1 00:00:03,120 --> 00:00:08,200 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:10,600 --> 00:00:13,360 Speaker 2: Hello and welcome to The Money Stuff Podcast, your weekly 3 00:00:13,400 --> 00:00:16,520 Speaker 2: podcast where we talk about stuff related to money. I'm 4 00:00:16,520 --> 00:00:18,480 Speaker 2: Matt Levine and I write the Money Stuff column for 5 00:00:18,480 --> 00:00:19,360 Speaker 2: Bloomberg Opinion. 6 00:00:19,760 --> 00:00:22,640 Speaker 1: And I'm Katie Greifeld. I'm a reporter with Bloomberg News 7 00:00:22,680 --> 00:00:24,720 Speaker 1: and an anchor for Bloomberg Television. 8 00:00:26,920 --> 00:00:29,080 Speaker 2: Katy did that offscript, and I'm sort of clutching the 9 00:00:29,120 --> 00:00:29,960 Speaker 2: table as she did. 10 00:00:30,640 --> 00:00:33,360 Speaker 1: I forgot usually fret out the intro. I forgot to 11 00:00:33,400 --> 00:00:35,200 Speaker 1: do that this week, but I do have a strong 12 00:00:35,240 --> 00:00:35,920 Speaker 1: sense of self. 13 00:00:36,000 --> 00:00:37,800 Speaker 2: Okay, what are we talking about this week? Katie? 14 00:00:38,760 --> 00:00:43,600 Speaker 1: Great question freestyle? Yeah, T plus one. It's finally here 15 00:00:43,720 --> 00:00:46,440 Speaker 1: in the US and in Canada and Mexico. 16 00:00:46,720 --> 00:00:47,440 Speaker 2: It's possible. 17 00:00:47,640 --> 00:00:50,440 Speaker 1: Maybe it's happening in India soon. We're going to talk 18 00:00:50,479 --> 00:00:52,720 Speaker 1: about Elon Musk. We have a few different things to 19 00:00:52,720 --> 00:00:54,760 Speaker 1: talk about with Elon Musk, but I really like the 20 00:00:55,080 --> 00:00:57,920 Speaker 1: attention auction that you wrote about this week, So we're 21 00:00:57,920 --> 00:01:00,120 Speaker 1: going to talk about that, and we're going to talk 22 00:01:00,000 --> 00:01:03,480 Speaker 1: talk about Bill Wang. It thinks possible and there'll be 23 00:01:04,160 --> 00:01:10,080 Speaker 1: we do have a mill bag. I like that you saying, 24 00:01:10,120 --> 00:01:12,760 Speaker 1: and I didn't usually it's usually the other way around. 25 00:01:18,880 --> 00:01:22,800 Speaker 1: T plus one. It's here. It feels like this was abrupt. 26 00:01:23,000 --> 00:01:24,640 Speaker 1: Maybe I just haven't been paying attention. 27 00:01:25,000 --> 00:01:27,600 Speaker 2: I think that if you had been reading articles for 28 00:01:27,640 --> 00:01:31,440 Speaker 2: the last three months being like TE plus one settlement 29 00:01:31,520 --> 00:01:34,520 Speaker 2: is coming the week after Memorial Day, you would have 30 00:01:34,880 --> 00:01:38,039 Speaker 2: growen very bored. I think that's news for a long time. 31 00:01:38,240 --> 00:01:40,200 Speaker 2: I think that's like news the week before, and then 32 00:01:40,280 --> 00:01:42,479 Speaker 2: news the week it happens. But yeah, it's T plus one. 33 00:01:42,640 --> 00:01:45,000 Speaker 1: It's T plus one. It happened at the start of 34 00:01:45,280 --> 00:01:48,440 Speaker 1: this week that we're recording the podcast in there was 35 00:01:48,480 --> 00:01:52,400 Speaker 1: a beautiful day where trades from both Tuesday and Friday 36 00:01:52,480 --> 00:01:55,120 Speaker 1: settled on the same day. It was like a lunar 37 00:01:55,160 --> 00:01:58,200 Speaker 1: eclipse or a solar eclipse, whatever you want to call it. 38 00:01:58,200 --> 00:02:00,520 Speaker 1: Seems like things are actually going fine, right. 39 00:02:00,880 --> 00:02:05,280 Speaker 2: I know, you root for chaos. I root for having 40 00:02:05,280 --> 00:02:09,160 Speaker 2: funny things to write about, and so clearly it would 41 00:02:09,200 --> 00:02:11,720 Speaker 2: have been more chaotic have T plus one kind of 42 00:02:11,880 --> 00:02:15,160 Speaker 2: broken the financial system, But in fact things seem to 43 00:02:15,160 --> 00:02:17,440 Speaker 2: be going very smoothly, and in fact, the fail rate 44 00:02:17,960 --> 00:02:19,720 Speaker 2: so far it seems to be a little bit lower 45 00:02:19,720 --> 00:02:22,640 Speaker 2: than the fail rate last week, meaning that if you 46 00:02:22,720 --> 00:02:25,920 Speaker 2: do a security trade and it settles T plus two 47 00:02:25,960 --> 00:02:27,720 Speaker 2: last week, T plus one this week. Then like in 48 00:02:27,760 --> 00:02:30,160 Speaker 2: two days, you have to deliver the stock and the 49 00:02:30,160 --> 00:02:32,520 Speaker 2: other person has to deliver the money, and if you 50 00:02:32,560 --> 00:02:34,880 Speaker 2: don't do that in time, it's called a fail And 51 00:02:34,919 --> 00:02:37,639 Speaker 2: people keep track of the fail rate and every soft 52 00:02:37,639 --> 00:02:40,239 Speaker 2: and people have conspiracy theories about naked short selling because 53 00:02:40,280 --> 00:02:42,520 Speaker 2: of like the fail rate's going up or whatever, and 54 00:02:42,560 --> 00:02:45,320 Speaker 2: the fail rate like last week was like two percent 55 00:02:45,440 --> 00:02:49,560 Speaker 2: or whatever, and then this week, like the first day 56 00:02:49,600 --> 00:02:50,600 Speaker 2: of T plus one, it. 57 00:02:50,520 --> 00:02:52,440 Speaker 1: Was like a little bit lower. 58 00:02:53,280 --> 00:02:57,040 Speaker 2: So everything's going great. I was wondering what that means, 59 00:02:57,080 --> 00:02:59,160 Speaker 2: like that the fail rate is lower. Like one possibility 60 00:02:59,200 --> 00:03:01,799 Speaker 2: is that they spent all this time modernizing their systems. 61 00:03:02,000 --> 00:03:04,320 Speaker 2: They turn on the modernized systems and it just works better. 62 00:03:04,480 --> 00:03:05,200 Speaker 1: Right there you go. 63 00:03:05,360 --> 00:03:08,320 Speaker 2: Possibility. Another possibility is that everyone's in the office this week. 64 00:03:08,320 --> 00:03:11,519 Speaker 2: If you work in settlement, you're definitely not on vacations. Yeah, 65 00:03:11,520 --> 00:03:14,480 Speaker 2: you're definitely like paying total attention to making sure the 66 00:03:14,520 --> 00:03:15,360 Speaker 2: failure it stays though. 67 00:03:15,639 --> 00:03:17,600 Speaker 1: Yeah, maybe the real thing to watch will be of 68 00:03:17,639 --> 00:03:21,399 Speaker 1: course next week. Yeah, we do have another test coming 69 00:03:21,480 --> 00:03:25,240 Speaker 1: up on Friday. The MSCI indexes are going to rebalance, 70 00:03:25,280 --> 00:03:28,720 Speaker 1: so that's another potential hurdle. But yeah, definitely. The optimistic 71 00:03:28,720 --> 00:03:32,040 Speaker 1: take here is that all the preparation that Bloomberg News 72 00:03:32,080 --> 00:03:34,480 Speaker 1: and other outlets have been writing about that the banks 73 00:03:34,480 --> 00:03:37,360 Speaker 1: and everyone else are undertaking, maybe it paid off. And 74 00:03:37,680 --> 00:03:40,160 Speaker 1: this is a total y two K moment. 75 00:03:40,120 --> 00:03:42,000 Speaker 2: Y two K in the sense of it's not like 76 00:03:42,080 --> 00:03:45,040 Speaker 2: that the fears were misplaced. It's just that people worked 77 00:03:45,080 --> 00:03:47,160 Speaker 2: really hard to fix them and they succeeded. 78 00:03:47,400 --> 00:03:48,040 Speaker 1: We did it, guys. 79 00:03:48,280 --> 00:03:52,280 Speaker 2: Yeah, congratulations all the settlement professionals. I think probably if 80 00:03:52,320 --> 00:03:54,000 Speaker 2: you're a settlement professional and you spent like the last 81 00:03:54,000 --> 00:03:56,000 Speaker 2: three months complaining about this's like probably some part of 82 00:03:56,040 --> 00:03:57,840 Speaker 2: you wants there to be a disaster, so you like 83 00:03:57,880 --> 00:03:58,360 Speaker 2: I told you. 84 00:03:58,400 --> 00:04:01,120 Speaker 1: But yeah, I was saying to him Matt this morning 85 00:04:01,160 --> 00:04:03,600 Speaker 1: that this would be a lot more fun had there 86 00:04:03,640 --> 00:04:06,560 Speaker 1: been a disaster. But I guess it comes into question 87 00:04:06,920 --> 00:04:09,560 Speaker 1: what's next. I know that some people talk about T 88 00:04:09,640 --> 00:04:13,120 Speaker 1: plus zero. Gensler himself actually suggested that T plus evening 89 00:04:13,600 --> 00:04:16,039 Speaker 1: could be a possibility, But what's the point. 90 00:04:16,200 --> 00:04:19,159 Speaker 2: Well, part of why they moved to T plus one 91 00:04:19,680 --> 00:04:22,680 Speaker 2: is like the credit risk involved in waiting two days 92 00:04:22,720 --> 00:04:25,280 Speaker 2: to settle a trade. And I think the big impetus 93 00:04:25,360 --> 00:04:27,920 Speaker 2: was the memestock failures in twenty twenty one, when well, 94 00:04:27,920 --> 00:04:30,159 Speaker 2: when a lot of brokers got the large margin calls 95 00:04:30,160 --> 00:04:32,920 Speaker 2: because of the crazy volatility in the memestocks, and Robinhood 96 00:04:32,920 --> 00:04:34,160 Speaker 2: had to go out and raise money, and like the 97 00:04:34,200 --> 00:04:36,000 Speaker 2: lott of brokers shut off trading in game stop for 98 00:04:36,040 --> 00:04:38,480 Speaker 2: a while. So all that stuff felt kind of bad 99 00:04:38,520 --> 00:04:40,680 Speaker 2: and rickety, and so they wanted to change it. But 100 00:04:40,760 --> 00:04:42,279 Speaker 2: I do think another part of the impetus for this 101 00:04:42,360 --> 00:04:45,160 Speaker 2: is just like there's a general sense that payments and 102 00:04:45,200 --> 00:04:48,479 Speaker 2: like financial transactions should be real time. That wasn't always 103 00:04:48,520 --> 00:04:50,600 Speaker 2: people's sense, right, they used to like nail a check 104 00:04:50,680 --> 00:04:52,719 Speaker 2: or whatever. But now you know, you look at the 105 00:04:52,800 --> 00:04:55,320 Speaker 2: Venmo sort of, you know, like people's desire to be 106 00:04:55,320 --> 00:04:57,240 Speaker 2: able to make real time payments on their phone, and 107 00:04:57,279 --> 00:04:59,320 Speaker 2: like people find it weird that the US banking system 108 00:04:59,360 --> 00:05:03,640 Speaker 2: doesn't be support with that and with securities transactions. I 109 00:05:03,640 --> 00:05:07,120 Speaker 2: do think there's the example of crypto where crypto doesn't 110 00:05:07,120 --> 00:05:10,599 Speaker 2: always move like instantly, but like a crypto trade on 111 00:05:10,720 --> 00:05:13,719 Speaker 2: the blockchain settles when it happens, right, It's like it's 112 00:05:13,760 --> 00:05:18,200 Speaker 2: instantaneous settlement. And people sort of are introduced to the 113 00:05:18,200 --> 00:05:20,440 Speaker 2: financial world through that, and they look at stock trading 114 00:05:20,440 --> 00:05:21,800 Speaker 2: they're like, why does it take two days? Or even 115 00:05:21,839 --> 00:05:23,440 Speaker 2: why does it take one day? So I think there's 116 00:05:23,480 --> 00:05:25,599 Speaker 2: just like a sort of sense that like in a 117 00:05:25,680 --> 00:05:28,440 Speaker 2: modern computerized age, it shouldn't take any time to settle 118 00:05:28,440 --> 00:05:31,160 Speaker 2: a transaction. And I think that's like wrong. I think 119 00:05:31,200 --> 00:05:36,240 Speaker 2: it's like people confuse like the computer mechanics of like 120 00:05:36,279 --> 00:05:38,120 Speaker 2: moving the stuff around with the actual sort of like 121 00:05:38,160 --> 00:05:40,240 Speaker 2: financial mechanics of it. Nic stock trading is like very 122 00:05:40,279 --> 00:05:42,400 Speaker 2: efficient and very sort of just in time. And so 123 00:05:42,480 --> 00:05:44,720 Speaker 2: when people want to buy stock, they don't have money 124 00:05:44,720 --> 00:05:46,920 Speaker 2: sitting in their account. Most people do, but big hedgephones 125 00:05:46,920 --> 00:05:48,440 Speaker 2: want to buy so I don't have money just like 126 00:05:48,600 --> 00:05:50,120 Speaker 2: sitting around in their account. They have to like go 127 00:05:50,160 --> 00:05:52,080 Speaker 2: to their financing prime broker to like lend them the 128 00:05:52,080 --> 00:05:53,839 Speaker 2: money the moment after they agree to the trade. Right, 129 00:05:53,839 --> 00:05:56,239 Speaker 2: there's a lot of like you agree to a trade 130 00:05:56,240 --> 00:05:58,400 Speaker 2: before you have the money sitting in the account. Sometimes 131 00:05:58,440 --> 00:05:59,840 Speaker 2: you agree to the trade before you have the stock. 132 00:06:00,240 --> 00:06:02,760 Speaker 2: All those sort of business processes happen after you agree 133 00:06:02,800 --> 00:06:06,280 Speaker 2: to the trade. And if you moved to like very 134 00:06:06,279 --> 00:06:08,920 Speaker 2: fast settlement which I don't know exactly what very fast means, 135 00:06:08,920 --> 00:06:11,440 Speaker 2: Like maybe T plus evening is still like slow enough. 136 00:06:11,720 --> 00:06:13,200 Speaker 1: I want like T plus lunchtime. 137 00:06:13,360 --> 00:06:16,320 Speaker 2: Yeah, if you move to like instantaneous settlement, then like 138 00:06:16,480 --> 00:06:19,120 Speaker 2: everything changes, like you have to prefund trades, you have 139 00:06:19,160 --> 00:06:21,479 Speaker 2: to have the money sitting in the account before you 140 00:06:21,520 --> 00:06:23,200 Speaker 2: do the trade. And again, like in crypto, it kind 141 00:06:23,240 --> 00:06:24,760 Speaker 2: of works that way. Like in crypto, you kind of 142 00:06:24,760 --> 00:06:27,240 Speaker 2: prefund everything, and so people are there's like a model 143 00:06:27,240 --> 00:06:29,279 Speaker 2: for that, but it's not really how the modern financial 144 00:06:29,279 --> 00:06:29,960 Speaker 2: system works. 145 00:06:30,160 --> 00:06:33,039 Speaker 1: Yeah, I know I'm being dramatic when I say this, 146 00:06:33,160 --> 00:06:36,720 Speaker 1: but I don't know. The notion of taking pages out 147 00:06:36,760 --> 00:06:40,719 Speaker 1: of crypto infrastructure and bringing it into like the equity 148 00:06:40,760 --> 00:06:43,240 Speaker 1: market feels very weird for me. This is the second 149 00:06:43,240 --> 00:06:45,400 Speaker 1: time that we're sort of talking about that. Like we 150 00:06:45,440 --> 00:06:48,440 Speaker 1: talked about twenty four hour trading. Yeah, a few weeks 151 00:06:48,520 --> 00:06:50,400 Speaker 1: or months or years ago. At this point, I can't 152 00:06:50,400 --> 00:06:53,440 Speaker 1: remember what it feels like. But the idea that maybe 153 00:06:53,440 --> 00:06:56,039 Speaker 1: stocks being able to trade twenty four to seven or 154 00:06:56,040 --> 00:06:58,679 Speaker 1: twenty four to five, maybe that's a reality in the future. 155 00:06:59,040 --> 00:07:02,719 Speaker 1: Crypto does it here, Instantaneous settlement crypto does it. Why 156 00:07:02,760 --> 00:07:04,000 Speaker 1: not equities. 157 00:07:03,720 --> 00:07:06,640 Speaker 2: Crypto is a financial system that grew up entirely around 158 00:07:06,680 --> 00:07:08,920 Speaker 2: computers and in the computer era, right, like it dates 159 00:07:08,960 --> 00:07:10,720 Speaker 2: to like, you know, two thousand and nine. I think 160 00:07:11,480 --> 00:07:14,200 Speaker 2: if you were just like designing a financial system from 161 00:07:14,200 --> 00:07:17,000 Speaker 2: first principles, you'd be like, wow, that'll be on computers, 162 00:07:17,160 --> 00:07:18,360 Speaker 2: and then I'll be like, well, we should it open 163 00:07:18,360 --> 00:07:19,960 Speaker 2: at nine thirty in the morning. Now it's on a computer. 164 00:07:20,160 --> 00:07:22,080 Speaker 2: The Internet is open twenty four hours a day, so 165 00:07:22,120 --> 00:07:24,320 Speaker 2: you'd sort of design a system like that. And similarly, 166 00:07:24,480 --> 00:07:26,920 Speaker 2: if you're like, well, I've got a database of stocks 167 00:07:26,920 --> 00:07:29,480 Speaker 2: and a database of dollars, and like when I agree 168 00:07:29,520 --> 00:07:32,240 Speaker 2: a trade, we swapped the dollars to the stocks, It's like, yeah, 169 00:07:32,240 --> 00:07:34,520 Speaker 2: that should happen like on a computer, like immediately. Right, 170 00:07:34,560 --> 00:07:37,480 Speaker 2: if you're designing a financial system in two thousand and 171 00:07:37,560 --> 00:07:40,080 Speaker 2: nine or in twenty twenty four around computers, like you'll 172 00:07:40,160 --> 00:07:43,960 Speaker 2: naturally have twenty four hour real time trades. Right. It 173 00:07:44,080 --> 00:07:47,040 Speaker 2: just so happens that the actual financial system grew up 174 00:07:47,040 --> 00:07:50,640 Speaker 2: over hundreds of years and wasn't built around computers, and 175 00:07:51,800 --> 00:07:55,640 Speaker 2: the processes that have built up around that are very 176 00:07:55,680 --> 00:07:58,080 Speaker 2: path dependent and historically determined, but some of them are 177 00:07:58,800 --> 00:08:03,640 Speaker 2: good ish or like they work for humans or they 178 00:08:03,720 --> 00:08:06,040 Speaker 2: work for a financial system. So with twenty four hour trading, 179 00:08:06,120 --> 00:08:09,440 Speaker 2: what we talked about was in fact, in modern markets, 180 00:08:09,640 --> 00:08:12,760 Speaker 2: people like concentrated liquidity. You know, the stock markets open 181 00:08:12,800 --> 00:08:14,160 Speaker 2: six and a half hours a day, but like people 182 00:08:14,200 --> 00:08:16,560 Speaker 2: actually like largely traded the clothes because that's when everyone 183 00:08:16,560 --> 00:08:18,160 Speaker 2: else is trading, and it's good to be able to 184 00:08:18,160 --> 00:08:20,200 Speaker 2: trade when everyone else is trading. And if you spread 185 00:08:20,200 --> 00:08:22,280 Speaker 2: out your trading over twenty four hours, a few people 186 00:08:22,280 --> 00:08:25,000 Speaker 2: to trade with in like three am. And similarly here 187 00:08:25,000 --> 00:08:27,920 Speaker 2: it's yeah, like if everything moved instantaneously, like in some ways, 188 00:08:27,960 --> 00:08:30,400 Speaker 2: that would look more efficient, but it would mean that 189 00:08:30,440 --> 00:08:32,400 Speaker 2: you'd need to have the money in your account before 190 00:08:32,440 --> 00:08:35,360 Speaker 2: you did a trade, and so there'd be like weird stuff. 191 00:08:35,480 --> 00:08:37,520 Speaker 2: A lot of the problems that people worried about with 192 00:08:37,520 --> 00:08:41,360 Speaker 2: T plus one were foreign investors having to convert currents. 193 00:08:41,559 --> 00:08:45,360 Speaker 2: If you're a foreign investor and you want to buy 194 00:08:45,400 --> 00:08:48,200 Speaker 2: a US stock, you can just decide to do that 195 00:08:48,760 --> 00:08:52,160 Speaker 2: and then figure out how to convert your euros into 196 00:08:52,200 --> 00:08:55,160 Speaker 2: dollars later, not like much later, but like two minutes later, 197 00:08:55,280 --> 00:08:57,439 Speaker 2: and an instantaneous settlement world, you wouldn't be able to 198 00:08:57,440 --> 00:09:00,599 Speaker 2: do that. Now, maybe your FX transaction would also settletaneously 199 00:09:00,760 --> 00:09:03,280 Speaker 2: and everything with like just in time workout, But it's 200 00:09:03,280 --> 00:09:03,800 Speaker 2: like trickier. 201 00:09:04,040 --> 00:09:06,880 Speaker 1: It does seem really complicated, especially, I mean the FX 202 00:09:06,880 --> 00:09:09,400 Speaker 1: piece talking about T plus one. When it comes to 203 00:09:10,160 --> 00:09:14,120 Speaker 1: just domestic US equities, that's somewhat easy to wrap one's 204 00:09:14,160 --> 00:09:17,000 Speaker 1: mind around, but thinking about the FX piece and the 205 00:09:17,000 --> 00:09:20,160 Speaker 1: international investor piece. I was talking to someone on TV 206 00:09:20,320 --> 00:09:22,520 Speaker 1: sometime this week and they said, you went from having 207 00:09:23,280 --> 00:09:26,480 Speaker 1: twelve hours to source your US dollars to having like 208 00:09:26,520 --> 00:09:27,040 Speaker 1: two hours. 209 00:09:27,080 --> 00:09:28,520 Speaker 2: Yeah, And like, I don't know you say that to 210 00:09:28,559 --> 00:09:30,200 Speaker 2: a normal person, And it's like, how long does it 211 00:09:30,240 --> 00:09:32,800 Speaker 2: take for your bank to convert your years? 212 00:09:32,800 --> 00:09:35,800 Speaker 1: And I've never thought about it, right, Like, yeah. 213 00:09:35,320 --> 00:09:37,800 Speaker 2: It should theoretically it kind of should take a millisecond. 214 00:09:38,040 --> 00:09:41,240 Speaker 1: Yeah right, Well maybe that's computer entries, but that's the 215 00:09:41,559 --> 00:09:44,440 Speaker 1: world we're rapidly hurtling towards her. Maybe we're already in 216 00:09:44,480 --> 00:09:46,040 Speaker 1: Can we talk about the thing I won't really want 217 00:09:46,080 --> 00:09:49,679 Speaker 1: to talk about? Okay? So I cover ETFs in my 218 00:09:49,760 --> 00:09:52,560 Speaker 1: day job, and I think that a lot of etf 219 00:09:52,600 --> 00:09:56,319 Speaker 1: issuers do is securities lending. They lend out the securities 220 00:09:56,360 --> 00:09:59,800 Speaker 1: and their portfolio it gets them a few basis points 221 00:10:00,080 --> 00:10:02,240 Speaker 1: for doing that. They make that, but you think about 222 00:10:02,240 --> 00:10:04,480 Speaker 1: the expense ratios on a lot of these ETFs and 223 00:10:04,600 --> 00:10:07,960 Speaker 1: they're like three basis points, So a couple of basis 224 00:10:07,960 --> 00:10:12,679 Speaker 1: points is super meaningful. I don't really understand how security 225 00:10:12,760 --> 00:10:16,640 Speaker 1: is lending is impacted by this move to T plus one. 226 00:10:16,720 --> 00:10:18,640 Speaker 1: It seems like it would be a headache. Not just 227 00:10:18,640 --> 00:10:21,200 Speaker 1: an ETFs, put mutual funds, et cetera. 228 00:10:21,559 --> 00:10:25,000 Speaker 2: It's a huge headache, I think. So here's why it works. So, 229 00:10:25,040 --> 00:10:27,000 Speaker 2: like you're a mutual fund or you're an ETF, you 230 00:10:27,080 --> 00:10:29,240 Speaker 2: like lend out your stocks. You know on stocks, you 231 00:10:29,320 --> 00:10:31,520 Speaker 2: lend them out, then you decide to sell them right 232 00:10:31,520 --> 00:10:34,320 Speaker 2: because you have outflows or because you're your indexes rebalancing 233 00:10:34,360 --> 00:10:37,280 Speaker 2: or whatever, you decide to sell your stocks. So between 234 00:10:37,320 --> 00:10:40,320 Speaker 2: the minute you sell the stock, the minute you'd like 235 00:10:40,640 --> 00:10:44,040 Speaker 2: your sell order executes on the stock exchange, and the 236 00:10:44,120 --> 00:10:46,960 Speaker 2: settlement date, you have to get the stock right. Like 237 00:10:47,000 --> 00:10:49,319 Speaker 2: you've loaned it out, you don't have it in your possession, 238 00:10:49,360 --> 00:10:53,520 Speaker 2: so you have to call back the borrow. So you 239 00:10:53,559 --> 00:10:54,920 Speaker 2: had two days to do that. Now you have one 240 00:10:55,000 --> 00:10:57,160 Speaker 2: day to do it right. Now you call back the 241 00:10:57,200 --> 00:10:59,559 Speaker 2: borrow by like you've loaned the stock out, probably through 242 00:10:59,600 --> 00:11:02,120 Speaker 2: a broke who's loaned out to like a short cellar. 243 00:11:02,200 --> 00:11:04,320 Speaker 2: So you call your broker and you say call the 244 00:11:04,320 --> 00:11:06,079 Speaker 2: intermediary and you say, I want the stock back in. 245 00:11:06,120 --> 00:11:09,120 Speaker 2: The intermediary calls the hedge fund who borrowed it and said, 246 00:11:09,120 --> 00:11:11,000 Speaker 2: we want the stock pack and the edge fund doesn't 247 00:11:11,000 --> 00:11:12,800 Speaker 2: have it either. They've sold the stock, so they have 248 00:11:12,920 --> 00:11:15,240 Speaker 2: to find it somewhere else right now, maybe they borrow 249 00:11:15,280 --> 00:11:17,480 Speaker 2: it from some other mutual fund or some other lender, 250 00:11:17,559 --> 00:11:20,160 Speaker 2: right and then they borrow it in like four hours 251 00:11:20,280 --> 00:11:22,319 Speaker 2: and they deliver it to you within twenty four hours, 252 00:11:22,320 --> 00:11:25,360 Speaker 2: and then you deliver it to settle your sale. But 253 00:11:25,400 --> 00:11:27,400 Speaker 2: another possibility is like they can't borrow it and they 254 00:11:27,440 --> 00:11:29,880 Speaker 2: have to buy in their short but then that settles 255 00:11:29,920 --> 00:11:31,960 Speaker 2: T plus one. So they're doing a trade after you 256 00:11:32,040 --> 00:11:34,319 Speaker 2: that has to settle before you in order to give 257 00:11:34,360 --> 00:11:36,240 Speaker 2: you the stocks that you can deliver it on your cell. 258 00:11:36,559 --> 00:11:38,840 Speaker 2: So it's like very tricky, and I think that like 259 00:11:38,960 --> 00:11:41,839 Speaker 2: one thing that mutual funds have been at least talking 260 00:11:41,880 --> 00:11:44,960 Speaker 2: about doing to address this is calling in their borrow 261 00:11:45,000 --> 00:11:47,199 Speaker 2: before they sell their stock. You know, you're having like 262 00:11:47,240 --> 00:11:51,440 Speaker 2: an index rebalanceing or whatever. Instead of hitting sell and 263 00:11:51,480 --> 00:11:53,920 Speaker 2: then calling back your borrow, you call back your borrow 264 00:11:53,960 --> 00:11:55,600 Speaker 2: the day before, so you make sure it settles, and 265 00:11:55,600 --> 00:11:58,160 Speaker 2: then you hit sell. Larry Tabbo Bloomberg Intelligence that has 266 00:11:58,200 --> 00:12:01,160 Speaker 2: written about like the problems of that in terms of 267 00:12:01,200 --> 00:12:03,600 Speaker 2: both you lose like a day of that lending income, 268 00:12:03,600 --> 00:12:06,000 Speaker 2: but you also maybe tip your hand that you're going 269 00:12:06,000 --> 00:12:08,280 Speaker 2: to be signing the stock because you're calling a sophisticated 270 00:12:08,320 --> 00:12:09,959 Speaker 2: hedge fund and saying we need our borrow back. The 271 00:12:10,000 --> 00:12:13,440 Speaker 2: hedge fund gets some information from that. They know you're selling. Yeah. 272 00:12:13,679 --> 00:12:16,480 Speaker 1: I guess from my perspective of someone who cares about 273 00:12:16,520 --> 00:12:18,800 Speaker 1: the ETF and a little bit the mutual fund world, 274 00:12:18,960 --> 00:12:21,440 Speaker 1: the fact that you do lose a day of that 275 00:12:21,520 --> 00:12:22,400 Speaker 1: fee coming in. 276 00:12:22,840 --> 00:12:24,760 Speaker 2: And I don't think that's a big deal. 277 00:12:25,160 --> 00:12:27,040 Speaker 1: You lose a day on Also. 278 00:12:26,679 --> 00:12:28,319 Speaker 2: They have twenty basis points of earnings. 279 00:12:28,360 --> 00:12:30,760 Speaker 1: Hey, that sounds pretty good. I mean, we're talking about 280 00:12:30,840 --> 00:12:33,600 Speaker 1: razor thin margins on some of these ETFs. I'm wondering 281 00:12:33,600 --> 00:12:37,760 Speaker 1: if it'll make securities lending a less appealing proposition for 282 00:12:37,960 --> 00:12:38,880 Speaker 1: some of these companies. 283 00:12:39,240 --> 00:12:41,920 Speaker 2: I be surprised if it moves the needle on that 284 00:12:42,080 --> 00:12:44,200 Speaker 2: because it's the money. You know, if you're like an 285 00:12:44,240 --> 00:12:46,199 Speaker 2: index e, you're not selling stock that often. 286 00:12:46,400 --> 00:12:48,400 Speaker 1: All right, that's everything I wanted to know about this. 287 00:12:48,679 --> 00:12:49,840 Speaker 2: That's probably everything I wanted to say. 288 00:12:49,920 --> 00:12:52,080 Speaker 1: But I guess we'll talk about it when we do 289 00:12:52,160 --> 00:12:54,600 Speaker 1: move to T plus zero, because actually it surprised me 290 00:12:54,640 --> 00:12:56,760 Speaker 1: to learn that we only moved to T plus two 291 00:12:56,840 --> 00:12:57,760 Speaker 1: and twenty seventeen. 292 00:12:58,120 --> 00:12:59,240 Speaker 2: Oh yeah, I was there. 293 00:12:59,280 --> 00:13:00,320 Speaker 3: I was not. 294 00:13:00,559 --> 00:13:02,640 Speaker 1: I mean I was there, actually, I just was not 295 00:13:02,640 --> 00:13:05,080 Speaker 1: paying attention. Yeah, yeah, no, what was that doing. 296 00:13:05,200 --> 00:13:07,120 Speaker 2: It was really twenty seventeen. Hey, I remember that. Yeah, 297 00:13:07,200 --> 00:13:08,760 Speaker 2: it was T plus three for my whole career, and 298 00:13:08,840 --> 00:13:11,960 Speaker 2: it was like plus five in like the sixties or something. 299 00:13:12,080 --> 00:13:15,439 Speaker 1: Yeah, we moved to T plus three, I guess in 300 00:13:15,520 --> 00:13:16,440 Speaker 1: nineteen ninety three. 301 00:13:16,760 --> 00:13:18,760 Speaker 2: My favorite part is that I didn't know this still 302 00:13:18,760 --> 00:13:20,480 Speaker 2: like this week it was T plus one, and like 303 00:13:20,520 --> 00:13:23,120 Speaker 2: the nineteen until nineteen years, I sort of imagine that, 304 00:13:23,160 --> 00:13:24,800 Speaker 2: like the reason it was T plus three or whatever, 305 00:13:24,840 --> 00:13:26,120 Speaker 2: you know, I grew up in T plus three. The 306 00:13:26,120 --> 00:13:27,560 Speaker 2: reason it was T plus three is because like you 307 00:13:27,600 --> 00:13:29,720 Speaker 2: needed to like load the stock certificates on a horse 308 00:13:29,760 --> 00:13:31,840 Speaker 2: and buggy and take them across around and count them 309 00:13:31,840 --> 00:13:32,200 Speaker 2: by hand. 310 00:13:32,320 --> 00:13:33,440 Speaker 1: That was happening in the nineties. 311 00:13:33,800 --> 00:13:35,920 Speaker 2: Yeah, no, it was happening in the twenties, but like 312 00:13:35,960 --> 00:13:37,760 Speaker 2: there were only so many stock certificates, so you could 313 00:13:37,800 --> 00:13:39,400 Speaker 2: do all of that in one day, right, Yeah, And 314 00:13:39,440 --> 00:13:42,240 Speaker 2: so it only became like a longer settlement process when 315 00:13:42,280 --> 00:13:45,000 Speaker 2: there were more trades and they were not like fully computerized, 316 00:13:45,040 --> 00:13:47,000 Speaker 2: and so you had you know, max that at T 317 00:13:47,120 --> 00:13:49,520 Speaker 2: plus five where it was like still a pretty manual process, 318 00:13:49,559 --> 00:13:51,920 Speaker 2: but there were a lot of trades, and now there 319 00:13:51,920 --> 00:13:55,760 Speaker 2: are many more trades, but it's a much less manual process. Okay, 320 00:13:56,040 --> 00:13:56,559 Speaker 2: there we are. 321 00:13:57,240 --> 00:14:10,760 Speaker 3: We're some buggies. 322 00:14:12,120 --> 00:14:16,320 Speaker 1: Oh boy, Elon Musk, it's been several weeks since we 323 00:14:16,920 --> 00:14:18,439 Speaker 1: really really dug in. 324 00:14:18,760 --> 00:14:21,040 Speaker 2: Part of me feels like Elon Musk, it's always the same. 325 00:14:20,840 --> 00:14:23,200 Speaker 1: Story, and that is checking his phone. He just checked 326 00:14:23,200 --> 00:14:25,560 Speaker 1: the time he has to want to talk about this. 327 00:14:26,760 --> 00:14:29,720 Speaker 1: We are drawing closer and closer to that shareholder vote. 328 00:14:29,800 --> 00:14:33,240 Speaker 2: Yeah, so, Elon Musk, he had a huge package of 329 00:14:33,280 --> 00:14:35,720 Speaker 2: options from Tesla in like twenty eighteenth. You know, everyone 330 00:14:35,760 --> 00:14:37,840 Speaker 2: says it's fifty six billion dollars, it doesn't really matter. 331 00:14:38,280 --> 00:14:42,480 Speaker 2: And then this year a Delaware judge said, no, we're 332 00:14:42,520 --> 00:14:45,800 Speaker 2: taking those back, and in reaction to that, Tesla wants 333 00:14:45,840 --> 00:14:47,560 Speaker 2: two things. They want the shareholders to vote to give 334 00:14:47,600 --> 00:14:51,160 Speaker 2: him back the options, and they want the shareholders to 335 00:14:51,240 --> 00:14:54,080 Speaker 2: vote to reincorporate the company in Texas so that no 336 00:14:54,200 --> 00:14:57,840 Speaker 2: Delaware judge can ever again take away Elon Musk's money. 337 00:14:57,960 --> 00:14:58,600 Speaker 2: Both of those votes. 338 00:14:58,640 --> 00:15:01,400 Speaker 1: As j thirteenth, he met the targets. Yeah, that he 339 00:15:01,480 --> 00:15:02,280 Speaker 1: was supposed to hit. 340 00:15:02,520 --> 00:15:05,840 Speaker 2: Like, I'm not a big ela On Musk pooster necessarily, 341 00:15:05,920 --> 00:15:08,520 Speaker 2: but I feel like here in this money, yeah, like 342 00:15:08,560 --> 00:15:11,320 Speaker 2: he should get the money. Maybe this is just projecting, 343 00:15:11,360 --> 00:15:16,200 Speaker 2: but my impression is that the maybe like most standard 344 00:15:16,280 --> 00:15:19,960 Speaker 2: view among the institutional investors in Tesla is one he 345 00:15:20,000 --> 00:15:23,320 Speaker 2: should get the money. Fair is fair, and two they 346 00:15:23,320 --> 00:15:24,880 Speaker 2: should not reincorporate in Texas. 347 00:15:25,160 --> 00:15:28,520 Speaker 1: Yeah, so let's attack the first point because I've been 348 00:15:28,520 --> 00:15:33,800 Speaker 1: thinking about why that doesn't feel great. So, yes, fair 349 00:15:33,840 --> 00:15:35,720 Speaker 1: is fair here in the money, But like, I feel 350 00:15:35,760 --> 00:15:38,360 Speaker 1: like you have to kind of forget about everything that 351 00:15:38,400 --> 00:15:40,920 Speaker 1: has happened in the past year or so. I mean, 352 00:15:40,960 --> 00:15:43,680 Speaker 1: I'm talking pretty short term when I talk about the 353 00:15:43,760 --> 00:15:46,840 Speaker 1: year to date performance of Tesla, but it's been pretty bad. 354 00:15:46,840 --> 00:15:49,280 Speaker 1: We've seen a big draw down in market cap and 355 00:15:49,360 --> 00:15:52,440 Speaker 1: they're facing real business problems right now. 356 00:15:52,640 --> 00:15:54,000 Speaker 2: Right When I say here in the money, I mean 357 00:15:54,040 --> 00:15:56,400 Speaker 2: like he was granted this money in twenty eighteen with 358 00:15:56,480 --> 00:15:58,320 Speaker 2: the goal of taking the market cap from like fifty 359 00:15:58,320 --> 00:16:00,360 Speaker 2: billion to six hundred and fifty billion dollars and he 360 00:16:00,400 --> 00:16:03,000 Speaker 2: did that by like twenty twenty one. Yeah, and so 361 00:16:03,040 --> 00:16:04,720 Speaker 2: he earned the money and they gave him the grants 362 00:16:04,720 --> 00:16:07,720 Speaker 2: and then now they've been taken away. But like since then, yeah, yeah, 363 00:16:07,880 --> 00:16:10,840 Speaker 2: things have changed. It's weird. It's a very backward looking 364 00:16:10,880 --> 00:16:13,040 Speaker 2: pay award, yeah, because it was a forward looking pay 365 00:16:13,040 --> 00:16:15,360 Speaker 2: award in twenty eighteen that has not been reversed. But 366 00:16:15,560 --> 00:16:18,480 Speaker 2: the question is should they give him this backward looking 367 00:16:18,520 --> 00:16:21,680 Speaker 2: pay award because he did accomplish all these things in 368 00:16:21,720 --> 00:16:24,280 Speaker 2: the past. And I kind of think the answer is yes, 369 00:16:24,400 --> 00:16:27,040 Speaker 2: that's fair. But I do think that if you're a 370 00:16:27,320 --> 00:16:30,920 Speaker 2: just hyper rational investor looking at things today, it's like, 371 00:16:31,640 --> 00:16:33,120 Speaker 2: is it a good idea to give him all this 372 00:16:33,200 --> 00:16:35,320 Speaker 2: money given what has he done for me lately? 373 00:16:35,640 --> 00:16:39,560 Speaker 1: Yeah? Yeah, I mean Tesla has a pretty sizable retail 374 00:16:39,720 --> 00:16:41,280 Speaker 1: I mean a lot of them are huge fans of 375 00:16:41,280 --> 00:16:44,560 Speaker 1: Elon Musk. But I would just imagine that human psychology 376 00:16:44,600 --> 00:16:46,280 Speaker 1: is going to play in as and what has he 377 00:16:46,360 --> 00:16:47,160 Speaker 1: done for me lately? 378 00:16:47,400 --> 00:16:49,360 Speaker 2: Oh yeah, yeah, the retail people are there because they 379 00:16:49,400 --> 00:16:52,320 Speaker 2: love Elon Musk. Yeah, the institutions, I think it's more. 380 00:16:52,520 --> 00:16:54,560 Speaker 1: I mean you have seen like Glass Lewis come out 381 00:16:54,600 --> 00:16:56,840 Speaker 1: and say that they probably shouldn't vote for this. 382 00:16:57,000 --> 00:16:59,120 Speaker 2: There are few those came out against it in twenty 383 00:16:59,240 --> 00:16:59,800 Speaker 2: eighteen as well. 384 00:17:00,080 --> 00:17:03,480 Speaker 1: Yeah, something that keeps coming up is and this is 385 00:17:03,520 --> 00:17:06,680 Speaker 1: something you've written about, is just that he's got a 386 00:17:06,800 --> 00:17:10,280 Speaker 1: lot going on. This man is the CEO of six companies. 387 00:17:10,680 --> 00:17:14,560 Speaker 1: It's clear that Tesla isn't like really the only thing 388 00:17:14,720 --> 00:17:18,040 Speaker 1: occupying his mind share right now. He was really into 389 00:17:18,160 --> 00:17:22,080 Speaker 1: his AI startup SpaceX Scark. I forgot actually that the 390 00:17:22,160 --> 00:17:24,640 Speaker 1: boring company was still in there as well. 391 00:17:25,640 --> 00:17:27,800 Speaker 2: The boring company is the one I always mentioned because 392 00:17:27,840 --> 00:17:30,040 Speaker 2: it's like, I think, if you rank, how much does 393 00:17:30,119 --> 00:17:33,960 Speaker 2: Elon Musk speak publicly about, pay attention to and care 394 00:17:34,040 --> 00:17:37,359 Speaker 2: about his companies? Like, yeah, Tesla is really volatile and 395 00:17:37,480 --> 00:17:40,600 Speaker 2: like right now Tesla maybe like having some problems of 396 00:17:40,680 --> 00:17:43,639 Speaker 2: getting his attention, although the vote complicates that, But like 397 00:17:44,040 --> 00:17:47,000 Speaker 2: boring companies usually toward the bottom because its name is 398 00:17:47,040 --> 00:17:49,840 Speaker 2: the boring company. It digs tunnels. It's like just sort 399 00:17:49,880 --> 00:17:50,280 Speaker 2: of less. 400 00:17:50,320 --> 00:17:52,320 Speaker 1: It's like the cash in the portfolio, you know, you 401 00:17:52,359 --> 00:17:53,359 Speaker 1: don't really talk about it. 402 00:17:53,720 --> 00:17:54,040 Speaker 3: Sort of. 403 00:17:54,840 --> 00:17:56,800 Speaker 2: It's not literally like that because no. 404 00:17:57,560 --> 00:17:59,560 Speaker 1: Just in terms of like a small allocation that you 405 00:17:59,600 --> 00:18:03,280 Speaker 1: don't really think about. Neuralink is real obviously when you 406 00:18:03,320 --> 00:18:06,480 Speaker 1: look at the portfolio of his company's Twitter is the 407 00:18:06,560 --> 00:18:09,119 Speaker 1: weirdest one to me, x I'm sorry. 408 00:18:09,400 --> 00:18:11,600 Speaker 2: Elon Musk is really into AI, right, Yeah, He's kind 409 00:18:11,640 --> 00:18:13,600 Speaker 2: of always been into AI. He was a founder of 410 00:18:13,760 --> 00:18:16,560 Speaker 2: open Ai, right is now not an affiliated and angry 411 00:18:16,560 --> 00:18:18,240 Speaker 2: about and like suing open Ai. But he was like 412 00:18:18,320 --> 00:18:21,320 Speaker 2: there at the beginning, and he's very into AI right now, 413 00:18:21,920 --> 00:18:23,879 Speaker 2: and everyone's kind of right into AI right now. And 414 00:18:23,920 --> 00:18:26,359 Speaker 2: in some ways it's like weirdly trend following for Elon 415 00:18:26,480 --> 00:18:28,840 Speaker 2: Musk to be like, I also have a large language 416 00:18:28,880 --> 00:18:31,000 Speaker 2: model startup. Right, That's never been his thing. Right, He's 417 00:18:31,040 --> 00:18:34,080 Speaker 2: not like, oh, I'm founding the tenth electric car company 418 00:18:34,160 --> 00:18:36,040 Speaker 2: or the tenth commercial rocket company. 419 00:18:36,160 --> 00:18:36,280 Speaker 1: Right. 420 00:18:36,359 --> 00:18:38,920 Speaker 2: He's not like, you know, in fierce competition and like 421 00:18:39,040 --> 00:18:41,240 Speaker 2: the tunnel digging business. Right, It's like all of his 422 00:18:41,359 --> 00:18:44,120 Speaker 2: ideas have been sort of unusual and then XAI. He's like, yeah, 423 00:18:44,119 --> 00:18:46,040 Speaker 2: I'll do a large luggage model. Why not? But it 424 00:18:46,119 --> 00:18:48,320 Speaker 2: did seem like he had big AI plans for Twitter, 425 00:18:48,480 --> 00:18:50,720 Speaker 2: and like Tessla does do a lot of not like 426 00:18:50,840 --> 00:18:52,840 Speaker 2: large language models, but like a lot of AI for 427 00:18:53,040 --> 00:18:57,840 Speaker 2: like the self driving cars. And it's a little strange though. 428 00:18:57,960 --> 00:19:02,080 Speaker 2: He has instead started a separate company for AI and 429 00:19:02,359 --> 00:19:04,520 Speaker 2: ramped it up and has a twenty four billion dollar 430 00:19:04,600 --> 00:19:07,720 Speaker 2: valuation now and is raising money and seems to be, 431 00:19:08,000 --> 00:19:10,679 Speaker 2: to some extent the apple of his eye, and Tesla's 432 00:19:10,920 --> 00:19:12,080 Speaker 2: maybe a little neglected. 433 00:19:12,400 --> 00:19:14,800 Speaker 1: Yeah, it does feel like that, and you think about 434 00:19:14,840 --> 00:19:16,520 Speaker 1: I mean, his threat is that if he doesn't get 435 00:19:16,560 --> 00:19:20,440 Speaker 1: this pay package, then hold devote his energy and time elsewhere. 436 00:19:20,760 --> 00:19:22,639 Speaker 1: It seems like he's doing that already. And even if 437 00:19:22,720 --> 00:19:26,920 Speaker 1: the pay package was reapproved again on June thirteenth, I 438 00:19:26,960 --> 00:19:30,800 Speaker 1: believe the vote is it's not clear that would get 439 00:19:30,880 --> 00:19:32,520 Speaker 1: him re excited about Tesla. 440 00:19:32,800 --> 00:19:35,399 Speaker 2: So two things. One, like glass Lewis, one of their 441 00:19:35,440 --> 00:19:38,080 Speaker 2: objections to his pay package is that he has clearly 442 00:19:38,160 --> 00:19:40,360 Speaker 2: not been focused on Tesla. Yeah, and Tesla put out 443 00:19:40,400 --> 00:19:43,680 Speaker 2: this response that's a stockholder should care noormously about value 444 00:19:43,720 --> 00:19:46,960 Speaker 2: creation and not about whether Elon's perceived focus in scare 445 00:19:47,040 --> 00:19:50,639 Speaker 2: quotes was strong enough, and like, that's fair, but it 446 00:19:50,720 --> 00:19:53,720 Speaker 2: depends on your time frame. And in recent months, the 447 00:19:53,880 --> 00:19:57,399 Speaker 2: value creation has maybe tracked his lack of focus. Right 448 00:19:57,480 --> 00:19:59,439 Speaker 2: since the Twitter deal, like his lack of focus has 449 00:19:59,480 --> 00:20:02,200 Speaker 2: been bad for now Again, this pay package is for 450 00:20:02,359 --> 00:20:04,080 Speaker 2: like the work he did from twenty eighteen to twenty 451 00:20:04,160 --> 00:20:07,439 Speaker 2: twenty one, so I can see approving it, but as 452 00:20:07,480 --> 00:20:09,600 Speaker 2: a going forward better Yeah, you'd be worried about his 453 00:20:09,720 --> 00:20:12,720 Speaker 2: lack of focus, not only because you keep reading articles 454 00:20:12,760 --> 00:20:14,320 Speaker 2: about the other stuff he's doing, but also because the 455 00:20:14,359 --> 00:20:16,879 Speaker 2: stick price is down and like it's izing business challenges. 456 00:20:17,359 --> 00:20:19,040 Speaker 2: The other thing I'd say is Tesla's in a weird 457 00:20:19,080 --> 00:20:22,280 Speaker 2: position in terms of like how much of Elon Musk's 458 00:20:22,480 --> 00:20:26,760 Speaker 2: focus it gets or it will get going forward, because 459 00:20:26,800 --> 00:20:29,320 Speaker 2: it's his only public company and also it's his biggest company, 460 00:20:29,680 --> 00:20:32,240 Speaker 2: and so on the one hand, that means it is 461 00:20:32,400 --> 00:20:36,200 Speaker 2: his like cash source. It is I think more important 462 00:20:36,280 --> 00:20:38,640 Speaker 2: to his fortune than any of the other companies, because 463 00:20:38,640 --> 00:20:41,000 Speaker 2: it's if he needs a billion dollars, he can get 464 00:20:41,040 --> 00:20:44,000 Speaker 2: it by selling Tesla stock borrowing against Tesla's slock much 465 00:20:44,080 --> 00:20:46,240 Speaker 2: more easily than he can from his other companies, and 466 00:20:46,400 --> 00:20:48,879 Speaker 2: so he sometimes does a need for a large amounts 467 00:20:48,880 --> 00:20:51,840 Speaker 2: of money, for example to buy Twitter. Yeah, and when 468 00:20:51,840 --> 00:20:55,360 Speaker 2: he does that, he sells Tesla stock. So Tesla's really 469 00:20:55,359 --> 00:20:58,040 Speaker 2: important to him. And if some of his other companies 470 00:20:58,080 --> 00:21:00,639 Speaker 2: like evaporated, he'd be fine. But it does evaporated, it 471 00:21:00,760 --> 00:21:02,760 Speaker 2: would be a big problem. On the other hand, he 472 00:21:02,840 --> 00:21:05,880 Speaker 2: hates running a public company. He's not a public company guy. 473 00:21:06,160 --> 00:21:08,879 Speaker 2: It doesn't work. He goes around saying I do not 474 00:21:08,960 --> 00:21:12,639 Speaker 2: respect the SEC. He gets in trouble, he gets sued 475 00:21:12,680 --> 00:21:16,600 Speaker 2: by shareholders. He pushes the boundaries in a way that 476 00:21:16,720 --> 00:21:18,720 Speaker 2: when you have a private company where all of the 477 00:21:18,760 --> 00:21:22,600 Speaker 2: shareholders are your fans and understand that they're there to 478 00:21:22,640 --> 00:21:24,920 Speaker 2: support you, it kind of works. But in a public 479 00:21:24,920 --> 00:21:26,720 Speaker 2: company where anyone can buy stock and then sue you 480 00:21:27,320 --> 00:21:30,040 Speaker 2: and like a judge or the SEC can just get involved, 481 00:21:30,600 --> 00:21:33,359 Speaker 2: it doesn't work that well. And he clearly hates it. 482 00:21:33,680 --> 00:21:35,840 Speaker 2: He sort of tried to take Tesla private in a 483 00:21:36,440 --> 00:21:38,639 Speaker 2: never deel that got him in trouble with the SEC. 484 00:21:39,320 --> 00:21:42,040 Speaker 2: And he's said off and on over the years that 485 00:21:42,040 --> 00:21:45,760 Speaker 2: he hates and running a public company, and will SpaceX 486 00:21:45,760 --> 00:21:48,680 Speaker 2: eventually go public probably but I would love that it's 487 00:21:48,760 --> 00:21:50,760 Speaker 2: possible that it would have gone public before. Now we're 488 00:21:50,840 --> 00:21:52,800 Speaker 2: not run by Elon Musk, who has had a bad 489 00:21:52,840 --> 00:21:55,600 Speaker 2: experience of running public companies. So if he has some 490 00:21:55,760 --> 00:21:58,000 Speaker 2: great idea, does he want to do it at Tesla 491 00:21:58,080 --> 00:22:02,040 Speaker 2: where it's going to be subject to public company's scrutiny, 492 00:22:02,119 --> 00:22:04,280 Speaker 2: or is he gonna want to focus on his other 493 00:22:04,560 --> 00:22:06,239 Speaker 2: companies that he has much more control over. 494 00:22:06,520 --> 00:22:09,240 Speaker 1: It feels like we're heading towards a rubber meets the 495 00:22:09,400 --> 00:22:12,119 Speaker 1: road moment when it comes to the shareholder vote. I mean, 496 00:22:13,600 --> 00:22:16,639 Speaker 1: either it's reapproved and he's a happy man maybe, or 497 00:22:16,880 --> 00:22:19,359 Speaker 1: maybe he leaves and then we as we spoke about 498 00:22:19,359 --> 00:22:20,920 Speaker 1: a few weeks ago, maybe we find out what the 499 00:22:21,040 --> 00:22:24,600 Speaker 1: Musk premium to Tesla actually is and we find out 500 00:22:24,720 --> 00:22:27,560 Speaker 1: I don't know whether Tesla needs Elon Musk at this point, 501 00:22:27,600 --> 00:22:33,120 Speaker 1: whether it would do better with a traditional auto type CEO. 502 00:22:33,240 --> 00:22:35,320 Speaker 1: When you think about I don't know the fact that 503 00:22:35,440 --> 00:22:38,200 Speaker 1: EV demand is drying up for everyone, not just for Tesla. 504 00:22:38,240 --> 00:22:40,600 Speaker 1: It feels like a kind of existential moment for the 505 00:22:40,640 --> 00:22:41,280 Speaker 1: EV market. 506 00:22:41,600 --> 00:22:43,880 Speaker 2: Yeah, it's not clear that his skill set is what's 507 00:22:43,960 --> 00:22:46,040 Speaker 2: really needed at Tesla right now, because it's like a 508 00:22:46,119 --> 00:22:50,120 Speaker 2: mature auto company with auto company problems, and he's off 509 00:22:50,240 --> 00:22:53,480 Speaker 2: putting wires in people's brains. Right, maybe the move is 510 00:22:53,560 --> 00:22:57,080 Speaker 2: in fact for him to step back as CEO, but 511 00:22:57,200 --> 00:22:59,080 Speaker 2: that's hard for thenock price. Like you get a lot 512 00:22:59,119 --> 00:23:01,840 Speaker 2: of valuation premium from the retail investors who love them. 513 00:23:01,880 --> 00:23:02,920 Speaker 2: I mean, that's the other thing about it being a 514 00:23:02,960 --> 00:23:05,080 Speaker 2: public company is it's the only place that his retail 515 00:23:05,119 --> 00:23:07,960 Speaker 2: investors can invest with them. Yeah, you can't buy. 516 00:23:07,840 --> 00:23:10,040 Speaker 1: SpaceX, but you know what a neat solution would be 517 00:23:10,640 --> 00:23:14,879 Speaker 1: taking SpaceX public closed and fun sure and invest in 518 00:23:14,920 --> 00:23:17,640 Speaker 1: all the elon musk companies. We can publicly list it too, 519 00:23:17,840 --> 00:23:19,400 Speaker 1: and that would be really fun to watch. 520 00:23:19,840 --> 00:23:21,160 Speaker 2: That is actually a really good idea. 521 00:23:21,560 --> 00:23:23,080 Speaker 1: Thanks that one's for free, but. 522 00:23:26,040 --> 00:23:27,119 Speaker 2: You get a commission on that one. 523 00:23:41,359 --> 00:23:42,520 Speaker 1: Bill Aang Bill Wang. 524 00:23:42,840 --> 00:23:45,359 Speaker 2: So Bill Wang is on trial for his family office, 525 00:23:45,440 --> 00:23:49,800 Speaker 2: Archie's Capital Management, employed a while back and lost thirty 526 00:23:49,840 --> 00:23:52,359 Speaker 2: something billion dollar fortune for him and billions of dollars 527 00:23:52,440 --> 00:23:56,480 Speaker 2: for several banks, including Credit Suites, which didn't fail because 528 00:23:56,520 --> 00:23:57,600 Speaker 2: of our chagoes. 529 00:23:57,680 --> 00:23:59,200 Speaker 1: But like it's not here anymore. 530 00:23:59,320 --> 00:24:01,879 Speaker 2: Yeah, it didn't didn't help. But he's on trial for 531 00:24:02,280 --> 00:24:05,479 Speaker 2: kind of two things like market manipulation, bottle these stocks 532 00:24:05,680 --> 00:24:07,680 Speaker 2: and pushed them way up and then they crashed when 533 00:24:07,680 --> 00:24:10,399 Speaker 2: he stopped buying them, And for lying to banks, because 534 00:24:10,440 --> 00:24:12,160 Speaker 2: basically he like borrowed a lot of money from banks 535 00:24:12,200 --> 00:24:15,320 Speaker 2: to buy all these stocks, and had the banks known 536 00:24:15,440 --> 00:24:17,280 Speaker 2: the true extent of his positions, they wouldn't have lent 537 00:24:17,400 --> 00:24:20,640 Speaker 2: him all the money. And he's on trial this week, 538 00:24:21,480 --> 00:24:23,159 Speaker 2: and I have to say it seems to be kind 539 00:24:23,200 --> 00:24:25,119 Speaker 2: of going okay for him in the sense that they 540 00:24:25,160 --> 00:24:28,359 Speaker 2: haven't really done the market manipulation case yet, but it 541 00:24:28,520 --> 00:24:31,200 Speaker 2: just sort of sounds like the evidence is like he 542 00:24:31,320 --> 00:24:34,680 Speaker 2: bought a lot of these stocks, which is weird, but 543 00:24:34,760 --> 00:24:36,960 Speaker 2: it is not proof of market manipulation by itself. It 544 00:24:37,000 --> 00:24:38,960 Speaker 2: doesn't seem to be any smoking gun of him being like, 545 00:24:39,440 --> 00:24:42,960 Speaker 2: I'm buying these stocks so that I can like artificially 546 00:24:43,000 --> 00:24:45,600 Speaker 2: inflate their price, so that I can do something. Because 547 00:24:45,600 --> 00:24:48,119 Speaker 2: he didn't do something, they bottle the stocks and then 548 00:24:48,200 --> 00:24:50,160 Speaker 2: they crashed and he lost all his money. He wasn't 549 00:24:50,240 --> 00:24:52,159 Speaker 2: like doing it for some nefarious plan as far as 550 00:24:52,200 --> 00:24:54,040 Speaker 2: I can tell. But the other thing he's on twelve 551 00:24:54,040 --> 00:24:55,440 Speaker 2: for is lining to the banks, and like there was 552 00:24:55,440 --> 00:24:57,200 Speaker 2: definitely some line to the banks. There's a lot of 553 00:24:57,240 --> 00:24:58,879 Speaker 2: testimony that there was lying to the banks, but it 554 00:24:58,960 --> 00:25:01,360 Speaker 2: wasn't from him. It's like from his employees. 555 00:25:01,480 --> 00:25:04,520 Speaker 1: Yeah, so far, we've heard from Scott Becker, for example, 556 00:25:04,560 --> 00:25:08,959 Speaker 1: who was a risk manager at Archagos, and he testified 557 00:25:09,160 --> 00:25:12,560 Speaker 1: that he lied. He told several banks that Archaeos was 558 00:25:12,600 --> 00:25:17,000 Speaker 1: heavily invested in fang stocks like Apple, Amazon, et cetera, 559 00:25:17,040 --> 00:25:21,520 Speaker 1: et cetera. In actuality, actually they were really invested in 560 00:25:21,640 --> 00:25:25,920 Speaker 1: ADRs for companies like ten cents and by Do et cetera. 561 00:25:26,080 --> 00:25:27,840 Speaker 1: That was a large part of the portfolio. 562 00:25:27,920 --> 00:25:30,960 Speaker 2: So that was a lie and he's but also like 563 00:25:31,240 --> 00:25:35,480 Speaker 2: you know, Viacom was like yeah the company or yeah, 564 00:25:35,960 --> 00:25:38,359 Speaker 2: quantities of a few, like a handful of stocks. 565 00:25:38,520 --> 00:25:41,520 Speaker 1: Yeah. But I guess what looks good for Bill Wangs 566 00:25:41,560 --> 00:25:46,800 Speaker 1: so far is that it's not clear that he necessarily 567 00:25:46,920 --> 00:25:48,000 Speaker 1: told those employees. 568 00:25:48,040 --> 00:25:49,800 Speaker 2: There's no email from him being like make sure to 569 00:25:49,800 --> 00:25:52,439 Speaker 2: a lot of the banks, which sometimes in some cases 570 00:25:52,480 --> 00:25:52,800 Speaker 2: they have that. 571 00:25:53,040 --> 00:25:56,600 Speaker 1: Yeah. Yeah, but I mean you raised the point why 572 00:25:56,680 --> 00:25:57,720 Speaker 1: did they lie? Then? 573 00:25:57,840 --> 00:25:59,879 Speaker 2: I was thinking about that. There's a sort of like 574 00:26:01,280 --> 00:26:04,320 Speaker 2: he was the boss, there's some sort of implicit assumption 575 00:26:04,440 --> 00:26:07,280 Speaker 2: of well, if the employees are lying to the banks 576 00:26:08,359 --> 00:26:10,240 Speaker 2: to keep our ke goos going. They were doing it 577 00:26:10,359 --> 00:26:12,760 Speaker 2: because that's what their boss wanted to them, which, first 578 00:26:12,800 --> 00:26:14,680 Speaker 2: of all, I'm not sure is enough for to be 579 00:26:14,720 --> 00:26:17,000 Speaker 2: a crime. But saying I'm not sure that's true, I 580 00:26:17,080 --> 00:26:19,480 Speaker 2: feel like people who have jobs are motivated to do 581 00:26:19,560 --> 00:26:21,320 Speaker 2: a good job at work. It's not like they're like, 582 00:26:21,800 --> 00:26:24,920 Speaker 2: I need to make this trade work at because my 583 00:26:24,960 --> 00:26:26,399 Speaker 2: boss told me to. It's I need to make this 584 00:26:26,440 --> 00:26:27,920 Speaker 2: trade work out because I'm like trying to be a 585 00:26:27,960 --> 00:26:29,800 Speaker 2: good employee. And like, you know, you sort of have 586 00:26:29,880 --> 00:26:32,480 Speaker 2: a general create value. Yeah, you want to create value, 587 00:26:32,920 --> 00:26:35,360 Speaker 2: and you're whatever, you've been at that company for a while, 588 00:26:35,359 --> 00:26:37,560 Speaker 2: and you have some sense of commitment to the company 589 00:26:37,600 --> 00:26:39,760 Speaker 2: in some sense of professional desire to do a good 590 00:26:39,840 --> 00:26:42,160 Speaker 2: job at whatever it is you do, and what you're 591 00:26:42,200 --> 00:26:46,480 Speaker 2: doing is keeping this extremely concentrated portfolio from crashing. Then 592 00:26:46,520 --> 00:26:48,239 Speaker 2: maybe you'll lie to a bank to do that, right, 593 00:26:48,400 --> 00:26:50,879 Speaker 2: And maybe you're just doing it because that's in the 594 00:26:51,119 --> 00:26:54,480 Speaker 2: very short term, the way to improve your own performance, 595 00:26:54,520 --> 00:26:56,600 Speaker 2: and you're just trying to do a good job. So 596 00:26:57,200 --> 00:26:59,040 Speaker 2: is that his fault. I don't know, it's like kind 597 00:26:59,080 --> 00:26:59,600 Speaker 2: of his fault. 598 00:26:59,640 --> 00:27:02,040 Speaker 1: But so for a couple of days into testimony, it 599 00:27:02,160 --> 00:27:04,600 Speaker 1: seems okay ish for bull Wang at the moment just 600 00:27:04,680 --> 00:27:07,359 Speaker 1: to meditate on Scott Becker a little bit longer. He's 601 00:27:07,400 --> 00:27:10,360 Speaker 1: definitely not having a great week or a great last 602 00:27:10,400 --> 00:27:13,320 Speaker 1: couple of weeks. Again, testified, he did say he lied. 603 00:27:14,400 --> 00:27:19,240 Speaker 1: He also apparently texted in twenty eighteen that he hoped 604 00:27:19,280 --> 00:27:22,000 Speaker 1: that his boss would die in a plane crash, and 605 00:27:22,040 --> 00:27:24,120 Speaker 1: then in twenty twenty, I hope that he would die 606 00:27:24,280 --> 00:27:30,080 Speaker 1: a quote slow, painful death from COVID. He said of 607 00:27:30,240 --> 00:27:33,840 Speaker 1: the texts, I obviously regret that it is not. 608 00:27:33,920 --> 00:27:36,280 Speaker 2: Inconsistent with what I said before. You'd be like really 609 00:27:36,359 --> 00:27:39,160 Speaker 2: motivated to do a good job and also have days 610 00:27:39,200 --> 00:27:41,480 Speaker 2: when you which your boss would dine a plane crash. 611 00:27:42,920 --> 00:27:45,800 Speaker 1: I that's why I never want to get sued. I mean, 612 00:27:45,840 --> 00:27:47,639 Speaker 1: for a lot of reasons. I don't want anyone to 613 00:27:47,720 --> 00:27:50,120 Speaker 1: go through my text messages. They're all super clean though. 614 00:27:50,720 --> 00:27:52,720 Speaker 1: But anyway, that was a fun. 615 00:27:52,680 --> 00:27:55,760 Speaker 2: Little through the outs of the Money Stuff podcast. 616 00:27:55,400 --> 00:27:59,879 Speaker 1: Exactly, Uh, we burn every recording, We'd smash it with bats. Anyway, 617 00:28:00,200 --> 00:28:03,359 Speaker 1: that was a fun little detail that came out in testimony. 618 00:28:03,520 --> 00:28:06,880 Speaker 1: Also coming out was the Goldman fat Finger, which wasn't 619 00:28:06,880 --> 00:28:07,760 Speaker 1: previously known. 620 00:28:07,800 --> 00:28:08,959 Speaker 2: I believe it's amazing. 621 00:28:09,080 --> 00:28:09,840 Speaker 3: Yeah, it's amazing. 622 00:28:10,359 --> 00:28:12,520 Speaker 2: At the end of our Chagos, like they had like 623 00:28:12,760 --> 00:28:15,240 Speaker 2: scraps of money at different banks, and like they were 624 00:28:15,280 --> 00:28:17,440 Speaker 2: getting furious margin calls, and they're also trying to buy 625 00:28:17,520 --> 00:28:19,280 Speaker 2: more of these stocks to prop them up, and so 626 00:28:19,359 --> 00:28:21,359 Speaker 2: they were going to every bank and saying, oh, we 627 00:28:21,400 --> 00:28:23,080 Speaker 2: have one hundred million dollars at your bank, send us 628 00:28:23,080 --> 00:28:25,320 Speaker 2: one hundred million dollars. And some banks were doing it 629 00:28:25,600 --> 00:28:27,680 Speaker 2: even though they were like a day away from bankruptcy. 630 00:28:28,000 --> 00:28:29,639 Speaker 2: And so they did that to Golden. They're like, before 631 00:28:29,640 --> 00:28:31,640 Speaker 2: it did seventy million dollars at Goldman, can you send 632 00:28:31,680 --> 00:28:33,879 Speaker 2: it to us, Except they like hit the wrong button 633 00:28:34,240 --> 00:28:36,960 Speaker 2: and instead of asking for ford and seventy million dollars 634 00:28:36,960 --> 00:28:38,880 Speaker 2: from Golden, they sent for hundred and seventy million dollars 635 00:28:38,920 --> 00:28:40,480 Speaker 2: in Golden And then they called govid Or like, hey, 636 00:28:40,560 --> 00:28:42,520 Speaker 2: can we get that money back? And Golvin was like no, 637 00:28:44,480 --> 00:28:46,000 Speaker 2: I sort of they were like, oh, we need to 638 00:28:46,160 --> 00:28:47,880 Speaker 2: Like yeah, they like sort of dragged their feet a 639 00:28:47,920 --> 00:28:49,720 Speaker 2: little bit, and then by the time they stopped dragging 640 00:28:49,720 --> 00:28:52,080 Speaker 2: their feet, like it was clear that our Kegos was 641 00:28:52,120 --> 00:28:54,040 Speaker 2: busted and yeah, Golbyn kept the money. 642 00:28:53,960 --> 00:28:55,680 Speaker 1: Didn't they request a meeting with them. 643 00:28:55,800 --> 00:28:57,520 Speaker 2: Yeah, they were like, yeah, you get at the money back. 644 00:28:57,600 --> 00:28:59,760 Speaker 2: Let's just talk to your chief trader to make sure everything's. 645 00:28:59,440 --> 00:29:02,239 Speaker 1: Okay, right, Like he's busy right now. 646 00:29:02,600 --> 00:29:04,680 Speaker 2: I think anyone if you get a call saying can 647 00:29:04,720 --> 00:29:07,000 Speaker 2: we have all of our money back, you're like, well, 648 00:29:07,120 --> 00:29:09,960 Speaker 2: I think okay. Then Goldman they were just holding four 649 00:29:10,040 --> 00:29:12,480 Speaker 2: hundred and seventy million dollars for them. They were also 650 00:29:12,720 --> 00:29:16,360 Speaker 2: lending them enormous amounts of money against concentrated stock positions. 651 00:29:16,840 --> 00:29:19,440 Speaker 2: And if you're like, oh, our go needs money, your 652 00:29:19,480 --> 00:29:22,760 Speaker 2: next thought is are all these derivatives positions that we 653 00:29:22,880 --> 00:29:24,280 Speaker 2: have with them are they good for them? 654 00:29:24,480 --> 00:29:24,720 Speaker 3: Yeah? 655 00:29:24,760 --> 00:29:28,440 Speaker 2: And the answer was very much no. So Goldman cut 656 00:29:28,480 --> 00:29:28,840 Speaker 2: the money. 657 00:29:29,280 --> 00:29:33,080 Speaker 1: There was testimony from a Jeffreys managing director as well, 658 00:29:33,120 --> 00:29:35,760 Speaker 1: who when she got the call, her reaction was, what's 659 00:29:35,800 --> 00:29:39,120 Speaker 1: the emergency? Like, we need all the money back right now? 660 00:29:39,960 --> 00:29:41,800 Speaker 2: You get a call from your customer being like I 661 00:29:41,880 --> 00:29:44,640 Speaker 2: need every penny in my account wired to me immediately. 662 00:29:44,920 --> 00:29:46,720 Speaker 2: If you're just their bank, maybe you'd do that, right, 663 00:29:46,840 --> 00:29:49,080 Speaker 2: But you also have like an enormous loan out to them, 664 00:29:49,080 --> 00:29:50,080 Speaker 2: and you're like, wait a minute. 665 00:30:00,880 --> 00:30:01,600 Speaker 1: Mail back. 666 00:30:02,440 --> 00:30:05,600 Speaker 2: On this very podcast last week, we talked about, well, 667 00:30:05,600 --> 00:30:08,040 Speaker 2: we talked about several city fat. 668 00:30:07,840 --> 00:30:11,600 Speaker 1: Fingers to be a somewhat regular occurrence, but. 669 00:30:11,680 --> 00:30:13,680 Speaker 2: We talked specifically about the one where they like, they 670 00:30:13,720 --> 00:30:16,000 Speaker 2: sold a ton of European stocks and crashed all the markets, 671 00:30:16,080 --> 00:30:18,960 Speaker 2: and then we're like, oops, we meant to sell fifty 672 00:30:19,000 --> 00:30:21,000 Speaker 2: million dollars, but we sold four hundred and forty billion 673 00:30:21,040 --> 00:30:24,080 Speaker 2: dollars among us? Who among us? Indeed, because every time 674 00:30:24,120 --> 00:30:25,959 Speaker 2: I write or talk about a fat figure, I get 675 00:30:26,000 --> 00:30:28,240 Speaker 2: emails from people about like, yeah, here's my pad finger story. 676 00:30:28,320 --> 00:30:30,160 Speaker 2: I got a good one from a reader. He said 677 00:30:30,200 --> 00:30:33,280 Speaker 2: that he's trading in his personal account. He made some 678 00:30:33,360 --> 00:30:35,760 Speaker 2: money on call options, right, so he bought some call 679 00:30:35,800 --> 00:30:38,520 Speaker 2: options and some stock. He sold the call options. He 680 00:30:38,600 --> 00:30:40,640 Speaker 2: had one hundred thousand dollars, and he says, well, he's 681 00:30:40,720 --> 00:30:42,040 Speaker 2: trying to figure out what to do with the money. 682 00:30:42,600 --> 00:30:45,600 Speaker 2: He decided to put it into the bill ETF, like 683 00:30:45,640 --> 00:30:48,360 Speaker 2: a short term money market ETF. He's like one hundred 684 00:30:48,360 --> 00:30:51,400 Speaker 2: thousand dollars, and he says on his brokerage screen, like 685 00:30:51,600 --> 00:30:53,560 Speaker 2: when you sell an option and then you got to 686 00:30:53,640 --> 00:30:56,720 Speaker 2: do another trade, it defaults to doing an options trade. 687 00:30:57,160 --> 00:30:58,680 Speaker 2: And so he was like, I'm gonna put a hundred 688 00:30:58,680 --> 00:31:02,280 Speaker 2: thousand dollars into bill and instead he bought one hundred 689 00:31:02,320 --> 00:31:05,600 Speaker 2: thousand dollars of call options on the bill money market, 690 00:31:06,240 --> 00:31:08,880 Speaker 2: which is like, there is no more boring investment than 691 00:31:08,920 --> 00:31:12,640 Speaker 2: the billity, but there's no crazier investment than call options 692 00:31:12,720 --> 00:31:15,520 Speaker 2: on the time. Yeah, that's wild. And so he bought 693 00:31:15,640 --> 00:31:17,360 Speaker 2: a lot of the He hit buy on a lot 694 00:31:17,400 --> 00:31:19,960 Speaker 2: of these options, and he said that they executed like 695 00:31:20,000 --> 00:31:22,080 Speaker 2: one contract and moved the market, and he noticed and 696 00:31:22,160 --> 00:31:24,160 Speaker 2: canceled the rest of it and was only a few 697 00:31:24,240 --> 00:31:24,800 Speaker 2: hundred dollars. 698 00:31:25,160 --> 00:31:27,120 Speaker 1: But I thought it was amazing because we were talking 699 00:31:27,200 --> 00:31:30,200 Speaker 1: in relation to the city system, how it was maybe 700 00:31:30,320 --> 00:31:32,840 Speaker 1: just designed poorly. And I mean, here's a great example, 701 00:31:33,240 --> 00:31:36,160 Speaker 1: a real life example of a person in their personal 702 00:31:36,200 --> 00:31:41,280 Speaker 1: account falling victim to maybe an unintuitive trading screen, right right. 703 00:31:42,600 --> 00:31:45,280 Speaker 2: If I were designing a trading system, I would probably 704 00:31:45,440 --> 00:31:49,360 Speaker 2: make it default to trading cash, not options, every trade. 705 00:31:49,520 --> 00:31:52,400 Speaker 2: So of course, if I were a retail broker, I 706 00:31:52,440 --> 00:31:54,800 Speaker 2: would want to encourage as much option trading as possible, 707 00:31:54,800 --> 00:31:56,960 Speaker 2: because that's how the retail brokers make money, so maybe 708 00:31:57,000 --> 00:31:58,960 Speaker 2: I would, you know, maybe I would encourage. 709 00:31:59,240 --> 00:32:02,360 Speaker 1: I would want the text to be as big as possible, 710 00:32:02,480 --> 00:32:04,880 Speaker 1: like a really large font size. Those always make me 711 00:32:04,960 --> 00:32:07,080 Speaker 1: feel safe. Anyway, time to go. 712 00:32:08,240 --> 00:32:09,440 Speaker 2: How's the Money Stuff Podcast? 713 00:32:09,600 --> 00:32:10,760 Speaker 1: I don't have my script? 714 00:32:11,840 --> 00:32:13,920 Speaker 2: And that was the Money Stuff Podcast. I'm Matt Levian 715 00:32:14,080 --> 00:32:18,960 Speaker 2: and I'm Katy Gray. We're not actually doing that, and 716 00:32:19,080 --> 00:32:20,360 Speaker 2: that was the Money Stuff Podcast. 717 00:32:20,560 --> 00:32:22,480 Speaker 1: I'm Matt Levian and I'm Katie Greifeld. 718 00:32:24,360 --> 00:32:26,400 Speaker 2: You can find my work by subscribing to the money 719 00:32:26,400 --> 00:32:27,360 Speaker 2: Stuff newsletter on the. 720 00:32:27,360 --> 00:32:30,000 Speaker 1: Bloomberg dot com, and you can find me on Bloomberg 721 00:32:30,040 --> 00:32:32,640 Speaker 1: TV every day between ten to eleven am Eastern. 722 00:32:33,000 --> 00:32:34,600 Speaker 2: We'd love to hear from you, and you can send 723 00:32:34,600 --> 00:32:37,840 Speaker 2: an email to Moneypod at Bloomberg dot net. Ask us 724 00:32:37,880 --> 00:32:39,360 Speaker 2: a question and we might answer it on air. 725 00:32:40,320 --> 00:32:42,440 Speaker 1: You can also subscribe to our show wherever you're listening 726 00:32:42,560 --> 00:32:44,560 Speaker 1: right now and leave us a review. It helps more 727 00:32:44,600 --> 00:32:45,440 Speaker 1: people find the show. 728 00:32:46,520 --> 00:32:49,720 Speaker 2: The Money Stuff Podcast is produced by Anamasaracus and Moses 729 00:32:49,760 --> 00:32:50,120 Speaker 2: on Them. 730 00:32:50,360 --> 00:32:52,400 Speaker 1: Our theme music was composed by Blake Naples. 731 00:32:52,880 --> 00:32:55,520 Speaker 2: Brandon Francis Newnham is our executive producer. 732 00:32:55,560 --> 00:32:57,720 Speaker 1: And Sage Ballman is Bloomberg's head of podcasts. 733 00:32:58,240 --> 00:33:00,560 Speaker 2: Thanks for listening to the Money Stuff podcast. We'll be 734 00:33:00,640 --> 00:33:02,080 Speaker 2: back next week with more stuff.