 notion that like, owning all of the companies is bad. 0:19:56.720 --> 0:19:59.320 Owning all the companies in a sector because you're an 0:19:59.320 --> 0:20:02.200 index investor somehow leads to price fixing. 0:20:02.720 --> 0:20:05.280 So's the That's like the starting point of it. But 0:20:05.320 --> 0:20:07.080 I think it's like a bigger theory than that, right, 0:20:07.240 --> 0:20:09.800 I mean, I think it's that, And sometimes my headline 0:20:09.800 --> 0:20:11.600 is sometimes like should index ones be illegal? 0:20:11.920 --> 0:20:12.200 Right? 0:20:12.320 --> 0:20:15.360 The basic idea is that if all of the companies 0:20:15.400 --> 0:20:18.199 in a sector, or all of the companies in the 0:20:18.320 --> 0:20:20.200 country or in the world, you know, all the company 0:20:20.240 --> 0:20:24.040 if they are all owned by twelve people. Right. John Coates, 0:20:24.040 --> 0:20:26.119 the Harvard law professor, has a book out called The 0:20:26.119 --> 0:20:28.920 Problem of Twelve where he's like, yeah, there's like twelve 0:20:28.920 --> 0:20:31.119 people and the people are like, you know, the people 0:20:31.160 --> 0:20:34.679 who run Black Rock, Vanguard, you know, State Street, but 0:20:34.720 --> 0:20:36.600 also like Fidelity, Right, Like, this is not really a 0:20:36.640 --> 0:20:40.520 passive question. This is a very large diversified investor question. Right. 0:20:40.800 --> 0:20:43.919 If like twelve people control you know, fifty one percent 0:20:43.920 --> 0:20:46.600 of the stock in all of the companies, then it 0:20:46.800 --> 0:20:50.000 sort of stands to reason that those people will want 0:20:50.080 --> 0:20:52.879 stuff to happen that is broadly good for all of 0:20:52.920 --> 0:20:55.359 their companies, rather than for one company to compete against 0:20:55.359 --> 0:20:59.800 another company, and that the CEOs of those companies who 0:20:59.800 --> 0:21:02.320 are for douce shares for these shaolders will think like, yeah, 0:21:02.359 --> 0:21:04.080 I got to do what is right for these shareolders. 0:21:04.240 --> 0:21:05.840 And so that happens in a lot of ways, and 0:21:05.880 --> 0:21:08.199 the alleged to happen in a lot of ways. And 0:21:08.200 --> 0:21:10.919 like the starting point for all of this is some 0:21:10.960 --> 0:21:13.760 papers that people published about price fixing. Like the idea 0:21:13.840 --> 0:21:16.159 is that if all of the airlines are owned by 0:21:16.200 --> 0:21:19.560 the same dozen investors, then the airlines will not compete 0:21:19.600 --> 0:21:21.800 hard on price, and like they will try to divvy 0:21:21.880 --> 0:21:24.640 up roots in a way that keeps prices high. Because 0:21:24.680 --> 0:21:27.400 if you compete on price, you're essentially, you know, mostly 0:21:27.440 --> 0:21:29.760 taking a dollar away from your competitor, and like that 0:21:29.800 --> 0:21:32.479 dollar ends up in the hands of your shareholders anyway. 0:21:32.600 --> 0:21:34.360 So why would you compete. Why wouldn't you just try 0:21:34.359 --> 0:21:37.439 to grow the pie for everyone? And it's like super controversial, 0:21:37.440 --> 0:21:39.600 and like the empirical evidence where it is not super clear, and. 0:21:39.560 --> 0:21:42.440 Like especially focusing on airlines as opposed to tech or 0:21:42.440 --> 0:21:45.760 industrials or they cherry pick that sector, which kind of 0:21:45.760 --> 0:21:50.760 reveals how bankrupt the argument is. But keep going, like. 0:21:50.720 --> 0:21:52.720 They are fascinating stories about like this is not in 0:21:52.760 --> 0:21:54.679 public companies, this is not the problem as well. But 0:21:54.720 --> 0:21:57.720 like ride sharing startups, like soft Bank was financing all 0:21:57.720 --> 0:21:59.480 these ride sharing startups and then like the kind of 0:21:59.560 --> 0:22:01.720 didn't feeding against each other, and they kind of like 0:22:01.800 --> 0:22:03.840 divvate up the world, you know, and it's like, well, yeah, 0:22:03.880 --> 0:22:06.560 they're like subsidiaries of SoftBank, right, And if you think 0:22:06.600 --> 0:22:09.680 about the world as being like all companies are subsidiaries 0:22:09.680 --> 0:22:12.640 of black Rock, then it's just like an interesting analytical framework. 0:22:13.320 --> 0:22:17.720 But you but you need that leap, which is inally 0:22:18.280 --> 0:22:21.159 the part that nobody talks about is, hey, we're running 0:22:21.160 --> 0:22:24.560 a ten trillion dollar company. I know, let's put that 0:22:24.640 --> 0:22:28.240 at risk to reduce competition in the airline section. Okay, 0:22:28.280 --> 0:22:29.959 but such an absurd argument. 0:22:30.040 --> 0:22:33.440 Okay, But but like here's where it is universally accepted 0:22:33.440 --> 0:22:36.320 to be true, which is ESG think about like what 0:22:36.320 --> 0:22:39.800 black Rock is, right, Like, they don't really gain from 0:22:40.200 --> 0:22:43.359 one company like improving its competitive position against another company, 0:22:43.359 --> 0:22:44.359 because they own all the companies. 0:22:44.440 --> 0:22:47.159 What they get, that's their business. Their business is to 0:22:47.200 --> 0:22:49.840 own all the companies, and they gain when they run 0:22:49.880 --> 0:22:50.760 that business better. 0:22:50.880 --> 0:22:54.119 Yes, and so like broadly speaking, competition is good for 0:22:54.160 --> 0:22:57.040 them because like competition sort of you know, does ultimately 0:22:57.040 --> 0:22:59.359 grow the pie. But like there are places, and like 0:22:59.400 --> 0:23:01.560 the place that I think is sort of obvious is 0:23:01.560 --> 0:23:03.880 like Blackrock has and they do less of this now 0:23:03.960 --> 0:23:07.520 because of political pressures, but they have put up papers 0:23:07.600 --> 0:23:09.800 and they put out you know, strongly worded letters to 0:23:09.840 --> 0:23:13.200 CEOs saying you need to take climate risk seriously because 0:23:13.200 --> 0:23:15.439 climate risk is a systemic risk that affects all of 0:23:15.480 --> 0:23:18.840 our companies, and like that strikes me as straight forwardly true. 0:23:19.080 --> 0:23:21.960 And Blackrock is saying, you know, we have to care 0:23:22.000 --> 0:23:25.000 about not just like year to year bottom line of 0:23:25.040 --> 0:23:27.600 these companies. We have to care about like the systemic, 0:23:27.720 --> 0:23:31.200 like long run sustainability of like the entire capitalist system. 0:23:31.000 --> 0:23:33.440 Which by the way, is their way of doing business. 0:23:33.600 --> 0:23:37.080 Vanguard hasn't done that, statement hasn't done that. Yeah, I agree, 0:23:37.119 --> 0:23:40.560 And the competition amongst the three of those is why 0:23:40.560 --> 0:23:43.560 there's no real price fixing. If I don't think it's 0:23:43.600 --> 0:23:44.560 going the other way. 0:23:44.560 --> 0:23:46.639 I don't want to argue for like there's price fixing 0:23:46.640 --> 0:23:49.399 in airlines because of Blackrock, But I do think that, like, 0:23:50.080 --> 0:23:53.679 if you are a broadly diversified, enormous asset manager, you 0:23:53.760 --> 0:23:58.240 do have to think about your portfolio primarily in systemic 0:23:58.280 --> 0:24:01.600 ways and not in like competitive decisions that your individual 0:24:01.640 --> 0:24:04.280 companies are making. And if you're thinking about your portfolio 0:24:04.280 --> 0:24:08.240 systemically like that creates different incentives for you and for 0:24:08.359 --> 0:24:12.400 your portfolio companies managers. Then if they all had shareholders 0:24:12.440 --> 0:24:14.640 who only owned their company and they were just trying 0:24:14.640 --> 0:24:18.280 to maximize their company's share all sorts of like ESG 0:24:18.480 --> 0:24:21.240 stuff is about externalities, right, It's about a company saying, 0:24:21.600 --> 0:24:24.560 we can make more money by doing bad stuff that 0:24:24.600 --> 0:24:27.040 causes externalities to other companies, but we're not going to 0:24:27.119 --> 0:24:28.600 do that. I think part of why they're not going 0:24:28.640 --> 0:24:31.960 to do that is because like their shareholders absorb those externalities, right, 0:24:32.000 --> 0:24:34.160 and like that's like the simplest form of the story, right, 0:24:34.200 --> 0:24:36.080 and like then you can be like, well, one thing 0:24:36.119 --> 0:24:38.600 that causes externalities is like airlines cutting prices, and like 0:24:38.640 --> 0:24:40.840 that seems bad, and stopping them from doing that it 0:24:40.880 --> 0:24:43.840 seems bad. Another thing that causes externalities is like pollution, 0:24:44.080 --> 0:24:45.720 and stopping them from doing that is good. Right, Like 0:24:45.760 --> 0:24:47.280 there's all sorts of things, and some of them are 0:24:47.280 --> 0:24:49.359 good and some of them are bad. But like this 0:24:49.560 --> 0:24:54.280 notion that like a systemic shareholder is doing systemic stewardship 0:24:54.320 --> 0:24:56.080 and that it wants its companies to act in a 0:24:56.119 --> 0:24:58.760 way that benefits all of its portfolio rather than just 0:24:58.760 --> 0:25:00.960 that one company, I think like makes total intuitive sense. 0:25:01.080 --> 0:25:03.200 And then like you're gonna have questions about the individual cases. 0:25:03.359 --> 0:25:06.680 So I wanted to bring it up because you bring 0:25:06.720 --> 0:25:10.360 it up every couple of months, there's always some crazy 0:25:10.880 --> 0:25:14.840 law review article or some wacky that that are at 0:25:14.960 --> 0:25:19.040 the outer limits of how the world really works, how 0:25:19.160 --> 0:25:22.680 how indexing works, and how big asset managers like black 0:25:22.760 --> 0:25:26.000 Rocker vangor to state street work. But if we pretend 0:25:26.200 --> 0:25:29.640 that they're colluding, well maybe index funds are illegal. 0:25:29.880 --> 0:25:32.040 I don't really think they should be illegal. But there 0:25:32.040 --> 0:25:33.800 are people, and I I've made fun of the people 0:25:33.800 --> 0:25:35.480 who like really strongly believe they should be illegal. 0:25:35.680 --> 0:25:37.440 Now do they really believe that or are they just 0:25:37.560 --> 0:25:40.680 hired by active managers to push them facility because I 0:25:43.280 --> 0:25:46.000 ideal going on, hey push the fish. 0:25:46.359 --> 0:25:47.840 I don't think most of them even believe that index 0:25:47.880 --> 0:25:49.680 fund should be leg I think they I think that, 0:25:49.840 --> 0:25:51.960 like me, they find they find this like an interesting 0:25:52.000 --> 0:25:54.959 sort of theoretical point. And I agree with you that 0:25:55.000 --> 0:25:57.760 like a lot of them feel like empirically sort of 0:25:57.800 --> 0:26:01.000 pushing the limits of what is plausible, but like there's 0:26:01.000 --> 0:26:04.680 some nub of it that like just seems uncontroversially true, 0:26:04.680 --> 0:26:06.400 and then it's just about like sort of figuring out 0:26:06.400 --> 0:26:09.520 like what the like, how to frame it and understand. 0:26:09.119 --> 0:26:10.879 It, where's the line how far you could take it? 0:26:11.000 --> 0:26:11.119 Right? 0:26:11.200 --> 0:26:15.160 Last topic that you talk about on a regular basis derivatives, 0:26:15.560 --> 0:26:19.160 high frequency trading, hedge funds, and down and short selling. 0:26:19.440 --> 0:26:22.120 Let's talk a little bit about SPACs, which you covered 0:26:22.280 --> 0:26:26.600 pretty aggressively during the SPAC frenzy over the past couple 0:26:26.640 --> 0:26:29.119 of years. Yeah, it's over, it's done, right, Are you 0:26:29.160 --> 0:26:31.439 going to see this again or is this another another 0:26:31.480 --> 0:26:33.800 ten years have to go by before this pops up again? 0:26:33.840 --> 0:26:36.400 Because you remember mid two thousand SPACs were a thing 0:26:36.480 --> 0:26:37.120 as well. 0:26:37.520 --> 0:26:39.359 Right, there was a long period where SPACs were like 0:26:39.640 --> 0:26:43.479 a known technology but like notoriously shady, and then in 0:26:43.520 --> 0:26:46.480 like the recent boom, they became kind of like mainstream 0:26:46.560 --> 0:26:48.639 and popular. I don't know if they'll go back to 0:26:48.680 --> 0:26:51.159 being like a notoriously shady thing. I think it's a 0:26:51.160 --> 0:26:54.800 plausible tool, right, I think that, like you know, before 0:26:54.840 --> 0:26:56.639 SPACs there is a bit of a boom and direct 0:26:56.720 --> 0:26:59.120 listings US and that's still. 0:26:58.960 --> 0:27:01.600 Kicking around, been talking about that forever. 0:27:01.680 --> 0:27:03.879 You'll still see an occasional direct listing. Like that's just 0:27:03.880 --> 0:27:06.560 like a technology that like someone built and that was 0:27:07.320 --> 0:27:09.520 it's kind of domesticated and is now part of the toolbox. 0:27:09.680 --> 0:27:11.520 I think SPACs are different because like you can't just 0:27:11.560 --> 0:27:12.960 like go to a company and be like, well you 0:27:12.960 --> 0:27:14.600 can do an IPO, you can do a spec because 0:27:14.640 --> 0:27:16.760 you need to have a pre existing spack lying around. Right. 0:27:17.160 --> 0:27:20.359 The spack experience, you know, was very lucrative for spack 0:27:20.400 --> 0:27:23.000 sponsors for you know, the first half of that boom, 0:27:23.200 --> 0:27:25.040 and then more and more sponsors got into it and 0:27:25.119 --> 0:27:28.159 a lot of them ended up stuck and like with spacks, 0:27:28.200 --> 0:27:30.600 that will expire and they will eat a million dollars 0:27:30.640 --> 0:27:33.200 or whatever of setup costs and feel burned. So I 0:27:33.240 --> 0:27:35.840 think that you'll be less likely to see people starting 0:27:35.840 --> 0:27:37.879 spacks like on spack as it were, and trying to 0:27:38.000 --> 0:27:40.119 you know, find a deal. So I don't know, I 0:27:40.119 --> 0:27:43.200 think it will kind of dissipate. But there's still stuff. 0:27:43.240 --> 0:27:46.000 I mean, like I really like Bill Ackman's spark, you 0:27:46.040 --> 0:27:48.480 know his like ah, his spack where you don't raise 0:27:48.520 --> 0:27:51.040 the fund first. Like that solves like a number of issues. 0:27:51.040 --> 0:27:53.000 But one issue that it solves is like it's not 0:27:53.080 --> 0:27:56.040 as risky for the sponsor upfront, right, like because you 0:27:56.040 --> 0:27:57.240 said up the thing and it's like, well, you have 0:27:57.240 --> 0:27:59.360 as long as you need and like you're not raising 0:27:59.359 --> 0:28:01.040 a specific amount money you have, like you know, you 0:28:01.080 --> 0:28:03.480 can raise as much moneys you want and so it's 0:28:03.520 --> 0:28:06.320 like a tool where like seven years from now, a 0:28:06.359 --> 0:28:07.919 bank can go to a company and be like, well 0:28:07.960 --> 0:28:09.199 you can go pupic with an IPO. You can do 0:28:09.200 --> 0:28:10.920 a direct listing, or you can call it Bill Blackman 0:28:10.960 --> 0:28:13.080 and see if he's got a sparkling around, right, And 0:28:13.160 --> 0:28:16.520 so there's something as a technology. It's interesting, but like 0:28:16.680 --> 0:28:18.520 because it needs to be set up in advance, like 0:28:18.600 --> 0:28:21.159 it's possible that like there mostly go away. 0:28:21.240 --> 0:28:24.320 Any other topics that you've been looking at lately that 0:28:24.640 --> 0:28:27.840 are going to become regulars, and I'm holding crypto to 0:28:27.920 --> 0:28:28.679 be its own, you. 0:28:28.680 --> 0:28:30.760 Know, crypto, You're right, like crypto was a regular topic 0:28:30.800 --> 0:28:33.479 and it still is, but you know, a large subset 0:28:33.520 --> 0:28:35.040 of my readers or second it I mean crypto was 0:28:35.080 --> 0:28:38.120 fascinating because lake Elon Musk, it was a laboratory for 0:28:38.240 --> 0:28:40.520 understanding financial concepts, right, Like people who were like kind 0:28:40.520 --> 0:28:43.000 of rebuilding the financial system from scratch, and so you 0:28:43.040 --> 0:28:46.600 could have like great discussions about like what is margin lending? 0:28:46.680 --> 0:28:48.840 Right because like crypto exchanges were like thinking of new 0:28:48.840 --> 0:28:49.360 ways to do it. 0:28:49.440 --> 0:28:49.600 Right. 0:28:49.760 --> 0:28:51.920 The retrenchment of crypto has been has meant that there's 0:28:51.960 --> 0:28:53.520 just like much less of that there's much less like 0:28:53.520 --> 0:28:56.440 interesting financial experiments in crypto, because like crypto is just 0:28:56.480 --> 0:28:59.560 like there's just less new stuff happening in crypto. The 0:28:59.600 --> 0:29:01.239 thing that, like, that's been on my mind a lot 0:29:01.280 --> 0:29:04.840 recently because of the open AI saga. It's just AI, right, Like, 0:29:04.880 --> 0:29:07.160 I just like the influence of large language models and 0:29:07.200 --> 0:29:10.160 other sort of AI tools in finance. It's still kind 0:29:10.200 --> 0:29:12.360 of early days, but you're just like, oh, is an 0:29:12.400 --> 0:29:16.520 article about how AI tools are being used, you know, 0:29:16.640 --> 0:29:19.920 to do new stuff, to like take over jobs from humans, 0:29:19.920 --> 0:29:22.200 to like find new ways to do things in finance. 0:29:22.240 --> 0:29:23.840 And I think that's like, you know, obviously going to 0:29:23.880 --> 0:29:25.000 be a central theme. 0:29:25.160 --> 0:29:26.760 All right, so let's let's talk about a few of 0:29:26.800 --> 0:29:30.760 your other favorite topics. I just love the way you 0:29:30.800 --> 0:29:34.120 put this quote. I have to say, nobody makes being 0:29:34.160 --> 0:29:37.680 a billionaire look like less fun than Elon Musk. He's 0:29:37.720 --> 0:29:41.560 the richest person in the world. Exclamation point. He decided 0:29:41.600 --> 0:29:43.600 to buy his favorite toy and to make it more 0:29:43.640 --> 0:29:46.200 closely aligned with his tastes. So he did that, and 0:29:46.240 --> 0:29:49.440 it worked, and yet it seems to make him more 0:29:49.520 --> 0:29:54.760 miserable every day. So when when the Twitter acquisition was 0:29:54.880 --> 0:29:58.800 early days, it was front page with you all the time. 0:29:58.880 --> 0:30:01.360 It was top of mind. Tell us a little bit 0:30:01.440 --> 0:30:05.120 about why you find it so fascinating to write about 0:30:05.160 --> 0:30:05.920 Elon Musk. 0:30:06.240 --> 0:30:08.800 So, in terms of like my professional interests, I'm really 0:30:08.800 --> 0:30:12.120 interested in like kind of financial stuff, and Elon Musk 0:30:12.200 --> 0:30:18.720 is a fascinating like financial guy because he really rethinks everything. 0:30:18.760 --> 0:30:23.040 And I think, like his biggest supporters would say this, 0:30:23.400 --> 0:30:27.320 he really rethinks everything from first principles, and that's kind 0:30:27.360 --> 0:30:30.400 of a terrible way to do almost everything in like 0:30:30.480 --> 0:30:33.560 regulated financial markets. And so like, I write a lot 0:30:33.600 --> 0:30:36.000 of like imagined dialogue for Elon Musk, and a lot 0:30:36.080 --> 0:30:39.240 of it is like Elon calling his lawyers and saying, 0:30:39.320 --> 0:30:42.280 why can't I pretend I'm going to take Tesla private 0:30:42.400 --> 0:30:45.240 or whatever, and his lawyers being like, you can't do that. 0:30:45.760 --> 0:30:48.120 And I think, you know, you read stories where you're 0:30:48.120 --> 0:30:49.720 like at space X, they're like, well, the laws of 0:30:49.720 --> 0:30:52.320 physics don't allow you to do whatever you're doing. Right 0:30:52.800 --> 0:30:56.000 in like the laws of like financial markets and the 0:30:56.080 --> 0:30:58.840 laws of the sec everything's like a little grayer, you know, 0:30:58.840 --> 0:31:00.720 it's a little bit less clear what's allowed and what's 0:31:00.760 --> 0:31:03.680 not allowed. And so he's constantly pushing up against what's allowed. 0:31:04.160 --> 0:31:08.760 So he's always doing weird stuff that one is funny, 0:31:08.760 --> 0:31:12.520 and then two that kind of illuminates how these mechanisms work, right. 0:31:12.560 --> 0:31:14.960 I mean I wrote so much about his acquisition of 0:31:15.000 --> 0:31:16.960 Twitter because I you know, I was an M and 0:31:17.000 --> 0:31:19.440 A lawyer, and I have written over the you know, 0:31:19.720 --> 0:31:23.040 twelve years of my career in financial journalism there have 0:31:23.120 --> 0:31:26.000 been M and A deals where like there's been some 0:31:26.080 --> 0:31:28.280 dispute about whether some deal had to close, and like 0:31:28.680 --> 0:31:30.280 where you could be like, oh, this is how merger 0:31:30.280 --> 0:31:31.840 are going to work, this is how remedies work in 0:31:31.920 --> 0:31:33.880 merger disputes, right, But I didn't do a lot of 0:31:33.880 --> 0:31:36.680 that because people find it kind of boring, right, and you're, yeah, yeah, 0:31:36.680 --> 0:31:40.800 like merger dispute remedies in in merger contracts, and then 0:31:40.800 --> 0:31:43.320 Elon Musk makes it like hilarious front page News. I'm like, 0:31:43.360 --> 0:31:45.880 I can write about merger disputes and you often don't 0:31:45.880 --> 0:31:48.760 see those mechanics because usually people just kind of do 0:31:48.800 --> 0:31:51.239 the expected thing. And Elon Musk is like, no, I'm 0:31:51.280 --> 0:31:54.960 going to test every like pressure point of how mergers work. 0:31:55.360 --> 0:31:58.560 It turns out they do work, right, Like we might 0:31:58.560 --> 0:32:00.520 have been wrong, right, we might have like all done 0:32:00.560 --> 0:32:04.320 merger argreements in ways that were vulnerable to Elon Musk 0:32:04.680 --> 0:32:06.840 finding flaws in them, but in fact it held up, 0:32:06.880 --> 0:32:09.080 you know, And there's just like a lot of stuff 0:32:09.120 --> 0:32:11.360 like that. There's a lot of you know, he like 0:32:11.480 --> 0:32:13.480 pushes the boundaries of what he can get away with. 0:32:13.920 --> 0:32:16.280 He does weird things and sort of pushes people to 0:32:16.880 --> 0:32:19.080 acquiesce to them, and sometimes they do and sometimes they don't. 0:32:19.120 --> 0:32:21.880 It's always just like illuminating about how finance and how 0:32:21.880 --> 0:32:22.480 the law works. 0:32:22.760 --> 0:32:26.479 I love this description. Nobody has been penalized more in 0:32:26.600 --> 0:32:30.600 history for their inability to manage their impulse control. 0:32:31.280 --> 0:32:35.000 Well, you know, like in like dollar terms, but like 0:32:35.440 --> 0:32:38.120 you know, other people have been penalized worse, like in 0:32:38.200 --> 0:32:40.200 terms of their own utility. Like he's had to pay 0:32:40.200 --> 0:32:42.920 a lot of money for his inability to resist Twitter, 0:32:43.000 --> 0:32:44.520 but like I mean still quite rich. 0:32:44.960 --> 0:32:48.160 Right, that's that's forty four billion dollars. I always wondered 0:32:48.200 --> 0:32:51.800 why he didn't just write the billion dollar breakup of FEEB. 0:32:51.920 --> 0:32:53.400 Well, this is this is what we're telling about. Like 0:32:53.640 --> 0:32:56.000 he couldn't do that. That wasn't how it worked. The 0:32:56.040 --> 0:32:59.600 merger agreement isn't that simple. It had a specific performance 0:32:59.640 --> 0:33:02.200 Clauset said, you can't walk away for by writing a 0:33:02.240 --> 0:33:04.400 billion dollar breakup fee. The breakup fee is payable and 0:33:04.520 --> 0:33:07.920 specific circumstances where you're sort of allowed to walk away. 0:33:07.960 --> 0:33:09.440 But he was not allowed to walk away by writing 0:33:09.480 --> 0:33:10.720 by paying a billion dollar fee. 0:33:11.000 --> 0:33:15.080 Who is advising him to waive due diligence? I recall 0:33:15.120 --> 0:33:15.920 you wrote about that. 0:33:16.080 --> 0:33:19.400 Well, he so I actually think that in hostile public 0:33:19.400 --> 0:33:21.720 company m and A, it is not that uncommon to 0:33:21.720 --> 0:33:23.600 not do due diligence, right, And that's how hostile m and 0:33:23.640 --> 0:33:26.400 A works, Like you don't talk to the management, We'll 0:33:26.440 --> 0:33:27.520 talk to you, and you're like, I'm gonna put in 0:33:27.560 --> 0:33:33.080 a bid anyway. These days, normally the hostile deals sort 0:33:33.080 --> 0:33:35.080 of end up going quasi friendly and like you get 0:33:35.080 --> 0:33:37.040 to do some due diligence. But like, I mean, the 0:33:37.080 --> 0:33:42.680 reasoning is Twitter's financials and you know, it's business were 0:33:42.720 --> 0:33:47.080 all fairly well known publicly, and there was no information 0:33:47.400 --> 0:33:49.600 that he didn't have that was relevant to his bid, 0:33:49.920 --> 0:33:51.600 so like he had all the information he needed. Like 0:33:51.680 --> 0:33:53.160 what happened is like, first of all, he was kind 0:33:53.200 --> 0:33:57.480 of overpaying, you know generally, but more importantly, like kind 0:33:57.480 --> 0:34:00.320 of the market tanked, right, between when he and the 0:34:00.320 --> 0:34:03.320 deal and when it closed, the waiving due diligence was 0:34:03.360 --> 0:34:06.200 not the problem there, right, Like, like he he was 0:34:06.240 --> 0:34:11.080 buying a very well known public company and he knew 0:34:11.080 --> 0:34:12.400 what he needed to know about it. 0:34:12.960 --> 0:34:16.920 So your your headline for that story was Musk lost 0:34:17.040 --> 0:34:20.320 interest in pretending to buy Twitter, which is kind of vibral. 0:34:20.320 --> 0:34:22.640 Well that's what I thought at the time, right, ironic 0:34:22.680 --> 0:34:25.320 because he ends up being forced to buy Twitter because 0:34:25.400 --> 0:34:29.160 he made a firm offer. Yeah, which raises a big question. 0:34:29.239 --> 0:34:31.920 How could you be the wealthiest person in the world 0:34:32.400 --> 0:34:36.200 and not have one or two lawyers and accounts on 0:34:36.360 --> 0:34:39.920 staff that say, hey, genius, you're going to be forty 0:34:39.920 --> 0:34:41.759 five billion in the hole if you don't stop this, 0:34:42.280 --> 0:34:43.920 Like nobody says note him. 0:34:44.320 --> 0:34:47.520 Well, there's two points right before he signed the deal, Like, 0:34:47.560 --> 0:34:49.040 I think that, Like there are a lot of people 0:34:49.360 --> 0:34:51.840 signing a public company merger agreement is sort of different 0:34:51.880 --> 0:34:54.280 from like signing a letter of intent to buy at computer. 0:34:54.560 --> 0:34:57.160 Like I think that, like he might have some experience 0:34:57.239 --> 0:34:59.560 in doing deals where like you sign a piece of 0:34:59.600 --> 0:35:02.920 paper that is not a final binding commitment, right, whereas 0:35:02.920 --> 0:35:04.480 in a public company merger, like it doesn't really work 0:35:04.520 --> 0:35:05.839 that way. You sign a piece of paper, your pretty 0:35:05.840 --> 0:35:08.279 committed it done. I think it's possible that he had 0:35:08.320 --> 0:35:10.040 lawyers who told him that and he didn't listen. I 0:35:10.040 --> 0:35:12.000 think it's also possible that it did not occur to 0:35:12.040 --> 0:35:14.840 a lawyer to say, when you signed the definitive merger agreement, 0:35:14.880 --> 0:35:16.000 that's a definitive merger group. 0:35:16.080 --> 0:35:16.160 Right. 0:35:16.160 --> 0:35:18.000 Think it might have been like the lawyer might have 0:35:18.000 --> 0:35:21.040 assumed that was obvious right after he signed the deal. 0:35:21.280 --> 0:35:24.000 The reporting on this suggests that he did that. His 0:35:24.080 --> 0:35:26.919 lawyers did tell him, you know, you signed a binding deal, 0:35:27.239 --> 0:35:29.480 but I think that they probably accurately told him he 0:35:29.520 --> 0:35:31.319 had some chance of winning. 0:35:31.920 --> 0:35:33.360 Not exactly the same. 0:35:34.040 --> 0:35:36.000 He was like, let's roll the dice. Man like, I 0:35:36.000 --> 0:35:39.040 don't think he minds going up against long odds. 0:35:39.520 --> 0:35:42.560 Really really interesting stuff. Let's talk a little bit about 0:35:42.640 --> 0:35:46.320 how money stuff got started before it was the most 0:35:46.440 --> 0:35:49.960 red item on Wall Street? How did it begin? Tell 0:35:50.040 --> 0:35:52.040 us a little bit about the background. 0:35:51.600 --> 0:35:53.319 You know, I don't. I don't really know. It's sort 0:35:53.320 --> 0:35:55.440 of like accrewed in stages. So I was blogging at 0:35:55.480 --> 0:35:58.799 del Bicker for a while, you know, writing like you know, 0:35:59.000 --> 0:36:02.600 one to three blog posts today about the financial industry 0:36:02.600 --> 0:36:06.080 back when people wrote blog posts. And then I came 0:36:06.120 --> 0:36:08.320 to Bloomberg and they sort of it was at a 0:36:08.360 --> 0:36:09.640 time when they were sort of thing, you do the 0:36:09.680 --> 0:36:12.080 same thing. You know, you'll blog a couple of times 0:36:12.080 --> 0:36:15.120 a day, and like many blogs like deal Breaker, like 0:36:15.160 --> 0:36:17.920 some other financial blogs, you know, there's this notion that 0:36:18.000 --> 0:36:20.200 in the morning you just sent out a roundup of links, 0:36:20.480 --> 0:36:23.120 and so it became like my morning link round up 0:36:23.600 --> 0:36:26.799 was like a couple of paragraphs about four stories, right, 0:36:27.520 --> 0:36:30.080 And at some point I was like, I want this 0:36:30.160 --> 0:36:34.320 link wrap to be an email that goes to your inbox. 0:36:34.680 --> 0:36:36.520 I didn't like do a lot of thinking and market 0:36:36.520 --> 0:36:38.920 research about this. I think I was mostly inspired by 0:36:39.200 --> 0:36:42.040 this great media newsletter called Today in Tabs by Rusty 0:36:42.080 --> 0:36:44.680 Foster that was like hilarious and uh. 0:36:44.920 --> 0:36:47.080 Just very like stylish still still around. 0:36:46.840 --> 0:36:49.000 Still around. Yeah, it's like gone through different direction day 0:36:49.719 --> 0:36:51.560 Today and Tabs that's great and. 0:36:51.840 --> 0:36:53.560 Back in the pre substat days. 0:36:53.440 --> 0:36:58.600 Yeah, this was fourteen something like that. And so I 0:36:58.680 --> 0:37:00.319 was like, I'm gonna make this an email newsletter and 0:37:00.360 --> 0:37:02.800 everyone was, you know, Bloomberger was like sure, whatever, h 0:37:03.080 --> 0:37:04.439 And I don't know. 0:37:04.400 --> 0:37:06.279 Exactly that's precisely what they said sure. 0:37:06.640 --> 0:37:09.239 There was a kind of like real thinking about it, 0:37:09.440 --> 0:37:12.200 and we were like, we should give it a name. 0:37:12.640 --> 0:37:15.799 And I do think that Tim O'Brien, now the head 0:37:15.800 --> 0:37:18.880 of Bloomberg Opinion, came up with the name money Stuff, 0:37:19.120 --> 0:37:20.759 but he thinks it was me. But any any case, 0:37:20.800 --> 0:37:22.319 someone came up with the name money stuff wi I, 0:37:22.360 --> 0:37:23.359 which I adore and. 0:37:23.440 --> 0:37:29.479 Is like, cause it's so it's so perfectly ambiguous and generic. Yeah, 0:37:29.760 --> 0:37:33.320 and yet it's so winking at the same time. 0:37:34.239 --> 0:37:37.120 One of my editors once called my tone and headlines 0:37:37.520 --> 0:37:41.360 blandly sarcastic, and I think I think of money Stuff 0:37:41.360 --> 0:37:43.600 as being blandly sarcastic. But so we came with the name, 0:37:43.600 --> 0:37:45.759 which is which was great. But then like you know, 0:37:45.760 --> 0:37:47.400 I started sending out it's an email, and then like 0:37:48.000 --> 0:37:50.440 over time, more of my work went into the email, 0:37:50.480 --> 0:37:52.560 and it got longer and frankly got later in the day, 0:37:52.719 --> 0:37:54.600 and less of my work went into the standalone blog 0:37:54.600 --> 0:37:57.520 post until I realized, like I had this audience on email, 0:37:57.760 --> 0:38:01.359 it would be obscene for me to write a long, 0:38:01.440 --> 0:38:03.080 good post and put it up on Bloomberg and not 0:38:03.080 --> 0:38:05.360 send it to my email subscribers. So instead the email 0:38:05.400 --> 0:38:07.200 is gonna be the whole thing, and like, if I 0:38:07.200 --> 0:38:08.680 have something good, I'm gonna put it in the email, 0:38:08.680 --> 0:38:11.160 you know. And so I no longer write like standalone 0:38:11.239 --> 0:38:15.480 blog posts, and the word blog has sort of vanished 0:38:15.480 --> 0:38:17.400 from the Internet, but I still kind of think of 0:38:17.440 --> 0:38:19.960 myself as a blogger. It was such a good strategic 0:38:20.000 --> 0:38:23.120 decision to like capture this audience and people who expect 0:38:23.160 --> 0:38:25.040 to hear from you each day, who know your name 0:38:25.400 --> 0:38:27.799 or get an email from your name, rather than like, 0:38:27.840 --> 0:38:29.960 you know, a column that they don't necessarily look at 0:38:29.960 --> 0:38:33.399 the pieline, who expect it every day, who feel some 0:38:33.440 --> 0:38:35.759 sort of like parasocial relationship with you, where they're like, 0:38:35.840 --> 0:38:38.040 were there in some sense in correspondence with you, rather 0:38:38.080 --> 0:38:40.280 than just like reading some stuff on the internet. 0:38:40.600 --> 0:38:43.279 So let's talk a little bit about your audience. And 0:38:43.560 --> 0:38:47.000 I have a few quotes I've pulled from the Internet. 0:38:47.280 --> 0:38:51.399 Matt's one of the best writers today chronicling the ironies, paradoxes, 0:38:51.440 --> 0:38:55.680 and absurdities of modern business and finance. That that's Jim 0:38:55.760 --> 0:38:58.920 Chanos of Kinnicos Associates. His work is some of the 0:38:58.960 --> 0:39:03.520 most sophistic analysis of what's really happening on Wall Street 0:39:03.600 --> 0:39:07.520 says Bill Ackman. These are some pretty big hitters blowing 0:39:07.600 --> 0:39:11.280 kisses your way. What's it like to know that your 0:39:11.880 --> 0:39:15.879 daily email is being read by some pretty big Wall 0:39:15.880 --> 0:39:16.600 Street titans. 0:39:16.719 --> 0:39:19.120 I try not to think about it too much because, 0:39:19.160 --> 0:39:20.400 like sometimes you write about. 0:39:20.160 --> 0:39:22.919 Them when you when you write something, do you know 0:39:23.200 --> 0:39:24.759 this is going to be read by them? Is that 0:39:24.840 --> 0:39:25.640 in the back of your head? 0:39:25.880 --> 0:39:27.520 The thing is that, like the tone of the email 0:39:27.600 --> 0:39:29.640 is so like it is written for like me and 0:39:29.680 --> 0:39:31.759 my friends. You know. It's like I used to think 0:39:31.800 --> 0:39:34.400 of my audience as being like the analysts on my desk, 0:39:34.440 --> 0:39:36.200 who are like sort of like young people who know 0:39:36.239 --> 0:39:38.200 a little that finance play. You can still explain a 0:39:38.239 --> 0:39:40.600 lot of things to them. I no longer really think 0:39:40.600 --> 0:39:42.160 about that way, but I still think of it as like, 0:39:42.160 --> 0:39:44.000 like the audience is to like to make myself laugh. 0:39:44.239 --> 0:39:46.400 I don't think of it as being like Bill Ackman's 0:39:46.400 --> 0:39:47.200 going to see this, you know. 0:39:47.520 --> 0:39:51.480 The New York Times described your analyzes as humor with 0:39:51.600 --> 0:39:55.080 a nerdy, confident tone. Sounds like you're writing for your 0:39:55.120 --> 0:39:57.719 buds on the in the analysts room. 0:39:57.920 --> 0:39:59.200 Yeah a little bit. Yeah. 0:39:59.360 --> 0:40:02.640 So so so let's talk a little bit about some 0:40:02.719 --> 0:40:08.120 of that nerdiness. What's with the endless humorous footnotes? 0:40:08.400 --> 0:40:11.560 I don't know, Like it's just like it's a tick 0:40:11.640 --> 0:40:13.400 that started a deal breaker and then I sort of 0:40:13.520 --> 0:40:15.600 brought it over because like people complain if I don't 0:40:15.600 --> 0:40:17.920 have footnotes that you know, It's like an email newsletter 0:40:17.960 --> 0:40:20.239 is a very linear thing, but like sometimes there are 0:40:20.280 --> 0:40:22.200 like digressions that you want to have and the best 0:40:22.239 --> 0:40:23.719 way to do that is in a footnote and you 0:40:23.800 --> 0:40:27.520 have some rudimentary HTML that allows you to jump back 0:40:27.520 --> 0:40:30.320 and forth. Although in an email newsletter it's like pretty rudimentary. 0:40:30.520 --> 0:40:32.720 As it's gone on longer, like you know, the audience 0:40:32.719 --> 0:40:35.120 has broadened, right, and so it's not like I'm literally 0:40:35.120 --> 0:40:39.279 writing for, like, you know, an audience of analysts at 0:40:39.320 --> 0:40:42.880 a bank. I'm writing for a kind of range of audiences. 0:40:42.920 --> 0:40:46.280 And there are times when I will say something general 0:40:46.680 --> 0:40:49.520 and straightforward in the text, and then I'll be like, 0:40:49.600 --> 0:40:51.320 I know you're going to complain about this, So in 0:40:51.360 --> 0:40:53.480 the footnote I'll be like, this is like not quite right, 0:40:53.520 --> 0:40:55.120 and here's why, you know, And I try to like 0:40:55.200 --> 0:40:57.480 be like not in the direction of like a sort 0:40:57.480 --> 0:40:59.960 of deeper understanding with that necessarily cluttering up the description 0:41:00.120 --> 0:41:01.600 of the text. But there's other things too. Some of 0:41:01.600 --> 0:41:03.319 things there are just like funny jokes that are that 0:41:03.360 --> 0:41:05.719 are distracting in the text, and so I'll put a 0:41:05.760 --> 0:41:06.480 joke on the phoot. 0:41:06.520 --> 0:41:08.480 So, so you mentioned the audience, how often do you 0:41:08.480 --> 0:41:11.200 hear from them? How often are readers hitting you up 0:41:11.239 --> 0:41:12.040 with emails? 0:41:12.280 --> 0:41:14.279 I often get emails from people who are very much 0:41:14.320 --> 0:41:17.880 on my wavelength, right, So I wrote recently about this 0:41:18.040 --> 0:41:21.920 like trading mistake by a power company that led to 0:41:22.080 --> 0:41:25.520 finish electric prices being negative, and so there are like 0:41:25.560 --> 0:41:28.400 these news stories about like finish people running their saunas 0:41:28.680 --> 0:41:30.960 all night to like to make money because they're getting 0:41:30.960 --> 0:41:33.520 paid to run their saunas, and so many people emailed 0:41:33.560 --> 0:41:35.839 at me about that, being like, oh, here's the time 0:41:35.840 --> 0:41:37.600 that my electric presses were negative, and I, you know, 0:41:37.640 --> 0:41:40.520 like that. It's like when I write about like weird trades, 0:41:40.760 --> 0:41:43.280 I have enough of an audience who does weird trades 0:41:43.680 --> 0:41:45.520 and who like think about this in the same way 0:41:45.520 --> 0:41:47.040 that they'll be like, oh, here's a weird trade. I 0:41:47.080 --> 0:41:49.080 did that. It's hilarious and like I always love those, 0:41:49.200 --> 0:41:51.360 and so I often am able to like, if I 0:41:51.360 --> 0:41:53.040 write about something weird, I will have like then a 0:41:53.040 --> 0:41:57.319 week of follow ups of readers corresponding and saying being like, 0:41:57.320 --> 0:41:58.520 here's an even weirder story. 0:41:58.560 --> 0:42:00.920 You know, I have a vivid ruck election when oil 0:42:00.960 --> 0:42:04.080 prices went negative and your headline was something along the 0:42:04.120 --> 0:42:08.040 lines of there's no place to store oil. It's smelly, 0:42:08.160 --> 0:42:11.719 it's it's dangerous, it's this, it's that, and so we'll 0:42:11.719 --> 0:42:14.040 pay you to take this oil off our hands. You 0:42:14.040 --> 0:42:19.200 you probably affected, certainly my understanding what was going on 0:42:19.320 --> 0:42:22.120 with negative oil prices, but I bet a whole lot 0:42:22.120 --> 0:42:23.080 of other people as well. 0:42:23.440 --> 0:42:26.640 Thanks. That's the goal, Like I like to, you know, 0:42:26.880 --> 0:42:29.040 the best things are like things were like there's some 0:42:29.080 --> 0:42:31.319 weird story, and like the headliness like, oh, here's a 0:42:31.360 --> 0:42:33.680 weird thing, and I can be like, here's like a 0:42:33.840 --> 0:42:36.719 sort of intuitive conceptual framework for understanding that weird thing. 0:42:36.760 --> 0:42:39.080 You know, here's like how to think about that weird thing. 0:42:39.080 --> 0:42:40.920 But that's always like super satisfying to do. 0:42:41.160 --> 0:42:42.960 But it's a little more than that. I'm going to 0:42:43.040 --> 0:42:46.120 quote the New York Times on that he makes readers 0:42:46.160 --> 0:42:51.120 feel in on the savage joke that is late capitalism, 0:42:51.520 --> 0:42:54.799 and the Times was referring to what I thought was 0:42:54.800 --> 0:42:59.200 a pretty hilarious acronym that's about thirty letters wrong long 0:43:00.400 --> 0:43:05.319 about a city group shared downside protection derivative that you 0:43:05.440 --> 0:43:10.440 decided to abbreviate, and it was a really really funny 0:43:10.920 --> 0:43:12.240 tongue in chic line. 0:43:12.440 --> 0:43:14.040 I think there's like a sort of standard mode in 0:43:14.040 --> 0:43:16.359 financial journalism of like you look at like stuff that 0:43:16.360 --> 0:43:18.960 banks do and you're like, this is really bad, and 0:43:19.000 --> 0:43:21.320 then like my mode is I often find it really funny. 0:43:21.560 --> 0:43:23.760 And I think that resonates with a lot of readers 0:43:23.960 --> 0:43:26.520 in different ways, sometimes because they work in capital in 0:43:26.560 --> 0:43:30.080 finance and also find it funny, sometimes because they don't 0:43:30.080 --> 0:43:32.160 work in finance and find it funny. You know. I 0:43:32.160 --> 0:43:34.480 have a lot of readers these days who work, like 0:43:34.520 --> 0:43:37.520 broadly speaking, in tech, and like what they are interested 0:43:37.560 --> 0:43:40.920 in is not like specifically descriptions of finance, but like 0:43:41.480 --> 0:43:45.960 this like sort of like system z, like nerdy algorithmic 0:43:45.960 --> 0:43:47.719 way of thinking about the world, and so like, I 0:43:47.719 --> 0:43:49.160 have a lot of tech readers who are sort of like, 0:43:49.200 --> 0:43:50.920 I like your style. I don't really care about finance, 0:43:50.920 --> 0:43:52.960 but I think this is like a explanation of finance 0:43:52.960 --> 0:43:54.840 that resonates with tech people. I have a lot of 0:43:54.880 --> 0:43:57.759 readers who are like very strong critics of banks and 0:43:57.800 --> 0:44:01.960 of finance, and who like what I do because sort 0:44:01.960 --> 0:44:05.600 of neutrally explanatory and tries to get at what's actually 0:44:05.640 --> 0:44:07.640 going on and how people are in the industry are 0:44:07.640 --> 0:44:10.640 actually thinking about things. And the people who are like 0:44:10.680 --> 0:44:14.480 strong critics of banking often find that useful. Right, will 0:44:14.480 --> 0:44:16.600 as supposed to just be like, oh oh, banks are evil. 0:44:16.560 --> 0:44:21.080 Right, You're critical without seeking to be critical in a 0:44:21.120 --> 0:44:25.520 way that once you understand the absurdity of certain situations, 0:44:26.040 --> 0:44:26.879 it can help. 0:44:26.920 --> 0:44:30.000 But be critical, I work from them opinion. I joke 0:44:30.040 --> 0:44:32.880 that I'm an opinion columnist without any opinions. That's not 0:44:32.920 --> 0:44:35.560 really true, but like I'm not, like, it is not 0:44:35.680 --> 0:44:37.680 high on my list to be like this is bad 0:44:37.760 --> 0:44:39.719 or this is good, right, Like, it's always like this 0:44:39.800 --> 0:44:41.960 is interesting, right, Like, look at this interesting thing. Let's 0:44:41.960 --> 0:44:44.440 try to understand it. Yeah, I definitely think that a 0:44:44.440 --> 0:44:46.640 lot of readers come away being like, you have explained 0:44:46.640 --> 0:44:48.880 this thing, and now I think it's much worse. But 0:44:49.080 --> 0:44:50.680 like that's not always my goal, you know. 0:44:51.320 --> 0:44:54.600 That's that's hilarious. So let's talk a little bit about 0:44:54.840 --> 0:44:59.080 a somewhat infamous podcast you did with Sam Banking Freed 0:44:59.239 --> 0:45:02.840 and FTX on odd lots a good year before or 0:45:02.880 --> 0:45:06.640 so before it crashed. What was your sense of FTX 0:45:07.120 --> 0:45:07.760 at the time. 0:45:08.280 --> 0:45:09.799 I've no story that makes me look good. I thought 0:45:09.880 --> 0:45:12.560 FTX was really interesting. I thought FTX seemed like a 0:45:12.600 --> 0:45:14.840 well run crypto exchange that seemed to be printing a 0:45:14.840 --> 0:45:18.400 lot of money, and that had interesting, you know, aggressive 0:45:18.440 --> 0:45:21.880 ideas for how to change the structure of derivatives, margining, 0:45:22.320 --> 0:45:25.600 and what's your endgame as a crypto exchange. I thought 0:45:25.600 --> 0:45:28.760 that Sam Bankmin Freed had a like reasonably clever endgame, 0:45:28.760 --> 0:45:32.120 which is like he was going to consume the regular 0:45:32.160 --> 0:45:35.160 financial system. He was going to be a place where 0:45:35.160 --> 0:45:38.720 you could like tokenize stocks and run a crypto exchange 0:45:38.719 --> 0:45:41.640 that gradually became like the main financial exchange for the world. Right. 0:45:41.840 --> 0:45:42.880 I don't want to say it like I thought that 0:45:42.920 --> 0:45:45.319 plan was inevitable, but I thought that was like, that's 0:45:45.360 --> 0:45:48.040 a better plan for your crypto exchange than like, well, 0:45:48.120 --> 0:45:51.120 crypto will take you know, all of like financial life 0:45:51.120 --> 0:45:52.920 will be in bitcoin. Right. I thought he had like 0:45:52.960 --> 0:45:54.799 a pretty good idea for like how we're going to 0:45:54.840 --> 0:45:56.360 be a you know, enormous company. 0:45:56.560 --> 0:45:59.640 Well, well, he clearly came up with a better mechanism 0:46:00.080 --> 0:46:04.360 for extending credit and liquidating portfolios that were in the 0:46:04.400 --> 0:46:09.759 red then other exchanges had. He just kept building FTX 0:46:10.239 --> 0:46:15.640 and kept focusing on being the biggest, baddest crypto trading 0:46:15.680 --> 0:46:19.480 platform and crypto exchange that could have been wildly successful. 0:46:19.520 --> 0:46:22.040 It certainly looked like he was printing money for a while. 0:46:22.680 --> 0:46:25.560 It turned out there were some com mingling funds and 0:46:25.600 --> 0:46:26.439 other issues there. 0:46:26.560 --> 0:46:30.120 Yeah, I think it's interesting to ask if he was 0:46:30.200 --> 0:46:31.840 doing what he said he was doing, was that a 0:46:31.840 --> 0:46:33.960 good idea, because I was like, yeah, that sounds like interesting. 0:46:34.000 --> 0:46:36.160 I don't know. He was very much about like we're 0:46:36.160 --> 0:46:39.200 going to have an automated margining system where we're never 0:46:39.200 --> 0:46:40.680 going to call you for margin calls. We're just going 0:46:40.719 --> 0:46:42.640 to blow you out if you fall below a certain level. 0:46:42.760 --> 0:46:44.719 It's going to be all twenty four to seven mark 0:46:44.760 --> 0:46:47.160 to market. It's going to be much less subjective. And 0:46:47.200 --> 0:46:48.880 he was talking about this at a time when like 0:46:49.280 --> 0:46:51.359 the London Metals Exchange had had this like sort of 0:46:51.719 --> 0:46:55.319 semi scandalous problem where like this big trader accumulated this 0:46:55.400 --> 0:46:57.239 huge deaf as a position and like he couldn't meet 0:46:57.239 --> 0:46:59.600 margin calls and they couldn't do anything about it because like, 0:47:00.239 --> 0:47:02.600 if you know, they would have like blown up the exchange. 0:47:03.360 --> 0:47:05.600 So they just sort of like pause trading for a week. 0:47:05.719 --> 0:47:07.399 And it just looked bad, right, And it's like, oh yeah, 0:47:07.400 --> 0:47:10.920 this like system of like subjectively doing margin calls and 0:47:10.960 --> 0:47:12.680 like doing margin calls once a day, and if like 0:47:12.760 --> 0:47:15.160 if it's moved too far, then like you're like, oh no, 0:47:15.200 --> 0:47:18.600 it's too big to fail. That the SBF endorsed system 0:47:18.719 --> 0:47:21.239 of like we're going to do everything automated. You know, 0:47:21.320 --> 0:47:23.160 you're like, oh yeah, I see the appeal of that. 0:47:23.320 --> 0:47:24.840 I don't know that it was a good idea. I 0:47:24.880 --> 0:47:27.839 think that like there are obvious downsides to it too, 0:47:28.080 --> 0:47:30.080 But like what brought FTX down was not any of 0:47:30.120 --> 0:47:32.800 those downsides, because like what was in fact happening was 0:47:32.840 --> 0:47:35.560 that he had simply exempted his own big hedge fund 0:47:35.560 --> 0:47:39.760 from the automated margining rules and it accumulated a vastly 0:47:39.800 --> 0:47:43.200 bigger deficit position than like the London Metals Exchange guy did, 0:47:43.560 --> 0:47:45.360 and then it did in fact blow up the exchange 0:47:45.400 --> 0:47:47.480 and take customer money down with it. The thing he 0:47:47.520 --> 0:47:50.200 said he wasn't doing was what caused them to blow up. 0:47:50.520 --> 0:47:52.600 But as far as I know, FTX was printing money, 0:47:52.680 --> 0:47:55.560 Like the exchange was very valuable in terms of it 0:47:55.600 --> 0:47:57.960 made a lot of revenue, and some of what they 0:47:57.960 --> 0:48:00.319 did was just they overspent that revenue. And then what 0:48:00.360 --> 0:48:02.799 they did was like they had this affiliated hedge fund 0:48:02.840 --> 0:48:06.160 that you know, lost bajillions of dollars, right and because 0:48:06.560 --> 0:48:08.600 it was just taking enormous margin loans from the exchange, 0:48:08.600 --> 0:48:10.600 when it lost the bajillions of dollars, it took the 0:48:10.600 --> 0:48:13.480 exchange down with it. But the exchange itself is very profitable. 0:48:13.680 --> 0:48:15.000 And one thing you could say, like there was a 0:48:15.040 --> 0:48:17.960 time I think like over the summer when like they 0:48:17.960 --> 0:48:21.600 considered shutting down Alameda the hedge fund, and you do 0:48:21.800 --> 0:48:23.840 look back and say, like could they have managed to 0:48:23.880 --> 0:48:25.640 do that in a way that you know, it was 0:48:25.640 --> 0:48:28.480 like embarrassing it whatever, you know, like lost money, but 0:48:28.600 --> 0:48:31.680 that left FTX intact and then FTX could continue printing 0:48:31.680 --> 0:48:33.480 money and maybe I don't know, like maybe they had 0:48:33.520 --> 0:48:35.799 already gone too far by that point. The other thing 0:48:35.880 --> 0:48:38.480 is like there is a theory that one reason that 0:48:38.600 --> 0:48:41.600 FTX was printing so much money was that it was 0:48:41.600 --> 0:48:44.920 a very good trading experience for customers because Alameda was 0:48:44.960 --> 0:48:46.040 on the other side of a lot of trades, and 0:48:46.080 --> 0:48:48.000 Alameda was losing money on all these customers. So you'd 0:48:48.000 --> 0:48:49.880 go to FTX, you'd trade, you'd make money. You're like, oh, 0:48:49.960 --> 0:48:51.320 this is great, I'll come back right. But it was 0:48:51.360 --> 0:48:53.200 all sort of like an indirect Ponzi scheme, where like 0:48:53.200 --> 0:48:55.840 you were making money from Alameda and Alameda was stealing 0:48:55.880 --> 0:48:58.560 it from you. I don't think that's really true, I think, 0:48:58.600 --> 0:49:00.520 but I think there's like a element of truth of that. 0:49:00.520 --> 0:49:03.239 I don't think that's like what mainly explains FTX. Like 0:49:03.280 --> 0:49:05.520 I think FTX was a good business and now Alimita 0:49:05.680 --> 0:49:09.000 was like a hilariously bad business, and like they were interminkled. 0:49:09.280 --> 0:49:13.440 So last summer, you write this giant piece in Business 0:49:13.440 --> 0:49:18.920 Week about Crypto. Essentially you were that entire issue of 0:49:19.200 --> 0:49:23.080 Business Week. Tell us about what led to that massive 0:49:23.360 --> 0:49:26.480 piece and what the thinking was that had you say, 0:49:26.600 --> 0:49:29.400 I know, I'm going to take over Business Week for 0:49:29.560 --> 0:49:31.800 a week and write about nothing but crypto. 0:49:32.160 --> 0:49:33.799 Joel Weber, the editor of Business Week, came to me 0:49:33.880 --> 0:49:35.480 and it was like, hey, do you remember what is code? 0:49:35.480 --> 0:49:37.840 So what is code? Is Paul Forth, this great computer programmer, 0:49:38.200 --> 0:49:40.799 wrote a Business Week issue took over the entire issue 0:49:40.800 --> 0:49:43.360 of Business Week to write a thing called what is Code? 0:49:43.560 --> 0:49:46.600 I was trying to explain computer programming to a like 0:49:46.640 --> 0:49:49.360 I get sophisticated business audience, but not coders, right, And 0:49:49.440 --> 0:49:51.439 it was just like this really fabulous, like just piece 0:49:51.480 --> 0:49:54.040 of writing and explaining and thinking. And I loved it 0:49:54.080 --> 0:49:56.239 when it came out, and Joel came to me, is like, 0:49:56.239 --> 0:49:58.360 remember what is code? We'd like to do that for Crypto, 0:49:58.680 --> 0:50:02.480 and I was like, I found it appealing because I 0:50:02.560 --> 0:50:04.080 like to write long and I was like, I have 0:50:04.200 --> 0:50:07.000 a whole magazine. Two. Crypto felt to me like a 0:50:07.040 --> 0:50:09.640 big enough subject to warrant a whole magazine, but a 0:50:09.680 --> 0:50:12.359 small enough subject that you could like almost do all 0:50:12.400 --> 0:50:14.080 of it, Like I didn't do all of it, but 0:50:14.200 --> 0:50:16.280 you can almost like sort of start at the most 0:50:16.719 --> 0:50:19.919 basic building block intuitions and build up to a full 0:50:20.000 --> 0:50:22.880 understanding of the entire Crypto universe in the space of 0:50:22.920 --> 0:50:24.759 like forty thousand words. And that just seemed like a 0:50:24.800 --> 0:50:27.480 really interesting, like just technical challenge to be like take 0:50:27.480 --> 0:50:30.880 a reader from nothing to like not like some vague intuitions, 0:50:30.880 --> 0:50:33.560 but like a detailed understanding of like all the stuff 0:50:33.600 --> 0:50:36.680 that matters in crypto that felt really interesting. But also 0:50:36.760 --> 0:50:39.560 like in my day job, I was often writing about crypto, 0:50:39.719 --> 0:50:41.560 and you have this question of where to start, right, 0:50:41.760 --> 0:50:43.759 do I explain what a blockchain is in order to 0:50:43.880 --> 0:50:46.560 like make a joke about this, like you know, crypto 0:50:46.640 --> 0:50:49.400 exchange that got hacked, right, And so the idea of 0:50:49.400 --> 0:50:52.520 writing this this magazine piece is partly like selfishly for me, 0:50:52.800 --> 0:50:54.640 I could be like, I've explained what a blockchain is 0:50:54.640 --> 0:50:56.360 over there, so I can just tell you about this 0:50:56.400 --> 0:50:58.880 thing that got hacked, right. So it felt like a useful, 0:50:58.920 --> 0:51:02.440 like like reference piece for me to do from then on. Oh. 0:51:02.480 --> 0:51:03.919 The other thing that I was thinking at the time, 0:51:03.920 --> 0:51:06.160 to be honest, is that Joel came to me and 0:51:06.200 --> 0:51:09.080 like in June or whatever, and I was like, summer's 0:51:09.080 --> 0:51:12.239 always slow. Let me be so bored writing my newsletter every day. 0:51:12.560 --> 0:51:14.359 I'm not gonna have enough to write about, so why 0:51:14.400 --> 0:51:15.800 don't I take some time off from the newsletter to 0:51:15.840 --> 0:51:17.400 write this long thing. And then of course that was 0:51:17.440 --> 0:51:19.759 the summer of Elon and Twitter and so like I 0:51:19.800 --> 0:51:22.200 was like, oh damn, And so then yeah, like that's 0:51:22.320 --> 0:51:24.480 that was that was kind of the motivation for it. 0:51:24.480 --> 0:51:27.040 My my biggest regret is that, you know, this is 0:51:27.080 --> 0:51:29.680 really directly inspired by Paul Ford's What Is Code? And 0:51:30.040 --> 0:51:32.319 the Joel sort of like working title was like what 0:51:32.480 --> 0:51:34.160 is Crypto? And I was like we should call it 0:51:34.200 --> 0:51:37.120 what was Crypto? And we were like that's too mean, 0:51:37.200 --> 0:51:39.000 We're not gonna do it. And then it came out 0:51:39.000 --> 0:51:40.800 and like, I don't know they'd come out in October 0:51:40.840 --> 0:51:43.400 of twenty twenty two. It came out like, you know, 0:51:43.480 --> 0:51:46.359 like two weeks before I have to Exitxploded. And had 0:51:46.440 --> 0:51:48.759 we called it what was Crypto? You were like, what 0:51:48.800 --> 0:51:51.319 about all the awards? Man, that what a great title 0:51:51.320 --> 0:51:52.960 that would have been, and we just like we didn't 0:51:53.000 --> 0:51:54.799 have the courage or conviction, so we didn't call it 0:51:54.800 --> 0:51:55.480 what was Crypto? 0:51:55.680 --> 0:51:58.080 Well, this leads me to a sort of curve ball 0:51:58.239 --> 0:52:01.839 question that was almost the book. When is the Matt 0:52:01.920 --> 0:52:02.560 Levine book? 0:52:02.920 --> 0:52:04.400 Yeah? When I write it, I don't know. I mean, like, 0:52:04.480 --> 0:52:07.400 I like, there's they're sure there'll be a book. I 0:52:07.480 --> 0:52:09.319 want to do a book, but like I I really 0:52:09.400 --> 0:52:10.200 like my day job. 0:52:10.080 --> 0:52:12.080 A lot, and it goes to get in the way. 0:52:12.360 --> 0:52:15.239 Yeah, like involves writing a lot of words, so like 0:52:15.400 --> 0:52:16.880 I don't have any more words to go when I 0:52:16.880 --> 0:52:18.759 go home at night. But I really like that my my, 0:52:18.960 --> 0:52:21.040 you know, I like the day job, but like, I 0:52:21.080 --> 0:52:24.239 don't know, I found that what was crypto exercise really 0:52:24.239 --> 0:52:26.000 fun and I would like to do something like that 0:52:26.080 --> 0:52:27.280 for you know, not crypto. 0:52:27.400 --> 0:52:29.759 All right, well, we only have you for another ten 0:52:29.880 --> 0:52:32.480 or so minutes, so let's jump to our favorite questions 0:52:32.520 --> 0:52:35.640 that we ask all our guests, starting with what are 0:52:35.640 --> 0:52:38.680 you streaming these days? Tell us what you're either watching 0:52:38.760 --> 0:52:41.600 on Netflix or listening to In terms of podcasts, what's 0:52:41.680 --> 0:52:42.680 keeping you entertained. 0:52:42.960 --> 0:52:45.239 I don't really watch television. I have like a lot 0:52:45.239 --> 0:52:47.879 of children's television in my life, so streaming a lot 0:52:47.880 --> 0:52:51.960 of Eleanor Wonders Why, a lot of Frozen two things 0:52:52.000 --> 0:52:56.000 like that. I used to listen to weirder podcasts. Now 0:52:56.040 --> 0:52:58.840 I listened to like the long form podcast I love. 0:52:58.960 --> 0:53:02.839 I love song Exploder, the like yeah music podcast that's great. 0:53:02.960 --> 0:53:05.640 Yeah in PoCA, like I find myself like long form 0:53:05.760 --> 0:53:07.680 is the same thing, right, Like it's like people who 0:53:07.719 --> 0:53:10.440 are really good at something explaining like at a like 0:53:10.520 --> 0:53:13.160 a like a truly like mechanical specific level, like how 0:53:13.160 --> 0:53:15.400 they do what they do. It's like always satisfying and 0:53:15.480 --> 0:53:16.759 like how they do what they do, and also like 0:53:16.880 --> 0:53:19.600 they're sort of psychological traumas as they do it. I 0:53:19.640 --> 0:53:20.600 find it very useful. 0:53:20.719 --> 0:53:23.560 Tell us about your mentors who helped shape your career. 0:53:23.960 --> 0:53:27.520 The person who I most think of that way, it 0:53:27.600 --> 0:53:29.239 was just like, yeah, my first job out of law 0:53:29.239 --> 0:53:31.239 school was clerking for a judge, right, And like that's 0:53:31.280 --> 0:53:34.360 a very weird job, right, like because it's it's like 0:53:34.400 --> 0:53:37.400 you and like two other people with like cloking for 0:53:37.800 --> 0:53:41.200 one sort of powerful figure. And I clerked for this judge, 0:53:41.280 --> 0:53:43.520 Ed Becker in Philadelphia, who was like one of the 0:53:43.560 --> 0:53:46.640 great judges. Like he was you know, brilliant, highly respected, 0:53:47.200 --> 0:53:50.839 but also like a mensh a nice guy, a guy 0:53:50.840 --> 0:53:52.719 who like in your interview would be like I have 0:53:52.719 --> 0:53:54.960 a zero deference policy and like really meant it and 0:53:55.000 --> 0:53:57.680 like wanted to hear from his clerks and like wanted 0:53:57.719 --> 0:54:00.880 to hear your opinions, and who just like had like 0:54:00.920 --> 0:54:03.319 a work ethic and a just an ethic that was 0:54:03.400 --> 0:54:05.719 really inspiring. Like he went, in doubt, do it the 0:54:05.760 --> 0:54:07.120 right way, and like he just like that's how he 0:54:07.120 --> 0:54:09.200 lived his life, you know, like he really like wasn't 0:54:09.239 --> 0:54:11.880 interested in short cuts or like he was just like 0:54:11.920 --> 0:54:13.920 he wanted to get things right, and that was just 0:54:14.080 --> 0:54:16.719 very inspiring to see, like, you know, in my earliest 0:54:16.760 --> 0:54:18.560 career to be like, oh yeah, this is a guy 0:54:18.560 --> 0:54:20.600 who like has been doing it forever and has a 0:54:20.640 --> 0:54:23.400 lot of accolades, but who is just like totally focused 0:54:23.440 --> 0:54:24.239 on doing the right thing. 0:54:24.440 --> 0:54:26.680 Let's talk about books. What are some of your favorites 0:54:26.719 --> 0:54:28.000 and what are you reading right now. 0:54:28.239 --> 0:54:30.239 I never have a favorite book. I'm like, I read 0:54:30.280 --> 0:54:33.279 a lot. I feel like having a favorite book is 0:54:33.320 --> 0:54:35.040 like I have too many books to have a favorite. 0:54:35.040 --> 0:54:38.040 But like the finance e books that like when people 0:54:38.080 --> 0:54:41.040 are like what should I read? Knowing nothing, the books 0:54:41.080 --> 0:54:43.640 I recommend are Liar's Poker Barbarians at the Gate, which 0:54:43.680 --> 0:54:45.960 I already mentioned right Like, it's just like I read 0:54:46.000 --> 0:54:47.680 it at a formative age and I was like, oh yeah, 0:54:47.719 --> 0:54:50.560 this finance stuff is cool. And the other one that 0:54:50.600 --> 0:54:52.839 I love is a diary of a very bad year. 0:54:53.000 --> 0:54:54.960 It was put out by like N plus one the magazine. 0:54:55.000 --> 0:54:57.680 It's it's Keith Gassing. There's a N plus one utter 0:54:58.160 --> 0:55:01.040 interviewing this anonymous hedge fund manager over the course of 0:55:01.080 --> 0:55:02.839 like two thousand and seven to two thousand and nine. 0:55:02.880 --> 0:55:04.680 He's just like a series of long interviews with this 0:55:05.160 --> 0:55:08.200 hedge fund manager talks about the financial crisis, but also 0:55:08.239 --> 0:55:09.719 just about like what it's like to run a hedge fund. 0:55:09.719 --> 0:55:11.880 He's just like very thoughtful and it gives you a 0:55:11.880 --> 0:55:14.279 sort of real flavor for like what finance is like, 0:55:14.320 --> 0:55:15.799 but also like what it is like to think about 0:55:15.840 --> 0:55:18.040 at a high level, and like like what the mindset 0:55:18.120 --> 0:55:19.880 is of someone who's very good at this. What am 0:55:19.920 --> 0:55:23.840 I reading now? I'm reading a book called a Nansi's Gold, 0:55:24.200 --> 0:55:27.239 which is about this con man in Ghana in like 0:55:27.280 --> 0:55:31.240 the seventies and eighties who was running a Nigerian prince scamp. 0:55:31.480 --> 0:55:33.960 If I have all this money waiting for me, if 0:55:33.960 --> 0:55:36.719 you sat me exactly, I'll split it with you. 0:55:36.960 --> 0:55:39.280 His version of the scam was that the first president 0:55:39.280 --> 0:55:42.279 of an independent Ghana had spirited hundreds of millions of 0:55:42.280 --> 0:55:45.920 dollars out of the country as and then was then deposed, 0:55:46.200 --> 0:55:48.480 and the money was in trust in a bank in Switzerland. 0:55:48.800 --> 0:55:50.640 He was going to get the money back and use 0:55:50.680 --> 0:55:52.680 it for the benefit of Ghana, but he just needed 0:55:52.719 --> 0:55:55.960 investors to whatever fill out the formalities, and so it's 0:55:56.000 --> 0:55:58.640 like this is just fascinating story of I love cons right, 0:55:58.680 --> 0:56:01.839 I love like financial frauds. And what to me is 0:56:02.000 --> 0:56:07.360 so incredible about this story is just that it lasted 0:56:07.760 --> 0:56:10.279 for decades because like the problem with this is is 0:56:10.320 --> 0:56:12.960 you're like, I need money, and in two months, I 0:56:13.000 --> 0:56:15.120 will get all this money and I'll pay you back tenfold. 0:56:15.239 --> 0:56:17.279 And then you do that for twenty years, and like 0:56:17.480 --> 0:56:19.759 your investor, you have like investors who stick with you 0:56:19.800 --> 0:56:22.279 for twenty years, and like the like the just the 0:56:22.680 --> 0:56:25.799 charisma and like the ability to get those you know, 0:56:25.920 --> 0:56:27.360 probably some of a return in two months, and then 0:56:27.400 --> 0:56:29.360 twenty years later they're still waiting for it. It's crazy. 0:56:29.719 --> 0:56:32.680 So our final two questions, what sort of advice would 0:56:32.719 --> 0:56:35.799 you give to a recent college grad interested in a 0:56:35.880 --> 0:56:41.320 career in m and a derivative structuring or financial writing. 0:56:41.640 --> 0:56:45.640 Well, it depends on which of those three things. So 0:56:45.680 --> 0:56:47.800 if you're interested in career and financi're writing, I recommend 0:56:47.840 --> 0:56:49.680 a career in finance first, because I do think it 0:56:49.719 --> 0:56:52.120 is really helpful to have subject matter knowledge and also 0:56:52.200 --> 0:56:53.799 just like sort of cultural knowledge of like what it 0:56:53.800 --> 0:56:55.719 feels like to work at a bank or whatever. You know. 0:56:55.800 --> 0:56:57.680 I would not be where I am today if I 0:56:57.719 --> 0:57:00.400 had like pursued this, you know, like I came to 0:57:00.480 --> 0:57:03.080 this in a haphazard way after having several other careers. 0:57:03.080 --> 0:57:05.040 First subject matter of expertise matters. 0:57:05.160 --> 0:57:07.799 Yeah, it's just like it's I find it like I'm 0:57:07.920 --> 0:57:09.560 very glad that I did not try to be a 0:57:09.560 --> 0:57:12.120 writer when I was twenty two. If you want to 0:57:12.120 --> 0:57:14.600 be interrivatives the advice I sometimes I don't want to 0:57:14.600 --> 0:57:16.360 say I regret that I have. But a dumb thing 0:57:16.440 --> 0:57:18.320 I did was like when I left law, I was like, 0:57:18.360 --> 0:57:20.480 I want to be in finance, and so I'm going 0:57:20.520 --> 0:57:22.919 to take the first like finance job I get right, 0:57:23.800 --> 0:57:27.040 And finance is like this enormous, you know, varied industry 0:57:27.040 --> 0:57:29.120 where there are a lot of different roles, and like 0:57:29.240 --> 0:57:33.400 if you are essentially like a math person and a tinkerer, 0:57:33.640 --> 0:57:36.040 like you will want different roles than if you're like 0:57:36.080 --> 0:57:38.640 a people person and a salesman, you know, and so 0:57:38.680 --> 0:57:41.320 there's a lot of like, uh, it's hard to know 0:57:41.720 --> 0:57:44.320 in advance what you'll be good at, but like it's 0:57:44.320 --> 0:57:46.840 important to know yourself and sort of understand what roles 0:57:46.880 --> 0:57:49.000 exist and try to find a role that matches your 0:57:49.320 --> 0:57:53.000 characteristics rather than just like be in finance generally. The 0:57:53.000 --> 0:57:54.960 other piece of advice I love to give young people 0:57:55.080 --> 0:57:58.520 is like, like I did a very standard career path, 0:57:58.600 --> 0:58:01.400 Like I went to college, went to a fancy college. 0:58:01.440 --> 0:58:03.160 I went to a fancy law school. I went to 0:58:03.160 --> 0:58:04.880 a fancy law firm, and then it was like two 0:58:04.920 --> 0:58:07.080 thousand and seven, so like, if you're a fancy corporate lawyer, 0:58:07.120 --> 0:58:08.400 you want to be an investmentker. So I went to 0:58:08.400 --> 0:58:11.440 a fancy investment back. Right, everything very standard until I 0:58:11.480 --> 0:58:13.560 was like, you know, in my early thirties, and then 0:58:13.560 --> 0:58:15.000 I was like I'm going to quit for deal Ricker. 0:58:15.160 --> 0:58:17.160 And that was a big change. Right. I tell people, 0:58:17.160 --> 0:58:19.160 I've made one career decision in my life, right, like 0:58:19.200 --> 0:58:21.120 everything was set for me and then I went to 0:58:21.160 --> 0:58:24.200 deal Ricker. And I think that if you are, like, 0:58:24.400 --> 0:58:25.960 you know, if you're a lot of like young people 0:58:26.120 --> 0:58:28.440 like looking you know, like an analyst job at Goldban, 0:58:28.520 --> 0:58:32.080 like you've been on this prestige seeking career path that 0:58:32.200 --> 0:58:34.680 is very set for you. My advice is like, that's good. 0:58:34.960 --> 0:58:37.400 Do that, and like there's some point at which you 0:58:37.440 --> 0:58:40.040 have to jump off that like standard career prestige path 0:58:40.160 --> 0:58:41.360 and you have to just kind of like know when 0:58:41.360 --> 0:58:43.160 that point is, and like be really calibrated to where 0:58:43.160 --> 0:58:45.320 that point is, because there are people who are miserable 0:58:45.360 --> 0:58:47.480 law firm partners because they stayed on that path too 0:58:47.520 --> 0:58:49.200 long and they were like I'm gonna do the expected 0:58:49.200 --> 0:58:51.520 thing and do the expected thing, like oh no, I'm 0:58:51.560 --> 0:58:53.600 trapped in this thing. I can't do anything else. I 0:58:53.640 --> 0:58:55.640 need the money, and like I don't like it, right, 0:58:55.840 --> 0:58:57.200 And then there are people who jump off too early 0:58:57.240 --> 0:58:59.919 and they're like I don't need to like pursue these 0:59:00.080 --> 0:59:02.040 hard jobs. I can just like go be a poet. 0:59:02.040 --> 0:59:03.840 And then like they're not happy either, right, And like 0:59:03.880 --> 0:59:06.480 there's some like optimally calibrated point where you can like 0:59:06.640 --> 0:59:09.160 the like optionality and prestige of the standard path and 0:59:09.160 --> 0:59:12.120 then like exercise your optionality and like do the thing 0:59:12.120 --> 0:59:14.280 you actually want to do. And it's not immediately, but 0:59:14.320 --> 0:59:15.240 it's not like never. 0:59:15.400 --> 0:59:18.640 You know, you seem to have exercised that optionality. 0:59:18.720 --> 0:59:21.160 Yeah, I mean my timing was great and like, you know, accidentally, 0:59:21.200 --> 0:59:24.040 but like I do think that like people in these 0:59:24.120 --> 0:59:27.040 jobs think of themselves as a carering optionality and like 0:59:27.080 --> 0:59:28.400 eventually that starts to decay. 0:59:28.560 --> 0:59:31.040 So our final question, what do you know about the 0:59:31.040 --> 0:59:34.600 world of finance today you wish you knew twenty five 0:59:34.680 --> 0:59:37.320 or so years ago when you were first getting started. 0:59:37.480 --> 0:59:39.320 This is a mixed bag because like, I love what 0:59:39.400 --> 0:59:42.200 I do now, and it is so fortuitous that I 0:59:42.280 --> 0:59:45.280 landed here, and like, there are a lot of ways 0:59:45.320 --> 0:59:48.520 that I could have been luckier early and then been 0:59:48.600 --> 0:59:51.960 sadder overall, because I would have found a really good 0:59:52.040 --> 0:59:55.000 job early on that really fit me, and then it 0:59:55.000 --> 0:59:56.560 wouldn't fit me quite as well as this one, but 0:59:56.600 --> 0:59:58.360 I would stay at it. But I do think that, 0:59:58.400 --> 1:00:01.040 like what I said earlier, like I didn't know anything 1:00:01.080 --> 1:00:03.680 about like what the different types of jobs were, and 1:00:03.760 --> 1:00:07.520 I thought finance was this undifferentiated like world where like 1:00:07.720 --> 1:00:10.760 it's all like you know, the same spreadsheets or whatever. 1:00:11.400 --> 1:00:13.560 And I think had I known better, like what I 1:00:13.680 --> 1:00:16.000 was good at and like what kind of jobs there were, 1:00:16.080 --> 1:00:18.920 I might have like more intentionally pursued jobs in finance 1:00:18.960 --> 1:00:21.840 and I might have gotten rich. But I might have 1:00:22.280 --> 1:00:25.000 been like you know, miserable and overworked. So I don't know, 1:00:25.080 --> 1:00:26.360 I mean, I don't know anything now. 1:00:26.960 --> 1:00:29.480 It all worked out in the end. Thanks Matt for 1:00:29.560 --> 1:00:32.240 being so generous with your time. We have been speaking 1:00:32.320 --> 1:00:36.360 with Matt Levine. He is the author of Bloomberg's Money 1:00:36.360 --> 1:00:40.880 Stuff daily newsletter. If you enjoy this conversation, well check 1:00:40.920 --> 1:00:44.320 out any of the five hundred previous interviews we've conducted 1:00:44.400 --> 1:00:49.960 over the past nine years. You can find those at iTunes, Spotify, YouTube, 1:00:50.280 --> 1:00:54.040 wherever you get your favorite podcasts. Sign up for my 1:00:54.200 --> 1:00:56.680 daily reading list at ridults dot com. Follow me on 1:00:56.720 --> 1:01:00.840 Twitter at rid Holt's. Follow Matt Levine on Twitter at 1:01:01.000 --> 1:01:04.840 Matt underscore Levine. Follow all of the Bloomberg family of 1:01:04.880 --> 1:01:09.200 podcasts at Twitter, and check out my new podcast at 1:01:09.240 --> 1:01:12.520 the Money, where each week we share a quick investing 1:01:12.680 --> 1:01:17.600 insight with an industry expert. Those are on Apple Premium 1:01:17.640 --> 1:01:20.880 Podcast for the end of the fourth quarter of twenty 1:01:20.920 --> 1:01:24.520 twenty three. It will be everywhere in twenty twenty four. 1:01:25.240 --> 1:01:27.200 I would be remiss if I did not thank the 1:01:27.280 --> 1:01:31.360 Crack staff that helps put these conversations together. My audio 1:01:31.440 --> 1:01:35.240 engineer is Meredith Frank, My producer is Anna Luck. Sean 1:01:35.320 --> 1:01:38.080 Russo is my head of research. Attika of al Broun 1:01:38.240 --> 1:01:42.560 is our project manager. I'm Barry Rutolts. You've been listening 1:01:42.600 --> 1:01:46.400 to Masters in Business on Bloomberg Radio