1 00:00:08,760 --> 00:00:12,559 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:12,600 --> 00:00:16,160 Speaker 1: I'm Joe Wysn't and I'm Tracy Alloway. You know, it's 3 00:00:16,200 --> 00:00:19,639 Speaker 1: really fun last week, you know, really enjoyed getting to 4 00:00:19,680 --> 00:00:22,919 Speaker 1: record an episode in person for once. But now, of 5 00:00:22,960 --> 00:00:27,440 Speaker 1: course we're back to our normal ways. It's it's very sad. 6 00:00:27,520 --> 00:00:30,680 Speaker 1: I miss you, Joe likewise, and here we are recording 7 00:00:30,680 --> 00:00:33,800 Speaker 1: a podcast on opposite sides of the world. But okay, 8 00:00:33,840 --> 00:00:36,920 Speaker 1: moving on today, I think we're going to be talking 9 00:00:36,960 --> 00:00:40,040 Speaker 1: about something that we've covered in a few episodes and 10 00:00:40,040 --> 00:00:42,600 Speaker 1: that I think is one of your favorite themes. Okay, 11 00:00:42,920 --> 00:00:46,479 Speaker 1: because you said that, I know exactly what it is. Um, 12 00:00:46,520 --> 00:00:48,400 Speaker 1: so we don't have to play the guessing game like 13 00:00:48,440 --> 00:00:53,000 Speaker 1: we sometimes do. No. Um, it's liquidity, right right? Why 14 00:00:53,080 --> 00:00:55,040 Speaker 1: is this one of your favorite topics? It's funny, we've 15 00:00:55,040 --> 00:00:57,319 Speaker 1: talked about it a lot, like the sort of it's 16 00:00:57,360 --> 00:01:01,440 Speaker 1: particularly the bond market, bond market, liquidity, the market structure. 17 00:01:01,840 --> 00:01:04,280 Speaker 1: We've talked about it a lot, but I guess I've 18 00:01:04,319 --> 00:01:07,280 Speaker 1: never asked why is this a subject of such fascination 19 00:01:07,319 --> 00:01:10,080 Speaker 1: for you? Okay, I can tell you exactly why, because 20 00:01:10,440 --> 00:01:15,000 Speaker 1: liquidity is almost the essence of markets. Like, if you 21 00:01:15,000 --> 00:01:18,920 Speaker 1: think that a really simple definition of liquidity is the 22 00:01:19,040 --> 00:01:24,119 Speaker 1: ease of buying or selling something maybe without affecting its 23 00:01:24,360 --> 00:01:28,319 Speaker 1: price too much, that's exactly what markets are, right. And 24 00:01:28,360 --> 00:01:31,520 Speaker 1: the other thing is you get all these really interesting 25 00:01:31,800 --> 00:01:36,240 Speaker 1: um motivational dynamics at play and lots of design issues, 26 00:01:36,360 --> 00:01:38,559 Speaker 1: And even though you can think of the perfect market 27 00:01:38,600 --> 00:01:43,240 Speaker 1: structure to suit a partricular asset class or transaction, there 28 00:01:43,319 --> 00:01:46,119 Speaker 1: might be different players involved who don't want to see 29 00:01:46,120 --> 00:01:49,400 Speaker 1: that market structure come to fruition. So it's it's a 30 00:01:49,440 --> 00:01:54,880 Speaker 1: fantastic mix of human behavior and markets, I think. So basically, 31 00:01:54,920 --> 00:01:58,960 Speaker 1: this idea of liquidity the ease with which one can 32 00:01:59,040 --> 00:02:01,760 Speaker 1: buy or sell an asset at a given price, if 33 00:02:01,800 --> 00:02:04,800 Speaker 1: we can understand why it exists or why it doesn't, 34 00:02:04,840 --> 00:02:07,440 Speaker 1: then we could sort of understand the entire structure of 35 00:02:07,480 --> 00:02:10,320 Speaker 1: the market, who the different players are, what their different 36 00:02:10,320 --> 00:02:13,920 Speaker 1: motivations are, etcetera. That's exactly right. Are you telling me 37 00:02:14,000 --> 00:02:15,840 Speaker 1: we have someone on the show today who knows the 38 00:02:15,840 --> 00:02:18,720 Speaker 1: answer to this question. Well, we might, I don't know, 39 00:02:18,760 --> 00:02:20,920 Speaker 1: really have the answer, but we're going to try and 40 00:02:20,960 --> 00:02:24,200 Speaker 1: get a closer to the answer. But I think we're 41 00:02:24,200 --> 00:02:26,880 Speaker 1: gonna do it in a cool way because obviously, normally, 42 00:02:27,160 --> 00:02:29,280 Speaker 1: you know, we might talk to someone and we have 43 00:02:29,400 --> 00:02:31,919 Speaker 1: who's like an expert in how the bond market works 44 00:02:32,040 --> 00:02:36,080 Speaker 1: or stock market structure. Today we're going to talk about 45 00:02:36,520 --> 00:02:41,120 Speaker 1: how this concept of liquidity and market structure exists in 46 00:02:41,280 --> 00:02:43,880 Speaker 1: our everyday lives, so not just in what we call 47 00:02:43,960 --> 00:02:47,120 Speaker 1: financial markets, but in the sort of how we how 48 00:02:47,160 --> 00:02:50,000 Speaker 1: we see this concept everywhere and the things we buy, 49 00:02:50,120 --> 00:02:54,320 Speaker 1: transact in, etcetera. That sounds absolutely amazing, and I hope 50 00:02:54,360 --> 00:02:57,280 Speaker 1: we can come up with some real life parallels for 51 00:02:57,280 --> 00:02:59,880 Speaker 1: for instance, lack of liquidity in the corporate ball market. 52 00:03:00,680 --> 00:03:03,679 Speaker 1: That's what I'm hoping for. I'm hoping that by understanding 53 00:03:04,040 --> 00:03:06,840 Speaker 1: how liquidity exists in everyday life or lack of it, 54 00:03:07,000 --> 00:03:10,200 Speaker 1: that we can then translate that back into maybe some 55 00:03:10,240 --> 00:03:14,520 Speaker 1: new insight into the financial world. So, without a further ado, 56 00:03:14,560 --> 00:03:16,120 Speaker 1: I want to bring in our guest. His name is 57 00:03:16,200 --> 00:03:19,760 Speaker 1: Karthik Shah Shudar. He is the author of Between the 58 00:03:19,800 --> 00:03:23,800 Speaker 1: Buyer and the Seller, a book that examines some of 59 00:03:23,840 --> 00:03:26,560 Speaker 1: these topics. Karthik, thank you very much for joining the 60 00:03:26,600 --> 00:03:30,000 Speaker 1: Odd Lots podcast. Hi to Hi Trizzy. I'm glad to 61 00:03:30,040 --> 00:03:33,520 Speaker 1: be here. So Karthik, What did you think about our introduction? 62 00:03:33,639 --> 00:03:38,320 Speaker 1: Did you think that Tracy's explanation for why liquidity is 63 00:03:38,360 --> 00:03:41,839 Speaker 1: such an important aspect of the market to understand sort 64 00:03:41,840 --> 00:03:45,520 Speaker 1: of parallels with why this interests you? Absolutely? I think 65 00:03:45,520 --> 00:03:48,080 Speaker 1: she's kind of bang on, and I think the definition 66 00:03:48,080 --> 00:03:51,040 Speaker 1: of liquidity she used is also like precisely the one 67 00:03:51,120 --> 00:03:54,240 Speaker 1: that I use in my book. But yes, liquidity, I 68 00:03:54,240 --> 00:03:57,160 Speaker 1: think is an important topic because it's it's around us everybody. 69 00:03:57,160 --> 00:04:00,560 Speaker 1: It's around us in pretty much every market that we 70 00:04:00,720 --> 00:04:04,080 Speaker 1: happen to transact in on a daily basis, and like 71 00:04:04,400 --> 00:04:07,880 Speaker 1: as Stacy just explained, it's a wonderful combination of markets 72 00:04:07,880 --> 00:04:11,280 Speaker 1: and human behaviors. So we always used to write that 73 00:04:11,480 --> 00:04:14,600 Speaker 1: liquidity is kind of a nebulous concept and people have 74 00:04:14,760 --> 00:04:18,320 Speaker 1: different definitions of good and bad liquidity, So why don't 75 00:04:18,360 --> 00:04:21,680 Speaker 1: we just jump right into it to clarify the concept, 76 00:04:22,160 --> 00:04:27,440 Speaker 1: give us a real life example where liquidity is an 77 00:04:27,440 --> 00:04:31,719 Speaker 1: issue or that tells us about one specific aspect of liquidity. 78 00:04:31,920 --> 00:04:34,840 Speaker 1: So I'll start with liquidity itself. I'll start to the 79 00:04:34,920 --> 00:04:36,880 Speaker 1: quote that I have that I begin my book with. 80 00:04:37,040 --> 00:04:40,479 Speaker 1: It's by Michael Lewis, and it's from Flashboys and He 81 00:04:40,560 --> 00:04:43,799 Speaker 1: says liquidity was one of those words Wall Street people 82 00:04:43,839 --> 00:04:46,880 Speaker 1: through around when they wanted the conversation to end and 83 00:04:46,960 --> 00:04:49,400 Speaker 1: for brains to go or date and for all questioning 84 00:04:49,440 --> 00:04:52,600 Speaker 1: to cease. This book is basically an attempt to kind 85 00:04:52,600 --> 00:04:56,640 Speaker 1: of like dake liquidity beyond its kind of Wall Street origins. 86 00:04:56,640 --> 00:04:58,200 Speaker 1: I myself have a little bit of a background in 87 00:04:58,279 --> 00:05:00,719 Speaker 1: Wall Street type. Briefly, you work for a couple of 88 00:05:00,760 --> 00:05:04,479 Speaker 1: years at Goldman Sacks, and now I'm working in the 89 00:05:04,520 --> 00:05:08,080 Speaker 1: financial services industry, working for a company called our Kra 90 00:05:08,279 --> 00:05:11,719 Speaker 1: where we're trying to revolutionize how client engagement has done 91 00:05:11,720 --> 00:05:15,080 Speaker 1: in investrent banks. That aside, I think to come coming 92 00:05:15,080 --> 00:05:19,440 Speaker 1: back to liquidity, to take a very simple example that 93 00:05:19,520 --> 00:05:21,000 Speaker 1: I think a lot of us kind of deal with 94 00:05:21,040 --> 00:05:23,800 Speaker 1: every day. UH. It's to do with the market for 95 00:05:24,680 --> 00:05:28,719 Speaker 1: uh what it call is motorized local transportation. That's cabs 96 00:05:28,760 --> 00:05:32,960 Speaker 1: and cab like uh instrument pretty much everywhere. So one 97 00:05:33,000 --> 00:05:36,200 Speaker 1: of the biggest kind of UH. It was actually one 98 00:05:36,200 --> 00:05:38,120 Speaker 1: of the motivations from my book in terms of like 99 00:05:38,200 --> 00:05:40,400 Speaker 1: one of the markets that have seen a massive revolution 100 00:05:40,440 --> 00:05:43,600 Speaker 1: and liquidity is the way is the cab market well, 101 00:05:43,640 --> 00:05:45,840 Speaker 1: which I kind of existed in the fairly low level 102 00:05:45,839 --> 00:05:49,200 Speaker 1: equilibrium for a lot of years. I mean different the 103 00:05:49,360 --> 00:05:53,880 Speaker 1: regulation was different in different cities, but pretty much each 104 00:05:53,880 --> 00:05:57,680 Speaker 1: city was broken in one way or the other. Like 105 00:05:58,360 --> 00:06:00,680 Speaker 1: for example, in a lot a lot of cities in 106 00:06:00,720 --> 00:06:04,680 Speaker 1: India where I come from, Uh, it's common for taxi 107 00:06:04,800 --> 00:06:07,800 Speaker 1: drivers to refuse you are right once they know where 108 00:06:07,800 --> 00:06:11,440 Speaker 1: you want to go. Or for example, if taking the 109 00:06:11,480 --> 00:06:14,000 Speaker 1: example of New York City in the mornings, if you're 110 00:06:14,000 --> 00:06:17,479 Speaker 1: trying to take a taxi from midtown to downtown, it's 111 00:06:18,320 --> 00:06:21,080 Speaker 1: highly unlikely that you're going to find one. This is 112 00:06:21,120 --> 00:06:25,280 Speaker 1: a market which was kind of very, very inefficient. It 113 00:06:25,360 --> 00:06:28,880 Speaker 1: was people. I tried to regulate it in the in 114 00:06:28,920 --> 00:06:30,719 Speaker 1: a whole lot of ways, but like none of it 115 00:06:30,760 --> 00:06:34,400 Speaker 1: had really worked out. And then comes along this company 116 00:06:34,400 --> 00:06:39,760 Speaker 1: called Uber, which using an app and using this concept 117 00:06:39,839 --> 00:06:43,280 Speaker 1: of dynamic pricing, which is highly controversial, but I mean 118 00:06:43,360 --> 00:06:45,720 Speaker 1: I I absolutely love it by the way they have 119 00:06:46,440 --> 00:06:51,800 Speaker 1: kind of changed the way, changed the taken the liquidity 120 00:06:51,839 --> 00:06:54,680 Speaker 1: in the cap market to a whole new level. So 121 00:06:54,800 --> 00:06:58,039 Speaker 1: there's several ways. I think obviously it's great that we're 122 00:06:58,040 --> 00:07:01,040 Speaker 1: starting with the Uber discussion because it's probably one of 123 00:07:01,080 --> 00:07:04,919 Speaker 1: the most clear ways in modern life in which something 124 00:07:04,960 --> 00:07:08,159 Speaker 1: we just took for granted. Uh, you know, putting out 125 00:07:08,160 --> 00:07:11,320 Speaker 1: your hand and getting a taxi is really a sort 126 00:07:11,360 --> 00:07:15,119 Speaker 1: of quasi financial market, and the new market has changed. 127 00:07:15,160 --> 00:07:19,320 Speaker 1: So there's dynamic pricing. There's the fact that you know, 128 00:07:19,400 --> 00:07:22,400 Speaker 1: the ubers have to take you everywhere. You can sort 129 00:07:22,440 --> 00:07:26,400 Speaker 1: of see the supply that's on the road more vividly, 130 00:07:26,600 --> 00:07:28,720 Speaker 1: because you know, you're not just sort of wondering when 131 00:07:28,760 --> 00:07:31,280 Speaker 1: a cab is going to come around. You can set 132 00:07:31,360 --> 00:07:36,320 Speaker 1: up timing very well in your view. Hey, what is 133 00:07:36,720 --> 00:07:40,080 Speaker 1: the most sort of radical thing about Uber? Perhaps it's 134 00:07:40,120 --> 00:07:42,920 Speaker 1: the dynamic pricing. And then you know, since we're looking 135 00:07:42,960 --> 00:07:46,640 Speaker 1: for financial market lessons, what is sort of is there 136 00:07:46,680 --> 00:07:49,880 Speaker 1: an Uber equivalent in the world of finance that we 137 00:07:49,920 --> 00:07:53,000 Speaker 1: could say, Okay, this thing that Uber does is similar 138 00:07:53,040 --> 00:07:57,040 Speaker 1: to this on an exchange. Good question. So the first 139 00:07:57,040 --> 00:07:59,600 Speaker 1: party guard bangled. I think the most important part of 140 00:08:00,360 --> 00:08:03,520 Speaker 1: is UH dynamic pricing in the financial markets. I can't 141 00:08:03,560 --> 00:08:06,040 Speaker 1: think of a direct parallel right now. I can't think 142 00:08:06,040 --> 00:08:09,280 Speaker 1: of a direct part where like where let's say an 143 00:08:09,320 --> 00:08:13,160 Speaker 1: intermediary Uber is also an intermediary between the cab driver 144 00:08:13,240 --> 00:08:16,840 Speaker 1: and the passenger, where an intermediary uses kind of dynamic 145 00:08:16,880 --> 00:08:21,080 Speaker 1: pricing to kind of, uh make the markets more efficient 146 00:08:21,240 --> 00:08:25,600 Speaker 1: for everyone. I think UBER one of the work of 147 00:08:25,640 --> 00:08:29,280 Speaker 1: the taxi market is that, like it's extremely fragmented when 148 00:08:29,280 --> 00:08:32,320 Speaker 1: it comes to both space and time. Like the market 149 00:08:32,440 --> 00:08:36,760 Speaker 1: that you see is limited by the taxis that are 150 00:08:37,040 --> 00:08:39,480 Speaker 1: you as a passenger, you see the taxis around you 151 00:08:39,600 --> 00:08:42,680 Speaker 1: at that point in time. So there's massive fragmentation on 152 00:08:43,040 --> 00:08:46,160 Speaker 1: two dimensions, and that kind of fragmentation. I mean you 153 00:08:46,160 --> 00:08:48,840 Speaker 1: can say that like even the regular stockore bond markets 154 00:08:48,840 --> 00:08:51,520 Speaker 1: have that kind of fragmentation because they are like there 155 00:08:51,559 --> 00:08:54,160 Speaker 1: are like you have like multiple venues and you have 156 00:08:54,280 --> 00:08:57,720 Speaker 1: like kind of there is fragmentation through the day because 157 00:08:57,720 --> 00:09:00,920 Speaker 1: there are some market makers who operate more heavily at 158 00:09:01,000 --> 00:09:03,520 Speaker 1: different times of the day and volume changes through the 159 00:09:03,600 --> 00:09:06,680 Speaker 1: day and so on. But the key difference between Uber 160 00:09:06,760 --> 00:09:08,720 Speaker 1: and the kind of first stock market is that, like 161 00:09:08,960 --> 00:09:12,959 Speaker 1: in a stock market, by providing supplying supply in one place, 162 00:09:12,960 --> 00:09:16,240 Speaker 1: you're not taking supply away from another place. So for example, 163 00:09:16,280 --> 00:09:19,920 Speaker 1: if if I am Golden SAX and I'm participating right 164 00:09:19,920 --> 00:09:22,600 Speaker 1: now in the New York Stock Exchange, that doesn't come 165 00:09:22,640 --> 00:09:24,880 Speaker 1: at the cost of my participation at this point of 166 00:09:24,960 --> 00:09:28,440 Speaker 1: time in ASDAC, if I had to kind of choose 167 00:09:28,480 --> 00:09:30,200 Speaker 1: between one or the other, then like it would have 168 00:09:30,240 --> 00:09:32,680 Speaker 1: been more like Uber. So in that sense, I feel 169 00:09:32,679 --> 00:09:35,760 Speaker 1: like I got It's hard to at this moment draw 170 00:09:35,800 --> 00:09:40,440 Speaker 1: a direct parallel between between Uber and financial markets, because 171 00:09:40,679 --> 00:09:43,520 Speaker 1: Uber is a far more complex problem. I would say. 172 00:09:44,040 --> 00:09:47,320 Speaker 1: So Uber is a great example of a sort of 173 00:09:47,320 --> 00:09:51,920 Speaker 1: technological change that has arguably boosted liquidity or the availability 174 00:09:52,040 --> 00:09:56,400 Speaker 1: of a certain service. But there are existing assets or 175 00:09:56,440 --> 00:10:02,040 Speaker 1: services out there that have also resisted technological change, UM, 176 00:10:02,080 --> 00:10:04,200 Speaker 1: And I think you brought one of them up in 177 00:10:04,280 --> 00:10:08,000 Speaker 1: your book, And I'm particularly interested in this. The real 178 00:10:08,120 --> 00:10:11,280 Speaker 1: estate market, the concept of all these real estate agents 179 00:10:11,440 --> 00:10:14,560 Speaker 1: who find you a house or an apartment. There have 180 00:10:14,600 --> 00:10:19,240 Speaker 1: been multiple attempts to make that market more liquid, either 181 00:10:19,360 --> 00:10:24,160 Speaker 1: with online platforms or some other new big ideas, and 182 00:10:24,200 --> 00:10:27,680 Speaker 1: they seem to have largely failed. So why is it 183 00:10:27,800 --> 00:10:31,360 Speaker 1: that liquidity hasn't come to the property market and we 184 00:10:31,400 --> 00:10:34,480 Speaker 1: all still have to pay, you know, obscene commissions to 185 00:10:34,880 --> 00:10:38,240 Speaker 1: New York real estate agents. The thing with the real 186 00:10:38,360 --> 00:10:42,120 Speaker 1: estate market, UM, is that like the way in which 187 00:10:42,200 --> 00:10:45,280 Speaker 1: the new players like take somebody like a rape frill 188 00:10:45,360 --> 00:10:47,559 Speaker 1: in the U S or housing in India. The way 189 00:10:47,600 --> 00:10:50,280 Speaker 1: they are approaching the market is very different from how 190 00:10:50,440 --> 00:10:55,160 Speaker 1: your local real estate agent approaches the market. So here 191 00:10:55,240 --> 00:10:57,320 Speaker 1: I bring in an analogy in the book from the 192 00:10:57,360 --> 00:11:00,840 Speaker 1: Financial market Tan right to distinct between what I call 193 00:11:00,920 --> 00:11:04,439 Speaker 1: us brokers and clearing houses for this podcast audience, I 194 00:11:04,480 --> 00:11:06,720 Speaker 1: don't think I need to explain those two terms, so 195 00:11:07,280 --> 00:11:10,360 Speaker 1: the difference between your tradition. Actually, I do think a 196 00:11:10,440 --> 00:11:13,280 Speaker 1: quick definition of the two terms would be able to focus. 197 00:11:13,320 --> 00:11:15,840 Speaker 1: I get confused myself, and I think I suspect we 198 00:11:15,880 --> 00:11:19,000 Speaker 1: have a lot of listeners that would like a clarification. Okay, 199 00:11:19,080 --> 00:11:22,240 Speaker 1: So broker's basically take a mandate on behalf of a 200 00:11:22,280 --> 00:11:25,959 Speaker 1: client and take responsibility for executing the trade on behalf 201 00:11:26,000 --> 00:11:28,880 Speaker 1: of the client. Clearing Houses, on the other hand, don't 202 00:11:28,920 --> 00:11:31,600 Speaker 1: really take them, but they don't work for a particular client. 203 00:11:31,720 --> 00:11:35,440 Speaker 1: They just provide a platform where clients can come on 204 00:11:35,559 --> 00:11:40,079 Speaker 1: and find each other and transact. So the way the 205 00:11:40,240 --> 00:11:42,920 Speaker 1: traditional real estate industry has been set up with the 206 00:11:42,960 --> 00:11:46,240 Speaker 1: broker's brokers and brokers they take a mandate from me. 207 00:11:46,520 --> 00:11:49,720 Speaker 1: They I tell them I want a two bedroom apartment 208 00:11:49,800 --> 00:11:51,560 Speaker 1: on the Upper West Side and I'm willing to pay 209 00:11:51,640 --> 00:11:54,320 Speaker 1: up to two tho dollars a month, and they will 210 00:11:54,320 --> 00:12:00,000 Speaker 1: take that mandate and possibly try and find me how 211 00:12:00,640 --> 00:12:03,280 Speaker 1: if one exists, if there is a supply for it, 212 00:12:03,360 --> 00:12:05,240 Speaker 1: and so on. On the other hand, if you take 213 00:12:05,840 --> 00:12:09,240 Speaker 1: something like housing and taking any Indian example, because that's 214 00:12:09,440 --> 00:12:12,679 Speaker 1: that's what I'm most familiar with, but what they do 215 00:12:12,720 --> 00:12:16,920 Speaker 1: is it's an online portal where I, as a seller 216 00:12:16,960 --> 00:12:20,080 Speaker 1: of a house or a landlord, can list my house, 217 00:12:20,600 --> 00:12:23,560 Speaker 1: and you, as a buyer or a tenant, can come 218 00:12:23,559 --> 00:12:27,400 Speaker 1: and search for listings. So so red fin or Housing 219 00:12:27,480 --> 00:12:30,000 Speaker 1: doesn't take a mandate on behalf of the client, so 220 00:12:30,040 --> 00:12:34,240 Speaker 1: they just kind of enabled transactions. And what happens because 221 00:12:34,280 --> 00:12:36,200 Speaker 1: of that in the real estate market because like no 222 00:12:36,360 --> 00:12:38,800 Speaker 1: two houses are similar, and there's a lot of a 223 00:12:38,840 --> 00:12:41,880 Speaker 1: lot of quirks, and like people have weird preferences. I 224 00:12:41,920 --> 00:12:44,920 Speaker 1: think what's happened is that, like it's very hard for 225 00:12:44,960 --> 00:12:50,160 Speaker 1: the clearinghouse to kind of really offer the precise, like 226 00:12:52,480 --> 00:12:54,880 Speaker 1: offer a really short list. So if you want, if 227 00:12:54,920 --> 00:12:58,679 Speaker 1: you have a particulars a set of preferences, and you 228 00:12:58,760 --> 00:13:01,480 Speaker 1: might put in the filters on the website and you'll 229 00:13:01,480 --> 00:13:04,199 Speaker 1: get a really long list. In the effort required and 230 00:13:04,320 --> 00:13:06,880 Speaker 1: going through that and and eliminating the stuff that you 231 00:13:07,040 --> 00:13:10,800 Speaker 1: don't want as pretty high. So on the other hand, 232 00:13:10,800 --> 00:13:14,360 Speaker 1: a broker as as a human being, his advantage over 233 00:13:14,400 --> 00:13:18,120 Speaker 1: the platform is that, like he can really represent you. 234 00:13:18,120 --> 00:13:21,720 Speaker 1: You can clearly communicate to him what you're what you're 235 00:13:21,760 --> 00:13:25,880 Speaker 1: looking for, and he can kind of find you precisely 236 00:13:25,960 --> 00:13:28,960 Speaker 1: that kind of UH deal and so on. So in 237 00:13:29,040 --> 00:13:32,360 Speaker 1: that sense, they have been able to add value. And also, 238 00:13:32,440 --> 00:13:34,240 Speaker 1: as I mentioned in the book, especially in the India, 239 00:13:35,080 --> 00:13:38,560 Speaker 1: brokers have kind of leveraged these online platforms because they 240 00:13:38,679 --> 00:13:41,160 Speaker 1: I mean, it always happens in the stock market where 241 00:13:41,400 --> 00:13:44,880 Speaker 1: your local broker goes and participates on your behalf on 242 00:13:45,000 --> 00:13:48,240 Speaker 1: the New York Stock Exchange. So similarly, in the property 243 00:13:48,240 --> 00:13:51,320 Speaker 1: market you have brokers taking their clients mandate and going 244 00:13:51,360 --> 00:13:55,080 Speaker 1: to one of these UH websites to find a deep 245 00:14:05,559 --> 00:14:09,960 Speaker 1: It is interesting hearing this explanation because, you know, once 246 00:14:09,960 --> 00:14:13,480 Speaker 1: again going back to sort of traditional financial markets, one 247 00:14:13,520 --> 00:14:17,040 Speaker 1: of the themes that we've talked about is UH. You know, 248 00:14:17,120 --> 00:14:20,560 Speaker 1: the degree to which the bond market is characterized by 249 00:14:20,600 --> 00:14:24,160 Speaker 1: such a greater diversity of instruments than the stock market. 250 00:14:24,640 --> 00:14:27,800 Speaker 1: And so hearing you explain, you know, each each apartment 251 00:14:28,040 --> 00:14:30,280 Speaker 1: or house that someone would want to buy is probably 252 00:14:30,280 --> 00:14:32,680 Speaker 1: going to be a little different, even if they're sort 253 00:14:32,680 --> 00:14:35,920 Speaker 1: of can be grouped in general categories. The you know, 254 00:14:35,960 --> 00:14:39,200 Speaker 1: there's not any two apartments are not as fungible the 255 00:14:39,240 --> 00:14:41,320 Speaker 1: way you know, sort of every other every share of 256 00:14:41,360 --> 00:14:45,960 Speaker 1: Microsoft is basically identical. Wait, so, I mean, I've heard 257 00:14:45,960 --> 00:14:50,160 Speaker 1: that explanation for bond market um issues and it makes 258 00:14:50,160 --> 00:14:53,280 Speaker 1: some sense. But the other thing to consider, and I'm 259 00:14:53,280 --> 00:14:55,600 Speaker 1: pretty sure we've talked about it at various points on 260 00:14:55,640 --> 00:14:59,400 Speaker 1: all thoughts, is the motivation of the players involved. So 261 00:14:59,480 --> 00:15:01,480 Speaker 1: a lot of people will say that the bond market 262 00:15:01,640 --> 00:15:05,840 Speaker 1: is resistant to change because, for instance, the big dealer banks, 263 00:15:05,880 --> 00:15:08,240 Speaker 1: the guys that buy and sell bonds on behalf of 264 00:15:08,240 --> 00:15:11,360 Speaker 1: their clients, don't want to give up a really lucrative 265 00:15:11,640 --> 00:15:15,920 Speaker 1: form of commission. So cartex I'm just wondering, in terms 266 00:15:15,920 --> 00:15:20,800 Speaker 1: of everyday examples of market structures or liquidity, is there 267 00:15:20,840 --> 00:15:24,760 Speaker 1: one that springs to mind where the participants in it 268 00:15:24,920 --> 00:15:29,280 Speaker 1: have been, you know, basically unmotivated to change their ways. 269 00:15:30,160 --> 00:15:32,560 Speaker 1: I'd probably go back to the kind of the taxi 270 00:15:32,640 --> 00:15:35,680 Speaker 1: example because in a uber obviously you know what, it's 271 00:15:35,680 --> 00:15:39,720 Speaker 1: been fairly controversial in London where it now live. Ugle 272 00:15:39,800 --> 00:15:44,120 Speaker 1: kind of has been effectively banned in its uh fairly 273 00:15:44,160 --> 00:15:46,640 Speaker 1: recently and as a huge controversy going on over there 274 00:15:46,960 --> 00:15:49,080 Speaker 1: and there. I think it's more to do with the 275 00:15:49,120 --> 00:15:52,520 Speaker 1: fact that the fact that the traditional taxi industry has been, 276 00:15:52,600 --> 00:15:54,720 Speaker 1: like they have immense lob being power, and they have 277 00:15:54,800 --> 00:15:58,280 Speaker 1: been kind of resistant to change in terms of like 278 00:15:58,400 --> 00:16:01,560 Speaker 1: they have been, uh, have been a few ways in 279 00:16:01,560 --> 00:16:04,120 Speaker 1: which they have been in afficiate, Like for example, even 280 00:16:04,160 --> 00:16:07,360 Speaker 1: in the most well regulated markets, you have the problems 281 00:16:07,400 --> 00:16:10,640 Speaker 1: of taxis not wanting to go into certain parts of town, 282 00:16:10,680 --> 00:16:15,120 Speaker 1: that and so on, so so from so, what's happened 283 00:16:15,120 --> 00:16:17,080 Speaker 1: there is that, Like, I mean, one of the reasons 284 00:16:17,080 --> 00:16:19,960 Speaker 1: you see the regulatory backlash against Tuba is because the 285 00:16:20,040 --> 00:16:23,280 Speaker 1: incumbents kind of are kind of afraid of this threat 286 00:16:23,280 --> 00:16:25,680 Speaker 1: time they want to kind of because they're sitting on 287 00:16:25,800 --> 00:16:29,160 Speaker 1: fairly valuable assets. They're not valuable assets in terms of 288 00:16:29,200 --> 00:16:31,800 Speaker 1: like as intermediaries, which is what it is with the 289 00:16:31,840 --> 00:16:33,760 Speaker 1: banks in the bond market. Here. It more it is 290 00:16:33,800 --> 00:16:36,360 Speaker 1: in terms of like they're sitting in terms of valuable 291 00:16:36,400 --> 00:16:39,320 Speaker 1: assets as the right to sell in this particular market, 292 00:16:39,400 --> 00:16:43,160 Speaker 1: think of the New York taxi Medalian for example. So 293 00:16:43,160 --> 00:16:47,680 Speaker 1: so so they have been stymying all efforts to kind 294 00:16:47,680 --> 00:16:51,800 Speaker 1: of reform the markets because of their unwillingness to change. 295 00:16:51,920 --> 00:16:54,400 Speaker 1: But but yeah, but because we were shown away out 296 00:16:54,440 --> 00:16:58,080 Speaker 1: in terms of like it's increasing efficiency, it might not 297 00:16:58,320 --> 00:17:02,200 Speaker 1: be very h that might not be a fight that 298 00:17:02,280 --> 00:17:06,720 Speaker 1: might last too long, hopefully. Let's see now speaking of 299 00:17:06,840 --> 00:17:10,399 Speaker 1: real estate, Um, one of the you know, with the 300 00:17:10,520 --> 00:17:13,720 Speaker 1: rise of the Internet, one of the big theories that 301 00:17:13,840 --> 00:17:18,199 Speaker 1: people had was that geography would be destroyed. So we 302 00:17:18,240 --> 00:17:20,440 Speaker 1: can all work from anywhere. We could work from home, 303 00:17:20,520 --> 00:17:23,679 Speaker 1: we could work from wherever, So there's no reason to 304 00:17:23,960 --> 00:17:27,080 Speaker 1: live in New York or Silicon Valley or Washington, d C. 305 00:17:27,560 --> 00:17:31,000 Speaker 1: Or l A. And yet the opposite seems to have happened, 306 00:17:31,040 --> 00:17:33,000 Speaker 1: and you wrote about you write about this in your book, 307 00:17:33,000 --> 00:17:36,240 Speaker 1: where in fact, people, you know, cities and urban centers 308 00:17:36,240 --> 00:17:39,639 Speaker 1: have become even more and more important for the economy. 309 00:17:39,680 --> 00:17:43,600 Speaker 1: Despite what sort of this theory of disrupting geography would say, 310 00:17:44,000 --> 00:17:46,840 Speaker 1: what what happened there? Why has that idea that the 311 00:17:46,880 --> 00:17:51,919 Speaker 1: Internet would sort of subvert traditional geography not really played out? Okay, 312 00:17:52,280 --> 00:17:55,080 Speaker 1: so I think what we kind of ignored us in 313 00:17:55,160 --> 00:17:58,680 Speaker 1: terms of to use some Silicon Valley speak here, uh 314 00:17:58,800 --> 00:18:01,800 Speaker 1: that cit saide if it to leave platforms. Cities can 315 00:18:01,840 --> 00:18:05,399 Speaker 1: be viewed as platforms that connect employees on one side 316 00:18:05,400 --> 00:18:09,240 Speaker 1: and businesses on the other, and like at a different level, 317 00:18:09,320 --> 00:18:13,080 Speaker 1: they connect consumers of local goods and services to produce 318 00:18:13,160 --> 00:18:15,840 Speaker 1: us of local goods and services such as restaurants and 319 00:18:15,880 --> 00:18:18,399 Speaker 1: so on. But we leave that aside right now. So 320 00:18:18,480 --> 00:18:24,199 Speaker 1: what people had kind of vastly underestimated was the importance 321 00:18:24,200 --> 00:18:28,800 Speaker 1: of proximity in terms of getting work done and so on. 322 00:18:28,880 --> 00:18:32,200 Speaker 1: So what people have assumed is that with Internet there 323 00:18:32,280 --> 00:18:35,199 Speaker 1: is going to be like there is, it is going 324 00:18:35,280 --> 00:18:39,320 Speaker 1: to be possible to kind of uh communicate seepless Lee 325 00:18:40,160 --> 00:18:43,200 Speaker 1: across great distances, and so you can sit in your 326 00:18:43,359 --> 00:18:47,240 Speaker 1: farm and Wyoming and kind of work the same way 327 00:18:47,359 --> 00:18:50,439 Speaker 1: as somebody sitting in his office in San Francisco can. 328 00:18:50,560 --> 00:18:54,199 Speaker 1: So I think that was something people assumed and that 329 00:18:54,280 --> 00:18:56,439 Speaker 1: has not come to be because like, there is always 330 00:18:56,480 --> 00:18:59,639 Speaker 1: a transaction cost involved in talking to somebody who's not 331 00:19:00,560 --> 00:19:02,840 Speaker 1: next to you, So you'll have either have to call 332 00:19:02,960 --> 00:19:05,960 Speaker 1: the tye and make sure he understands what you're saying, 333 00:19:06,040 --> 00:19:08,879 Speaker 1: and there can be various kind of places where like 334 00:19:09,040 --> 00:19:13,919 Speaker 1: coordination across distance can kind of falter. And because of that, 335 00:19:14,040 --> 00:19:18,359 Speaker 1: I think, like people companies have recognized the recognized the 336 00:19:18,480 --> 00:19:21,359 Speaker 1: need to kind of be in one place and so on, 337 00:19:21,400 --> 00:19:25,119 Speaker 1: and so you have like the despite how expensive San 338 00:19:25,160 --> 00:19:28,240 Speaker 1: Francisco has gotten nowadays, like people still continue to move 339 00:19:28,280 --> 00:19:30,520 Speaker 1: to the Bay Area and so on, because that's where 340 00:19:30,560 --> 00:19:34,280 Speaker 1: the kind of the liquid market for the skills that 341 00:19:34,320 --> 00:19:37,800 Speaker 1: people have. This is making me feel bad about working 342 00:19:37,840 --> 00:19:42,360 Speaker 1: from our Abu Dhabi satellite office of my living room. 343 00:19:42,960 --> 00:19:47,880 Speaker 1: Um Karthik, I have a slightly more theoretical question for you, 344 00:19:48,280 --> 00:19:52,800 Speaker 1: to what extent do systems of buying and selling reflect 345 00:19:53,400 --> 00:19:57,080 Speaker 1: the nature of the underlying assets, Like if you have 346 00:19:57,119 --> 00:20:00,919 Speaker 1: a bunch of really diverse things that are actual that fungible, 347 00:20:01,560 --> 00:20:06,000 Speaker 1: and to what extent do they reflect the nature and 348 00:20:06,040 --> 00:20:10,440 Speaker 1: the motivations of the parties involved, and which one would 349 00:20:10,440 --> 00:20:14,480 Speaker 1: you give more weight to. That's not a very easy 350 00:20:14,560 --> 00:20:18,240 Speaker 1: question to answer. I think it's it's highly interdependent. I 351 00:20:18,280 --> 00:20:22,680 Speaker 1: think how a market has developed historically is a function 352 00:20:22,720 --> 00:20:25,840 Speaker 1: of the kind of assets that are being created in 353 00:20:25,880 --> 00:20:29,840 Speaker 1: that market. So, for example, I think one of the 354 00:20:30,520 --> 00:20:33,199 Speaker 1: one of the if you have things that are like 355 00:20:33,280 --> 00:20:36,520 Speaker 1: easily fungible, which is easy for a lot of people 356 00:20:36,560 --> 00:20:39,359 Speaker 1: to provide. You would have seen that the market would 357 00:20:39,359 --> 00:20:43,879 Speaker 1: have evolved such that like the overall transaction cost and 358 00:20:44,040 --> 00:20:49,560 Speaker 1: even the overall transaction cost is pretty low because because 359 00:20:49,600 --> 00:20:53,479 Speaker 1: competition drives the bittern ask close together when you have 360 00:20:53,600 --> 00:20:56,360 Speaker 1: lots of products which are pungible, which can be easily treated. 361 00:20:56,760 --> 00:20:58,960 Speaker 1: On the other hand, I think that this is something 362 00:20:59,000 --> 00:21:01,199 Speaker 1: I talk about in my in the first chapter in 363 00:21:01,200 --> 00:21:05,159 Speaker 1: my book, which unfortunately you're my u S readers may 364 00:21:05,160 --> 00:21:09,040 Speaker 1: not really appreciate. It's about the markets in football players. 365 00:21:09,080 --> 00:21:13,280 Speaker 1: Football as an association football, where you have because the 366 00:21:13,320 --> 00:21:17,080 Speaker 1: players are not fungible at all, No two players, especially 367 00:21:17,080 --> 00:21:19,080 Speaker 1: at the highest level, are very similar to each other. 368 00:21:19,520 --> 00:21:24,640 Speaker 1: You see the deals that happen that are either extremely expensive. 369 00:21:24,720 --> 00:21:27,840 Speaker 1: We had recently a case of a footballer going UH 370 00:21:28,680 --> 00:21:31,840 Speaker 1: for some two hundred million euros between a club in 371 00:21:31,880 --> 00:21:33,840 Speaker 1: Spain and a club in France. So it's like, on 372 00:21:33,920 --> 00:21:36,600 Speaker 1: the other hand, you can have equally highly rated footballer 373 00:21:36,680 --> 00:21:40,080 Speaker 1: is moving between clubs without any transfer feedboard, so it's 374 00:21:40,080 --> 00:21:44,040 Speaker 1: a highly uh. The kind of when you have less 375 00:21:44,119 --> 00:21:48,120 Speaker 1: fungible kind of assets, the you the deals take place 376 00:21:48,160 --> 00:21:49,800 Speaker 1: at either the bit or the ask and sol like 377 00:21:49,880 --> 00:21:52,520 Speaker 1: you have a very a bit of a crazy market. 378 00:21:53,200 --> 00:21:58,000 Speaker 1: But I think that the that actually drives the behavior 379 00:21:58,280 --> 00:22:01,840 Speaker 1: of the that drives behavior of the intermediaries. I mean, like, 380 00:22:02,160 --> 00:22:05,359 Speaker 1: if you're let's say, an intermediary who if you're making 381 00:22:05,440 --> 00:22:09,399 Speaker 1: market in markets and stocks, and you decide to behave 382 00:22:09,440 --> 00:22:13,800 Speaker 1: as if like stocks are the stocks are a non 383 00:22:13,840 --> 00:22:18,080 Speaker 1: fungible item, might try to charge high bid asks rates 384 00:22:18,119 --> 00:22:20,320 Speaker 1: and things like, you will be easily priced out of 385 00:22:20,359 --> 00:22:23,560 Speaker 1: the market. So I think it's the nature of the 386 00:22:23,640 --> 00:22:29,280 Speaker 1: asset that's been traded that drives the nature of the market. Okay, 387 00:22:29,040 --> 00:22:32,680 Speaker 1: I want to ask about another what one might call 388 00:22:32,800 --> 00:22:38,280 Speaker 1: a market in which no two of the assets are fungible, 389 00:22:38,800 --> 00:22:42,600 Speaker 1: but which has been massively disrupted by the Internet, and 390 00:22:42,680 --> 00:22:45,679 Speaker 1: that is the dating market or the marriage market, or 391 00:22:45,680 --> 00:22:49,320 Speaker 1: whatever you want to call it. Obviously extraordinary change in 392 00:22:49,400 --> 00:22:51,960 Speaker 1: behavior with the rise of Tinder, where someone can just 393 00:22:52,000 --> 00:22:54,760 Speaker 1: sit on their phone and arrange numerous dates in the 394 00:22:54,800 --> 00:22:57,760 Speaker 1: span of a few seconds or minutes. As far as 395 00:22:57,800 --> 00:22:59,760 Speaker 1: I know, I've never you know, I've never used it. 396 00:22:59,800 --> 00:23:05,320 Speaker 1: But yeah, whatever, I'm way too Oh, I'm way too 397 00:23:05,320 --> 00:23:08,679 Speaker 1: I'm way too all I missed all of it versus 398 00:23:08,720 --> 00:23:10,960 Speaker 1: the old days, where I guess theoretically you had to 399 00:23:11,080 --> 00:23:13,600 Speaker 1: go to a bar and it was very slow, cumbersome 400 00:23:13,840 --> 00:23:18,520 Speaker 1: process to meet people in theoretically arrange dates. Tell us 401 00:23:18,560 --> 00:23:21,320 Speaker 1: about this market, what are some of the lessons we 402 00:23:21,359 --> 00:23:24,879 Speaker 1: can learn in a liquidity from the way from the 403 00:23:25,320 --> 00:23:28,879 Speaker 1: dating market? So the dating market is again quite uh, 404 00:23:29,280 --> 00:23:33,000 Speaker 1: quite interesting, especially the way it has kind of ill 405 00:23:33,040 --> 00:23:35,280 Speaker 1: again think the Indian example, because it's a bit more 406 00:23:35,440 --> 00:23:39,000 Speaker 1: interesting and less liquid than I think in other places. 407 00:23:39,320 --> 00:23:42,200 Speaker 1: What do you have in India is because of historical 408 00:23:42,359 --> 00:23:46,760 Speaker 1: or cultural works, there's a massive gender imbalance on on 409 00:23:46,760 --> 00:23:50,040 Speaker 1: on apps such as the Tinder, So I think it's 410 00:23:50,200 --> 00:23:53,600 Speaker 1: uh somewhere around eighty twenty or in favor of men 411 00:23:53,840 --> 00:23:57,560 Speaker 1: or worse. So what happens is that neither let's just 412 00:23:57,640 --> 00:24:01,360 Speaker 1: assume hetero sexual relationships here, So what happens is that 413 00:24:01,640 --> 00:24:05,119 Speaker 1: neither men nor women have a good time in the market. 414 00:24:05,240 --> 00:24:09,040 Speaker 1: Because when you have like let's say five men for 415 00:24:09,080 --> 00:24:11,280 Speaker 1: every woman or for ten men for every woman in 416 00:24:11,320 --> 00:24:14,399 Speaker 1: the market, well, if you are I mean tender to 417 00:24:14,520 --> 00:24:19,280 Speaker 1: some extent, is a little less bothersome compared to other apps, 418 00:24:19,320 --> 00:24:23,560 Speaker 1: because you only kind of there's only a kind of 419 00:24:23,600 --> 00:24:25,840 Speaker 1: only when there's a mutual like that, like you get 420 00:24:25,880 --> 00:24:28,840 Speaker 1: a notification. But what happens is that if you're a 421 00:24:28,880 --> 00:24:31,320 Speaker 1: woman and there there are like lots of men in 422 00:24:31,359 --> 00:24:33,600 Speaker 1: the market but few other women what have, you will 423 00:24:33,760 --> 00:24:38,080 Speaker 1: end up getting a lot of kind of interest from 424 00:24:38,119 --> 00:24:41,399 Speaker 1: a large number of men, and you know for sure 425 00:24:41,520 --> 00:24:44,640 Speaker 1: right up front that like maybe of them are not 426 00:24:44,760 --> 00:24:46,920 Speaker 1: your type. So you have to you have the job 427 00:24:46,960 --> 00:24:50,080 Speaker 1: of kind of sifting through so many of these profiles 428 00:24:50,080 --> 00:24:53,200 Speaker 1: and in order and to somehow find the needle in 429 00:24:53,240 --> 00:24:56,440 Speaker 1: the haystack. On the other hand, if you're a man 430 00:24:57,440 --> 00:25:00,119 Speaker 1: in such a market and you what you not is 431 00:25:00,320 --> 00:25:03,200 Speaker 1: that there are like so many men for every woman here, 432 00:25:03,880 --> 00:25:06,720 Speaker 1: then you need to someone stand out and standing out 433 00:25:06,800 --> 00:25:09,479 Speaker 1: in this kind of a market where your competitors are 434 00:25:09,480 --> 00:25:12,600 Speaker 1: also evolving and so on, it's not easy. So so 435 00:25:12,640 --> 00:25:16,480 Speaker 1: in that sense it's a very while theoretically it is, 436 00:25:16,560 --> 00:25:18,800 Speaker 1: like I mean, it's all the liquidity problem to some 437 00:25:18,880 --> 00:25:21,280 Speaker 1: extent in that like now, if I go to a 438 00:25:21,320 --> 00:25:23,760 Speaker 1: party and as which on Tinder, I know that who 439 00:25:23,760 --> 00:25:26,800 Speaker 1: else is on I can Let's say I support somebody 440 00:25:26,800 --> 00:25:28,199 Speaker 1: at a party and want to check her out and 441 00:25:28,240 --> 00:25:30,879 Speaker 1: I can see if she's on Tinder, which where she 442 00:25:31,000 --> 00:25:34,320 Speaker 1: probably will be she's single, and then like maybe express 443 00:25:34,359 --> 00:25:37,679 Speaker 1: interests there without facing the fear of rejection. So in 444 00:25:37,720 --> 00:25:40,800 Speaker 1: that sense, it's kind of increase the volume of trading 445 00:25:41,480 --> 00:25:44,719 Speaker 1: or volume of interest in the market. But on the 446 00:25:44,720 --> 00:25:48,960 Speaker 1: other hand that it is still not completely solved the 447 00:25:49,000 --> 00:25:53,000 Speaker 1: market because there is this whole issue of what they 448 00:25:53,040 --> 00:25:57,760 Speaker 1: call us congestion. That's that's fascinating. The idea that there's 449 00:25:57,760 --> 00:26:00,760 Speaker 1: sort of imbalance creates a broken market, and it sort 450 00:26:00,800 --> 00:26:04,320 Speaker 1: of explains why bars, you know, often I don't know 451 00:26:04,320 --> 00:26:05,679 Speaker 1: if they still do, you know, they'd have like a 452 00:26:05,760 --> 00:26:08,840 Speaker 1: Ladies Night, Ladies Night to pay a cover, women got 453 00:26:08,840 --> 00:26:12,119 Speaker 1: in free in order to you know, keep keep the 454 00:26:12,119 --> 00:26:15,800 Speaker 1: populations balanced, because with imbalance it doesn't work out very 455 00:26:15,800 --> 00:26:19,879 Speaker 1: well for either side, you know, Ladies Night. Sorry, I 456 00:26:19,920 --> 00:26:22,480 Speaker 1: just have to interject, Ladies Night is alive and well 457 00:26:22,600 --> 00:26:25,200 Speaker 1: in Dubai and Abu Dhabi, and that's because the gender 458 00:26:25,200 --> 00:26:28,040 Speaker 1: balance is so extreme. There are so many more men 459 00:26:28,080 --> 00:26:30,560 Speaker 1: than women. Here, karthact before we go, we just have 460 00:26:30,640 --> 00:26:34,240 Speaker 1: time for one more minute. Give us one quick other 461 00:26:34,320 --> 00:26:37,439 Speaker 1: example from your book. What's just one more thing in 462 00:26:38,160 --> 00:26:41,000 Speaker 1: modern life that we see. That's an interesting example of 463 00:26:41,320 --> 00:26:44,960 Speaker 1: liquidity providing an action. So one more way is I 464 00:26:45,000 --> 00:26:48,200 Speaker 1: think i'll answer this question at a bit of a 465 00:26:48,240 --> 00:26:53,400 Speaker 1: meta level. So, uh, you take the publishing industry itself, right, 466 00:26:53,440 --> 00:26:55,879 Speaker 1: So if you were to think of in the olden 467 00:26:56,000 --> 00:26:58,760 Speaker 1: days before Amazon, what happened was if I were to 468 00:26:58,920 --> 00:27:01,879 Speaker 1: want it to publish something in the book form and 469 00:27:02,000 --> 00:27:05,320 Speaker 1: have it read by you, the transaction costs would have 470 00:27:05,359 --> 00:27:08,560 Speaker 1: been immense in terms of because first I had to 471 00:27:08,640 --> 00:27:11,360 Speaker 1: kind of put it on to get it printed onto 472 00:27:11,359 --> 00:27:13,879 Speaker 1: a paper nicely bound, and then like it has to 473 00:27:13,960 --> 00:27:17,040 Speaker 1: kind of go through the entire supply chain of books, 474 00:27:17,080 --> 00:27:19,360 Speaker 1: and then my publisher will have to kind of do 475 00:27:19,400 --> 00:27:22,600 Speaker 1: the marketing to make sure that you know that my 476 00:27:22,720 --> 00:27:25,520 Speaker 1: book exists and so on. So so there was a 477 00:27:25,520 --> 00:27:30,160 Speaker 1: lot of cost transaction costs involved in terms of publishing 478 00:27:30,200 --> 00:27:34,000 Speaker 1: and consuming books itself. I think what's happened is that 479 00:27:34,040 --> 00:27:37,119 Speaker 1: with the again, this is a this is a market 480 00:27:37,119 --> 00:27:40,000 Speaker 1: that's only like become partly liquid and just a very 481 00:27:40,000 --> 00:27:42,640 Speaker 1: long way to go. As I've figured out after kind 482 00:27:42,680 --> 00:27:46,040 Speaker 1: of having published the book, is that like after Amazon 483 00:27:46,119 --> 00:27:49,080 Speaker 1: came about and kind of released the concept of the 484 00:27:49,160 --> 00:27:53,800 Speaker 1: Kingdon where all the dead prey in the publication process, 485 00:27:53,840 --> 00:27:57,399 Speaker 1: it's taken away. So it's not funny what portion of 486 00:27:57,440 --> 00:28:02,560 Speaker 1: the cost of my book goes into modifying and moving paper. 487 00:28:02,800 --> 00:28:05,240 Speaker 1: And if you take that out, the kind of the 488 00:28:06,000 --> 00:28:09,400 Speaker 1: amount of the value that the reader pays that can 489 00:28:09,440 --> 00:28:13,840 Speaker 1: be captured by the writer is immense and so effectively 490 00:28:13,920 --> 00:28:18,640 Speaker 1: the once you have the kind of the paper taken away, 491 00:28:18,640 --> 00:28:21,400 Speaker 1: I think that what did the biggest kind of transaction 492 00:28:21,440 --> 00:28:23,879 Speaker 1: costs between the buyer and the sellers that the readers 493 00:28:23,880 --> 00:28:27,359 Speaker 1: should know that the book exists sense on which is 494 00:28:27,480 --> 00:28:30,920 Speaker 1: again fairly big cost. But still I think there's a 495 00:28:30,960 --> 00:28:33,200 Speaker 1: market which is on its way to becoming a bit 496 00:28:33,240 --> 00:28:40,000 Speaker 1: more becoming more liquid. Karthec shas are fascinating conversation the 497 00:28:40,040 --> 00:28:43,160 Speaker 1: author of the book and question between the buyer and 498 00:28:43,200 --> 00:28:47,480 Speaker 1: the seller which explores concepts of liquidity and market structure 499 00:28:47,560 --> 00:28:52,000 Speaker 1: in everyday life. Fascinating conversation. Really appreciate you coming on 500 00:28:52,040 --> 00:29:05,240 Speaker 1: the show. Thanks True, Thanks du So. Tracy. Do you 501 00:29:05,280 --> 00:29:08,840 Speaker 1: think we are we are any closer to understanding the 502 00:29:09,080 --> 00:29:13,520 Speaker 1: history of market liquidity? I mean, I think we may 503 00:29:13,520 --> 00:29:17,640 Speaker 1: be muddling the concept of liquidity with just service provision 504 00:29:17,760 --> 00:29:22,360 Speaker 1: in that conversation. But that said, the thing that's endlessly 505 00:29:22,440 --> 00:29:25,600 Speaker 1: fascinating about liquidity is the fact that everyone has different 506 00:29:25,640 --> 00:29:29,120 Speaker 1: definitions and views of it. So even when it comes 507 00:29:29,160 --> 00:29:32,760 Speaker 1: to the corporate bond market, you have all these investors 508 00:29:32,840 --> 00:29:38,000 Speaker 1: or traders who will say anecdotally that liquidity has deteriorated 509 00:29:38,080 --> 00:29:40,840 Speaker 1: in the market. I was speaking to one credit guy 510 00:29:40,920 --> 00:29:42,400 Speaker 1: today who told me it took him a week and 511 00:29:42,440 --> 00:29:46,160 Speaker 1: a half to sell one million worth of bonds. And 512 00:29:46,200 --> 00:29:48,080 Speaker 1: then you have the regulators who will come out and 513 00:29:48,080 --> 00:29:51,160 Speaker 1: do these studies and say, well, based on these hard 514 00:29:51,240 --> 00:29:55,280 Speaker 1: data points, we see no problem with liquidity whatsoever. And 515 00:29:55,320 --> 00:29:58,200 Speaker 1: it's just really interesting to me how you can't really 516 00:29:58,920 --> 00:30:01,800 Speaker 1: get to the bottom of what ostensibly should be a 517 00:30:01,880 --> 00:30:07,239 Speaker 1: fundamental concept in markets and finance. Absolutely, but you know, 518 00:30:07,320 --> 00:30:10,160 Speaker 1: I think like all of those different examples, some were 519 00:30:10,240 --> 00:30:14,560 Speaker 1: more like financial markets than others, I think they tell 520 00:30:14,640 --> 00:30:17,240 Speaker 1: us something profound, which is that I think if from 521 00:30:17,240 --> 00:30:20,640 Speaker 1: a naive point of view, you could imagine that with 522 00:30:20,760 --> 00:30:24,880 Speaker 1: the Internet, everything could suddenly just become a liquid market 523 00:30:24,960 --> 00:30:28,400 Speaker 1: where there's no more need for brokers, there's no more 524 00:30:28,480 --> 00:30:30,600 Speaker 1: need for anything. You just put your information out there. 525 00:30:30,640 --> 00:30:32,880 Speaker 1: I'm a person working in here I want to I 526 00:30:32,920 --> 00:30:35,560 Speaker 1: have these skills, or I'm looking for this kind of 527 00:30:35,600 --> 00:30:37,880 Speaker 1: person to date, or I'm looking for this kind of 528 00:30:37,920 --> 00:30:41,640 Speaker 1: apartment or whatever it is, and even and uh, but 529 00:30:41,760 --> 00:30:44,719 Speaker 1: it's still really hard and and different markets really do 530 00:30:44,840 --> 00:30:48,280 Speaker 1: have fundamentally different structures, or at least they have players, 531 00:30:48,320 --> 00:30:50,840 Speaker 1: as you are alluding to. In those markets that have 532 00:30:51,440 --> 00:30:55,040 Speaker 1: can prove pretty effective at resisting change. And so in 533 00:30:55,080 --> 00:30:58,040 Speaker 1: the same way, we just sort of imagine that in theory, 534 00:30:58,160 --> 00:31:02,200 Speaker 1: electronic trading markets will disintermediate everything and you can just 535 00:31:02,240 --> 00:31:05,120 Speaker 1: buy whatever you want by putting it out there. Uh, 536 00:31:05,120 --> 00:31:08,000 Speaker 1: It's really not that simple. Yes, And maybe the lesson 537 00:31:08,200 --> 00:31:12,080 Speaker 1: is that even in a technological age, you can charge 538 00:31:12,120 --> 00:31:16,960 Speaker 1: for liquidity as a service for certain assets, I guess right. 539 00:31:17,040 --> 00:31:20,360 Speaker 1: And then even in a technological age, there people have 540 00:31:20,480 --> 00:31:24,280 Speaker 1: ways of sort of preserving the existing order and not 541 00:31:24,400 --> 00:31:27,120 Speaker 1: everything is just not everything is just so simple as 542 00:31:27,160 --> 00:31:30,040 Speaker 1: a you know, a gigantic eBay market or whatever it is. Right, 543 00:31:30,120 --> 00:31:33,440 Speaker 1: if something hasn't been disrupted before, there might be a 544 00:31:33,520 --> 00:31:37,240 Speaker 1: reason for that. That's well play, all right, should we 545 00:31:37,280 --> 00:31:39,720 Speaker 1: leave it there, Let's do it. This has been another 546 00:31:39,760 --> 00:31:42,960 Speaker 1: episode of the Odd Lots podcast. I'm Joe Wisenthal. You 547 00:31:43,000 --> 00:31:45,640 Speaker 1: can follow me on Twitter at the Stalwart, and I'm 548 00:31:45,680 --> 00:31:49,280 Speaker 1: Tracy Alloway. You can follow me at Tracy Alloway. And 549 00:31:49,320 --> 00:31:52,959 Speaker 1: you can find Karthika on Twitter at Karthik s. And 550 00:31:53,040 --> 00:31:57,080 Speaker 1: you can find our producer Sarah Patterson on Twitter at 551 00:31:57,200 --> 00:32:04,200 Speaker 1: Sarah pat With two teams to a