WEBVTT - Matt Levine on Why 'Everything Is Securities Fraud' 0:00:13.800 --> 0:00:17.440 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.560 --> 0:00:20.520 My name is Mike Reagan. I'm a senior editor at Bloomberg. 0:00:20.680 --> 0:00:24.040 Now Meldonna Hirich across asset reporter with Bloomberg. 0:00:23.800 --> 0:00:26.639 And this week on the show, Well Weil Donna. You 0:00:26.680 --> 0:00:28.720 know what I always say, one of the best perks 0:00:28.720 --> 0:00:32.320 of being a journalist is that you get to meet 0:00:32.320 --> 0:00:36.320 these very smart people and ask these very smart people 0:00:36.320 --> 0:00:40.720 some dumb questions. Yes, one of the being a journalist, 0:00:41.120 --> 0:00:43.200 and what's great about working at Bloomberg is we have 0:00:43.920 --> 0:00:48.000 so many very smart people just sitting a few rows away. 0:00:48.159 --> 0:00:50.400 Yeah, and we can chitchat with them whenever we feel 0:00:50.400 --> 0:00:50.640 like it. 0:00:50.800 --> 0:00:52.560 And ask them dumb questions. 0:00:52.120 --> 0:00:55.280 So many dumb questions, and they give us smart answer 0:00:55.280 --> 0:00:55.960 smart answers. 0:00:55.960 --> 0:00:59.600 That's right. There are no dumb answers, just dumb questions. 0:00:59.640 --> 0:00:59.960 I don't know. 0:01:00.160 --> 0:01:02.279 Just for me and you, I think, yeah, yeah. 0:01:02.080 --> 0:01:03.720 Well you can have a smart answer to a dumb 0:01:03.800 --> 0:01:06.240 question if I've learned anything from Mad magazine. 0:01:06.480 --> 0:01:07.080 Yeah. 0:01:07.280 --> 0:01:10.600 But anyway, I think, as you're talking about our guests, right, 0:01:10.720 --> 0:01:12.560 I am talking about our Yes, yes. 0:01:12.440 --> 0:01:15.560 I'm so happy to have him he is. Can I 0:01:15.600 --> 0:01:19.280 say he's famous in our circles. Absolutely, yeah, Yeah, he's 0:01:19.319 --> 0:01:21.920 a big deal our guest this week. He is famous 0:01:21.920 --> 0:01:23.840 in our circles. We all talk about him in the 0:01:23.959 --> 0:01:25.119 nicest possible ways. 0:01:25.520 --> 0:01:26.200 The suspense. 0:01:26.360 --> 0:01:28.760 I know, I'm dragging this out, like I want people 0:01:28.760 --> 0:01:32.399 at home listening to be like, who is it? It's 0:01:32.440 --> 0:01:36.319 no other than Matt Levine, our colleague and Bloomberg opinion columnists. 0:01:36.319 --> 0:01:37.720 And I'm so happy to have him on the show. 0:01:37.760 --> 0:01:41.040 Thank you so much for joining us, Thanks for having me. Okay, 0:01:41.240 --> 0:01:44.080 The New York Times famously wrote about you a couple 0:01:44.120 --> 0:01:49.400 of years ago. They don't typically profile financial newsletter writers. 0:01:49.520 --> 0:01:52.120 I don't think so it was a big deal. But 0:01:52.200 --> 0:01:55.680 maybe we can just start with you telling us like 0:01:55.760 --> 0:01:58.160 how did you become a columnist at Bloomberg. 0:01:58.920 --> 0:02:01.400 Well, I was a lawyer a long time prior to that. 0:02:01.560 --> 0:02:04.160 I left law for investment banking because it was two 0:02:04.200 --> 0:02:06.880 thousand and seven and if you were a corporate lawyer, 0:02:06.880 --> 0:02:08.760 it felt like the sort of right thing to do 0:02:08.880 --> 0:02:10.560 is to get into finance. And I didn't really know 0:02:10.639 --> 0:02:13.720 much about like the financial industry, like what people did 0:02:13.800 --> 0:02:16.000 all day. Someone offered me a job at Goldman and 0:02:16.000 --> 0:02:18.040 I was like, well that seems like it can't hurt. 0:02:18.080 --> 0:02:20.520 And I did it for like four years, like structuring 0:02:20.520 --> 0:02:24.239 equity derivatives for corporate clients, and I learned a lot 0:02:24.280 --> 0:02:27.919 and like it was fun and interesting, but over time 0:02:28.520 --> 0:02:30.799 you like learn less and become more of a like 0:02:31.240 --> 0:02:34.160 just salesperson, like at senior levels. The job is like 0:02:34.200 --> 0:02:37.000 you get on planes and fly around to clients and 0:02:37.160 --> 0:02:39.600 make small talk and try to convince them to do deals. 0:02:40.080 --> 0:02:42.080 And I was much less good at that, and so 0:02:42.120 --> 0:02:43.480 I was kind of tired of it, and I wanted 0:02:43.480 --> 0:02:47.000 to get out. And I'd always vaguely imagined being a 0:02:47.080 --> 0:02:49.720 writer without ever doing anything about it, and so I 0:02:49.760 --> 0:02:52.120 wanted to leave Goldman at the same time that a 0:02:52.240 --> 0:02:54.240 job was opening up a deal Breaker, which is this 0:02:54.320 --> 0:02:58.280 small like finance and comedy blog that I was reading religiously, 0:02:58.320 --> 0:03:02.000 as was everyone on Wall Street two thousand and eleven 0:03:02.000 --> 0:03:04.600 when I was leaving, and so I applied and they 0:03:04.680 --> 0:03:06.880 hired me, and I sort of took a leap of 0:03:06.919 --> 0:03:08.440 faith and went to do that. And I did that 0:03:08.480 --> 0:03:10.840 for a couple of years, and then eventually Bloomberg. 0:03:10.480 --> 0:03:12.400 Noticed me, and thank god they noticed you. 0:03:13.760 --> 0:03:16.120 Well, it does give you such a unique perspective both 0:03:16.120 --> 0:03:20.560 the law background and the sort of derivatives background at Goldman, 0:03:20.680 --> 0:03:23.760 It really puts you in a great position to do 0:03:23.800 --> 0:03:28.040 what you do and analyze basically the news flow. But Matt, 0:03:28.320 --> 0:03:32.600 my first question for you is what is the total 0:03:32.639 --> 0:03:36.480 market value of pepperoni in the United States in any 0:03:36.480 --> 0:03:36.960 given year? 0:03:37.520 --> 0:03:39.040 So I read about this the other day because this 0:03:39.080 --> 0:03:43.119 guy like did this cacamami calculation for his consulting firm, 0:03:43.480 --> 0:03:45.560 which I thought was so wonderful because this is a 0:03:45.560 --> 0:03:48.680 stereotypical question, like there's some like just random thing and 0:03:48.720 --> 0:03:51.320 that you get to a consulting interviewer, like you've asked 0:03:51.360 --> 0:03:53.720 some random question about like how many washing machines there 0:03:53.720 --> 0:03:55.160 are in the United States. Right, They just like to 0:03:55.160 --> 0:03:57.000 try to like judge your thought process. 0:03:57.120 --> 0:03:58.800 It was an intern, right, wasn't an intern? 0:03:59.000 --> 0:03:59.760 Yeah? He was an inn. 0:04:00.040 --> 0:04:00.360 Anyway. 0:04:00.520 --> 0:04:03.920 He had like heard somewhere like a Pepperoni CEO saying 0:04:04.160 --> 0:04:06.720 we sell enough pepperoni to blanket the entire US and 0:04:07.080 --> 0:04:09.360 in a thin layer of pepperoni, And so he did 0:04:09.400 --> 0:04:11.360 that math. And if you do that math, you get 0:04:11.440 --> 0:04:16.440 like the market for pepperoni is larger than entire economy 0:04:16.480 --> 0:04:18.560 of the world for the entire history of the world, 0:04:18.680 --> 0:04:20.839 Like more pepperoni is sold in a year than all 0:04:20.839 --> 0:04:23.400 goods and services sold in the world in all of 0:04:23.520 --> 0:04:24.159 human history. 0:04:24.240 --> 0:04:28.160 It's probably true, right, I don't know. 0:04:28.200 --> 0:04:29.960 You can go to the Domino's website and probably get 0:04:30.000 --> 0:04:31.919 most of what you need to know. Yeah, it's like 0:04:31.960 --> 0:04:34.200 two dollars that pepperoni to a pizza and they sell 0:04:34.279 --> 0:04:36.360 like a million pizzas a day, and then you're kind 0:04:36.360 --> 0:04:37.320 of in the ballpack. 0:04:37.080 --> 0:04:39.640 Or Hormel's earnings transcripts. Maybe I don't know. 0:04:39.680 --> 0:04:40.680 I like who sells pepperoni. 0:04:40.720 --> 0:04:43.080 I don't even know, Like figure Hormel I think is 0:04:43.120 --> 0:04:47.240 the main But I like computing the entire square inch 0:04:47.520 --> 0:04:48.520 the United. 0:04:48.240 --> 0:04:50.760 States, Right, that's just like if you think about that 0:04:50.800 --> 0:04:53.920 for a moment, like the United States has not covered 0:04:53.960 --> 0:04:56.800 wall to wall and cows or anything like it, Like 0:04:57.200 --> 0:04:59.080 not even one percent of the land in the US 0:04:59.160 --> 0:05:01.360 is covered by gues and so like you'd really need 0:05:01.400 --> 0:05:04.799 to like squish kas pretty thin to make that much pepperoni. 0:05:04.839 --> 0:05:07.520 Anyway, I don't know. Anyway, I forgot a lot about this. 0:05:07.520 --> 0:05:09.800 For one, I know you did. That's why I forget. 0:05:09.960 --> 0:05:14.680 I think it was two quadrillion dollars. Was the addressable. Yeah, right, 0:05:14.720 --> 0:05:16.360 But I bring it up because that is That's what 0:05:16.400 --> 0:05:20.839 Matt's so good at, is like finding some random financial 0:05:20.880 --> 0:05:23.960 news story and really dissecting it and unpacking. 0:05:23.560 --> 0:05:28.000 It and u and teaching us all how things work 0:05:28.320 --> 0:05:31.680 or how they were done, or how the calculations. 0:05:31.000 --> 0:05:32.360 Happened, how the pepperoni's made. 0:05:32.520 --> 0:05:34.880 Okay, but I'm so interested. As Mike said, that's a 0:05:34.880 --> 0:05:38.200 really good example of a recent story that you did 0:05:38.360 --> 0:05:40.960 that was really fun and fun for people to read. 0:05:41.760 --> 0:05:46.520 Your entire column every day is some dissecting some very 0:05:46.600 --> 0:05:50.640 very interesting story or aspect of something that's happening in markets. 0:05:51.320 --> 0:05:54.160 I'm curious about your process, like what do you do? 0:05:54.360 --> 0:05:57.039 Where do you look for these stories? Do people send 0:05:57.080 --> 0:05:59.560 them to you? I've always been so curious about how 0:05:59.560 --> 0:06:02.640 this worked, and I'm obviously trying to rip you off. 0:06:02.760 --> 0:06:04.800 I go to a little website I like to call 0:06:04.960 --> 0:06:07.640 Bloomberg dot com. No, I mean, like I don't know, 0:06:07.760 --> 0:06:12.200 like probably seventy five percent of what I write about 0:06:12.520 --> 0:06:17.679 is stuff that is kind of recognizably in the financial news. 0:06:17.720 --> 0:06:20.520 Stuff that's like on the front page of Bloomberg or 0:06:20.520 --> 0:06:23.320 the Wall Street Journal or the Ft or Delburg are 0:06:23.320 --> 0:06:25.599 often all of them, and so like there's no like 0:06:25.640 --> 0:06:29.159 particularly interesting process for finding like the big stories people 0:06:29.200 --> 0:06:31.480 sent me stuff, and there's there's stuff that I'm just 0:06:31.520 --> 0:06:34.760 like attuned to. Like I have a genre of stories 0:06:34.760 --> 0:06:38.159 called everything is securities fraud, which is where public companies 0:06:38.200 --> 0:06:40.520 do like random bad things and people sue them for 0:06:40.600 --> 0:06:44.720 securities fraud, like anything from like sexual harassment to like 0:06:44.960 --> 0:06:48.359 animal welfare stuff to pollution to it. Now there's a 0:06:48.400 --> 0:06:52.559 lot of like anti Dei backlash where Republicans have gotten 0:06:52.560 --> 0:06:55.360 into the game of suing companies for securities fraud because 0:06:55.360 --> 0:06:59.080 they like use transgender influencers in advertising and all that 0:06:59.120 --> 0:07:02.599 stuff gets a certain amount of media coverage. But to me, 0:07:02.680 --> 0:07:05.960 it's like indicative of this like really big interesting trend 0:07:06.000 --> 0:07:10.559 in like American securities laws, where like all conduct gets 0:07:10.600 --> 0:07:13.680 reflected through through like the notion of securities fraud because 0:07:14.200 --> 0:07:17.280 it is easy to bring cases and like the damages 0:07:17.280 --> 0:07:19.320 can be really large and so you can like litigate, 0:07:19.400 --> 0:07:22.600 you can fight over all sorts of like political and 0:07:22.680 --> 0:07:25.400 social issues by calling them securities fraud. I think that's 0:07:25.400 --> 0:07:27.640 like really weird and interesting, and so each individual case 0:07:27.720 --> 0:07:29.800 might be kind of dumb, but like the theme is 0:07:29.840 --> 0:07:31.440 big and interesting, so you do get some of that. 0:07:31.520 --> 0:07:34.040 Occasionally people will be like, I'm sure at this company 0:07:34.080 --> 0:07:38.120 you should write about how they're bad, and like sometimes 0:07:38.120 --> 0:07:40.080 that's annoying and ignore it. And sometimes it's like, oh, 0:07:40.120 --> 0:07:42.200 this is a really funny company. I tell people that 0:07:42.280 --> 0:07:44.600 my favorite email to gain or my favorite like IB 0:07:44.800 --> 0:07:48.320 messages to gat is you will enjoy this eight K 0:07:49.480 --> 0:07:52.400 because like that has like one hundred percent hit rate 0:07:52.600 --> 0:07:56.240 because like someone who sends me that message one knows 0:07:56.280 --> 0:07:58.360 what an eight K is. So if someone sends me 0:07:58.360 --> 0:08:00.640 an aking it's a funny AK, it's probably funny EK, 0:08:00.680 --> 0:08:02.880 and I will probably enjoy it. I am a columnist 0:08:02.920 --> 0:08:04.960 and I don't do a lot of like you know, 0:08:05.040 --> 0:08:08.360 breaking of news, and so when someone's like, oh you 0:08:08.360 --> 0:08:11.760 should look into this company they're really scammy, I'm like, yeah, okay, 0:08:11.760 --> 0:08:13.520 but like who I got a call to confirm that, right. 0:08:13.600 --> 0:08:15.400 Whereas like if someone's like, look at this ak, like 0:08:15.640 --> 0:08:17.800 the funny thing is like there in the public domain, 0:08:18.360 --> 0:08:20.560 publicly filed, it's sort of right in my wheelhouse to. 0:08:20.480 --> 0:08:23.160 Write about, Yeah, what's the funniest AK you ever read? 0:08:23.280 --> 0:08:27.160 It's not an eight K, but there's this public company 0:08:27.680 --> 0:08:29.760 that was like this sort of like tiny, shallow of 0:08:29.800 --> 0:08:33.080 public company was run by like one guy and he 0:08:33.160 --> 0:08:36.760 filed like, I don't know, thirty ten cues and ten 0:08:36.840 --> 0:08:39.760 k's like periodic reports all at once, Like he was 0:08:39.880 --> 0:08:43.440 way behind on the on the annual filings for his company, 0:08:43.600 --> 0:08:45.080 and so he filed them all at once. And they 0:08:45.080 --> 0:08:47.800 were just like complaining about how hardy was working, like 0:08:47.960 --> 0:08:49.640 all of this stuff was like mister so and so 0:08:49.679 --> 0:08:51.439 it gets no support and he's doing all these ten 0:08:51.480 --> 0:08:54.640 cues by hand, and they were very like there's a 0:08:54.760 --> 0:08:56.840 range of public companies and most of their filings are 0:08:56.880 --> 0:08:59.240 sort of carefully loyal, lured and sensible, and then at 0:08:59.240 --> 0:09:01.640 the far tael there's a lot of very weird stuff. 0:09:02.320 --> 0:09:04.920 What I find fascinating is, you know, you've always kind 0:09:04.920 --> 0:09:08.680 of focused on some of the absurdities of finance and 0:09:08.720 --> 0:09:12.240 the markets, but I feel like the markets are getting 0:09:12.240 --> 0:09:15.040 more and more absurd and more more and more Matt 0:09:15.120 --> 0:09:18.840 Levine esque as as the years go on. And I'll 0:09:18.880 --> 0:09:21.160 give you an example. You know, you're talking about securities fraud. 0:09:21.200 --> 0:09:24.440 One of my favorite columns of years recently was about 0:09:24.559 --> 0:09:28.280 Ryan Cohen, who is the meme stock He basically he 0:09:28.520 --> 0:09:31.720 was long bed, Bath and beyond, right, and uh to 0:09:31.840 --> 0:09:36.640 some big amount of dollar amount. And they tweeted. Someone 0:09:36.640 --> 0:09:40.040 tweeted something about bad, Bath and Beyond, and he replied 0:09:40.880 --> 0:09:45.800 with a funny quip and he included the moon face emoji, 0:09:46.600 --> 0:09:48.600 which I'm that and to your point, Matt, I think 0:09:48.600 --> 0:09:51.040 in the commn I've never even seen that emoji before. 0:09:51.240 --> 0:09:53.079 I don't think it translates to every device. 0:09:53.480 --> 0:09:55.320 Like everyone who was calling it the moon face the emotion, 0:09:55.400 --> 0:09:56.960 and I looked at it, like it's a smiley face. 0:09:57.240 --> 0:09:58.160 Apparently it's a moon. 0:09:58.160 --> 0:09:59.600 I thought it was a smiley face too. 0:09:59.640 --> 0:10:02.280 Actually it's just a smiley face. But like there's like 0:10:02.320 --> 0:10:05.640 if you like hover over it, it says it's a muonomiji. Anyway, Yeah, 0:10:05.640 --> 0:10:08.679 he treated this moon emigi, which I guess in like 0:10:09.080 --> 0:10:11.200 the code of memestacks means that the stock will go 0:10:11.240 --> 0:10:13.360 to the moon. And then he sold the stock like 0:10:13.480 --> 0:10:15.880 the next day, basically like two days later. Yeah, And 0:10:15.920 --> 0:10:17.840 so they sued him for securities for i'd saying that 0:10:17.880 --> 0:10:20.760 he was telling people to buy even as he was telling. 0:10:20.640 --> 0:10:23.360 You know, it's all funny and it's absurd and it's 0:10:23.400 --> 0:10:25.439 fun to talk about because that. But I feel like 0:10:25.480 --> 0:10:27.360 there's a bigger issue. Let me just read a couple 0:10:27.360 --> 0:10:29.560 of lines from your column. You said, back in the 0:10:29.559 --> 0:10:32.760 olden days, I learned that securities fraud meant lying about 0:10:32.800 --> 0:10:36.400 things that would be material to quote a reasonable investor. 0:10:37.280 --> 0:10:40.920 But in the world of memestocks, there are no reasonable investors. 0:10:41.480 --> 0:10:44.000 What matters is not cash flows or business plans, but 0:10:44.080 --> 0:10:47.439 memes and influencers, and so the standards for fraud are 0:10:47.679 --> 0:10:48.400 perhaps different. 0:10:48.600 --> 0:10:50.760 You know, I think it's reasonable to say, to a 0:10:50.840 --> 0:10:55.280 large extent, the memestock was a phenomenon of a particular 0:10:56.040 --> 0:10:59.040 macroeconomic and also social environment where like people were stuck 0:10:59.080 --> 0:11:03.120 at home. They were Yeah, Robinhood had sort of recently, 0:11:03.160 --> 0:11:05.120 like relatively reasonally come on the scene and like built 0:11:05.160 --> 0:11:07.760 a good product for gamifying stock trading, and like people 0:11:07.800 --> 0:11:10.120 are getting stimulus checks. There are a lot of factors 0:11:10.120 --> 0:11:13.360 combined to allow like a bunch of retail traders to 0:11:14.200 --> 0:11:18.160 get really into sort of irrational trading. And I don't 0:11:18.200 --> 0:11:20.760 think that's like the main factor that is driving like 0:11:20.800 --> 0:11:24.200 the price of Nvidia or whatever, or like of treasury bills. Yeah, 0:11:24.280 --> 0:11:26.640 like that's the thing, Like, and absolutely I've spent more 0:11:26.679 --> 0:11:28.959 time writing about dumber stuff than I would have five 0:11:29.000 --> 0:11:32.280 years ago, and that dumber stuff is often the meme 0:11:32.360 --> 0:11:33.319 stocks are crypto. 0:11:40.080 --> 0:11:42.240 I'm curious how you think about that. I mean crypto 0:11:42.280 --> 0:11:46.440 obviously it's a very similar storyline. But a regulator's kind 0:11:46.480 --> 0:11:49.560 of a sleep at the switch on policing this stuff. 0:11:49.679 --> 0:11:52.679 Or should it be up to these PLANEFFS attorneys. Should 0:11:52.720 --> 0:11:55.440 we just allow the markets to have this sort of 0:11:55.960 --> 0:11:59.600 absurd element to them without really doing anything to correct it. 0:12:00.080 --> 0:12:02.080 Think that regulators are not in the business for the 0:12:02.080 --> 0:12:05.840 most part of like correcting mistakes in financial markets, right, Like, 0:12:06.200 --> 0:12:08.839 if you think that people are buying stocks for irrational reasons, like, 0:12:08.840 --> 0:12:10.440 there's not so much you can do about it, right, 0:12:10.600 --> 0:12:13.760 And it's hard because like the regulatory paradigm has always 0:12:13.760 --> 0:12:19.800 been in the US about disclosure, and so when you 0:12:19.840 --> 0:12:22.560 know they're in sort of the early days of memestocks, 0:12:23.559 --> 0:12:26.760 some memestocks, I think it was kind of this is 0:12:26.800 --> 0:12:29.559 more or less true of Game Stop. We're nervous about 0:12:29.840 --> 0:12:32.240 their sock had gone up ten ten x and they 0:12:32.240 --> 0:12:34.320 needed money, and they were a little nervous about raising 0:12:34.360 --> 0:12:36.520 money because they're like, our stock is at really weird 0:12:36.559 --> 0:12:38.679 prices and it's gonna it just feels like fraud to 0:12:38.760 --> 0:12:41.640 raise money, and then other memestocks were like, great, people 0:12:41.679 --> 0:12:43.080 want to buy a stock, We're going to sell it 0:12:43.120 --> 0:12:45.760 to them, right, And that was like AMC was big 0:12:45.800 --> 0:12:48.400 on that. But also like Hurts were bankrupt and their 0:12:48.440 --> 0:12:50.439 stock got mamed up, and they're like, Okay, we're selling stock. 0:12:50.800 --> 0:12:53.760 I think they shut that down. Didn't shut that down? Yeah, 0:12:54.000 --> 0:12:56.160 but it turns out you would have done well buying 0:12:56.160 --> 0:12:59.080 the stock. But anyways, in response to the SEC basically 0:12:59.120 --> 0:13:00.640 said you need to put out more disclosure, like if 0:13:00.640 --> 0:13:04.120 you're if you are selling stock because you're a memestock, 0:13:04.640 --> 0:13:06.680 and they phrase it differently, you know what they mean. 0:13:07.000 --> 0:13:09.040 Then you have to put out in your perspectives like 0:13:09.600 --> 0:13:12.440 we don't know why our stock is trading this high. 0:13:12.559 --> 0:13:15.959 It's probably for no good reason. You probably shouldn't buy it, right, 0:13:16.240 --> 0:13:18.200 And so like companies would do that, they like put 0:13:18.200 --> 0:13:20.800 out a perspective saying, our stock is trading at random 0:13:20.840 --> 0:13:23.840 prices for no reason. We don't understand it either, but 0:13:24.040 --> 0:13:28.880 like nobody reads that. Like the whole disclosure regime just 0:13:28.880 --> 0:13:30.480 sort of falls apart in the face of like the 0:13:30.480 --> 0:13:33.560 memestock phenomenon because you can say whatever you want in 0:13:33.559 --> 0:13:36.160 this perspective, but nobody is reading it or deterred by it, 0:13:36.600 --> 0:13:39.000 and like that's the bullet that the SEC has and 0:13:39.040 --> 0:13:40.679 after that, like, Okay, you want to buy it, you 0:13:40.679 --> 0:13:41.040 buy it. 0:13:41.280 --> 0:13:42.000 Yeah. 0:13:42.080 --> 0:13:46.200 I think it's really hard, and I think they feel 0:13:46.320 --> 0:13:49.560 obligated to say stuff and do stuff and commission reports 0:13:49.559 --> 0:13:52.120 and like testify it in front of Congress and like 0:13:52.800 --> 0:13:54.720 creat the impression they're doing stuff. To the extent you 0:13:54.800 --> 0:13:58.360 diagnose the memestock phenomenon as like a bunch of people 0:13:58.400 --> 0:14:01.079 online decided to be fine to buy stocks at really 0:14:01.160 --> 0:14:04.480 high prices. It's just not something the SEC has any 0:14:04.720 --> 0:14:07.200 any like authority to stop, right, And so they go 0:14:07.280 --> 0:14:10.600 to after they talk about things that are ancillary to that. 0:14:10.600 --> 0:14:12.280 There's a lot of talk about payment for order flow 0:14:12.320 --> 0:14:17.120 and market structure and somehow you think if you change 0:14:17.240 --> 0:14:20.000 how the stock market orders get routed, that will somehow 0:14:20.040 --> 0:14:21.760 solve the memes. But it's had nothing to do with it, right, 0:14:21.800 --> 0:14:24.280 It's just some people get mad about online or they 0:14:24.360 --> 0:14:28.960 like the SEC has looked into short selling rules because 0:14:29.360 --> 0:14:32.640 some of the early name stock phenomenon was about trying 0:14:32.680 --> 0:14:36.240 to squeeze short sellers. But regulating short selling more harshly 0:14:36.360 --> 0:14:38.120 is a strange response to that, because like the short 0:14:38.120 --> 0:14:40.760 sellers weren't really the they were the victims there as 0:14:40.760 --> 0:14:42.880 it were. They looked into a little bit like is 0:14:42.920 --> 0:14:46.320 there some sort of collusive market manipulation here? And I 0:14:46.360 --> 0:14:48.520 just think the answer is clearly no. Right, it's people 0:14:48.560 --> 0:14:51.040 online saying I like the stock, so there's not a 0:14:51.040 --> 0:14:54.520 lot they can do. And I think they're keenly aware 0:14:54.520 --> 0:14:57.760 that it's embarrassing. Right if you want your capital markets 0:14:57.800 --> 0:15:02.320 to look sophisticated and professional and driven by fundamentals, and 0:15:02.360 --> 0:15:04.800 then when they're just meming around, you feel embarrassed about 0:15:04.800 --> 0:15:07.000 it is it's not a it's not something they can fix. 0:15:07.400 --> 0:15:10.680 But you know, I mean, there is this cohort of 0:15:11.160 --> 0:15:15.200 people posting on Reddit these wild conspiracy theories to help 0:15:15.240 --> 0:15:17.560 pump up the stock. But even with that, I'm not 0:15:17.560 --> 0:15:19.920 sure there's a lot they can do about that. 0:15:20.000 --> 0:15:22.800 And they regularly go after like true pumping numbers. Yeah, 0:15:22.840 --> 0:15:26.600 people who are who are pumping stocks while they're selling them, 0:15:26.720 --> 0:15:29.400 men who are lying about the fundamentals of the business. 0:15:29.800 --> 0:15:32.440 But I think in a lot of the memestock stuff 0:15:32.600 --> 0:15:35.240 in some combination of people who seem to be genuinely 0:15:35.960 --> 0:15:38.720 and often like pretty well informed believers in the business, 0:15:39.040 --> 0:15:42.320 plus like just the random enthusiasts and like they're not lying. 0:15:42.360 --> 0:15:44.160 They're just like to the moon. It's not a lie, 0:15:44.200 --> 0:15:46.960 there's nothing, there's nothing deceptive about that, And so it's 0:15:47.000 --> 0:15:48.560 just hard, hard to police that. 0:15:48.720 --> 0:15:50.760 When I went to see the Barbie movie, they played 0:15:50.800 --> 0:15:53.880 the preview for the Game Stop movie. Did you know 0:15:53.960 --> 0:15:54.560 it's coming out? 0:15:55.160 --> 0:15:55.840 I knew there was one. 0:15:56.000 --> 0:15:58.280 I don't even want to see it. What I love 0:15:58.520 --> 0:16:02.040 when I read your column, and I read them every day. 0:16:02.200 --> 0:16:06.160 I'm your number one reader. I think we Mike probably 0:16:06.160 --> 0:16:09.560 can't say the same about himself. I read all of 0:16:09.560 --> 0:16:11.960 them every day. I read you read all the way 0:16:11.960 --> 0:16:16.320 through thenoe bottom, oh yeah, just in case, because sometimes 0:16:16.400 --> 0:16:19.560 he saves like the funniest stuff for the last. 0:16:20.360 --> 0:16:20.600 Yeah. 0:16:20.760 --> 0:16:22.920 Often people would tell me they. 0:16:22.800 --> 0:16:25.440 Read it and reverse, Oh, that's not a bad idea. 0:16:25.480 --> 0:16:27.360 I might start doing so I can get a good 0:16:27.440 --> 0:16:28.240 laughing At first. 0:16:28.320 --> 0:16:30.240 I usually go in and make sure he's not making 0:16:30.320 --> 0:16:33.280 fun of me for something. 0:16:32.360 --> 0:16:37.400 Oh searched, Yeah, when if my yeah, you sometimes mentioned 0:16:37.440 --> 0:16:39.760 my articles and my heart stops. I'm like, oh no, 0:16:40.960 --> 0:16:44.520 did I do this calculation correctly? But anyway, what I 0:16:44.560 --> 0:16:47.000 love is that you do have these recurring themes. So one, 0:16:48.000 --> 0:16:50.600 like we were just talking about his memes talks everything 0:16:50.640 --> 0:16:55.000 is security is fraud. Another one is proximity to Elon Musk. 0:16:55.480 --> 0:16:57.240 I don't talk about that one so much because like 0:16:58.640 --> 0:17:01.200 that magic has gone away a little bit. Like for 0:17:01.280 --> 0:17:05.080 a while I was saying that the most important factor 0:17:05.119 --> 0:17:07.879 in financial markets was not cash flows, but proximity to 0:17:07.920 --> 0:17:09.800 Elon Musk. And what that meant is like when he 0:17:09.840 --> 0:17:13.840 would like tweet about a word a company who's stock, 0:17:14.119 --> 0:17:16.120 the company whose name was nearer to that word would 0:17:16.160 --> 0:17:19.719 stock would go up, like fans of Elon Musk would 0:17:20.680 --> 0:17:22.840 buy stuff he tweeted about. And so he really did 0:17:22.880 --> 0:17:25.359 have the ability to manipulate the prices of things like 0:17:26.040 --> 0:17:31.320 doage coin and to some extent Bitcoin and to a 0:17:31.400 --> 0:17:33.760 larger extent the price of Tesla stock and a lot 0:17:33.800 --> 0:17:38.000 of other stuff. And I thought that was fascinating in 0:17:38.040 --> 0:17:40.399 part just because like I would like to have that power, 0:17:40.560 --> 0:17:42.919 I would use it to make money. Doesn't it's not 0:17:42.960 --> 0:17:44.400 clear that he ever did use it to make money. 0:17:44.400 --> 0:17:45.320 He just sort of wanted to. 0:17:45.480 --> 0:17:46.840 That would be securities fraud. 0:17:47.280 --> 0:17:49.440 That would probably be securities for it that it depends, 0:17:49.800 --> 0:17:52.560 but Yeah, that has dissipated a little bit. I think 0:17:52.560 --> 0:17:54.679 partly because that's just a memes stock phenomenon, right, and 0:17:54.720 --> 0:17:57.560 people who are less bored and don't have stimulus strikes 0:17:57.560 --> 0:17:59.720 are just less interested in throwing money at whatever Elon 0:17:59.800 --> 0:18:03.080 Musk mentions, And then partly because a lot of those 0:18:03.240 --> 0:18:06.640 trades have not gone particularly well. He pumped doge coron 0:18:06.680 --> 0:18:09.960 and didn't do that great for people, and he did 0:18:10.000 --> 0:18:15.240 this ridiculous Twitter acquisition that I think went terribly for him, 0:18:15.560 --> 0:18:18.679 and so he might be less inclined to just invest 0:18:18.760 --> 0:18:21.879 with everything he's tweeting about. But I think most of like, 0:18:21.920 --> 0:18:24.240 I don't think people were buying dogecoin because they thought 0:18:24.240 --> 0:18:26.240 he had a genius investing idea in doge grain. I 0:18:26.240 --> 0:18:27.600 think they were buying it because he was like a 0:18:27.600 --> 0:18:30.359 meme king and they liked participating in the meme. And 0:18:30.400 --> 0:18:33.320 I think that whole phenomenon has just lessened. 0:18:34.280 --> 0:18:36.320 But what does keep happening is every time you go 0:18:36.359 --> 0:18:38.879 on vacation, he does have like the biggest news of 0:18:38.920 --> 0:18:41.440 the year, and then you are full time. 0:18:42.280 --> 0:18:46.639 I was out last week and he did only a 0:18:46.680 --> 0:18:50.000 few crazy things, including he did tweet that he was 0:18:50.040 --> 0:18:52.320 going to drive from Mark Zuckerberg's house and beat him up, 0:18:52.359 --> 0:18:55.320 which is pretty crazy, but not like core financial news 0:18:55.320 --> 0:18:57.920 that I felt obligated to cover in previous vacations. He's 0:18:57.920 --> 0:19:00.800 done things like by Twitter, and so like those I 0:19:00.840 --> 0:19:02.800 have to write about even from vacation. 0:19:03.000 --> 0:19:06.480 Yeah, well, Mett, one of your perennial themes that I've 0:19:06.480 --> 0:19:10.680 always enjoyed. It used to be anyway, people are worried 0:19:10.920 --> 0:19:14.280 about bond market liquidity. I don't know how many stories 0:19:14.280 --> 0:19:17.720 we've all seen about people worried about bond market liquidity, 0:19:18.119 --> 0:19:20.760