1 00:00:03,120 --> 00:00:10,120 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:10,880 --> 00:00:13,200 Speaker 2: Hello and welcome to the Money Stuff Podcast. You're a 3 00:00:13,200 --> 00:00:17,239 Speaker 2: weekly podcast where we talk about stuff related to money. 4 00:00:17,480 --> 00:00:19,480 Speaker 2: I'm Matt Levian, I write the Money Stuff column for 5 00:00:19,520 --> 00:00:20,320 Speaker 2: Bloomberg Opinion. 6 00:00:20,480 --> 00:00:22,919 Speaker 1: And I'm Katie Greifeld. I'm a reporter for Bloomberg News 7 00:00:22,920 --> 00:00:24,440 Speaker 1: and an anchor for Bloomberg Television. 8 00:00:26,840 --> 00:00:28,640 Speaker 2: Katie, what do you got today? 9 00:00:28,960 --> 00:00:31,720 Speaker 1: We have a meaty show. We're going to talk about, oh, 10 00:00:31,880 --> 00:00:37,239 Speaker 1: it's a twenty four to seven stock trading potentially what 11 00:00:37,280 --> 00:00:39,720 Speaker 1: that world might look like. Then we're going to talk 12 00:00:39,720 --> 00:00:42,960 Speaker 1: about the FTC and non competes, the FTC continuing to 13 00:00:43,000 --> 00:00:47,199 Speaker 1: be aggressive on a multitude of topics. Then we're going 14 00:00:47,240 --> 00:00:49,920 Speaker 1: to talk about gold bars, which I'm quite excited about, 15 00:00:49,960 --> 00:00:52,239 Speaker 1: and the arbitrage opportunities that don't exist. 16 00:00:52,800 --> 00:01:02,600 Speaker 2: My readers love in arbitrave twenty four seven stock trading. 17 00:01:02,880 --> 00:01:05,000 Speaker 1: Well, there's twenty four to seven, and then there's the 18 00:01:05,040 --> 00:01:08,440 Speaker 1: possibility that there's around the clock trading just on weekdays, which. 19 00:01:08,280 --> 00:01:09,360 Speaker 2: Is a little more humane. 20 00:01:09,440 --> 00:01:12,080 Speaker 1: Yes, exactly, I was actually exactly going to say humane, 21 00:01:12,160 --> 00:01:14,919 Speaker 1: but maybe we should set the scene that this comes 22 00:01:14,920 --> 00:01:19,800 Speaker 1: from a Financial Times article that Nise took a survey. 23 00:01:20,240 --> 00:01:23,280 Speaker 2: They're like, hey, if we had twenty four seven trading, 24 00:01:23,319 --> 00:01:25,360 Speaker 2: would you trade twenty four seven or twenty four five. 25 00:01:25,800 --> 00:01:27,759 Speaker 2: I think the survey had a bunch of options. Yeah, 26 00:01:27,800 --> 00:01:31,039 Speaker 2: it's like twenty four hours a day, seven days a week. 27 00:01:31,160 --> 00:01:32,240 Speaker 2: Both neither and. 28 00:01:32,240 --> 00:01:34,720 Speaker 1: I don't believe that we have the results of that survey, 29 00:01:34,760 --> 00:01:35,680 Speaker 1: which feel key. 30 00:01:35,800 --> 00:01:37,600 Speaker 2: I mean, it's not a public survey, it's for their 31 00:01:37,600 --> 00:01:39,960 Speaker 2: own information. But the reason they're doing it is because 32 00:01:40,000 --> 00:01:43,360 Speaker 2: there is pressure on it. Right. Someone started to think 33 00:01:43,400 --> 00:01:45,920 Speaker 2: called the twenty four exchange, that's meant to be a 34 00:01:45,920 --> 00:01:47,920 Speaker 2: twenty four hour I think it's actually twenty three hours 35 00:01:47,920 --> 00:01:51,280 Speaker 2: a day, And all the retail brokerages are moving to 36 00:01:51,320 --> 00:01:56,000 Speaker 2: offer extended hour overnight trading because a lot of robin 37 00:01:56,000 --> 00:01:58,200 Speaker 2: Hood customers would really like to be able to trade 38 00:01:58,240 --> 00:01:59,200 Speaker 2: stocks at three am. 39 00:01:59,520 --> 00:01:59,800 Speaker 1: Yeah. 40 00:02:00,080 --> 00:02:03,240 Speaker 2: So Nice sees where the market is going and is 41 00:02:03,280 --> 00:02:04,480 Speaker 2: asking its customers about it. 42 00:02:04,640 --> 00:02:06,320 Speaker 1: Yeah, and I guess that kind of answers the question 43 00:02:06,400 --> 00:02:09,239 Speaker 1: of who would this before, and it would be for 44 00:02:09,400 --> 00:02:11,720 Speaker 1: pajame traders, retail folks. 45 00:02:12,080 --> 00:02:13,880 Speaker 2: I think it would be for a lot of pajama 46 00:02:13,919 --> 00:02:16,440 Speaker 2: trating retail folks. The crypto market has been twenty four 47 00:02:16,440 --> 00:02:18,520 Speaker 2: to seven. Part of what's causing this is like crypto 48 00:02:18,600 --> 00:02:20,079 Speaker 2: is twenty four to seven, and people like, oh yeah, 49 00:02:20,160 --> 00:02:23,280 Speaker 2: twenty four seven trading can work. And you look at crypto, right, 50 00:02:23,320 --> 00:02:25,680 Speaker 2: they're like peaks when Asian markets wake up and when 51 00:02:25,680 --> 00:02:27,640 Speaker 2: European markets wake up. So I think some of this 52 00:02:27,800 --> 00:02:31,360 Speaker 2: might be for like news happens in Asia in like 53 00:02:31,440 --> 00:02:35,480 Speaker 2: the US overnight and people can go and trade American stocks. 54 00:02:36,120 --> 00:02:37,560 Speaker 2: A lot of it is for pajama traders. 55 00:02:37,919 --> 00:02:39,760 Speaker 1: I was gonna say, and who am I, But I 56 00:02:39,800 --> 00:02:41,880 Speaker 1: feel like the crypto market is that where we should 57 00:02:41,919 --> 00:02:44,000 Speaker 1: be taking our cues from in terms of twenty four 58 00:02:44,000 --> 00:02:44,680 Speaker 1: to seven trading. 59 00:02:45,160 --> 00:02:49,440 Speaker 2: I mean, I'm not sure that crypto has necessarily provided 60 00:02:49,440 --> 00:02:52,520 Speaker 2: great lessons for like real financial markets. Real financial markets 61 00:02:52,639 --> 00:02:56,280 Speaker 2: have patterns that come from technology of two hundred years ago, 62 00:02:56,760 --> 00:02:59,560 Speaker 2: and sometimes it takes a sort of brand new market 63 00:02:59,680 --> 00:03:02,280 Speaker 2: to cast aside that technology and say, wait a minute, 64 00:03:02,200 --> 00:03:04,200 Speaker 2: we have the computers to trade twenty four seven, so 65 00:03:04,360 --> 00:03:05,000 Speaker 2: let's just do it. 66 00:03:05,160 --> 00:03:08,120 Speaker 1: Thinking about the effects that this could have. Again, in 67 00:03:08,200 --> 00:03:11,120 Speaker 1: this hypothetical scenario where there's twenty four to five or 68 00:03:11,120 --> 00:03:13,920 Speaker 1: twenty four to seven trading, what the effects on liquidity 69 00:03:14,120 --> 00:03:18,000 Speaker 1: might be are really interesting because in normal market hours 70 00:03:18,000 --> 00:03:20,280 Speaker 1: in the US, it's the open and the close is 71 00:03:20,320 --> 00:03:22,880 Speaker 1: when you get the most volume. But if there's not 72 00:03:23,000 --> 00:03:26,200 Speaker 1: an open and there's not a close, where are the 73 00:03:26,320 --> 00:03:27,480 Speaker 1: liquidity clusters? 74 00:03:27,840 --> 00:03:29,919 Speaker 2: I suspect the answer is the open and the close. 75 00:03:30,320 --> 00:03:32,960 Speaker 2: I suspect, By the way, like Nicey and Ethic exchanges 76 00:03:33,000 --> 00:03:35,720 Speaker 2: offer extended hour trading, and it starts structural, but it's 77 00:03:35,720 --> 00:03:37,520 Speaker 2: in part just like tradition, like people know that nine 78 00:03:37,560 --> 00:03:39,960 Speaker 2: thirty and four are the times when everyone trades, and 79 00:03:40,000 --> 00:03:42,840 Speaker 2: so there are auctions then, and that's when liquidity clusters, 80 00:03:42,880 --> 00:03:45,280 Speaker 2: and you can trade ten minutes before the opening auction 81 00:03:45,680 --> 00:03:48,520 Speaker 2: or ten minutes after what the opening auction does collect liquidity. 82 00:03:48,800 --> 00:03:50,880 Speaker 2: I suspect that it won't be a crypto exchange where 83 00:03:50,880 --> 00:03:52,800 Speaker 2: it's we just turn it on and it goes forever. Yeah, 84 00:03:52,800 --> 00:03:55,120 Speaker 2: it'll be like Nicey, where there's a nine to thirty 85 00:03:55,520 --> 00:03:58,520 Speaker 2: auction and a four o'clock auction and trading during the 86 00:03:58,600 --> 00:04:01,360 Speaker 2: day and then after hour there's some other thing that's 87 00:04:01,360 --> 00:04:04,240 Speaker 2: like the overnight session, but it's like a little deprecated 88 00:04:04,240 --> 00:04:06,720 Speaker 2: so people understand where the main sources of liquidity are. 89 00:04:06,920 --> 00:04:09,800 Speaker 1: I root for chaos in general. I'm interested to see 90 00:04:09,880 --> 00:04:12,840 Speaker 1: what three am would look like on a twenty four 91 00:04:12,920 --> 00:04:16,880 Speaker 1: to five exchange, what shenanigans would happen around that time. 92 00:04:17,320 --> 00:04:23,040 Speaker 2: Presumably it's mostly pajama trading, retail traders interacting with one 93 00:04:23,080 --> 00:04:26,080 Speaker 2: or two very nervous electronic market makers. And then, like 94 00:04:26,120 --> 00:04:29,080 Speaker 2: every so often, the catastrophe happens overnight and like big 95 00:04:29,160 --> 00:04:32,640 Speaker 2: traders rushed to sell and the stock crashes because there's 96 00:04:32,680 --> 00:04:35,520 Speaker 2: no deep liquidity provision. Yeah, you'll see a lot more 97 00:04:35,560 --> 00:04:37,600 Speaker 2: flash crashes because like fewer people are going to be 98 00:04:37,600 --> 00:04:39,240 Speaker 2: putting in quotes at three am, so. 99 00:04:39,160 --> 00:04:41,400 Speaker 1: The charts will get super fun, even. 100 00:04:41,240 --> 00:04:44,279 Speaker 2: Like one big retail trader could crash the slack. Although 101 00:04:44,320 --> 00:04:46,240 Speaker 2: you say that the charts like even now, if you 102 00:04:46,279 --> 00:04:48,240 Speaker 2: look at like the Bloomberg charts, they are the nine 103 00:04:48,360 --> 00:04:51,520 Speaker 2: thirty to four o'clock session. There's trading after hours, but 104 00:04:51,600 --> 00:04:54,160 Speaker 2: everyone kind of understands that it doesn't count. You root 105 00:04:54,200 --> 00:04:57,080 Speaker 2: for chaos. I've been advocating for years that the stock 106 00:04:57,120 --> 00:04:59,279 Speaker 2: market should move to half an hour a day. The 107 00:04:59,400 --> 00:05:01,920 Speaker 2: large bulk professional trading occurs at the opening in the close. 108 00:05:01,920 --> 00:05:03,880 Speaker 2: If you don't have any like particular reason, right if 109 00:05:03,920 --> 00:05:05,920 Speaker 2: you're just like if you're a mutual fund with outflows 110 00:05:06,000 --> 00:05:07,960 Speaker 2: or whatever, Like you did try to get the closing 111 00:05:08,000 --> 00:05:10,039 Speaker 2: print right. You're looking to trade where there's the most 112 00:05:10,080 --> 00:05:14,240 Speaker 2: liquidity if you don't have any special information, and if 113 00:05:14,279 --> 00:05:16,440 Speaker 2: you concentrate all the liquidity at one time, you get 114 00:05:16,520 --> 00:05:19,960 Speaker 2: more efficient prices. If you've spread the liquidity over twenty 115 00:05:19,960 --> 00:05:22,120 Speaker 2: four hours, it like all gets worse. One thing I 116 00:05:22,120 --> 00:05:23,560 Speaker 2: was thinking about is if you do go to twenty 117 00:05:23,600 --> 00:05:26,560 Speaker 2: four hour trading, that probably moves some liquidity away from 118 00:05:26,600 --> 00:05:29,200 Speaker 2: like two pm right right, and so then it has 119 00:05:29,240 --> 00:05:32,560 Speaker 2: the effect of possibly concentrating even more trading at the 120 00:05:32,600 --> 00:05:35,320 Speaker 2: open end close, because people are like, oh, there's twenty 121 00:05:35,320 --> 00:05:37,599 Speaker 2: four hours of trading in the day, there's two real events, 122 00:05:37,800 --> 00:05:39,640 Speaker 2: and everything else is like a ghost town. So I 123 00:05:39,720 --> 00:05:41,800 Speaker 2: might as well only trade at the open up the close. 124 00:05:42,120 --> 00:05:44,280 Speaker 1: That would be a fun effect if it worked out 125 00:05:44,279 --> 00:05:44,839 Speaker 1: that way. 126 00:05:45,080 --> 00:05:47,240 Speaker 2: It would be even from a reader suggesting that there 127 00:05:47,240 --> 00:05:49,360 Speaker 2: should just be one auction a day. Everyone could put 128 00:05:49,400 --> 00:05:51,440 Speaker 2: in their bids in the auction and like you'd clear 129 00:05:51,520 --> 00:05:54,160 Speaker 2: the stock at whatever the clearing price of the auction was, 130 00:05:54,200 --> 00:05:55,600 Speaker 2: and then you'd try it again tomorrow. 131 00:05:55,640 --> 00:05:56,120 Speaker 1: Beautiful. 132 00:05:57,000 --> 00:05:59,560 Speaker 2: That is very appealing to me because it would give 133 00:05:59,600 --> 00:06:02,000 Speaker 2: people up free time, right, you wouldn't have to trade 134 00:06:02,040 --> 00:06:04,000 Speaker 2: all the time. The other advantage of that is it 135 00:06:04,000 --> 00:06:07,280 Speaker 2: cuts down on the cost of intermediation. I'm not sure, 136 00:06:07,279 --> 00:06:08,680 Speaker 2: but I think that if you go to twenty four 137 00:06:08,720 --> 00:06:12,120 Speaker 2: hour trading, then the high frequency trading firms of the 138 00:06:12,120 --> 00:06:14,880 Speaker 2: world are going to make more money because they're going 139 00:06:14,920 --> 00:06:17,839 Speaker 2: to be trading with retail traders at three am, and 140 00:06:18,600 --> 00:06:22,160 Speaker 2: in the aggregate that'll be noise trading, but liquidity will 141 00:06:22,200 --> 00:06:24,360 Speaker 2: be very thin, and they'll charge a lot for spreads, right, 142 00:06:24,360 --> 00:06:26,479 Speaker 2: I mean, like the point of a high frequency trader 143 00:06:26,600 --> 00:06:28,120 Speaker 2: is that there are a lot of people want to 144 00:06:28,120 --> 00:06:29,920 Speaker 2: buy stock. There a lot of people want to sell stock. 145 00:06:30,920 --> 00:06:33,479 Speaker 2: They don't come to the market at exactly the same time, 146 00:06:33,760 --> 00:06:36,040 Speaker 2: and so some electronic market maker is buying from the 147 00:06:36,040 --> 00:06:38,680 Speaker 2: people who want to sell, holding the stock for a 148 00:06:38,760 --> 00:06:40,880 Speaker 2: second or a minute or an hour, and then selling 149 00:06:40,880 --> 00:06:42,479 Speaker 2: it to people who want to buy. If you spread 150 00:06:42,480 --> 00:06:44,359 Speaker 2: out the trading, there's just more of that. There's like 151 00:06:44,400 --> 00:06:46,880 Speaker 2: more people coming in at different times, and more money 152 00:06:46,880 --> 00:06:49,479 Speaker 2: for high frequency traders to make because they are doing 153 00:06:49,520 --> 00:06:52,120 Speaker 2: more of that intermediaty trades in time, whereas if you 154 00:06:52,160 --> 00:06:54,039 Speaker 2: put all of the trading in one auction, then all 155 00:06:54,080 --> 00:06:55,520 Speaker 2: the people want to buy, all of the people want 156 00:06:55,520 --> 00:06:58,120 Speaker 2: to sell meat at that one second, and you don't 157 00:06:58,120 --> 00:07:00,479 Speaker 2: have any need for like electronic and mediation. 158 00:07:00,680 --> 00:07:01,800 Speaker 1: There are your two extremes. 159 00:07:01,880 --> 00:07:04,120 Speaker 2: Those are your two extremes. And like the modern like 160 00:07:04,200 --> 00:07:07,360 Speaker 2: retail stock trading boom, the like meme stock boom. Yeah, 161 00:07:07,400 --> 00:07:10,240 Speaker 2: people are so mad at the Citadel Securities of the world. 162 00:07:10,240 --> 00:07:12,640 Speaker 2: They're so mad at the hyper concy traders, but they 163 00:07:12,680 --> 00:07:14,640 Speaker 2: also want to trade stock at three. Yeah. The memestock 164 00:07:14,680 --> 00:07:17,000 Speaker 2: boom has been great for those hyper concut traders, right 165 00:07:17,000 --> 00:07:19,280 Speaker 2: because they're getting all this order flow to trade with, 166 00:07:19,800 --> 00:07:21,840 Speaker 2: while all these retail traders are so mad at at 167 00:07:21,840 --> 00:07:24,320 Speaker 2: Ceditel Securities. This is the same thing where it's like 168 00:07:24,320 --> 00:07:27,040 Speaker 2: this thing that caters to retail traders, I think will 169 00:07:27,040 --> 00:07:29,720 Speaker 2: be very good for the electronic market makers. 170 00:07:30,040 --> 00:07:31,000 Speaker 1: So they need each other. 171 00:07:31,280 --> 00:07:34,640 Speaker 2: Yeah. I think some of the memestock traders have a 172 00:07:34,680 --> 00:07:38,440 Speaker 2: somewhat faulty understanding of how Citital Securities makes money. I 173 00:07:38,520 --> 00:07:41,760 Speaker 2: think that if you have twenty four hour trading, it's 174 00:07:41,760 --> 00:07:43,920 Speaker 2: gonna be really good for those guys. And if you 175 00:07:43,960 --> 00:07:46,160 Speaker 2: don't like those Guys, if you think that it's bad 176 00:07:46,720 --> 00:07:50,960 Speaker 2: that these intermediaries make so much money trading stocks, which 177 00:07:50,960 --> 00:07:52,600 Speaker 2: I don't really think but like a lot of people do, 178 00:07:53,120 --> 00:07:55,440 Speaker 2: then collapsing it to one single point of trading would 179 00:07:55,440 --> 00:07:56,840 Speaker 2: be good for making traders. 180 00:07:56,840 --> 00:08:00,880 Speaker 1: Then what would the financial television anchors talk about all day? 181 00:08:00,960 --> 00:08:02,520 Speaker 2: I was going to say maybe the same thing, but 182 00:08:02,680 --> 00:08:03,280 Speaker 2: of course. 183 00:08:03,200 --> 00:08:05,120 Speaker 1: I just talk about it market more. 184 00:08:05,280 --> 00:08:08,120 Speaker 2: Oh yeah, Bomberker could do it to one auction a day. 185 00:08:08,320 --> 00:08:09,200 Speaker 2: Corporate earnings. 186 00:08:09,320 --> 00:08:12,240 Speaker 1: Yeah, it raises the question. I mean you think about 187 00:08:12,280 --> 00:08:15,800 Speaker 1: what happened with what was it left last earnings cycle 188 00:08:15,840 --> 00:08:19,480 Speaker 1: with the typo in their release and things went crazy, 189 00:08:19,520 --> 00:08:22,120 Speaker 1: but it was after hours, so the charts were still clean. 190 00:08:22,400 --> 00:08:25,000 Speaker 2: Yeah. I mean, it's like a really traveling possibility about 191 00:08:25,000 --> 00:08:27,000 Speaker 2: twenty four seven trading is like if you had real 192 00:08:27,040 --> 00:08:28,840 Speaker 2: twenty four seven trading where I was like, oh, it's 193 00:08:28,880 --> 00:08:31,280 Speaker 2: like fake and deprecated, but it's like the market is 194 00:08:31,320 --> 00:08:33,600 Speaker 2: just open all the time. Then like when would companies 195 00:08:33,640 --> 00:08:34,360 Speaker 2: put out news? 196 00:08:34,559 --> 00:08:36,000 Speaker 1: Yeah, and the government too. 197 00:08:36,520 --> 00:08:38,439 Speaker 2: Right now, there's this norm of like six and a 198 00:08:38,480 --> 00:08:43,200 Speaker 2: half hours of market hours, and during market hours you 199 00:08:43,280 --> 00:08:46,839 Speaker 2: try not to put out market moving news because one 200 00:08:46,880 --> 00:08:49,080 Speaker 2: if you get it wrong. The stakes are horrible or 201 00:08:49,080 --> 00:08:51,520 Speaker 2: really high. But like two, if you put out news 202 00:08:51,920 --> 00:08:54,880 Speaker 2: at ten am, someone's going to see it first. Someone's 203 00:08:54,920 --> 00:08:57,000 Speaker 2: going to trade on it ahead of someone else. And 204 00:08:57,080 --> 00:08:59,000 Speaker 2: like the person who sees at first is going to 205 00:08:59,080 --> 00:09:02,440 Speaker 2: be someone who is paying for like the fastest data 206 00:09:02,440 --> 00:09:06,320 Speaker 2: connections to the exchanges. It's systematically going to be not 207 00:09:06,400 --> 00:09:07,160 Speaker 2: the retail trader. 208 00:09:07,240 --> 00:09:09,760 Speaker 1: Right. I have an idea, Well, companies should release their 209 00:09:09,800 --> 00:09:12,199 Speaker 1: earnings at three am, and if you really care, you're 210 00:09:12,240 --> 00:09:14,640 Speaker 1: going to be up and we can still have normal 211 00:09:14,760 --> 00:09:18,040 Speaker 1: ish hours. Agree that it'll still be nine thirty and 212 00:09:18,240 --> 00:09:20,720 Speaker 1: four pm is when most of the trading happens. But 213 00:09:20,760 --> 00:09:22,079 Speaker 1: then you have goblin hours. 214 00:09:22,320 --> 00:09:24,679 Speaker 2: But if you're like a hedge fund, you're you're awake 215 00:09:24,679 --> 00:09:27,559 Speaker 2: in goblin hours and like someone's winning and someone's losing. 216 00:09:27,679 --> 00:09:30,280 Speaker 1: That's great, not for them, I know, but no, you 217 00:09:30,320 --> 00:09:32,960 Speaker 1: have goblin hours, and it'll be subverted where you have 218 00:09:33,080 --> 00:09:36,160 Speaker 1: all the professionals, all the hedge funds, they're trading in 219 00:09:36,200 --> 00:09:38,600 Speaker 1: the overnight session, and then the normal session will just 220 00:09:38,600 --> 00:09:39,760 Speaker 1: be kind of boring in retail. 221 00:09:39,960 --> 00:09:41,920 Speaker 2: Look, I mean, news happens right now and some people 222 00:09:41,920 --> 00:09:43,480 Speaker 2: react to and the it is faster than others. But 223 00:09:43,520 --> 00:09:46,240 Speaker 2: it is not the case that there's a race to 224 00:09:46,280 --> 00:09:48,920 Speaker 2: react to every piece of corporate earnings news, right or 225 00:09:48,960 --> 00:09:51,319 Speaker 2: every economic data point, because most of those things come 226 00:09:51,360 --> 00:09:53,760 Speaker 2: out outside of market hours, and you can't really have 227 00:09:53,760 --> 00:09:58,200 Speaker 2: that race, right if you have true market hours twenty 228 00:09:58,200 --> 00:09:59,680 Speaker 2: four hours a day, then like you do have that 229 00:09:59,760 --> 00:10:02,880 Speaker 2: race every time news comes out, and it's a socially 230 00:10:02,960 --> 00:10:05,760 Speaker 2: wasteful race, right. If you ask hedge funds like, what 231 00:10:06,000 --> 00:10:07,800 Speaker 2: socially valuable thing do you do, They're like, oh, we 232 00:10:07,840 --> 00:10:10,600 Speaker 2: make prices more efficient. It's like, yeah, understanding earnings news 233 00:10:10,600 --> 00:10:13,000 Speaker 2: and buying stocks that are undervalued is like a good thing, 234 00:10:13,000 --> 00:10:15,120 Speaker 2: but racing to do that at three am, one second 235 00:10:15,120 --> 00:10:17,040 Speaker 2: ahead of another hedge fund is like you should just 236 00:10:17,080 --> 00:10:18,640 Speaker 2: go to bed and wake up at nine thirty and 237 00:10:18,679 --> 00:10:18,920 Speaker 2: do it. 238 00:10:19,040 --> 00:10:22,880 Speaker 1: I wish that I had the Financial Times article pulled up, 239 00:10:22,920 --> 00:10:25,280 Speaker 1: because wasn't it one of the questions that was asked 240 00:10:25,280 --> 00:10:29,240 Speaker 1: in the survey was would the time you spend thinking 241 00:10:29,240 --> 00:10:33,080 Speaker 1: about overnight trading be better spent thinking about trading during 242 00:10:33,120 --> 00:10:34,240 Speaker 1: normal hours or yeah? 243 00:10:34,280 --> 00:10:35,480 Speaker 2: I think it was like I think it was something 244 00:10:35,520 --> 00:10:37,000 Speaker 2: like should we stop asking you about this? 245 00:10:37,120 --> 00:10:37,320 Speaker 1: Yeah? 246 00:10:37,320 --> 00:10:39,360 Speaker 2: It was like with the time that nicey spends thinking 247 00:10:39,360 --> 00:10:41,560 Speaker 2: about overnight try to be better spent on something else. 248 00:10:41,720 --> 00:10:44,720 Speaker 2: If trading was one second to day, hedge funds would 249 00:10:44,720 --> 00:10:49,280 Speaker 2: still have incentives to understand companies and understand what might 250 00:10:49,320 --> 00:10:52,400 Speaker 2: move their prices and incorporate all the information into their 251 00:10:52,440 --> 00:10:55,280 Speaker 2: one trade a day. But at twenty four to seven trading, 252 00:10:55,320 --> 00:10:57,720 Speaker 2: it's like you're spending a lot of time optimizing, Like 253 00:10:57,760 --> 00:10:59,600 Speaker 2: when you're waking up, you're thinking about things other than 254 00:10:59,640 --> 00:10:59,920 Speaker 2: the fund. 255 00:11:00,080 --> 00:11:02,480 Speaker 1: Mental Again, I root for chaos, but I feel like 256 00:11:02,720 --> 00:11:05,160 Speaker 1: at least this conversation has talked me into maybe we 257 00:11:05,200 --> 00:11:07,400 Speaker 1: should just stick to normal hours, or maybe we should 258 00:11:07,440 --> 00:11:09,800 Speaker 1: just be open for half an hour a day. 259 00:11:09,960 --> 00:11:12,640 Speaker 2: I feel like I haven't adequately emphasized the main benefit 260 00:11:12,640 --> 00:11:15,160 Speaker 2: of half an hour day, which is like everyone would 261 00:11:15,200 --> 00:11:17,760 Speaker 2: get to relax more and spend more time with their families. 262 00:11:18,120 --> 00:11:19,800 Speaker 1: We like watch financial TV. 263 00:11:20,520 --> 00:11:23,280 Speaker 2: Well, I mean when I say everyone, I include financial 264 00:11:23,360 --> 00:11:25,640 Speaker 2: news anchors, and that you would also. 265 00:11:25,440 --> 00:11:42,800 Speaker 3: Have less to do in a nice Yeah, maybe non competes. 266 00:11:43,400 --> 00:11:46,400 Speaker 2: So we talked about last week about how I did 267 00:11:46,400 --> 00:11:48,760 Speaker 2: not take full advantage of my gardening. 268 00:11:48,840 --> 00:11:50,880 Speaker 1: And now maybe you never will ever again. 269 00:11:51,000 --> 00:11:53,360 Speaker 2: Now, maybe no one will ever get gardening leave again. 270 00:11:53,480 --> 00:11:59,960 Speaker 1: God. Yeah. The FTC. Interesting move here about basically erratic 271 00:12:00,720 --> 00:12:04,920 Speaker 1: non competes. Yes, except for senior executives only barely. 272 00:12:05,160 --> 00:12:08,719 Speaker 2: Yeah. Basically, the FTC voted this week to ban all 273 00:12:08,720 --> 00:12:12,040 Speaker 2: non competes forever. If you're a senior executive you currently 274 00:12:12,080 --> 00:12:14,600 Speaker 2: have a non compete, it's enforceable. But otherwise they voted 275 00:12:14,640 --> 00:12:16,760 Speaker 2: to get rid of non competes. One important thing here 276 00:12:16,840 --> 00:12:19,000 Speaker 2: is it's a good chance this doesn't ever happen. Right, 277 00:12:19,040 --> 00:12:21,400 Speaker 2: the FDC voted to do it. It goes into effect 278 00:12:21,440 --> 00:12:23,760 Speaker 2: in about six months, but there are already like multiple 279 00:12:23,800 --> 00:12:26,480 Speaker 2: lawsuits against it, and even the FTC. There are five 280 00:12:26,600 --> 00:12:29,440 Speaker 2: FTC commissioners. Two of them voted against it, and they 281 00:12:29,440 --> 00:12:31,200 Speaker 2: both said in their votes against that this is not 282 00:12:31,240 --> 00:12:34,079 Speaker 2: going to pass muster with the courts, and we can 283 00:12:34,080 --> 00:12:35,880 Speaker 2: talk about the FDC's authority for it. 284 00:12:36,000 --> 00:12:39,160 Speaker 1: I mean, I am interested in that because my first 285 00:12:39,160 --> 00:12:42,160 Speaker 1: reaction was like why, and also why the FTC and 286 00:12:42,160 --> 00:12:44,160 Speaker 1: why is the FTC focusing on this? Shouldn't they be 287 00:12:44,200 --> 00:12:48,160 Speaker 1: like trying to stop Tapestry from buying Capri and other things. 288 00:12:48,280 --> 00:12:52,000 Speaker 2: The FTC was in the business of stopping unfair methods 289 00:12:52,000 --> 00:12:54,200 Speaker 2: of competition. Right, Like, we mostly think of it as 290 00:12:54,200 --> 00:12:57,040 Speaker 2: anti trust, right, but it's also like false advertising and 291 00:12:57,080 --> 00:13:00,680 Speaker 2: like other kinds of fraud. And they think that non 292 00:13:00,720 --> 00:13:04,800 Speaker 2: competes are an unfair method of competition, and you can 293 00:13:04,880 --> 00:13:06,920 Speaker 2: see why, right. I mean, like one thing that they 294 00:13:07,000 --> 00:13:09,439 Speaker 2: talk about in the rule and in the public statements 295 00:13:09,480 --> 00:13:12,240 Speaker 2: is non competes can stop people from leaving a company 296 00:13:12,240 --> 00:13:13,880 Speaker 2: to start a new business. So it's like a very 297 00:13:13,880 --> 00:13:16,600 Speaker 2: direct way for a company to prevent new businesses coming 298 00:13:16,600 --> 00:13:17,480 Speaker 2: out to compete with them. 299 00:13:17,679 --> 00:13:17,880 Speaker 1: Right. 300 00:13:17,960 --> 00:13:20,880 Speaker 2: The rule really mentions doctors a lot, Like doctors are 301 00:13:21,120 --> 00:13:24,160 Speaker 2: an important case. Doctors will often have non competes, and 302 00:13:24,760 --> 00:13:26,640 Speaker 2: if you're a doctor and you leave your practice, you 303 00:13:26,640 --> 00:13:28,640 Speaker 2: have to like sometimes move to a different state to 304 00:13:28,679 --> 00:13:32,560 Speaker 2: continue practicing medicine, and like to the extent the FTC 305 00:13:32,679 --> 00:13:35,400 Speaker 2: is in the business of protecting consumer choice and lowering 306 00:13:35,440 --> 00:13:37,600 Speaker 2: consumer prices. That seems like it would be bad for 307 00:13:37,640 --> 00:13:39,640 Speaker 2: consumers that they can't get a doctor because the doctor 308 00:13:39,679 --> 00:13:42,439 Speaker 2: had to move away, So it makes sense that it's 309 00:13:42,480 --> 00:13:45,840 Speaker 2: the FTC. Yeah, the FDC, this is not something they've 310 00:13:45,840 --> 00:13:48,160 Speaker 2: done before, and their authority for it is a little unclear, 311 00:13:48,360 --> 00:13:51,520 Speaker 2: and their ability to make rules about it is unclear. Yeah, 312 00:13:51,559 --> 00:13:55,319 Speaker 2: and you know, we live in a judicial climate where 313 00:13:56,240 --> 00:13:58,960 Speaker 2: when agencies are like, we're going to make new rules 314 00:13:58,960 --> 00:14:01,640 Speaker 2: to regulate things we've never regulated before, it's hard to 315 00:14:01,679 --> 00:14:04,800 Speaker 2: imagine the current Supreme Court saying Okay, great, sounds good. 316 00:14:04,920 --> 00:14:05,079 Speaker 1: Right. 317 00:14:05,160 --> 00:14:07,160 Speaker 2: It just feels like that's the sort of thing that 318 00:14:07,200 --> 00:14:08,200 Speaker 2: modern courts don't like. 319 00:14:08,559 --> 00:14:11,679 Speaker 1: So some pretty big question marks over authority here. And 320 00:14:11,960 --> 00:14:14,000 Speaker 1: maybe this won't even happen, But I mean, this was 321 00:14:14,040 --> 00:14:17,959 Speaker 1: a good reminder that at least I almost exclusively think 322 00:14:17,960 --> 00:14:21,960 Speaker 1: about non competes in the context of the financial industry. 323 00:14:22,360 --> 00:14:24,720 Speaker 1: But if you take a look at some of the 324 00:14:24,760 --> 00:14:28,479 Speaker 1: examples that the FDC used. You wrote about the powerwasher 325 00:14:28,920 --> 00:14:31,560 Speaker 1: who said, all I know is powerwashing. These business owners 326 00:14:31,600 --> 00:14:33,560 Speaker 1: all want me to sign a non compete clause. They 327 00:14:33,560 --> 00:14:38,520 Speaker 1: also cited someone who works in the asphalt industry, a bartender, 328 00:14:39,040 --> 00:14:44,160 Speaker 1: and as you were saying, a physician in rural underserved Appalasia. 329 00:14:44,360 --> 00:14:46,120 Speaker 1: So I don't know, that was a nice reminder. 330 00:14:46,240 --> 00:14:48,760 Speaker 2: They've been like media reports about non competes in the 331 00:14:48,800 --> 00:14:52,000 Speaker 2: fast food industry. It's really it is pretty widespread. 332 00:14:52,440 --> 00:14:55,600 Speaker 1: Yeah, the FTC had some numbers there too that nearly 333 00:14:55,680 --> 00:14:59,000 Speaker 1: twenty percent of workers are subject to non competes today, 334 00:14:59,080 --> 00:15:02,160 Speaker 1: and their estimate is that it would increase US earnings 335 00:15:02,160 --> 00:15:05,640 Speaker 1: by at least four hundred billion dollars over the next 336 00:15:05,640 --> 00:15:09,440 Speaker 1: ten years to abolish non competes. A lot of readers 337 00:15:09,520 --> 00:15:13,920 Speaker 1: emailed in about PE non competes, PE purchase non competes. 338 00:15:14,080 --> 00:15:16,360 Speaker 2: I got like a couple of emails from readers being like, 339 00:15:17,280 --> 00:15:22,440 Speaker 2: I work in private equity and we buy companies, and 340 00:15:22,520 --> 00:15:25,320 Speaker 2: a lot of the companies that private equity buyers are like, 341 00:15:25,720 --> 00:15:28,360 Speaker 2: it's like asset lights, some guy operating in business, right, 342 00:15:28,680 --> 00:15:30,760 Speaker 2: And so when you buy that business, you're sort of 343 00:15:30,840 --> 00:15:34,680 Speaker 2: buying the person. And if you pay that person twenty 344 00:15:34,680 --> 00:15:38,640 Speaker 2: million dollars to take over his business and then he 345 00:15:38,760 --> 00:15:42,720 Speaker 2: leaves and sets up another business, he'll probably take all 346 00:15:42,720 --> 00:15:45,200 Speaker 2: the customers with him, because it's like it's just him, yeah, 347 00:15:45,240 --> 00:15:48,080 Speaker 2: and you're out twenty million dollars for nothing. And so 348 00:15:49,400 --> 00:15:51,920 Speaker 2: seeing the headline of like FTC bands on competes, people 349 00:15:52,000 --> 00:15:54,160 Speaker 2: got really worried that would make it impossible to buy 350 00:15:54,160 --> 00:15:57,760 Speaker 2: and sell sort of one person small businesses. But there 351 00:15:57,800 --> 00:16:00,280 Speaker 2: is an exception for that, like the if you're signing 352 00:16:00,280 --> 00:16:02,280 Speaker 2: a non compete in connection with the sale of a business, 353 00:16:02,320 --> 00:16:03,280 Speaker 2: then that's enforceable. 354 00:16:03,760 --> 00:16:04,760 Speaker 1: So rest easy. 355 00:16:05,000 --> 00:16:06,240 Speaker 2: And you don't even have to be the owner of 356 00:16:06,240 --> 00:16:07,600 Speaker 2: the business. You know, if you have like a twenty 357 00:16:07,640 --> 00:16:09,840 Speaker 2: person company, like all the people in the company can 358 00:16:09,920 --> 00:16:12,280 Speaker 2: sign a non compete and it's still unforceable because you know, 359 00:16:12,320 --> 00:16:15,160 Speaker 2: what you're selling is the people in the business. So 360 00:16:15,240 --> 00:16:18,160 Speaker 2: there you go. Rest easy. I want to say one other. 361 00:16:18,040 --> 00:16:19,080 Speaker 1: Thing, yeah, and you should. 362 00:16:19,240 --> 00:16:21,280 Speaker 2: So the way it works is like they banned future 363 00:16:21,360 --> 00:16:23,760 Speaker 2: non competes, but they also say all current non competes 364 00:16:23,760 --> 00:16:27,120 Speaker 2: don't work, they're not enforceable. And so one thing in 365 00:16:27,160 --> 00:16:28,760 Speaker 2: the rule is that if you're a company that has 366 00:16:28,800 --> 00:16:31,080 Speaker 2: non competes, you have to send a notice to all 367 00:16:31,120 --> 00:16:34,040 Speaker 2: of your workers saying your non competes are no longer enforceable, 368 00:16:34,080 --> 00:16:35,720 Speaker 2: and like they actually have like language and the rule 369 00:16:35,720 --> 00:16:37,160 Speaker 2: of like this is what you have to put in 370 00:16:37,240 --> 00:16:39,320 Speaker 2: the email. My impression is that there are a lot 371 00:16:39,320 --> 00:16:42,640 Speaker 2: of non competes that are already illegal. In most states, 372 00:16:42,680 --> 00:16:44,680 Speaker 2: non competes are allowed, but they have to be reasonable, 373 00:16:44,720 --> 00:16:47,520 Speaker 2: and a lot of people sign unreasonable non competes. And 374 00:16:48,800 --> 00:16:53,120 Speaker 2: my impression is that companies write these illegal non competes 375 00:16:53,360 --> 00:16:56,440 Speaker 2: because they figure everyone sees this contract, and they're scared 376 00:16:56,480 --> 00:16:58,040 Speaker 2: and they're not going to go work for a competitor 377 00:16:58,120 --> 00:17:00,280 Speaker 2: because they don't want to get sued, and they don't 378 00:17:00,320 --> 00:17:01,920 Speaker 2: know enough about the law. They don't know if that 379 00:17:02,000 --> 00:17:04,800 Speaker 2: the non compete is illegal, And so you can get 380 00:17:04,840 --> 00:17:06,479 Speaker 2: a lot of mileage out of a non compete as 381 00:17:06,480 --> 00:17:08,640 Speaker 2: a company by just writing it down and like never 382 00:17:08,960 --> 00:17:11,480 Speaker 2: trying to enforce it. Even if it's not enforceable. You 383 00:17:11,520 --> 00:17:13,720 Speaker 2: can just say you can't compete, and then most people won't. 384 00:17:14,240 --> 00:17:16,359 Speaker 2: So the FDC wants to solve that problem by saying 385 00:17:16,600 --> 00:17:19,399 Speaker 2: you have to send all of your employees a letter 386 00:17:19,480 --> 00:17:22,680 Speaker 2: saying your non compute is unenforceable. Go ahead and compete, 387 00:17:22,960 --> 00:17:23,720 Speaker 2: but garden leave. 388 00:17:23,840 --> 00:17:25,360 Speaker 1: I know that you had a bad experience. That also 389 00:17:25,440 --> 00:17:26,400 Speaker 1: sounds really nice. 390 00:17:26,640 --> 00:17:31,520 Speaker 2: A lot of people in normal jobs think non competes 391 00:17:31,560 --> 00:17:33,879 Speaker 2: are bad because they just restrict their ability to get 392 00:17:33,920 --> 00:17:36,480 Speaker 2: a new job. But in finance you're like, oh, no, 393 00:17:37,040 --> 00:17:39,520 Speaker 2: I have to spend six months not working and getting 394 00:17:39,560 --> 00:17:43,119 Speaker 2: paid for me I can Finance people are like, I 395 00:17:43,200 --> 00:17:45,480 Speaker 2: kind of like the I like the noncompete status quo. 396 00:17:45,880 --> 00:17:49,560 Speaker 2: I was trying to figure out what happens to that. 397 00:17:49,760 --> 00:17:51,439 Speaker 2: In finance, it's like what tools do you have as 398 00:17:51,480 --> 00:17:53,880 Speaker 2: a financial firm to prevent people from competing. So one 399 00:17:53,960 --> 00:17:56,200 Speaker 2: is like you have a noncompete, which is maybe now illegal, 400 00:17:56,680 --> 00:17:59,560 Speaker 2: but I think the way that things normally work currently 401 00:17:59,680 --> 00:18:04,879 Speaker 2: is that like you have gardening leave, which is normally structured. 402 00:18:04,960 --> 00:18:08,640 Speaker 2: I think as you continue to be employed at the firm, 403 00:18:08,840 --> 00:18:12,560 Speaker 2: and they pay you your base salary, and you stay 404 00:18:12,560 --> 00:18:16,320 Speaker 2: there for some period, not going into work, not having 405 00:18:16,400 --> 00:18:19,640 Speaker 2: access to like the email system, getting pay your base salary, 406 00:18:19,720 --> 00:18:22,600 Speaker 2: and then eventually you leave. There's a litt unclear how 407 00:18:22,600 --> 00:18:23,920 Speaker 2: you would actually force that because I think that the 408 00:18:23,920 --> 00:18:26,960 Speaker 2: way finance works is that you have a non compete, 409 00:18:27,520 --> 00:18:30,639 Speaker 2: and so when you quit, you say I'm quitting, and 410 00:18:30,680 --> 00:18:33,719 Speaker 2: they're like, stay for your six month notice period and 411 00:18:33,840 --> 00:18:35,960 Speaker 2: will pay you. And if you say no, I don't 412 00:18:36,000 --> 00:18:37,679 Speaker 2: want to do that, they say, we have a non compete. 413 00:18:37,680 --> 00:18:39,280 Speaker 2: So you can't actually leave at the other firm anyway. 414 00:18:39,400 --> 00:18:41,760 Speaker 2: So it's like both like the employment terms and the 415 00:18:41,840 --> 00:18:45,159 Speaker 2: non compute. If the non compete goes away, it's not 416 00:18:45,200 --> 00:18:47,639 Speaker 2: totally clear to me that you could enforce the gardening 417 00:18:47,720 --> 00:18:49,040 Speaker 2: leave because you can be like, oh, you need to 418 00:18:49,040 --> 00:18:51,320 Speaker 2: provide six months notice to quit, and then someone is like, 419 00:18:51,800 --> 00:18:55,040 Speaker 2: I quit, I have at will employment in New York. 420 00:18:55,160 --> 00:18:58,600 Speaker 2: I'm quitting with no notice. And it's not clear how 421 00:18:58,680 --> 00:19:00,320 Speaker 2: much they can force you to stick to your six 422 00:19:00,359 --> 00:19:02,440 Speaker 2: month notice period if you don't want to get paid, 423 00:19:02,440 --> 00:19:03,800 Speaker 2: if you want to go to your new firm, which 424 00:19:05,080 --> 00:19:07,000 Speaker 2: if that became the norm, your new firm would insist 425 00:19:07,080 --> 00:19:08,159 Speaker 2: on it, then you wouldn't be able to get your 426 00:19:08,160 --> 00:19:09,760 Speaker 2: gardening leaf. Yeah, so I think you can do it. 427 00:19:09,800 --> 00:19:11,879 Speaker 2: I think you can write employment contracts. Let's say you 428 00:19:11,920 --> 00:19:13,600 Speaker 2: have to give six month notice. But it's a little 429 00:19:13,640 --> 00:19:16,080 Speaker 2: trickier than having the non compete as well. 430 00:19:16,320 --> 00:19:18,520 Speaker 1: That's interesting to hear because I mean, reading your column 431 00:19:18,560 --> 00:19:21,679 Speaker 1: and the description of notice period, I was like, oh, well, 432 00:19:21,960 --> 00:19:22,920 Speaker 1: then we'll just do that. 433 00:19:23,280 --> 00:19:25,760 Speaker 2: Yeah. I think that might be where it shakes that, 434 00:19:25,920 --> 00:19:27,840 Speaker 2: but I'm not totally sure. I think it might be 435 00:19:27,880 --> 00:19:30,160 Speaker 2: harder to enforce that if people really want to leave 436 00:19:30,560 --> 00:19:34,200 Speaker 2: without their gardening leave. Now you can imagine everyone having 437 00:19:34,200 --> 00:19:36,480 Speaker 2: this sort of gentleman's agreement of we're all going to 438 00:19:36,560 --> 00:19:38,800 Speaker 2: take our gardening leaf. The real hard chargers don't always 439 00:19:38,800 --> 00:19:39,760 Speaker 2: want to take the gardening leave. 440 00:19:39,920 --> 00:19:42,920 Speaker 1: Well, it sort of reminds me this discussion very loosely 441 00:19:42,960 --> 00:19:46,919 Speaker 1: about like the eternity leave. Maybe we can cut this. 442 00:19:47,040 --> 00:19:49,560 Speaker 1: But like, if you can get some alpha by not 443 00:19:49,760 --> 00:19:52,280 Speaker 1: taking your paternity leave and like showing how hardcore and 444 00:19:52,320 --> 00:19:55,280 Speaker 1: dedicated you are, maybe the gardening leave will kind of 445 00:19:55,280 --> 00:19:58,800 Speaker 1: turn into that I'm so dedicated and I'm so eager 446 00:19:58,840 --> 00:20:01,120 Speaker 1: to just get going, I'm not going to take gardening leave. 447 00:20:01,720 --> 00:20:03,560 Speaker 1: Will become a thing. 448 00:20:03,960 --> 00:20:07,000 Speaker 2: Nobody says to their new employer, I'm taking gardening leave. 449 00:20:07,040 --> 00:20:11,399 Speaker 2: I'll see you in six months. Everyone always conveys the 450 00:20:11,400 --> 00:20:13,960 Speaker 2: impression that they're so sorry about the gardening leave and 451 00:20:13,960 --> 00:20:16,359 Speaker 2: they'd really like to get started right away, and then 452 00:20:16,400 --> 00:20:18,240 Speaker 2: they like go home and you know, sit on the 453 00:20:18,240 --> 00:20:20,440 Speaker 2: couch and are happy. But I think if it became 454 00:20:20,560 --> 00:20:22,600 Speaker 2: possible to not take the gardening leave, then I think 455 00:20:22,760 --> 00:20:25,800 Speaker 2: that would become the requirement. Yes, this ties into the 456 00:20:25,840 --> 00:20:27,920 Speaker 2: twenty four seven trading, right. You need a certain amount 457 00:20:27,960 --> 00:20:31,040 Speaker 2: of rests from your financial job. Gardening, believe is a 458 00:20:31,080 --> 00:20:31,600 Speaker 2: nice way. 459 00:20:31,440 --> 00:20:35,000 Speaker 1: To get that. Like life is just hurtling towards relentlessly 460 00:20:35,160 --> 00:20:36,960 Speaker 1: just being on all the time. 461 00:20:37,280 --> 00:20:39,400 Speaker 2: I think that that is certainly the message of twenty 462 00:20:39,400 --> 00:20:41,720 Speaker 2: four seven trading. And like my impression is that there 463 00:20:41,800 --> 00:20:45,359 Speaker 2: are a minority of people in finance who've gotten really 464 00:20:45,359 --> 00:20:47,960 Speaker 2: good at optimizing for gardening leave. You like, quit your job, 465 00:20:48,280 --> 00:20:51,240 Speaker 2: spend six months on gardening leave, you start your new job, 466 00:20:51,359 --> 00:20:53,440 Speaker 2: you're like, ah, I gotta go back to that other job. 467 00:20:53,640 --> 00:20:53,840 Speaker 1: Yeah. 468 00:20:53,920 --> 00:20:55,639 Speaker 2: Quit After a month, you get like nine months of 469 00:20:55,680 --> 00:20:56,240 Speaker 2: gardening leave. 470 00:20:56,320 --> 00:20:58,280 Speaker 1: It can be like so good. I mean you linked 471 00:20:58,320 --> 00:21:02,560 Speaker 1: to that tweet about LinkedIn profile. The guy did that 472 00:21:02,640 --> 00:21:04,960 Speaker 1: and his descriptions were so funny. It was winter while 473 00:21:05,000 --> 00:21:07,760 Speaker 1: he was gardening leaving, so he just saw on his 474 00:21:07,800 --> 00:21:10,240 Speaker 1: couch and read books which came from trees, so it 475 00:21:10,280 --> 00:21:11,560 Speaker 1: was still a form of gardening. 476 00:21:11,800 --> 00:21:14,400 Speaker 2: It's a nice benefit of the financial career. You get 477 00:21:14,440 --> 00:21:16,840 Speaker 2: the occasional sabbatical in the form of gardening leave, and 478 00:21:16,920 --> 00:21:18,639 Speaker 2: it would be sad I think for a lot of 479 00:21:18,640 --> 00:21:19,600 Speaker 2: people if it went away. 480 00:21:19,680 --> 00:21:21,600 Speaker 1: Not The only way to get a lot of time 481 00:21:21,640 --> 00:21:23,440 Speaker 1: off is to have a child. 482 00:21:23,480 --> 00:21:27,680 Speaker 2: Spoken like someone just not a children. I don't think 483 00:21:27,680 --> 00:21:30,560 Speaker 2: most people think of ford to leave us time off. 484 00:21:30,880 --> 00:21:51,639 Speaker 1: Yeah. Maybe, did you know Accornable's fargo costco shoppers spend 485 00:21:51,920 --> 00:21:55,480 Speaker 1: two hundred million dollars a month on gold. That is crazy. 486 00:21:55,880 --> 00:21:57,680 Speaker 2: Some of that must be because they want. 487 00:21:57,480 --> 00:22:00,879 Speaker 1: To go Yeah, right. Some of it also, gold has 488 00:22:00,880 --> 00:22:03,240 Speaker 1: gone a lot more expensive, yeah, right. 489 00:22:03,920 --> 00:22:06,760 Speaker 2: Some of it is like gold hoarding for whatever reason. 490 00:22:06,800 --> 00:22:10,400 Speaker 2: Some of it is correct financial speculation should just. 491 00:22:10,320 --> 00:22:11,320 Speaker 1: Be buying ETFs. 492 00:22:11,400 --> 00:22:16,960 Speaker 2: But you know something something about holding an actual gold. 493 00:22:16,720 --> 00:22:17,600 Speaker 1: Bar instead of. 494 00:22:19,160 --> 00:22:21,840 Speaker 2: If you want like gold, you want gold, you don't 495 00:22:21,840 --> 00:22:23,480 Speaker 2: want ants, you're. 496 00:22:23,320 --> 00:22:25,760 Speaker 1: Actually tapping into like a very real tension. 497 00:22:26,000 --> 00:22:28,159 Speaker 2: Absolutely, yeah, absolutely. 498 00:22:27,720 --> 00:22:29,479 Speaker 1: Sounds like it's attention you're familiar with. 499 00:22:30,200 --> 00:22:32,560 Speaker 2: Oh, I've I've encountered people who want to buy gold, 500 00:22:33,359 --> 00:22:36,440 Speaker 2: but some people who buy gold from Costco are doing 501 00:22:36,480 --> 00:22:38,080 Speaker 2: it for credit card. 502 00:22:37,880 --> 00:22:40,760 Speaker 1: Reward points and we're trying. 503 00:22:40,800 --> 00:22:42,800 Speaker 2: Or trying they're doing it for credit card reward points. 504 00:22:42,800 --> 00:22:46,119 Speaker 2: But I wrote about this because the Most Journal had 505 00:22:46,119 --> 00:22:48,479 Speaker 2: an article about Costco gold and it started with this 506 00:22:48,520 --> 00:22:51,639 Speaker 2: guy who bought a lot of gold from Costco for 507 00:22:51,680 --> 00:22:54,600 Speaker 2: credit card points and then he tried to resell it 508 00:22:54,640 --> 00:22:56,760 Speaker 2: and he got less than he paid for it, and 509 00:22:57,080 --> 00:22:59,560 Speaker 2: I hate he was like, oh my Margins. You know, 510 00:23:00,040 --> 00:23:03,040 Speaker 2: he was very sad, And I wrote in general, the 511 00:23:03,080 --> 00:23:06,000 Speaker 2: great consumer financial arbitrage is like if you can buy 512 00:23:07,400 --> 00:23:09,600 Speaker 2: a thing that you can resell for the same price 513 00:23:09,640 --> 00:23:11,200 Speaker 2: you paid for it, and if you can put it 514 00:23:11,240 --> 00:23:13,199 Speaker 2: on your credit card, then like you can get your 515 00:23:13,200 --> 00:23:15,840 Speaker 2: credit card points, and you know, you have a sort 516 00:23:15,880 --> 00:23:18,400 Speaker 2: of a perpetual motion machine where you can like manufacture 517 00:23:18,400 --> 00:23:22,040 Speaker 2: credit card points without spending any money. And I said 518 00:23:22,080 --> 00:23:24,600 Speaker 2: something like this is the great consumer financial arbitrage. But 519 00:23:24,640 --> 00:23:26,680 Speaker 2: it's hard to do because credit card companies are aware 520 00:23:26,680 --> 00:23:28,280 Speaker 2: of this, right, and they try to crack down on it. 521 00:23:28,680 --> 00:23:31,280 Speaker 2: And of course, my readers, is that something like a 522 00:23:31,320 --> 00:23:33,479 Speaker 2: shudder to think of all the creddits that must all 523 00:23:33,480 --> 00:23:36,439 Speaker 2: the subreddits that must exist about buying costco cold for 524 00:23:36,480 --> 00:23:39,320 Speaker 2: credit card points. I got so many emails people are like, 525 00:23:39,720 --> 00:23:42,720 Speaker 2: people like, this is how I manufacture credit card points. 526 00:23:43,960 --> 00:23:45,919 Speaker 2: Like a lot of people pointed out that in like 527 00:23:45,960 --> 00:23:50,000 Speaker 2: twenty ten, the US Mint really wanted people to start 528 00:23:50,080 --> 00:23:52,800 Speaker 2: using dollar coins because the dollar coin is like more 529 00:23:52,840 --> 00:23:54,520 Speaker 2: cost effactor for the Mint than the dollar bill, and 530 00:23:54,560 --> 00:23:56,000 Speaker 2: so they were like, we're going to be like Europe 531 00:23:56,000 --> 00:23:58,480 Speaker 2: and transition to the dollar coin. And so they were 532 00:23:58,520 --> 00:24:01,880 Speaker 2: like trying to encourage people to get and use dollar coins. 533 00:24:02,160 --> 00:24:04,080 Speaker 2: And one way they did that was they let you 534 00:24:04,119 --> 00:24:06,840 Speaker 2: buy dollar coins like sacks of dollar coins for a 535 00:24:06,920 --> 00:24:09,560 Speaker 2: dollar each with free shipping, which is they're heavy and 536 00:24:09,560 --> 00:24:11,159 Speaker 2: you could do it on your credit card, and so 537 00:24:11,200 --> 00:24:14,080 Speaker 2: people are like, I'm gonna buy one thousand dollar coins 538 00:24:14,280 --> 00:24:16,800 Speaker 2: on my credit card. I'm gonna get ten dollars or 539 00:24:16,840 --> 00:24:20,080 Speaker 2: twenty dollars of credit card rewards. They're gonna arrive at 540 00:24:20,119 --> 00:24:22,920 Speaker 2: my house. I'm gonna put them directly in the card, 541 00:24:23,000 --> 00:24:24,480 Speaker 2: drive them to the bank to positive in the bank, 542 00:24:24,520 --> 00:24:26,359 Speaker 2: paying my credit card bill with that. And so the 543 00:24:26,440 --> 00:24:29,159 Speaker 2: US Mint did not get what it wanted, which was 544 00:24:29,240 --> 00:24:32,840 Speaker 2: like circulating use of the dollar coins, because everyone was 545 00:24:32,840 --> 00:24:34,400 Speaker 2: just taking them to the bank to pay their credit 546 00:24:34,480 --> 00:24:36,439 Speaker 2: card bills. People got a lot of airline miles out 547 00:24:36,480 --> 00:24:38,160 Speaker 2: of it. Eventually they shut it down. 548 00:24:38,160 --> 00:24:39,560 Speaker 1: But yeah, you know, and I. 549 00:24:39,560 --> 00:24:41,680 Speaker 2: Think the Mint was like losing money on each transaction. 550 00:24:41,400 --> 00:24:42,880 Speaker 1: Right because they I would imagine that they were. 551 00:24:43,000 --> 00:24:45,320 Speaker 2: The way credit card rewards work is that the seller 552 00:24:45,400 --> 00:24:48,040 Speaker 2: pays a fee of one and a half percent to 553 00:24:48,320 --> 00:24:51,000 Speaker 2: the credit card company. And so here the MINT is 554 00:24:51,000 --> 00:24:52,920 Speaker 2: paying one and a half percent to the credit card company, 555 00:24:52,920 --> 00:24:54,239 Speaker 2: which is giving it back to you in the form 556 00:24:54,280 --> 00:24:56,800 Speaker 2: of airline models, and the Mint is losing one and 557 00:24:56,840 --> 00:24:59,560 Speaker 2: a half cents on every dollar coin. Yeah, so eventually 558 00:24:59,560 --> 00:25:00,000 Speaker 2: they shut that. 559 00:25:00,280 --> 00:25:02,600 Speaker 1: I will say, like reading the Wall Street Journal, article 560 00:25:02,640 --> 00:25:05,000 Speaker 1: and then your column. I was thinking, I don't know, 561 00:25:05,000 --> 00:25:07,080 Speaker 1: maybe these people just trying to flip it too fast. 562 00:25:07,280 --> 00:25:09,040 Speaker 1: I mean gold prices, well, right. 563 00:25:08,920 --> 00:25:11,080 Speaker 2: With gold, you're not buying a dollar quint. Right with gold, 564 00:25:11,119 --> 00:25:12,280 Speaker 2: you're buying a thing that could go up. 565 00:25:12,440 --> 00:25:15,480 Speaker 1: Yeah, it's been going up quite a bit over the 566 00:25:15,480 --> 00:25:17,879 Speaker 1: past few months. But then I read there was an 567 00:25:17,960 --> 00:25:22,320 Speaker 1: anecdote in the Wall Street Journal article about Luke Gribe. 568 00:25:22,400 --> 00:25:25,479 Speaker 1: I hope I'm pronouncing his name right. He's of Southeast Michigan. 569 00:25:25,560 --> 00:25:27,960 Speaker 1: He waited almost a decade to make a profit on 570 00:25:28,000 --> 00:25:30,680 Speaker 1: his gold bar. He sold his one ounce credit sweet 571 00:25:30,760 --> 00:25:33,960 Speaker 1: bar for twenty three hundred and fifty dollars in April. 572 00:25:34,119 --> 00:25:38,119 Speaker 1: Not bad. That's after he paid fifteen hundred dollars for 573 00:25:38,480 --> 00:25:41,040 Speaker 1: back in twenty fifteen. Was it worth it? 574 00:25:41,200 --> 00:25:43,520 Speaker 2: I feel like if you bought the smp'd have done. 575 00:25:43,560 --> 00:25:45,960 Speaker 2: But yeah, the cold bar. 576 00:25:46,040 --> 00:25:49,320 Speaker 1: Yeah, it's a lot of thinking. I would just buy 577 00:25:49,320 --> 00:25:51,959 Speaker 1: an ETF with a credit card. I don't know. 578 00:25:53,000 --> 00:25:55,760 Speaker 2: I do want to mention another credit card awards story, which, 579 00:25:55,840 --> 00:25:58,280 Speaker 2: as you should somewhere you reminded of this. I actually 580 00:25:58,280 --> 00:26:00,920 Speaker 2: wrote about it in the past. There's this I who's 581 00:26:00,960 --> 00:26:04,119 Speaker 2: a experimental physicist and who was like, how can I 582 00:26:04,119 --> 00:26:06,800 Speaker 2: build a perpetual motion machine? So he hit an Amex 583 00:26:07,200 --> 00:26:09,119 Speaker 2: ames a lot of these credit cards. The way it 584 00:26:09,160 --> 00:26:11,680 Speaker 2: works is like they pay like one percent cash back, 585 00:26:11,720 --> 00:26:14,639 Speaker 2: but they give you like extra bonuses on certain categories 586 00:26:14,680 --> 00:26:16,880 Speaker 2: of spending to like encourage you to use their card more. 587 00:26:17,480 --> 00:26:21,200 Speaker 2: And so Amex was giving him five percent cash back 588 00:26:21,440 --> 00:26:24,240 Speaker 2: at grocery stores. So he'd get a grocery stores. He 589 00:26:24,240 --> 00:26:27,159 Speaker 2: would buy gift card like Visa prepaid gift cards at 590 00:26:27,160 --> 00:26:29,920 Speaker 2: the grocery stores, and he would get his five percent 591 00:26:29,960 --> 00:26:32,200 Speaker 2: cash back on these Visa prepaid gift cards. He would 592 00:26:32,240 --> 00:26:34,640 Speaker 2: take the gift cards and buy money orders. He would 593 00:26:34,680 --> 00:26:36,880 Speaker 2: take the money orders and deposit them in his bank. 594 00:26:37,160 --> 00:26:38,800 Speaker 2: He use the money in the bank to pay his 595 00:26:38,840 --> 00:26:40,320 Speaker 2: credit card bills. So it was just like a sort 596 00:26:40,359 --> 00:26:44,359 Speaker 2: of like closed loop of exchanging money for money for 597 00:26:44,440 --> 00:26:46,960 Speaker 2: money beautiful. And he got five percent on the credit 598 00:26:46,960 --> 00:26:48,760 Speaker 2: card transactions. He had to pay a little bit for 599 00:26:48,800 --> 00:26:50,000 Speaker 2: the gift card, he had to pay a little bit 600 00:26:50,040 --> 00:26:52,200 Speaker 2: for the money orders, but all in all he made 601 00:26:52,200 --> 00:26:55,480 Speaker 2: like three percent millions and millions and millions of dollars 602 00:26:55,720 --> 00:26:57,919 Speaker 2: worth of prepaid gift cards. Like every time he went 603 00:26:57,960 --> 00:26:59,600 Speaker 2: to the grocery store, he bought like all their gift cards. 604 00:27:00,080 --> 00:27:04,159 Speaker 2: He made I think three hundred thousand dollars of profit 605 00:27:04,440 --> 00:27:07,000 Speaker 2: three hundred three hundred ten thousand dollars of profit. And 606 00:27:07,040 --> 00:27:12,840 Speaker 2: then we know about this because the IRS wanted him 607 00:27:12,880 --> 00:27:16,199 Speaker 2: to pay taxes in his games for this trade. And 608 00:27:16,240 --> 00:27:19,600 Speaker 2: he was like, no, long standing IRS rules are that 609 00:27:20,200 --> 00:27:22,720 Speaker 2: credit card cash back or just the discount. They're not income, 610 00:27:22,720 --> 00:27:24,800 Speaker 2: they're just like reducing your expenses, and so you don't 611 00:27:24,800 --> 00:27:26,680 Speaker 2: have to pay taxes on them. And he actually won 612 00:27:26,680 --> 00:27:29,359 Speaker 2: in tax card. So he had this like three hundred 613 00:27:29,359 --> 00:27:31,440 Speaker 2: thousand dollars of arbitrage income that he didn't have to 614 00:27:31,480 --> 00:27:32,159 Speaker 2: pay taxes on. 615 00:27:32,359 --> 00:27:35,280 Speaker 1: See that sounds more worth it than less than a 616 00:27:35,320 --> 00:27:36,880 Speaker 1: thousand dollars over ten years. 617 00:27:37,320 --> 00:27:39,400 Speaker 2: Sure, cold is in some way and an efficient way 618 00:27:39,400 --> 00:27:42,000 Speaker 2: to do it, because it's heavy, right. Gift cards are lighter, right, 619 00:27:42,200 --> 00:27:44,280 Speaker 2: And so a lot of people find ways to buy 620 00:27:44,320 --> 00:27:47,240 Speaker 2: cash equivalents on credit cards and then max that out 621 00:27:47,240 --> 00:27:49,920 Speaker 2: as much as possible before the credit card company shuts 622 00:27:49,920 --> 00:27:50,280 Speaker 2: it down. 623 00:27:50,320 --> 00:27:52,840 Speaker 1: I have two points here specifically on gold, not on 624 00:27:52,880 --> 00:27:55,639 Speaker 1: credit cards. Okay, you make the point that gold is heavy, 625 00:27:55,920 --> 00:27:58,440 Speaker 1: and it is heavy and actually in one of the articles, 626 00:27:58,680 --> 00:28:01,879 Speaker 1: according to j M bullion, shipping fees can be as 627 00:28:01,920 --> 00:28:04,880 Speaker 1: much as forty dollars for an ounce of gold, so 628 00:28:04,960 --> 00:28:07,600 Speaker 1: it is expensive to ship it around, and then insurance 629 00:28:07,640 --> 00:28:10,040 Speaker 1: on the shipping that's another forty dollars. 630 00:28:10,200 --> 00:28:12,560 Speaker 2: Gold is heavy, but an ounce of gold I think 631 00:28:12,640 --> 00:28:13,480 Speaker 2: weighs an ounce. 632 00:28:13,760 --> 00:28:17,640 Speaker 1: Yeah, I know, but if you're shipping more than one 633 00:28:17,640 --> 00:28:19,359 Speaker 1: ounce of gold, it's going to add up there. 634 00:28:19,480 --> 00:28:19,760 Speaker 2: Sure. 635 00:28:19,920 --> 00:28:24,040 Speaker 1: The other point is that we were talking about ETFs 636 00:28:24,160 --> 00:28:28,920 Speaker 1: and gold ETFs. The largest gold etf is GLD, and 637 00:28:29,119 --> 00:28:33,119 Speaker 1: it's been shipping fees, no shipping fees for gold ETFs. 638 00:28:33,400 --> 00:28:36,719 Speaker 1: But the gold is in a vault underground in London, 639 00:28:36,960 --> 00:28:39,560 Speaker 1: which I'm fascinated by. I would like to go to 640 00:28:39,560 --> 00:28:42,080 Speaker 1: the vault, but you can't go to the vault as 641 00:28:42,120 --> 00:28:42,960 Speaker 1: a journalist. 642 00:28:43,240 --> 00:28:45,200 Speaker 2: Okay, interesting, Yeah, but. 643 00:28:45,160 --> 00:28:47,360 Speaker 1: There are a lot I remember. Actually how we got 644 00:28:47,360 --> 00:28:50,960 Speaker 1: there was because GLD skyrocketed and assets at one point 645 00:28:51,040 --> 00:28:53,680 Speaker 1: during the pandemic. Everyone wanted it and it just grew 646 00:28:53,760 --> 00:28:57,080 Speaker 1: so much, and there were a ton of conspiracy theories 647 00:28:57,080 --> 00:29:00,480 Speaker 1: out there, probably on Reddit too, about whether they actually 648 00:29:00,560 --> 00:29:03,640 Speaker 1: had the gold to back it up. Sure, but it's 649 00:29:03,640 --> 00:29:05,800 Speaker 1: in London. Underground. But you can't go to the vault. 650 00:29:05,840 --> 00:29:07,000 Speaker 1: None of us can go to the vault. 651 00:29:07,080 --> 00:29:10,080 Speaker 2: You here, how suspicious this ound. I know white people 652 00:29:10,080 --> 00:29:12,200 Speaker 2: are buying gold bars at Costco rather than GLD. 653 00:29:12,560 --> 00:29:13,280 Speaker 1: It makes sense. 654 00:29:14,080 --> 00:29:14,840 Speaker 2: Then you have it. 655 00:29:15,040 --> 00:29:18,440 Speaker 1: Do you trust State Street? Apparently a lot of people didn't. 656 00:29:18,760 --> 00:29:21,680 Speaker 2: I do, because my life is integrated into the modern 657 00:29:21,720 --> 00:29:24,320 Speaker 2: financial system. If I didn't trust the modern financial system 658 00:29:24,360 --> 00:29:26,600 Speaker 2: and I wanted to own gold instead, I wouldn't want 659 00:29:26,600 --> 00:29:28,680 Speaker 2: to own gold through State Street in a vault that, 660 00:29:28,760 --> 00:29:31,600 Speaker 2: like crack reporter Katie Graefel couldn't even get into. 661 00:29:32,360 --> 00:29:35,600 Speaker 1: I did ask a stupid question at the time because 662 00:29:36,040 --> 00:29:38,640 Speaker 1: assets in the CTF were going crazy, so they were 663 00:29:38,640 --> 00:29:40,560 Speaker 1: having to buy a lot of gold. Well, I said, 664 00:29:40,600 --> 00:29:43,360 Speaker 1: is there enough room in the vault? We're like, yes, 665 00:29:43,680 --> 00:29:44,960 Speaker 1: of course, Like gold. 666 00:29:44,760 --> 00:29:47,280 Speaker 2: Is right, gold bar right. 667 00:29:47,160 --> 00:29:49,400 Speaker 1: So there's plenty of room in this spot. 668 00:29:49,520 --> 00:29:52,000 Speaker 2: It's like it's like a room this size, and it's 669 00:29:52,080 --> 00:29:53,360 Speaker 2: just like a little pile on the corner. 670 00:29:54,800 --> 00:29:57,000 Speaker 1: I just always thought of greenots, and that's what I 671 00:29:57,040 --> 00:29:57,760 Speaker 1: had in my mind. 672 00:30:01,440 --> 00:30:02,680 Speaker 2: That was the Money Stuff podcast. 673 00:30:02,720 --> 00:30:04,680 Speaker 1: I'm Matt Levin and I'm Katie Greifeld. 674 00:30:05,000 --> 00:30:06,920 Speaker 2: You can find my work by subscribing to The Money 675 00:30:06,960 --> 00:30:08,680 Speaker 2: Stuff newsletter on Bloomberg dot. 676 00:30:08,520 --> 00:30:10,800 Speaker 1: Com, and you can find me on Bloomberg TV every 677 00:30:10,880 --> 00:30:13,120 Speaker 1: day between ten and eleven am Eastern. 678 00:30:13,960 --> 00:30:15,640 Speaker 2: We'd love to hear from you. You can send an 679 00:30:15,680 --> 00:30:18,840 Speaker 2: email to Moneypod at Bloomberg dot net, ask us a 680 00:30:18,920 --> 00:30:20,440 Speaker 2: question and we might answer it on air. 681 00:30:20,760 --> 00:30:23,160 Speaker 1: You can also subscribe to our show wherever you're listening 682 00:30:23,280 --> 00:30:25,360 Speaker 1: right now and leave us a review. It helps more 683 00:30:25,400 --> 00:30:26,240 Speaker 1: people find the show. 684 00:30:27,040 --> 00:30:30,280 Speaker 2: The Money Stuff Podcast is produced by Anamsarakus and Moses 685 00:30:30,320 --> 00:30:30,840 Speaker 2: and am. 686 00:30:31,400 --> 00:30:33,560 Speaker 1: Our theme music was composed by Blake Maples. 687 00:30:33,960 --> 00:30:36,720 Speaker 2: Brandon Francis Nannim is our executive producer, and. 688 00:30:36,720 --> 00:30:39,040 Speaker 1: Sage Bauman is Bloomberg's head of Podcasts. 689 00:30:39,320 --> 00:30:41,600 Speaker 2: Thanks for listening to The Money Stuff Podcast. We'll be 690 00:30:41,640 --> 00:30:43,160 Speaker 2: back next week with more stuff.