1 00:00:00,160 --> 00:00:02,320 Speaker 1: But knowledge to work and grow your business with c 2 00:00:02,520 --> 00:00:06,680 Speaker 1: i T from transportation to healthcare to manufacturing. C i 3 00:00:06,760 --> 00:00:10,520 Speaker 1: T offers commercial lending, leasing, and treasury management services for 4 00:00:10,600 --> 00:00:13,480 Speaker 1: small and middle market businesses. Learn more at c i 5 00:00:13,560 --> 00:00:25,880 Speaker 1: T dot com put Knowledge to Work. Hello and welcome 6 00:00:25,920 --> 00:00:30,480 Speaker 1: to another edition of the Odd Lots Podcast. I'm Joe Wisenthal, 7 00:00:30,600 --> 00:00:34,400 Speaker 1: Managing editor of Bloomberg Markets, and I'm Tracy Alloway, Executive 8 00:00:34,479 --> 00:00:40,080 Speaker 1: editor of Bloomberg Markets. So, Tracy, remember our our episode 9 00:00:40,080 --> 00:00:44,120 Speaker 1: a few weeks ago with Emmanuel Derman, the quant guy 10 00:00:44,280 --> 00:00:47,280 Speaker 1: who wrote who used to work at Goldman Sach, the physicist, 11 00:00:47,320 --> 00:00:50,440 Speaker 1: the physicist. I do, indeed, I love that episode. Is 12 00:00:50,440 --> 00:00:53,600 Speaker 1: he on again? Uh No, not quite. Um, But he 13 00:00:53,680 --> 00:00:57,640 Speaker 1: has a new book out. It's a textbook on modeling options, 14 00:00:58,400 --> 00:01:01,760 Speaker 1: and it's a textbook, so it's like massively over my head, 15 00:01:01,800 --> 00:01:05,720 Speaker 1: like I can't get past page thirty without not understanding it. 16 00:01:05,760 --> 00:01:08,720 Speaker 1: But I was reading through it and I noticed a 17 00:01:09,000 --> 00:01:13,560 Speaker 1: footnote in the book that really intrigued me. Yeah, very 18 00:01:13,560 --> 00:01:17,200 Speaker 1: intriguing footnote. Um. He was sort of explaining what options 19 00:01:17,200 --> 00:01:21,399 Speaker 1: were and what derivatives were, and he mentioned the work 20 00:01:21,600 --> 00:01:27,520 Speaker 1: of a Danish professor who sort of operating and the 21 00:01:27,600 --> 00:01:33,320 Speaker 1: sort of philosophical framework explained how a company was real 22 00:01:34,319 --> 00:01:38,120 Speaker 1: and the option was symbolic. And so it's sort of 23 00:01:38,120 --> 00:01:40,800 Speaker 1: going back to things you might learn in philosophy or 24 00:01:40,880 --> 00:01:45,640 Speaker 1: psycho psychology school. I mean, I can kind of see it. 25 00:01:45,640 --> 00:01:50,000 Speaker 1: It's a derivative, right, something synthetic based on something real, exactly. 26 00:01:50,000 --> 00:01:52,840 Speaker 1: So you have a company that produces cash flows, that 27 00:01:52,960 --> 00:01:56,440 Speaker 1: is a business that theoretically sells something, and then the 28 00:01:56,520 --> 00:02:00,920 Speaker 1: financial world is created, right, a a derivative that's sort 29 00:02:00,920 --> 00:02:06,320 Speaker 1: of fake and exists in our imagination based on based 30 00:02:06,320 --> 00:02:08,880 Speaker 1: on this company. So then I got really interested in 31 00:02:08,960 --> 00:02:13,200 Speaker 1: this professor and I wanted to I was googling him 32 00:02:13,320 --> 00:02:16,559 Speaker 1: and I was like, oh, this sounds really intriguing cyberstalking 33 00:02:17,240 --> 00:02:20,720 Speaker 1: cyberstalking exactly. And I saw that he had written a 34 00:02:20,800 --> 00:02:23,080 Speaker 1: book about poker, which is a game that I love, 35 00:02:23,680 --> 00:02:27,160 Speaker 1: called up Poker The Parody of Capitalism, And then I 36 00:02:27,200 --> 00:02:28,960 Speaker 1: was like, Oh, this is just amazing. I gotta read 37 00:02:29,000 --> 00:02:32,760 Speaker 1: more by this guy. He has this whole framework about 38 00:02:33,360 --> 00:02:37,400 Speaker 1: poker being this combination of the real, the symbolic, and 39 00:02:37,440 --> 00:02:43,160 Speaker 1: the imaginary, and what it says about capitalism and you know, 40 00:02:43,280 --> 00:02:47,359 Speaker 1: sort of modern financial capitalism, and uh, it's just totally 41 00:02:47,520 --> 00:02:49,239 Speaker 1: blew my mind, like it was one of the most 42 00:02:49,280 --> 00:02:51,040 Speaker 1: amazing things I've ever read. And this is where I 43 00:02:51,080 --> 00:02:53,240 Speaker 1: start to get a little bit nervous because I know 44 00:02:53,400 --> 00:02:57,040 Speaker 1: nothing about poker. I'm probably don't know that much about 45 00:02:57,040 --> 00:03:01,960 Speaker 1: capitalism either, so this conversation could well be over my head. Well, 46 00:03:02,000 --> 00:03:04,160 Speaker 1: I think this conversation is going to be pretty far 47 00:03:04,240 --> 00:03:06,840 Speaker 1: over my head too, because I know a little bit 48 00:03:06,840 --> 00:03:10,160 Speaker 1: about poker and maybe a little bit about capitalism, probably 49 00:03:10,200 --> 00:03:13,400 Speaker 1: less than you do, and I certainly don't know much 50 00:03:13,600 --> 00:03:18,680 Speaker 1: about this sort of you know, philosophy. This professor um, 51 00:03:18,840 --> 00:03:24,120 Speaker 1: he's a disciple of the Professor Jack, who who a 52 00:03:24,120 --> 00:03:27,960 Speaker 1: lot of like hipsters are really into. And anyway, all 53 00:03:28,040 --> 00:03:32,280 Speaker 1: this like academic, sort of post modern seeming stuff, it's 54 00:03:32,320 --> 00:03:34,359 Speaker 1: typically way over my head and I don't get it. 55 00:03:34,400 --> 00:03:37,680 Speaker 1: But we have the professor on our podcast today. His 56 00:03:37,800 --> 00:03:41,520 Speaker 1: name is ohle Berg. He's a professor at the Copenhagen 57 00:03:41,600 --> 00:03:46,400 Speaker 1: Business School in the Department of Management, Politics and Philosophy. 58 00:03:46,560 --> 00:03:51,120 Speaker 1: And I want to talk to him about financial markets, poker, 59 00:03:51,560 --> 00:03:55,120 Speaker 1: and the gap between the real the symbolic in the 60 00:03:55,200 --> 00:03:59,520 Speaker 1: imaginary and uh, you know, let'll just see where it goes. 61 00:03:59,760 --> 00:04:13,400 Speaker 1: It's sounds good. Let's let's try it. Thank you very 62 00:04:13,440 --> 00:04:16,200 Speaker 1: much for joining us. Thanks for having me on the podcast. 63 00:04:17,040 --> 00:04:20,960 Speaker 1: I read your book on a recent flight to Los Angeles, 64 00:04:21,440 --> 00:04:25,200 Speaker 1: book about poker, and I actually played poker when I 65 00:04:25,240 --> 00:04:27,560 Speaker 1: was there, because our casino is out there. So I 66 00:04:27,600 --> 00:04:30,160 Speaker 1: want to talk about my poker experience at the end 67 00:04:30,200 --> 00:04:33,159 Speaker 1: of it, because I had a very interesting realization. But 68 00:04:33,240 --> 00:04:36,000 Speaker 1: let's just start from the beginning. So why did you 69 00:04:36,080 --> 00:04:39,039 Speaker 1: write a book about poker. You're a professor in a 70 00:04:39,080 --> 00:04:41,960 Speaker 1: business school. UM tell us a little bit about the 71 00:04:42,000 --> 00:04:46,080 Speaker 1: philosophical framework that you study and why you thought poker 72 00:04:46,200 --> 00:04:51,320 Speaker 1: was an interesting entryway into studying capitalism. Well, first of all, 73 00:04:51,960 --> 00:04:54,080 Speaker 1: I wrote the book because I like poker. I'm not 74 00:04:54,120 --> 00:04:57,479 Speaker 1: a very good poker player, but I can certainly appreciate 75 00:04:57,560 --> 00:05:01,440 Speaker 1: the charm and the it excitement of the game. So 76 00:05:01,520 --> 00:05:05,360 Speaker 1: that was one thing. And I had previously had studied 77 00:05:05,360 --> 00:05:07,800 Speaker 1: compulsive gambling, and a lot of the stuff that was 78 00:05:07,839 --> 00:05:10,760 Speaker 1: written about gambling in that field is written by people 79 00:05:10,760 --> 00:05:13,279 Speaker 1: who don't really care about gambling. So I wanted to 80 00:05:13,279 --> 00:05:16,200 Speaker 1: write a book about gambling that actually appreciated the game. 81 00:05:16,279 --> 00:05:18,760 Speaker 1: So that was the one part The other thing was 82 00:05:18,839 --> 00:05:22,000 Speaker 1: that as I was getting into poker, I was also 83 00:05:22,040 --> 00:05:25,479 Speaker 1: reading some you know, like strategy books on poker. It 84 00:05:25,560 --> 00:05:29,080 Speaker 1: kind of struck me that there was a similarity between 85 00:05:29,760 --> 00:05:33,400 Speaker 1: poker and what I was kind of seeing in the 86 00:05:33,560 --> 00:05:37,280 Speaker 1: financial world. So this was around I think I started 87 00:05:37,320 --> 00:05:40,480 Speaker 1: sort of around just just around when the financial crisis 88 00:05:40,600 --> 00:05:43,719 Speaker 1: was unfolding. So I kind of figured, I have to 89 00:05:43,760 --> 00:05:47,160 Speaker 1: sort of find out what's what's the relationship between these 90 00:05:47,160 --> 00:05:52,200 Speaker 1: two things, what's the relationship between contemporary financial capitalism and 91 00:05:53,320 --> 00:05:56,279 Speaker 1: poker on the one on the other hand, so I 92 00:05:56,279 --> 00:06:00,559 Speaker 1: guess my my my reading of poker in a way 93 00:06:00,720 --> 00:06:03,240 Speaker 1: is I wanted to read poker as a as a 94 00:06:03,279 --> 00:06:06,680 Speaker 1: cultural expression of capitalism, much in the same way that 95 00:06:06,720 --> 00:06:09,839 Speaker 1: you would look at a piece of art or a 96 00:06:09,960 --> 00:06:14,440 Speaker 1: novel or something else. So I think, like, at first, blush, 97 00:06:14,520 --> 00:06:17,400 Speaker 1: maybe people would say, oh, this doesn't really sound that unusual. 98 00:06:17,800 --> 00:06:20,200 Speaker 1: You know, it's fairly common cliche to say that the 99 00:06:20,200 --> 00:06:23,479 Speaker 1: markets have become a casino and it's all gambling. But 100 00:06:23,560 --> 00:06:26,599 Speaker 1: I think you push it further than that sort of 101 00:06:27,040 --> 00:06:32,360 Speaker 1: surface level comparison, explain um, this sort of philosophical framework 102 00:06:32,680 --> 00:06:36,719 Speaker 1: that you're interested in, and then also specifically the sort 103 00:06:36,760 --> 00:06:39,760 Speaker 1: of distinction, you know, the sort of distinction you make 104 00:06:39,800 --> 00:06:42,840 Speaker 1: between the real, the symbolic, and the imaginary, and how 105 00:06:42,880 --> 00:06:45,800 Speaker 1: it relates to both. One of the things that intrigues 106 00:06:45,920 --> 00:06:51,000 Speaker 1: me about poker is how do you assess the value 107 00:06:51,240 --> 00:06:55,160 Speaker 1: of a hand at a particular point in time in 108 00:06:55,240 --> 00:06:58,720 Speaker 1: the game. And once you start unpacking that, you realize 109 00:06:58,760 --> 00:07:04,360 Speaker 1: that it's actually a extreamly complicated procedure. It's very difficult 110 00:07:04,400 --> 00:07:08,279 Speaker 1: to just look at the hand and it's intrinsic value 111 00:07:08,360 --> 00:07:10,760 Speaker 1: and then from there say, so this is what the 112 00:07:10,800 --> 00:07:14,080 Speaker 1: hand is worth, because it comes to the value of 113 00:07:14,120 --> 00:07:16,920 Speaker 1: the hand is dependent on a lot of other factors. 114 00:07:16,960 --> 00:07:19,600 Speaker 1: So how is your position in the game, who are 115 00:07:19,600 --> 00:07:22,080 Speaker 1: the other players, how did they play, what kind of 116 00:07:22,120 --> 00:07:25,000 Speaker 1: types of players are they? And so forth. So I 117 00:07:25,120 --> 00:07:28,400 Speaker 1: was kind of intrigued in the way that how how 118 00:07:28,440 --> 00:07:31,080 Speaker 1: do we how do we put a price on the 119 00:07:31,200 --> 00:07:33,440 Speaker 1: value of a poker hand in a way? And and 120 00:07:33,480 --> 00:07:37,880 Speaker 1: that's also what's going on in financial markets is a 121 00:07:38,040 --> 00:07:42,640 Speaker 1: game or an attempt to try and price or put 122 00:07:42,640 --> 00:07:47,760 Speaker 1: a price on different types of values. So that's kind 123 00:07:47,760 --> 00:07:50,440 Speaker 1: of yeah, what I was looking at. And then you 124 00:07:51,080 --> 00:07:55,600 Speaker 1: introduced or you mentioned si who's sort of the main 125 00:07:55,640 --> 00:07:58,800 Speaker 1: philosophical character in the book, and he has this distinction 126 00:07:58,840 --> 00:08:02,320 Speaker 1: between the real, the symbolic, and the imaginary. So it's 127 00:08:02,320 --> 00:08:04,840 Speaker 1: just the real we can't The real is something that 128 00:08:04,880 --> 00:08:08,160 Speaker 1: we cannot directly reach, or at least we can only 129 00:08:08,440 --> 00:08:11,360 Speaker 1: capture it in terms of the symbols we put on it. 130 00:08:11,760 --> 00:08:13,840 Speaker 1: And we can compare that to the way we talk 131 00:08:13,880 --> 00:08:16,760 Speaker 1: about value. It's it's we can't really talk about value 132 00:08:16,760 --> 00:08:18,600 Speaker 1: as such. We need to put a price on it 133 00:08:18,680 --> 00:08:21,760 Speaker 1: before we can talk about it. But once we started 134 00:08:21,880 --> 00:08:25,120 Speaker 1: pricing something, we've already moved from the realm of the 135 00:08:25,160 --> 00:08:30,360 Speaker 1: real into the realm of the symbolic. Wait, I'm lost, 136 00:08:31,040 --> 00:08:34,280 Speaker 1: Hold hold on, hold on, So are we saying that 137 00:08:34,320 --> 00:08:39,160 Speaker 1: there's so there's no real value um to something? Certainly 138 00:08:39,160 --> 00:08:41,560 Speaker 1: not in poker. If you have a hand, it kind 139 00:08:41,559 --> 00:08:44,480 Speaker 1: of depends on the hands of the other players and 140 00:08:44,559 --> 00:08:49,400 Speaker 1: like their reaction to you, and it only becomes like 141 00:08:49,559 --> 00:08:52,559 Speaker 1: actualized once you act, once you put a price on it. 142 00:08:52,600 --> 00:08:54,920 Speaker 1: Is that what you're saying, Well, what I'm saying is 143 00:08:54,960 --> 00:09:01,800 Speaker 1: that sometimes the real matters and sometimes it doesn't, and 144 00:09:01,880 --> 00:09:05,640 Speaker 1: we don't know. Oh, it's very difficult to decide when 145 00:09:06,559 --> 00:09:08,840 Speaker 1: it's one, and when it's the other, that's the whole 146 00:09:08,920 --> 00:09:11,959 Speaker 1: sort of that's what keeps poker going. But that's also 147 00:09:12,000 --> 00:09:16,439 Speaker 1: what keeps a market going. So if everyone in the 148 00:09:16,520 --> 00:09:20,000 Speaker 1: market could agree on the price of a particular asset, 149 00:09:20,280 --> 00:09:22,920 Speaker 1: there would be no trading because there's no reason. There 150 00:09:22,920 --> 00:09:25,880 Speaker 1: would be no reason. So trading comes about because people 151 00:09:25,920 --> 00:09:29,480 Speaker 1: disagree on the true symbolization, if you like, or the 152 00:09:29,520 --> 00:09:35,320 Speaker 1: true pricing of a particular acid. And now I don't know, 153 00:09:35,480 --> 00:09:39,439 Speaker 1: I kind of want to move into this thing about derivatives, 154 00:09:39,960 --> 00:09:44,000 Speaker 1: if that's okay, because that kind of exemplifies how this works. 155 00:09:44,040 --> 00:09:46,760 Speaker 1: So if we if we looked at what was happening 156 00:09:46,840 --> 00:09:49,559 Speaker 1: going into the financial crisis in two thousand and seven, 157 00:09:49,880 --> 00:09:54,120 Speaker 1: there was a lot of derivatives trading. We've heard about 158 00:09:54,160 --> 00:10:01,840 Speaker 1: the collateralized dead obligations and other types of derivatives, And 159 00:10:03,200 --> 00:10:05,440 Speaker 1: when we look back at it, we can sort of say, well, 160 00:10:05,440 --> 00:10:09,560 Speaker 1: that was completely disconnected. The prices pricing of these was 161 00:10:09,640 --> 00:10:14,360 Speaker 1: completely disconnected from any underlying reality in a way, and 162 00:10:14,440 --> 00:10:18,800 Speaker 1: yet people kept kept trading them, and they kept making money. 163 00:10:19,400 --> 00:10:21,760 Speaker 1: And I would even imagine that some of the people 164 00:10:21,760 --> 00:10:25,439 Speaker 1: who were trading they knew very well that there were 165 00:10:25,520 --> 00:10:29,480 Speaker 1: no underlyers or the underlier were not worth very much, 166 00:10:29,840 --> 00:10:32,680 Speaker 1: and yet they kept trading because they could still make money. 167 00:10:32,720 --> 00:10:35,480 Speaker 1: And then at some point, which no one could really predict, 168 00:10:36,240 --> 00:10:40,440 Speaker 1: there was this what what what would call like an 169 00:10:40,480 --> 00:10:43,360 Speaker 1: answer from the real. It was like sort of the 170 00:10:43,400 --> 00:10:47,360 Speaker 1: real sort of intervened into the market, like a Minsky 171 00:10:47,440 --> 00:10:51,480 Speaker 1: moment where everyone suddenly sort of like woke up and 172 00:10:51,520 --> 00:10:57,120 Speaker 1: realized that actually these weren't being priced correctly exactly. And 173 00:10:57,160 --> 00:11:00,000 Speaker 1: the same thing is what goes on in poker. Many 174 00:11:00,000 --> 00:11:05,000 Speaker 1: any hands in poker, ah, they are concluded even without anyone, 175 00:11:05,600 --> 00:11:09,720 Speaker 1: without anyone showing their cards. So most of what goes 176 00:11:09,720 --> 00:11:13,200 Speaker 1: on in poker is I mean purely in the realm 177 00:11:13,200 --> 00:11:16,160 Speaker 1: of the symbolic, if you like. But then all of 178 00:11:16,200 --> 00:11:19,800 Speaker 1: a sudden, someone says, I think you're bluffing. I want 179 00:11:19,840 --> 00:11:21,720 Speaker 1: to see your hand, and then you go to showdown, 180 00:11:21,760 --> 00:11:23,720 Speaker 1: and then you show the hand and then you see 181 00:11:23,720 --> 00:11:26,800 Speaker 1: who wins, but you don't you can't really predict if 182 00:11:26,800 --> 00:11:29,200 Speaker 1: it's going to go to a showdown or if the 183 00:11:29,200 --> 00:11:32,440 Speaker 1: other person is just going to fold. And then the 184 00:11:32,520 --> 00:11:38,480 Speaker 1: hand is completed without without anyone showing their their cards. 185 00:11:38,480 --> 00:11:40,040 Speaker 1: So in a in a sense. You could also say, 186 00:11:40,080 --> 00:11:42,199 Speaker 1: if you want to use the word the concept of 187 00:11:42,280 --> 00:11:45,640 Speaker 1: Minsky moments. Poker is a game that sort of circular 188 00:11:45,760 --> 00:11:48,920 Speaker 1: or it plays around with Minsky moments, so to speak. 189 00:11:49,280 --> 00:11:52,360 Speaker 1: One of the things that I really liked in the 190 00:11:52,440 --> 00:11:55,840 Speaker 1: book was, um, this idea is so like, you know, 191 00:11:55,960 --> 00:11:58,280 Speaker 1: it's sort of well understood that we live in a 192 00:11:58,360 --> 00:12:02,720 Speaker 1: symbolic world. From the moment that we learn words and 193 00:12:02,800 --> 00:12:05,800 Speaker 1: learn to read and learn to speak, we associate symbols 194 00:12:05,840 --> 00:12:10,240 Speaker 1: with everything in everyday life, and so symbols permanently intermediate 195 00:12:10,280 --> 00:12:13,559 Speaker 1: our understanding with reality. But that one of the appeals 196 00:12:13,559 --> 00:12:17,680 Speaker 1: of gambling is essentially to have the opportunity, I think, 197 00:12:17,920 --> 00:12:20,840 Speaker 1: if I'm understanding what you've said correctly, to essentially get 198 00:12:20,880 --> 00:12:24,839 Speaker 1: to experience the real unmediated by the symbolic. So sometimes 199 00:12:25,200 --> 00:12:28,200 Speaker 1: you might pull a slot on a slot machine, and 200 00:12:28,240 --> 00:12:30,360 Speaker 1: even though the odds are really stacked against you, you 201 00:12:30,400 --> 00:12:35,120 Speaker 1: win big, and so essentially you've violated what the symbolic says. 202 00:12:35,160 --> 00:12:37,720 Speaker 1: The symbolic says you should lose when you pull the lever, 203 00:12:38,000 --> 00:12:39,719 Speaker 1: but every once in a while you win. You get 204 00:12:39,760 --> 00:12:43,880 Speaker 1: to break through this sort of symbolic structure that sort 205 00:12:43,880 --> 00:12:46,920 Speaker 1: of defines everyday life. Yes, So you can say that 206 00:12:47,120 --> 00:12:52,480 Speaker 1: probability theory is it's kind of a symbolic order and 207 00:12:52,880 --> 00:12:56,080 Speaker 1: or a symbolic law, if you like. And what we 208 00:12:56,400 --> 00:13:00,880 Speaker 1: try to do with probability theory is to tame tame 209 00:13:01,040 --> 00:13:03,840 Speaker 1: chance in a way we want. We can say, we 210 00:13:03,920 --> 00:13:07,319 Speaker 1: know this is random, yet we can calculate these probabilities, 211 00:13:07,400 --> 00:13:10,920 Speaker 1: and we can master it by doing this, and that's 212 00:13:11,000 --> 00:13:13,520 Speaker 1: essentially also what you do with You can also find 213 00:13:13,520 --> 00:13:17,040 Speaker 1: that in markets very much. The thing is, however, that 214 00:13:17,240 --> 00:13:20,720 Speaker 1: probability theory works only in the long run. It never 215 00:13:20,760 --> 00:13:23,800 Speaker 1: works in the single instant. So when you do win 216 00:13:24,200 --> 00:13:27,640 Speaker 1: against all odds, you have this experience that not only 217 00:13:27,640 --> 00:13:30,800 Speaker 1: have you one sort of a particular amount of money, 218 00:13:30,840 --> 00:13:33,360 Speaker 1: but you also you kind of you've beaten the law 219 00:13:33,440 --> 00:13:36,120 Speaker 1: in a day. And there's a certain sense of thrill 220 00:13:36,960 --> 00:13:40,120 Speaker 1: in that. It can also be horrifying in a way, 221 00:13:40,200 --> 00:13:43,000 Speaker 1: but it's there's also some there's an element of thrill 222 00:13:43,240 --> 00:13:45,880 Speaker 1: in that. And that's another thing that I think that 223 00:13:46,360 --> 00:13:49,840 Speaker 1: games or and poker in particularly kind of thrives on, 224 00:13:50,440 --> 00:13:54,280 Speaker 1: is this element of being able to or have having 225 00:13:54,320 --> 00:13:57,920 Speaker 1: this sense of defeating the law. I think you can 226 00:13:57,920 --> 00:14:00,280 Speaker 1: find the say or you can find the same thing 227 00:14:00,440 --> 00:14:03,440 Speaker 1: in trading. I think a lot of traders also can 228 00:14:03,480 --> 00:14:06,920 Speaker 1: have this sense of oh, now I kind of kind 229 00:14:06,920 --> 00:14:09,079 Speaker 1: of beat the system or something like that. You know, 230 00:14:09,120 --> 00:14:11,400 Speaker 1: one thing that speaking. One thing that I find to 231 00:14:11,440 --> 00:14:14,840 Speaker 1: be very interesting about trading, and this is also similar 232 00:14:14,880 --> 00:14:16,600 Speaker 1: to poker, is that you know, if you look at 233 00:14:16,679 --> 00:14:19,640 Speaker 1: someone who's a beginner in the markets, maybe they'll buy 234 00:14:19,680 --> 00:14:22,680 Speaker 1: a handful of stocks and try to beat the market, 235 00:14:22,720 --> 00:14:25,360 Speaker 1: and they're almost guaranteed to lose money. And then you 236 00:14:25,400 --> 00:14:28,520 Speaker 1: get this other, this sort of next level investor who 237 00:14:28,560 --> 00:14:31,760 Speaker 1: I think you might characterize in poker as a grinder 238 00:14:31,800 --> 00:14:34,600 Speaker 1: who buys index funds and e t f s and 239 00:14:34,680 --> 00:14:39,640 Speaker 1: hardly trades because they know intellectually that that's the smartest way. 240 00:14:39,680 --> 00:14:42,560 Speaker 1: But then you get to an even higher level of trader, 241 00:14:42,640 --> 00:14:45,000 Speaker 1: like someone like a George Soros, or like some brilliant 242 00:14:45,000 --> 00:14:49,760 Speaker 1: hedge fund manager who at any discreet moment, their portfolio 243 00:14:49,880 --> 00:14:53,760 Speaker 1: might look identical to a novice trader because they're even 244 00:14:54,080 --> 00:14:57,360 Speaker 1: And it's very similar to poker, where in any discreet 245 00:14:57,800 --> 00:15:00,160 Speaker 1: hand or even a tournament, it can be have a 246 00:15:00,200 --> 00:15:04,520 Speaker 1: called to distinguish a terrible poker player from a great player. Yes, 247 00:15:04,600 --> 00:15:06,800 Speaker 1: So I as part of the book, I did some 248 00:15:06,880 --> 00:15:10,640 Speaker 1: research among among poker players, and I discovered that they 249 00:15:10,680 --> 00:15:13,280 Speaker 1: also had all these terms that they would use to 250 00:15:13,400 --> 00:15:17,440 Speaker 1: characterize different players or types of players. And so I 251 00:15:17,480 --> 00:15:20,400 Speaker 1: found I used sort of these ideal types of the sucker, 252 00:15:20,960 --> 00:15:24,720 Speaker 1: the grinder, and the player to sort of categorize different players. 253 00:15:24,960 --> 00:15:27,120 Speaker 1: And then I and then I combined this with this 254 00:15:27,280 --> 00:15:30,520 Speaker 1: distinction between the real, the symbolic, and the imaginary. So 255 00:15:30,560 --> 00:15:33,120 Speaker 1: the soccer is someone who's what turns the soccer on 256 00:15:33,400 --> 00:15:37,160 Speaker 1: is exactly what we talked about before taking wild chances 257 00:15:37,200 --> 00:15:40,760 Speaker 1: and then winning against all odds. The grinder we find 258 00:15:41,080 --> 00:15:43,240 Speaker 1: sort of he masked the sort of the symbolic, so 259 00:15:43,280 --> 00:15:45,960 Speaker 1: he's very much into probability theory. And what turns him 260 00:15:45,960 --> 00:15:48,680 Speaker 1: on it's the opposite. It's the ability sort of to 261 00:15:48,760 --> 00:15:52,520 Speaker 1: control chance and to play in the long run and 262 00:15:52,560 --> 00:15:55,200 Speaker 1: have a sort of steady in the long run. And 263 00:15:55,680 --> 00:15:59,440 Speaker 1: what the player that this third type, what he does, 264 00:15:59,760 --> 00:16:03,520 Speaker 1: he he masters the imaginary and that's he he can 265 00:16:03,600 --> 00:16:06,640 Speaker 1: not only can he sort of read the other players, 266 00:16:06,680 --> 00:16:08,960 Speaker 1: but he can also go into this game of reading 267 00:16:09,000 --> 00:16:12,000 Speaker 1: how the other players read him, or reading how the 268 00:16:12,040 --> 00:16:14,760 Speaker 1: other players read that he reads them and goes back 269 00:16:14,800 --> 00:16:18,080 Speaker 1: and forth. The players are kind of the one that 270 00:16:18,120 --> 00:16:20,720 Speaker 1: has the highest level of master of the game. What 271 00:16:20,800 --> 00:16:23,280 Speaker 1: they can also do is that they will they will 272 00:16:23,600 --> 00:16:25,800 Speaker 1: play in a certain way for a period of time, 273 00:16:25,920 --> 00:16:27,680 Speaker 1: and then all of a sudden they will shift gears 274 00:16:28,600 --> 00:16:31,200 Speaker 1: and then throw everyone else in the game, throw them off, 275 00:16:31,240 --> 00:16:34,000 Speaker 1: and then get a big win, and he's the player 276 00:16:34,040 --> 00:16:37,520 Speaker 1: again is then turned on by something else than the 277 00:16:37,560 --> 00:16:42,000 Speaker 1: other two figures. And I'm certain that or I think 278 00:16:42,000 --> 00:16:46,640 Speaker 1: you can find the same among people who who trade 279 00:16:46,680 --> 00:16:50,960 Speaker 1: in financial markets. Which of the three prototypes that you 280 00:16:51,040 --> 00:16:54,680 Speaker 1: just laid out, would you say dominate in financial markets? 281 00:16:56,080 --> 00:16:58,360 Speaker 1: None of them, because I think they're all there, and 282 00:16:58,440 --> 00:17:04,200 Speaker 1: they are there, Uh, simultaneous prisons is what kind of characterizes. 283 00:17:04,800 --> 00:17:07,080 Speaker 1: But but I think all of them. I think if 284 00:17:07,119 --> 00:17:10,240 Speaker 1: there were no sockers, then there wouldn't be any profits 285 00:17:10,280 --> 00:17:12,640 Speaker 1: for any of the others. So so I think they 286 00:17:12,680 --> 00:17:15,560 Speaker 1: sort of, yeah, we need all of them there in 287 00:17:15,680 --> 00:17:18,040 Speaker 1: order to or the market needs all of them to 288 00:17:18,080 --> 00:17:20,439 Speaker 1: be there in order to function the way that markets function. 289 00:17:21,320 --> 00:17:23,960 Speaker 1: I love that breakdown. We have to take a quick 290 00:17:24,000 --> 00:17:26,640 Speaker 1: word from our sponsor. When we come back. I want 291 00:17:26,640 --> 00:17:29,359 Speaker 1: to talk more about financial markets. But first a quick 292 00:17:29,400 --> 00:17:33,520 Speaker 1: ad but knowledge to work and grow your business with 293 00:17:33,640 --> 00:17:37,800 Speaker 1: c i T from transportation to healthcare to manufacturing. C 294 00:17:38,000 --> 00:17:41,720 Speaker 1: i T offers commercial lending, leasing, and treasury management services 295 00:17:41,800 --> 00:17:44,600 Speaker 1: for small and middle market businesses. Learn more at c 296 00:17:44,800 --> 00:17:54,680 Speaker 1: i T dot com. Put Knowledge to Work. And we're 297 00:17:54,720 --> 00:17:58,320 Speaker 1: back with Olive Berg. He's a professor at the Copenhagen 298 00:17:58,320 --> 00:18:02,359 Speaker 1: Business School. We're talking about poker, We're talking about financial markets. 299 00:18:02,400 --> 00:18:05,439 Speaker 1: We're talking about the distinction between the real, symbolic and 300 00:18:05,480 --> 00:18:08,800 Speaker 1: the imaginary. Well, I want to ask you about something 301 00:18:09,119 --> 00:18:12,160 Speaker 1: specifically going on in the markets right now that really 302 00:18:12,200 --> 00:18:15,560 Speaker 1: fascinates me and a lot of traders. You know, we 303 00:18:15,640 --> 00:18:18,680 Speaker 1: have the U S. There's this election coming up that 304 00:18:18,840 --> 00:18:20,880 Speaker 1: is causing a lot of people a lot of anxiety. 305 00:18:21,320 --> 00:18:23,640 Speaker 1: People are trying to figure out how to play the election. 306 00:18:23,800 --> 00:18:26,399 Speaker 1: What kind of trades will do well if Trump wins 307 00:18:26,480 --> 00:18:29,119 Speaker 1: or Clinton wins, you know, how to take advantage of 308 00:18:29,160 --> 00:18:32,000 Speaker 1: the fact that maybe everyone thinks Clinton will win and 309 00:18:32,160 --> 00:18:35,440 Speaker 1: Trump is under priced. One trade that really stands out 310 00:18:36,240 --> 00:18:38,199 Speaker 1: that people are talking about is the Mexican pas so 311 00:18:38,280 --> 00:18:40,959 Speaker 1: and there's a lot of trading in the pace so 312 00:18:41,440 --> 00:18:45,080 Speaker 1: related to the idea that because Trump has been so 313 00:18:45,280 --> 00:18:48,800 Speaker 1: sort of antagonistic with his rhetoric towards Mexico that the 314 00:18:48,800 --> 00:18:50,680 Speaker 1: paso would you can say it, Joe, he's going to 315 00:18:50,760 --> 00:18:53,000 Speaker 1: build a wall. He says He's gonna build a wall, 316 00:18:53,240 --> 00:18:56,200 Speaker 1: and so people, So there's been this is one asset, 317 00:18:56,720 --> 00:19:00,280 Speaker 1: and derivatives related to the paso are like clear really 318 00:19:00,720 --> 00:19:04,280 Speaker 1: trading around the election. But it's not clear to me 319 00:19:04,520 --> 00:19:09,040 Speaker 1: as an observer that there's anything real here in the 320 00:19:09,080 --> 00:19:11,760 Speaker 1: sense that if Trump were to win that it would 321 00:19:11,800 --> 00:19:16,440 Speaker 1: really be necessarily bad for the pasto or the Mexican economy. 322 00:19:16,520 --> 00:19:20,280 Speaker 1: And it feels like this is something where trading has 323 00:19:20,359 --> 00:19:22,920 Speaker 1: moved from the realm of the reel as in the pasto, 324 00:19:23,480 --> 00:19:28,040 Speaker 1: moving based on fundamentals of the Mexican Mexican economy, to 325 00:19:28,320 --> 00:19:32,720 Speaker 1: simply people trading each against each other because they imagine 326 00:19:32,720 --> 00:19:36,399 Speaker 1: that other people are playing the same game. Essentially, Do 327 00:19:36,440 --> 00:19:39,200 Speaker 1: you see this when you look at markets where there's 328 00:19:39,240 --> 00:19:42,159 Speaker 1: like a tipping point where some idea enters the realm, 329 00:19:42,240 --> 00:19:44,080 Speaker 1: it's like, ah, this is going to be how we 330 00:19:44,560 --> 00:19:48,520 Speaker 1: trade this risk and suddenly no longer becomes based on 331 00:19:48,520 --> 00:19:51,679 Speaker 1: the real but essentially a game in and of itself. Yeah, 332 00:19:51,800 --> 00:19:55,879 Speaker 1: I think, but I mean, particularly with four x markets, 333 00:19:56,160 --> 00:19:59,560 Speaker 1: it's very difficult to say, so what actually the fundamentals 334 00:19:59,600 --> 00:20:02,320 Speaker 1: that which rating on here. I think if you look 335 00:20:02,400 --> 00:20:06,200 Speaker 1: at the U. S. Dollar, the US economy or the 336 00:20:06,320 --> 00:20:10,720 Speaker 1: US government, they're building up this huge debt and I 337 00:20:10,760 --> 00:20:14,719 Speaker 1: think everyone knows that it's never gonna be paid, and 338 00:20:14,800 --> 00:20:18,399 Speaker 1: yet this doesn't seem to have any real effect on 339 00:20:18,840 --> 00:20:22,800 Speaker 1: the price of the dollar. So I think in forks Mark, 340 00:20:22,840 --> 00:20:24,800 Speaker 1: it's it's very difficult to say what is the real. 341 00:20:25,240 --> 00:20:27,240 Speaker 1: At the same time, I think that when we think 342 00:20:27,240 --> 00:20:30,600 Speaker 1: about these interventions from the real, they can come in 343 00:20:30,640 --> 00:20:32,800 Speaker 1: many different forms, and one of the forms in which 344 00:20:32,840 --> 00:20:37,200 Speaker 1: they can come is actually when there's a when when 345 00:20:37,200 --> 00:20:42,000 Speaker 1: when politics intervenes into economics in a way that's that 346 00:20:42,080 --> 00:20:44,919 Speaker 1: sort of goes beyond what we could have imagined in 347 00:20:44,960 --> 00:20:49,160 Speaker 1: a way like for I mean, one thing that one 348 00:20:49,200 --> 00:20:51,960 Speaker 1: could foresee sometime in the future. I think it's going 349 00:20:52,000 --> 00:20:54,800 Speaker 1: to be some years into the future, but I think 350 00:20:54,800 --> 00:20:57,080 Speaker 1: we could I think we could conceive of a shift 351 00:20:57,200 --> 00:21:00,760 Speaker 1: where the U. S. Dollars would would stop being sort 352 00:21:00,760 --> 00:21:04,000 Speaker 1: of the reserve currency of the world because other superpowers 353 00:21:04,040 --> 00:21:07,359 Speaker 1: are saying we it's costing us too much money. We 354 00:21:07,400 --> 00:21:09,679 Speaker 1: don't want to do this anymore. We don't want to 355 00:21:09,680 --> 00:21:14,840 Speaker 1: buy into this monetary gemony anymore. So now we'll sort 356 00:21:14,840 --> 00:21:17,320 Speaker 1: of try and disconnect from this idea, and in that 357 00:21:17,359 --> 00:21:21,120 Speaker 1: case you can have a huge like shift and when 358 00:21:21,160 --> 00:21:24,600 Speaker 1: people then some years later look back at then, then 359 00:21:24,760 --> 00:21:27,080 Speaker 1: they would look at the way we were, we were 360 00:21:27,080 --> 00:21:31,719 Speaker 1: saying now and say, WHOA, remember before two thousand and 361 00:21:31,760 --> 00:21:36,240 Speaker 1: twenty or whenever the ship just shift happens, it was 362 00:21:36,400 --> 00:21:40,119 Speaker 1: the U. S. Dollars was complete trading, completely out of 363 00:21:40,280 --> 00:21:43,920 Speaker 1: any fundamentals, and then we had the correction in twenty 364 00:21:43,960 --> 00:21:48,000 Speaker 1: when other currencies became reserve currency. Anyway, so I guess 365 00:21:48,040 --> 00:21:50,840 Speaker 1: my point here is to say that then it's in 366 00:21:50,880 --> 00:21:54,320 Speaker 1: the nature of the real to be beyond something that 367 00:21:54,359 --> 00:21:59,520 Speaker 1: we can truly anticipate or calculate. We just have a 368 00:21:59,560 --> 00:22:01,520 Speaker 1: few more minutes. But if you don't mind, I just 369 00:22:01,520 --> 00:22:05,000 Speaker 1: wanted to tell a very short story about poker, because 370 00:22:05,040 --> 00:22:08,480 Speaker 1: I mentioned that I was in California recently and I 371 00:22:08,520 --> 00:22:10,480 Speaker 1: had the I had a few hours to spare, I 372 00:22:10,560 --> 00:22:13,160 Speaker 1: was on a brief vacation with my wife Joe. Does 373 00:22:13,200 --> 00:22:16,240 Speaker 1: this end a new winning big No, it's just the opposite. 374 00:22:16,240 --> 00:22:18,800 Speaker 1: It's just the So I had a few hours to spare. 375 00:22:18,960 --> 00:22:21,520 Speaker 1: I love poker, and I had a poker stories with 376 00:22:21,600 --> 00:22:26,440 Speaker 1: wives in them. It's but I had a few hours 377 00:22:26,440 --> 00:22:29,080 Speaker 1: and I went to a casino on the outer side 378 00:22:29,119 --> 00:22:31,320 Speaker 1: of l A and I sat down and not all 379 00:22:31,359 --> 00:22:34,040 Speaker 1: that much money. But as soon as I as much 380 00:22:34,080 --> 00:22:36,400 Speaker 1: as I love poker and I think it's a fascinating game, 381 00:22:36,520 --> 00:22:39,480 Speaker 1: I started getting very um. I just started getting really 382 00:22:39,520 --> 00:22:41,840 Speaker 1: depressed when I was there and still it felt kind 383 00:22:41,840 --> 00:22:45,240 Speaker 1: of lonely, felt kind of pointless. I was like, what 384 00:22:45,280 --> 00:22:47,879 Speaker 1: am I doing. I'm in this beautiful city, the weather 385 00:22:48,000 --> 00:22:51,080 Speaker 1: is great, I'm indoors. And then and I couldn't like 386 00:22:51,200 --> 00:22:53,159 Speaker 1: stand up though, so I was like losing money. My 387 00:22:53,200 --> 00:22:55,880 Speaker 1: head wasn't in it. I wasn't playing well. And then 388 00:22:55,960 --> 00:22:57,960 Speaker 1: near the end, I looked down at my cards and 389 00:22:58,000 --> 00:23:02,480 Speaker 1: I had pocket kings and I got all the money 390 00:23:02,520 --> 00:23:05,760 Speaker 1: and pre flop I bet, and then someone raised me 391 00:23:05,760 --> 00:23:08,280 Speaker 1: and I re raised. We went all in and he 392 00:23:08,320 --> 00:23:11,960 Speaker 1: had pocket queens, but he caught a queen on the 393 00:23:12,000 --> 00:23:14,840 Speaker 1: turn and so he flopped a set and he won 394 00:23:14,920 --> 00:23:17,560 Speaker 1: all my money. And then as soon as that happened, 395 00:23:17,600 --> 00:23:21,040 Speaker 1: I felt that like overwhelming sense of relief, Like I 396 00:23:21,320 --> 00:23:23,320 Speaker 1: think that that would really upset me. But actually I 397 00:23:23,320 --> 00:23:25,720 Speaker 1: found like the cloud had lifted and I was sort 398 00:23:25,720 --> 00:23:27,880 Speaker 1: of like unhooked from the game and then I could 399 00:23:27,880 --> 00:23:29,399 Speaker 1: just sort of like walk out. I had lost all 400 00:23:29,400 --> 00:23:32,439 Speaker 1: my money and it really, you know, it's sort of 401 00:23:32,440 --> 00:23:36,120 Speaker 1: what you were saying is like the exhilaration of the 402 00:23:36,200 --> 00:23:40,920 Speaker 1: real intervening into the symbolic. I should have won that hand. Uh, 403 00:23:40,960 --> 00:23:43,240 Speaker 1: you know, I think the odds are twelve to one 404 00:23:43,320 --> 00:23:45,320 Speaker 1: when you have a pair over pair and all the 405 00:23:45,320 --> 00:23:48,800 Speaker 1: money goes in or something like that. But it didn't happen, 406 00:23:49,240 --> 00:23:51,320 Speaker 1: and rather than being upset, it was like this, like 407 00:23:52,119 --> 00:23:55,320 Speaker 1: this like tremendous like sense of like relaxation and relief 408 00:23:55,359 --> 00:23:57,680 Speaker 1: had descended over me. And I know in your book 409 00:23:57,720 --> 00:24:01,080 Speaker 1: you talk about like problem gambling and it's, uh, you know, 410 00:24:01,720 --> 00:24:04,520 Speaker 1: so some of how the gambling manifested in real life. 411 00:24:04,560 --> 00:24:06,359 Speaker 1: And I want to get your sort of a take, 412 00:24:06,600 --> 00:24:09,520 Speaker 1: you know, I want to get your psychological reading of 413 00:24:09,560 --> 00:24:13,000 Speaker 1: what happened to me. Well, I think the thing one 414 00:24:13,040 --> 00:24:16,440 Speaker 1: of the fascinating thing about poker is that you encounter 415 00:24:16,960 --> 00:24:21,199 Speaker 1: all sorts of emotions in poker. I think I quote 416 00:24:21,200 --> 00:24:25,520 Speaker 1: someone in the book saying poker is about everything you 417 00:24:25,560 --> 00:24:29,040 Speaker 1: can find in life except love, but they doesn't have 418 00:24:29,080 --> 00:24:31,400 Speaker 1: to be love everywhere, something like he put a little 419 00:24:31,400 --> 00:24:33,800 Speaker 1: bit smarter than I can do. So on the one hand, 420 00:24:33,840 --> 00:24:37,919 Speaker 1: you can find extreme joy and exhilaration, but you can 421 00:24:37,960 --> 00:24:41,480 Speaker 1: also find kind of depression in there. It's it's kind 422 00:24:41,480 --> 00:24:45,200 Speaker 1: of all in there. And the difference between the two 423 00:24:45,400 --> 00:24:48,480 Speaker 1: is can be very sort of sudden, or the shift 424 00:24:48,520 --> 00:24:52,320 Speaker 1: between the two can be very sudden. And I I 425 00:24:52,400 --> 00:24:56,919 Speaker 1: would say for my own what I've realized or is 426 00:24:56,960 --> 00:25:01,760 Speaker 1: that I only like to play poker with people whom 427 00:25:01,840 --> 00:25:05,880 Speaker 1: I would like to have a beer with anyway. Yeah, 428 00:25:06,160 --> 00:25:09,280 Speaker 1: so for me, it's, um, I don't. I mean, I've 429 00:25:09,280 --> 00:25:13,160 Speaker 1: also tried like playing games obviously with with the strangers 430 00:25:13,200 --> 00:25:15,200 Speaker 1: and and yes it's been fun. But at the same 431 00:25:15,200 --> 00:25:17,719 Speaker 1: time it's like, yeah, I kind of have to like 432 00:25:18,000 --> 00:25:21,800 Speaker 1: people in order to to play with them. Uh So, 433 00:25:22,880 --> 00:25:25,760 Speaker 1: But of course there is this one of the things 434 00:25:25,760 --> 00:25:28,040 Speaker 1: that the game does, it kind of it drags you. 435 00:25:28,960 --> 00:25:31,680 Speaker 1: That's also why you can end up becoming a compulsive game, 436 00:25:31,760 --> 00:25:34,760 Speaker 1: because it has this force where sort of directs you 437 00:25:34,800 --> 00:25:38,240 Speaker 1: in and even though you many many compulsive games when 438 00:25:38,240 --> 00:25:40,840 Speaker 1: they do play, they don't feel very very well. It's 439 00:25:40,840 --> 00:25:43,000 Speaker 1: not like they're just oh, I'm playing, this is great. No, 440 00:25:43,119 --> 00:25:47,280 Speaker 1: they can sit there and be really depressed and well, 441 00:25:47,320 --> 00:25:50,080 Speaker 1: regardless of the yeah, regardless of the winning. Whether they're 442 00:25:50,080 --> 00:25:53,679 Speaker 1: winning or losing doesn't necessarily matter. It can't matter, but 443 00:25:53,720 --> 00:25:56,439 Speaker 1: it doesn't necessarily but they will they will kind of 444 00:25:56,480 --> 00:25:59,359 Speaker 1: still still be sitting there, which which for me is 445 00:25:59,400 --> 00:26:04,879 Speaker 1: also it's again, it's a fascinating thing about gambling and poker, 446 00:26:04,920 --> 00:26:08,600 Speaker 1: but it's also of course a scary thing. I mean, 447 00:26:08,640 --> 00:26:10,760 Speaker 1: there's a that's That's also one of the things that 448 00:26:10,800 --> 00:26:13,359 Speaker 1: got me into studying gambling in the first place is 449 00:26:13,760 --> 00:26:16,280 Speaker 1: that I was fascinated by the fact that with so 450 00:26:16,520 --> 00:26:19,679 Speaker 1: such simple means, basically basically what you have is that 451 00:26:19,800 --> 00:26:24,800 Speaker 1: you have a stack of plastic discs and a stack 452 00:26:24,960 --> 00:26:28,960 Speaker 1: of paper cards. Yeah, and then yet you can just 453 00:26:29,240 --> 00:26:31,679 Speaker 1: by moving those things around, you can sort of have 454 00:26:31,800 --> 00:26:37,520 Speaker 1: people feeling the most extraordinant stream emotions just by that 455 00:26:37,800 --> 00:26:41,600 Speaker 1: very very simple technology. And now I was just like, Wow, 456 00:26:41,720 --> 00:26:45,080 Speaker 1: that's that's amazing. So I wanted to I don't I 457 00:26:45,400 --> 00:26:47,720 Speaker 1: don't want to say that I've sort of correct the 458 00:26:47,760 --> 00:26:49,600 Speaker 1: code on that, but but that was kind of what 459 00:26:49,640 --> 00:26:51,640 Speaker 1: I what I wanted to get at in my part 460 00:26:51,640 --> 00:26:54,320 Speaker 1: of what I wanted to get at in my my studies. Well, 461 00:26:54,480 --> 00:26:58,640 Speaker 1: although I think that is a great place to leave it. Um, 462 00:26:58,680 --> 00:27:01,719 Speaker 1: it's a fascinating book. I'm also looking forward to uh 463 00:27:01,960 --> 00:27:05,600 Speaker 1: reading your follow up books. And I really appreciate you 464 00:27:05,720 --> 00:27:09,560 Speaker 1: coming on the podcast today. I was very happy to 465 00:27:09,600 --> 00:27:12,680 Speaker 1: be on the podcast. Thank you very much to both 466 00:27:12,720 --> 00:27:22,119 Speaker 1: of you. So, Tracy, I know you were skeptical of 467 00:27:22,160 --> 00:27:25,240 Speaker 1: that conversation, and you, uh, but what do you think 468 00:27:25,600 --> 00:27:30,080 Speaker 1: after all of that? I just have one question, what's 469 00:27:30,280 --> 00:27:35,960 Speaker 1: what's the pocket queen? Oh? So so you in Texas 470 00:27:35,960 --> 00:27:38,600 Speaker 1: hold him? You get everyone gets gets dealt two cards, 471 00:27:39,119 --> 00:27:42,359 Speaker 1: and so you have too, probably you can see. And 472 00:27:42,400 --> 00:27:45,119 Speaker 1: then uh, there's five cards out on the table and 473 00:27:45,119 --> 00:27:47,480 Speaker 1: you make your best hand out of five. So two 474 00:27:48,040 --> 00:27:52,120 Speaker 1: pocket Kings and two queens of pocket queens. Okay, that's useful. Um. 475 00:27:52,440 --> 00:27:54,879 Speaker 1: On a more serious note, I thought that was I 476 00:27:55,000 --> 00:27:57,959 Speaker 1: was skeptical, but I thought that was a really fascinating conversation. 477 00:27:58,040 --> 00:28:01,000 Speaker 1: That gets to the heart of what you and I 478 00:28:01,080 --> 00:28:03,800 Speaker 1: talk a lot about. You know, when we're judging news 479 00:28:03,800 --> 00:28:08,040 Speaker 1: stories and judging market movements, are these fundamental things reflecting 480 00:28:08,400 --> 00:28:10,960 Speaker 1: something actually happening in the economy, or are they just 481 00:28:11,040 --> 00:28:15,640 Speaker 1: people speculating? And you know, if I could channel the 482 00:28:15,680 --> 00:28:18,919 Speaker 1: Bloomberg View columns Matt Levine for a second. He is 483 00:28:19,000 --> 00:28:22,680 Speaker 1: often fond of saying that when it comes to financial 484 00:28:22,720 --> 00:28:26,159 Speaker 1: markets and certainly things like big banks, they are just 485 00:28:26,520 --> 00:28:30,119 Speaker 1: kind of collections of estimates and forecasts and in some 486 00:28:30,240 --> 00:28:34,080 Speaker 1: sense of symbolic numbers. Well, I remember one of the things. 487 00:28:34,359 --> 00:28:37,679 Speaker 1: I remember. I used to trade stocks a little bit 488 00:28:37,720 --> 00:28:42,400 Speaker 1: back in when I was in college during the during 489 00:28:42,440 --> 00:28:45,600 Speaker 1: the dot com bubble, and there were all these message boards. 490 00:28:46,360 --> 00:28:48,479 Speaker 1: There were people like you know, hyped each other up 491 00:28:48,480 --> 00:28:50,600 Speaker 1: and said yeah, let's go buy this or whatever. And 492 00:28:50,640 --> 00:28:53,200 Speaker 1: then on the way down, I remember like those message 493 00:28:53,200 --> 00:28:56,640 Speaker 1: boards obviously took a very dark, grim turn as ione 494 00:28:56,680 --> 00:28:58,880 Speaker 1: was losing their money. And I remember there were a 495 00:28:58,880 --> 00:29:02,120 Speaker 1: lot of people who didn't understand why people had to sell. 496 00:29:02,200 --> 00:29:05,040 Speaker 1: They're basically like, don't sell, Let's just hold on to 497 00:29:05,160 --> 00:29:08,000 Speaker 1: our stock. All our money is here, And you could 498 00:29:08,000 --> 00:29:11,120 Speaker 1: see it was like this like desperate attempt to keep you, 499 00:29:11,240 --> 00:29:14,880 Speaker 1: in the parlance of the discussion, to prevent the reel 500 00:29:15,000 --> 00:29:18,040 Speaker 1: from intervening. Like there was clearly this like under like 501 00:29:18,360 --> 00:29:20,640 Speaker 1: the real which had been suppressed for so long, Like 502 00:29:20,680 --> 00:29:23,080 Speaker 1: people ignored the fact that so many of these UH 503 00:29:23,200 --> 00:29:26,280 Speaker 1: stocks didn't have like successful companies behind them. It could 504 00:29:26,360 --> 00:29:29,240 Speaker 1: only be submerged for so long, and then it was. 505 00:29:29,320 --> 00:29:31,560 Speaker 1: But in starting at two thousand, it really started to 506 00:29:31,560 --> 00:29:34,440 Speaker 1: bubble back up, and people didn't understand why that had 507 00:29:34,480 --> 00:29:36,560 Speaker 1: to be. Why couldn't we just keep making money and 508 00:29:36,600 --> 00:29:39,280 Speaker 1: trading stocks with each other and being rich like we 509 00:29:39,280 --> 00:29:41,680 Speaker 1: were last year? And so it was this very like 510 00:29:41,800 --> 00:29:45,720 Speaker 1: fascinating phenomenon of like people discovering in real time that 511 00:29:45,840 --> 00:29:50,160 Speaker 1: eventually get yeah, the real, the real returns eventually. I 512 00:29:50,240 --> 00:29:52,960 Speaker 1: question if that's true, because there are things that you 513 00:29:52,960 --> 00:29:56,320 Speaker 1: could argue that have gone on for you know, thousands 514 00:29:56,360 --> 00:29:59,760 Speaker 1: of years that aren't necessarily real, like you know, Fiat money. 515 00:30:00,080 --> 00:30:02,160 Speaker 1: Some people might say, why are we placing our faith 516 00:30:02,200 --> 00:30:04,440 Speaker 1: in pieces of paper and like bits of rock and 517 00:30:04,480 --> 00:30:07,840 Speaker 1: metal and things like that. That's an extreme version, but 518 00:30:07,920 --> 00:30:11,800 Speaker 1: like I do think markets can carry on in that 519 00:30:11,880 --> 00:30:14,480 Speaker 1: kind of way for a long time. But the other 520 00:30:14,560 --> 00:30:17,600 Speaker 1: thing the dot com bubble brings up is like just 521 00:30:17,680 --> 00:30:21,000 Speaker 1: the idea of how many fortunes are built on this 522 00:30:21,160 --> 00:30:25,480 Speaker 1: imaginary or symbolic wealth like they're not actually there. And 523 00:30:25,520 --> 00:30:27,240 Speaker 1: I know a lot of people lost money in the 524 00:30:27,280 --> 00:30:29,280 Speaker 1: dot com bubble, but I'm sure a lot of people 525 00:30:29,400 --> 00:30:32,080 Speaker 1: you know, got out at the right time and you know, 526 00:30:32,200 --> 00:30:36,960 Speaker 1: made money from what was essentially a falsehood. I guess, yeah, no, 527 00:30:37,120 --> 00:30:40,720 Speaker 1: it's exactly right. And uh it's uh as he put 528 00:30:40,760 --> 00:30:42,320 Speaker 1: it as all that put it. You know, that's sort 529 00:30:42,320 --> 00:30:45,840 Speaker 1: of like this relationship is what makes a market. The 530 00:30:45,840 --> 00:30:48,600 Speaker 1: fact that people disagree on stuff, the fact that there 531 00:30:48,680 --> 00:30:53,200 Speaker 1: is no objective way to measure the real and um, yeah, 532 00:30:53,320 --> 00:30:57,680 Speaker 1: you can have these extreme dislocations positive and negative, and 533 00:30:57,800 --> 00:31:01,800 Speaker 1: when fortunes can be made with nothing really underneath them, 534 00:31:01,840 --> 00:31:05,520 Speaker 1: should we do We should do like a market's philosophy 535 00:31:05,560 --> 00:31:08,680 Speaker 1: spinoff podcast. Yeah, I love that. We should bet Matt 536 00:31:08,760 --> 00:31:11,280 Speaker 1: Levine would like that one too. We'll get him on 537 00:31:12,000 --> 00:31:17,200 Speaker 1: Beyond Beyond Gamma and Alpha. We should call it that's terrible. 538 00:31:17,560 --> 00:31:19,720 Speaker 1: On that note, this has been another edition of the 539 00:31:19,760 --> 00:31:23,200 Speaker 1: Odd Lots Podcast. I'm Joe Wisenthal. You can follow me 540 00:31:23,280 --> 00:31:26,360 Speaker 1: on Twitter at the Stalwart. I'm Tracy Alloway. I'm on 541 00:31:26,400 --> 00:31:40,000 Speaker 1: Twitter at Tracy Alloway. Thanks for listening, but knowledge to 542 00:31:40,080 --> 00:31:42,680 Speaker 1: work and grow your business with c i T from 543 00:31:42,680 --> 00:31:47,800 Speaker 1: transportation to healthcare to manufacturing. C i T offers commercial lending, leasing, 544 00:31:47,880 --> 00:31:51,520 Speaker 1: and treasury management services for small and middle market businesses. 545 00:31:51,720 --> 00:31:54,400 Speaker 1: Learn more at c i T dot com Put knowledge 546 00:31:54,440 --> 00:31:54,880 Speaker 1: to work.