Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wysn't and I'm Tracy Alloway. You know, it's
Speaker 1: really fun last week, you know, really enjoyed getting to
Speaker 1: record an episode in person for once. But now, of
Speaker 1: course we're back to our normal ways. It's it's very sad.
Speaker 1: I miss you, Joe likewise, and here we are recording
Speaker 1: a podcast on opposite sides of the world. But okay,
Speaker 1: moving on today, I think we're going to be talking
Speaker 1: about something that we've covered in a few episodes and
Speaker 1: that I think is one of your favorite themes. Okay,
Speaker 1: because you said that, I know exactly what it is. Um,
Speaker 1: so we don't have to play the guessing game like
Speaker 1: we sometimes do. No. Um, it's liquidity, right right? Why
Speaker 1: is this one of your favorite topics? It's funny, we've
Speaker 1: talked about it a lot, like the sort of it's
Speaker 1: particularly the bond market, bond market, liquidity, the market structure.
Speaker 1: We've talked about it a lot, but I guess I've
Speaker 1: never asked why is this a subject of such fascination
Speaker 1: for you? Okay, I can tell you exactly why, because
Speaker 1: liquidity is almost the essence of markets. Like, if you
Speaker 1: think that a really simple definition of liquidity is the
Speaker 1: ease of buying or selling something maybe without affecting its
Speaker 1: price too much, that's exactly what markets are, right. And
Speaker 1: the other thing is you get all these really interesting
Speaker 1: um motivational dynamics at play and lots of design issues,
Speaker 1: And even though you can think of the perfect market
Speaker 1: structure to suit a partricular asset class or transaction, there
Speaker 1: might be different players involved who don't want to see
Speaker 1: that market structure come to fruition. So it's it's a
Speaker 1: fantastic mix of human behavior and markets, I think. So basically,
Speaker 1: this idea of liquidity the ease with which one can
Speaker 1: buy or sell an asset at a given price, if
Speaker 1: we can understand why it exists or why it doesn't,
Speaker 1: then we could sort of understand the entire structure of
Speaker 1: the market, who the different players are, what their different
Speaker 1: motivations are, etcetera. That's exactly right. Are you telling me
Speaker 1: we have someone on the show today who knows the
Speaker 1: answer to this question. Well, we might, I don't know,
Speaker 1: really have the answer, but we're going to try and
Speaker 1: get a closer to the answer. But I think we're
Speaker 1: gonna do it in a cool way because obviously, normally,
Speaker 1: you know, we might talk to someone and we have
Speaker 1: who's like an expert in how the bond market works
Speaker 1: or stock market structure. Today we're going to talk about
Speaker 1: how this concept of liquidity and market structure exists in
Speaker 1: our everyday lives, so not just in what we call
Speaker 1: financial markets, but in the sort of how we how
Speaker 1: we see this concept everywhere and the things we buy,
Speaker 1: transact in, etcetera. That sounds absolutely amazing, and I hope
Speaker 1: we can come up with some real life parallels for
Speaker 1: for instance, lack of liquidity in the corporate ball market.
Speaker 1: That's what I'm hoping for. I'm hoping that by understanding
Speaker 1: how liquidity exists in everyday life or lack of it,
Speaker 1: that we can then translate that back into maybe some
Speaker 1: new insight into the financial world. So, without a further ado,
Speaker 1: I want to bring in our guest. His name is
Speaker 1: Karthik Shah Shudar. He is the author of Between the
Speaker 1: Buyer and the Seller, a book that examines some of
Speaker 1: these topics. Karthik, thank you very much for joining the
Speaker 1: Odd Lots podcast. Hi to Hi Trizzy. I'm glad to
Speaker 1: be here. So Karthik, What did you think about our introduction?
Speaker 1: Did you think that Tracy's explanation for why liquidity is
Speaker 1: such an important aspect of the market to understand sort
Speaker 1: of parallels with why this interests you? Absolutely? I think
Speaker 1: she's kind of bang on, and I think the definition
Speaker 1: of liquidity she used is also like precisely the one
Speaker 1: that I use in my book. But yes, liquidity, I
Speaker 1: think is an important topic because it's it's around us everybody.
Speaker 1: It's around us in pretty much every market that we
Speaker 1: happen to transact in on a daily basis, and like
Speaker 1: as Stacy just explained, it's a wonderful combination of markets
Speaker 1: and human behaviors. So we always used to write that
Speaker 1: liquidity is kind of a nebulous concept and people have
Speaker 1: different definitions of good and bad liquidity, So why don't
Speaker 1: we just jump right into it to clarify the concept,
Speaker 1: give us a real life example where liquidity is an
Speaker 1: issue or that tells us about one specific aspect of liquidity.
Speaker 1: So I'll start with liquidity itself. I'll start to the
Speaker 1: quote that I have that I begin my book with.
Speaker 1: It's by Michael Lewis, and it's from Flashboys and He
Speaker 1: says liquidity was one of those words Wall Street people
Speaker 1: through around when they wanted the conversation to end and
Speaker 1: for brains to go or date and for all questioning
Speaker 1: to cease. This book is basically an attempt to kind
Speaker 1: of like dake liquidity beyond its kind of Wall Street origins.
Speaker 1: I myself have a little bit of a background in
Speaker 1: Wall Street type. Briefly, you work for a couple of
Speaker 1: years at Goldman Sacks, and now I'm working in the
Speaker 1: financial services industry, working for a company called our Kra
Speaker 1: where we're trying to revolutionize how client engagement has done
Speaker 1: in investrent banks. That aside, I think to come coming
Speaker 1: back to liquidity, to take a very simple example that
Speaker 1: I think a lot of us kind of deal with
Speaker 1: every day. UH. It's to do with the market for
Speaker 1: uh what it call is motorized local transportation. That's cabs
Speaker 1: and cab like uh instrument pretty much everywhere. So one
Speaker 1: of the biggest kind of UH. It was actually one
Speaker 1: of the motivations from my book in terms of like
Speaker 1: one of the markets that have seen a massive revolution
Speaker 1: and liquidity is the way is the cab market well,
Speaker 1: which I kind of existed in the fairly low level
Speaker 1: equilibrium for a lot of years. I mean different the
Speaker 1: regulation was different in different cities, but pretty much each
Speaker 1: city was broken in one way or the other. Like
Speaker 1: for example, in a lot a lot of cities in
Speaker 1: India where I come from, Uh, it's common for taxi
Speaker 1: drivers to refuse you are right once they know where
Speaker 1: you want to go. Or for example, if taking the
Speaker 1: example of New York City in the mornings, if you're
Speaker 1: trying to take a taxi from midtown to downtown, it's
Speaker 1: highly unlikely that you're going to find one. This is
Speaker 1: a market which was kind of very, very inefficient. It
Speaker 1: was people. I tried to regulate it in the in
Speaker 1: a whole lot of ways, but like none of it
Speaker 1: had really worked out. And then comes along this company
Speaker 1: called Uber, which using an app and using this concept
Speaker 1: of dynamic pricing, which is highly controversial, but I mean
Speaker 1: I I absolutely love it by the way they have
Speaker 1: kind of changed the way, changed the taken the liquidity
Speaker 1: in the cap market to a whole new level. So
Speaker 1: there's several ways. I think obviously it's great that we're
Speaker 1: starting with the Uber discussion because it's probably one of
Speaker 1: the most clear ways in modern life in which something
Speaker 1: we just took for granted. Uh, you know, putting out
Speaker 1: your hand and getting a taxi is really a sort
Speaker 1: of quasi financial market, and the new market has changed.
Speaker 1: So there's dynamic pricing. There's the fact that you know,
Speaker 1: the ubers have to take you everywhere. You can sort
Speaker 1: of see the supply that's on the road more vividly,
Speaker 1: because you know, you're not just sort of wondering when
Speaker 1: a cab is going to come around. You can set
Speaker 1: up timing very well in your view. Hey, what is
Speaker 1: the most sort of radical thing about Uber? Perhaps it's
Speaker 1: the dynamic pricing. And then you know, since we're looking
Speaker 1: for financial market lessons, what is sort of is there
Speaker 1: an Uber equivalent in the world of finance that we
Speaker 1: could say, Okay, this thing that Uber does is similar
Speaker 1: to this on an exchange. Good question. So the first
Speaker 1: party guard bangled. I think the most important part of
Speaker 1: is UH dynamic pricing in the financial markets. I can't
Speaker 1: think of a direct parallel right now. I can't think
Speaker 1: of a direct part where like where let's say an
Speaker 1: intermediary Uber is also an intermediary between the cab driver
Speaker 1: and the passenger, where an intermediary uses kind of dynamic
Speaker 1: pricing to kind of, uh make the markets more efficient
Speaker 1: for everyone. I think UBER one of the work of
Speaker 1: the taxi market is that, like it's extremely fragmented when
Speaker 1: it comes to both space and time. Like the market
Speaker 1: that you see is limited by the taxis that are
Speaker 1: you as a passenger, you see the taxis around you
Speaker 1: at that point in time. So there's massive fragmentation on
Speaker 1: two dimensions, and that kind of fragmentation. I mean you
Speaker 1: can say that like even the regular stockore bond markets
Speaker 1: have that kind of fragmentation because they are like there
Speaker 1: are like you have like multiple venues and you have
Speaker 1: like kind of there is fragmentation through the day because
Speaker 1: there are some market makers who operate more heavily at
Speaker 1: different times of the day and volume changes through the
Speaker 1: day and so on. But the key difference between Uber
Speaker 1: and the kind of first stock market is that, like
Speaker 1: in a stock market, by providing supplying supply in one place,
Speaker 1: you're not taking supply away from another place. So for example,
Speaker 1: if if I am Golden SAX and I'm participating right
Speaker 1: now in the New York Stock Exchange, that doesn't come
Speaker 1: at the cost of my participation at this point of
Speaker 1: time in ASDAC, if I had to kind of choose
Speaker 1: between one or the other, then like it would have
Speaker 1: been more like Uber. So in that sense, I feel
Speaker 1: like I got It's hard to at this moment draw
Speaker 1: a direct parallel between between Uber and financial markets, because
Speaker 1: Uber is a far more complex problem. I would say.
Speaker 1: So Uber is a great example of a sort of
Speaker 1: technological change that has arguably boosted liquidity or the availability
Speaker 1: of a certain service. But there are existing assets or
Speaker 1: services out there that have also resisted technological change, UM,
Speaker 1: And I think you brought one of them up in
Speaker 1: your book, And I'm particularly interested in this. The real
Speaker 1: estate market, the concept of all these real estate agents
Speaker 1: who find you a house or an apartment. There have
Speaker 1: been multiple attempts to make that market more liquid, either
Speaker 1: with online platforms or some other new big ideas, and
Speaker 1: they seem to have largely failed. So why is it
Speaker 1: that liquidity hasn't come to the property market and we
Speaker 1: all still have to pay, you know, obscene commissions to
Speaker 1: New York real estate agents. The thing with the real
Speaker 1: estate market, UM, is that like the way in which
Speaker 1: the new players like take somebody like a rape frill
Speaker 1: in the U S or housing in India. The way
Speaker 1: they are approaching the market is very different from how
Speaker 1: your local real estate agent approaches the market. So here
Speaker 1: I bring in an analogy in the book from the
Speaker 1: Financial market Tan right to distinct between what I call
Speaker 1: us brokers and clearing houses for this podcast audience, I
Speaker 1: don't think I need to explain those two terms, so
Speaker 1: the difference between your tradition. Actually, I do think a
Speaker 1: quick definition of the two terms would be able to focus.
Speaker 1: I get confused myself, and I think I suspect we
Speaker 1: have a lot of listeners that would like a clarification. Okay,
Speaker 1: So broker's basically take a mandate on behalf of a
Speaker 1: client and take responsibility for executing the trade on behalf
Speaker 1: of the client. Clearing Houses, on the other hand, don't
Speaker 1: really take them, but they don't work for a particular client.
Speaker 1: They just provide a platform where clients can come on
Speaker 1: and find each other and transact. So the way the
Speaker 1: traditional real estate industry has been set up with the
Speaker 1: broker's brokers and brokers they take a mandate from me.
Speaker 1: They I tell them I want a two bedroom apartment
Speaker 1: on the Upper West Side and I'm willing to pay
Speaker 1: up to two tho dollars a month, and they will
Speaker 1: take that mandate and possibly try and find me how
Speaker 1: if one exists, if there is a supply for it,
Speaker 1: and so on. On the other hand, if you take
Speaker 1: something like housing and taking any Indian example, because that's
Speaker 1: that's what I'm most familiar with, but what they do
Speaker 1: is it's an online portal where I, as a seller
Speaker 1: of a house or a landlord, can list my house,
Speaker 1: and you, as a buyer or a tenant, can come
Speaker 1: and search for listings. So so red fin or Housing
Speaker 1: doesn't take a mandate on behalf of the client, so
Speaker 1: they just kind of enabled transactions. And what happens because
Speaker 1: of that in the real estate market because like no
Speaker 1: two houses are similar, and there's a lot of a
Speaker 1: lot of quirks, and like people have weird preferences. I
Speaker 1: think what's happened is that, like it's very hard for
Speaker 1: the clearinghouse to kind of really offer the precise, like
Speaker 1: offer a really short list. So if you want, if
Speaker 1: you have a particulars a set of preferences, and you
Speaker 1: might put in the filters on the website and you'll
Speaker 1: get a really long list. In the effort required and
Speaker 1: going through that and and eliminating the stuff that you
Speaker 1: don't want as pretty high. So on the other hand,
Speaker 1: a broker as as a human being, his advantage over
Speaker 1: the platform is that, like he can really represent you.
Speaker 1: You can clearly communicate to him what you're what you're
Speaker 1: looking for, and he can kind of find you precisely
Speaker 1: that kind of UH deal and so on. So in
Speaker 1: that sense, they have been able to add value. And also,
Speaker 1: as I mentioned in the book, especially in the India,
Speaker 1: brokers have kind of leveraged these online platforms because they
Speaker 1: I mean, it always happens in the stock market where
Speaker 1: your local broker goes and participates on your behalf on
Speaker 1: the New York Stock Exchange. So similarly, in the property
Speaker 1: market you have brokers taking their clients mandate and going
Speaker 1: to one of these UH websites to find a deep
Speaker 1: It is interesting hearing this explanation because, you know, once
Speaker 1: again going back to sort of traditional financial markets, one
Speaker 1: of the themes that we've talked about is UH. You know,
Speaker 1: the degree to which the bond market is characterized by
Speaker 1: such a greater diversity of instruments than the stock market.
Speaker 1: And so hearing you explain, you know, each each apartment
Speaker 1: or house that someone would want to buy is probably
Speaker 1: going to be a little different, even if they're sort
Speaker 1: of can be grouped in general categories. The you know,
Speaker 1: there's not any two apartments are not as fungible the
Speaker 1: way you know, sort of every other every share of
Speaker 1: Microsoft is basically identical. Wait, so, I mean, I've heard
Speaker 1: that explanation for bond market um issues and it makes
Speaker 1: some sense. But the other thing to consider, and I'm
Speaker 1: pretty sure we've talked about it at various points on
Speaker 1: all thoughts, is the motivation of the players involved. So
Speaker 1: a lot of people will say that the bond market
Speaker 1: is resistant to change because, for instance, the big dealer banks,
Speaker 1: the guys that buy and sell bonds on behalf of
Speaker 1: their clients, don't want to give up a really lucrative
Speaker 1: form of commission. So cartex I'm just wondering, in terms
Speaker 1: of everyday examples of market structures or liquidity, is there
Speaker 1: one that springs to mind where the participants in it
Speaker 1: have been, you know, basically unmotivated to change their ways.
Speaker 1: I'd probably go back to the kind of the taxi
Speaker 1: example because in a uber obviously you know what, it's
Speaker 1: been fairly controversial in London where it now live. Ugle
Speaker 1: kind of has been effectively banned in its uh fairly
Speaker 1: recently and as a huge controversy going on over there
Speaker 1: and there. I think it's more to do with the
Speaker 1: fact that the fact that the traditional taxi industry has been,
Speaker 1: like they have immense lob being power, and they have
Speaker 1: been kind of resistant to change in terms of like
Speaker 1: they have been, uh, have been a few ways in
Speaker 1: which they have been in afficiate, Like for example, even
Speaker 1: in the most well regulated markets, you have the problems
Speaker 1: of taxis not wanting to go into certain parts of town,
Speaker 1: that and so on, so so from so, what's happened
Speaker 1: there is that, Like, I mean, one of the reasons
Speaker 1: you see the regulatory backlash against Tuba is because the
Speaker 1: incumbents kind of are kind of afraid of this threat
Speaker 1: time they want to kind of because they're sitting on
Speaker 1: fairly valuable assets. They're not valuable assets in terms of
Speaker 1: like as intermediaries, which is what it is with the
Speaker 1: banks in the bond market. Here. It more it is
Speaker 1: in terms of like they're sitting in terms of valuable
Speaker 1: assets as the right to sell in this particular market,
Speaker 1: think of the New York taxi Medalian for example. So
Speaker 1: so so they have been stymying all efforts to kind
Speaker 1: of reform the markets because of their unwillingness to change.
Speaker 1: But but yeah, but because we were shown away out
Speaker 1: in terms of like it's increasing efficiency, it might not
Speaker 1: be very h that might not be a fight that
Speaker 1: might last too long, hopefully. Let's see now speaking of
Speaker 1: real estate, Um, one of the you know, with the
Speaker 1: rise of the Internet, one of the big theories that
Speaker 1: people had was that geography would be destroyed. So we
Speaker 1: can all work from anywhere. We could work from home,
Speaker 1: we could work from wherever, So there's no reason to
Speaker 1: live in New York or Silicon Valley or Washington, d C.
Speaker 1: Or l A. And yet the opposite seems to have happened,
Speaker 1: and you wrote about you write about this in your book,
Speaker 1: where in fact, people, you know, cities and urban centers
Speaker 1: have become even more and more important for the economy.
Speaker 1: Despite what sort of this theory of disrupting geography would say,
Speaker 1: what what happened there? Why has that idea that the
Speaker 1: Internet would sort of subvert traditional geography not really played out? Okay,
Speaker 1: so I think what we kind of ignored us in
Speaker 1: terms of to use some Silicon Valley speak here, uh
Speaker 1: that cit saide if it to leave platforms. Cities can
Speaker 1: be viewed as platforms that connect employees on one side
Speaker 1: and businesses on the other, and like at a different level,
Speaker 1: they connect consumers of local goods and services to produce
Speaker 1: us of local goods and services such as restaurants and
Speaker 1: so on. But we leave that aside right now. So
Speaker 1: what people had kind of vastly underestimated was the importance
Speaker 1: of proximity in terms of getting work done and so on.
Speaker 1: So what people have assumed is that with Internet there
Speaker 1: is going to be like there is, it is going
Speaker 1: to be possible to kind of uh communicate seepless Lee
Speaker 1: across great distances, and so you can sit in your
Speaker 1: farm and Wyoming and kind of work the same way
Speaker 1: as somebody sitting in his office in San Francisco can.
Speaker 1: So I think that was something people assumed and that
Speaker 1: has not come to be because like, there is always
Speaker 1: a transaction cost involved in talking to somebody who's not
Speaker 1: next to you, So you'll have either have to call
Speaker 1: the tye and make sure he understands what you're saying,
Speaker 1: and there can be various kind of places where like
Speaker 1: coordination across distance can kind of falter. And because of that,
Speaker 1: I think, like people companies have recognized the recognized the
Speaker 1: need to kind of be in one place and so on,
Speaker 1: and so you have like the despite how expensive San
Speaker 1: Francisco has gotten nowadays, like people still continue to move
Speaker 1: to the Bay Area and so on, because that's where
Speaker 1: the kind of the liquid market for the skills that
Speaker 1: people have. This is making me feel bad about working
Speaker 1: from our Abu Dhabi satellite office of my living room.
Speaker 1: Um Karthik, I have a slightly more theoretical question for you,
Speaker 1: to what extent do systems of buying and selling reflect
Speaker 1: the nature of the underlying assets, Like if you have
Speaker 1: a bunch of really diverse things that are actual that fungible,
Speaker 1: and to what extent do they reflect the nature and
Speaker 1: the motivations of the parties involved, and which one would
Speaker 1: you give more weight to. That's not a very easy
Speaker 1: question to answer. I think it's it's highly interdependent. I
Speaker 1: think how a market has developed historically is a function
Speaker 1: of the kind of assets that are being created in
Speaker 1: that market. So, for example, I think one of the
Speaker 1: one of the if you have things that are like
Speaker 1: easily fungible, which is easy for a lot of people
Speaker 1: to provide. You would have seen that the market would
Speaker 1: have evolved such that like the overall transaction cost and
Speaker 1: even the overall transaction cost is pretty low because because
Speaker 1: competition drives the bittern ask close together when you have
Speaker 1: lots of products which are pungible, which can be easily treated.
Speaker 1: On the other hand, I think that this is something
Speaker 1: I talk about in my in the first chapter in
Speaker 1: my book, which unfortunately you're my u S readers may
Speaker 1: not really appreciate. It's about the markets in football players.
Speaker 1: Football as an association football, where you have because the
Speaker 1: players are not fungible at all, No two players, especially
Speaker 1: at the highest level, are very similar to each other.
Speaker 1: You see the deals that happen that are either extremely expensive.
Speaker 1: We had recently a case of a footballer going UH
Speaker 1: for some two hundred million euros between a club in
Speaker 1: Spain and a club in France. So it's like, on
Speaker 1: the other hand, you can have equally highly rated footballer
Speaker 1: is moving between clubs without any transfer feedboard, so it's
Speaker 1: a highly uh. The kind of when you have less
Speaker 1: fungible kind of assets, the you the deals take place
Speaker 1: at either the bit or the ask and sol like
Speaker 1: you have a very a bit of a crazy market.
Speaker 1: But I think that the that actually drives the behavior
Speaker 1: of the that drives behavior of the intermediaries. I mean, like,
Speaker 1: if you're let's say, an intermediary who if you're making
Speaker 1: market in markets and stocks, and you decide to behave
Speaker 1: as if like stocks are the stocks are a non
Speaker 1: fungible item, might try to charge high bid asks rates
Speaker 1: and things like, you will be easily priced out of
Speaker 1: the market. So I think it's the nature of the
Speaker 1: asset that's been traded that drives the nature of the market. Okay,
Speaker 1: I want to ask about another what one might call
Speaker 1: a market in which no two of the assets are fungible,
Speaker 1: but which has been massively disrupted by the Internet, and
Speaker 1: that is the dating market or the marriage market, or
Speaker 1: whatever you want to call it. Obviously extraordinary change in
Speaker 1: behavior with the rise of Tinder, where someone can just
Speaker 1: sit on their phone and arrange numerous dates in the
Speaker 1: span of a few seconds or minutes. As far as
Speaker 1: I know, I've never you know, I've never used it.
Speaker 1: But yeah, whatever, I'm way too Oh, I'm way too
Speaker 1: I'm way too all I missed all of it versus
Speaker 1: the old days, where I guess theoretically you had to
Speaker 1: go to a bar and it was very slow, cumbersome
Speaker 1: process to meet people in theoretically arrange dates. Tell us
Speaker 1: about this market, what are some of the lessons we
Speaker 1: can learn in a liquidity from the way from the
Speaker 1: dating market? So the dating market is again quite uh,
Speaker 1: quite interesting, especially the way it has kind of ill
Speaker 1: again think the Indian example, because it's a bit more
Speaker 1: interesting and less liquid than I think in other places.
Speaker 1: What do you have in India is because of historical
Speaker 1: or cultural works, there's a massive gender imbalance on on
Speaker 1: on apps such as the Tinder, So I think it's
Speaker 1: uh somewhere around eighty twenty or in favor of men
Speaker 1: or worse. So what happens is that neither let's just
Speaker 1: assume hetero sexual relationships here, So what happens is that
Speaker 1: neither men nor women have a good time in the market.
Speaker 1: Because when you have like let's say five men for
Speaker 1: every woman or for ten men for every woman in
Speaker 1: the market, well, if you are I mean tender to
Speaker 1: some extent, is a little less bothersome compared to other apps,
Speaker 1: because you only kind of there's only a kind of
Speaker 1: only when there's a mutual like that, like you get
Speaker 1: a notification. But what happens is that if you're a
Speaker 1: woman and there there are like lots of men in
Speaker 1: the market but few other women what have, you will
Speaker 1: end up getting a lot of kind of interest from
Speaker 1: a large number of men, and you know for sure
Speaker 1: right up front that like maybe of them are not
Speaker 1: your type. So you have to you have the job
Speaker 1: of kind of sifting through so many of these profiles
Speaker 1: and in order and to somehow find the needle in
Speaker 1: the haystack. On the other hand, if you're a man
Speaker 1: in such a market and you what you not is
Speaker 1: that there are like so many men for every woman here,
Speaker 1: then you need to someone stand out and standing out
Speaker 1: in this kind of a market where your competitors are
Speaker 1: also evolving and so on, it's not easy. So so
Speaker 1: in that sense it's a very while theoretically it is,
Speaker 1: like I mean, it's all the liquidity problem to some
Speaker 1: extent in that like now, if I go to a
Speaker 1: party and as which on Tinder, I know that who
Speaker 1: else is on I can Let's say I support somebody
Speaker 1: at a party and want to check her out and
Speaker 1: I can see if she's on Tinder, which where she
Speaker 1: probably will be she's single, and then like maybe express
Speaker 1: interests there without facing the fear of rejection. So in
Speaker 1: that sense, it's kind of increase the volume of trading
Speaker 1: or volume of interest in the market. But on the
Speaker 1: other hand that it is still not completely solved the
Speaker 1: market because there is this whole issue of what they
Speaker 1: call us congestion. That's that's fascinating. The idea that there's
Speaker 1: sort of imbalance creates a broken market, and it sort
Speaker 1: of explains why bars, you know, often I don't know
Speaker 1: if they still do, you know, they'd have like a
Speaker 1: Ladies Night, Ladies Night to pay a cover, women got
Speaker 1: in free in order to you know, keep keep the
Speaker 1: populations balanced, because with imbalance it doesn't work out very
Speaker 1: well for either side, you know, Ladies Night. Sorry, I
Speaker 1: just have to interject, Ladies Night is alive and well
Speaker 1: in Dubai and Abu Dhabi, and that's because the gender
Speaker 1: balance is so extreme. There are so many more men
Speaker 1: than women. Here, karthact before we go, we just have
Speaker 1: time for one more minute. Give us one quick other
Speaker 1: example from your book. What's just one more thing in
Speaker 1: modern life that we see. That's an interesting example of
Speaker 1: liquidity providing an action. So one more way is I
Speaker 1: think i'll answer this question at a bit of a
Speaker 1: meta level. So, uh, you take the publishing industry itself, right,
Speaker 1: So if you were to think of in the olden
Speaker 1: days before Amazon, what happened was if I were to
Speaker 1: want it to publish something in the book form and
Speaker 1: have it read by you, the transaction costs would have
Speaker 1: been immense in terms of because first I had to
Speaker 1: kind of put it on to get it printed onto
Speaker 1: a paper nicely bound, and then like it has to
Speaker 1: kind of go through the entire supply chain of books,
Speaker 1: and then my publisher will have to kind of do
Speaker 1: the marketing to make sure that you know that my
Speaker 1: book exists and so on. So so there was a
Speaker 1: lot of cost transaction costs involved in terms of publishing
Speaker 1: and consuming books itself. I think what's happened is that
Speaker 1: with the again, this is a this is a market
Speaker 1: that's only like become partly liquid and just a very
Speaker 1: long way to go. As I've figured out after kind
Speaker 1: of having published the book, is that like after Amazon
Speaker 1: came about and kind of released the concept of the
Speaker 1: Kingdon where all the dead prey in the publication process,
Speaker 1: it's taken away. So it's not funny what portion of
Speaker 1: the cost of my book goes into modifying and moving paper.
Speaker 1: And if you take that out, the kind of the
Speaker 1: amount of the value that the reader pays that can
Speaker 1: be captured by the writer is immense and so effectively
Speaker 1: the once you have the kind of the paper taken away,
Speaker 1: I think that what did the biggest kind of transaction
Speaker 1: costs between the buyer and the sellers that the readers
Speaker 1: should know that the book exists sense on which is
Speaker 1: again fairly big cost. But still I think there's a
Speaker 1: market which is on its way to becoming a bit
Speaker 1: more becoming more liquid. Karthec shas are fascinating conversation the
Speaker 1: author of the book and question between the buyer and
Speaker 1: the seller which explores concepts of liquidity and market structure
Speaker 1: in everyday life. Fascinating conversation. Really appreciate you coming on
Speaker 1: the show. Thanks True, Thanks du So. Tracy. Do you
Speaker 1: think we are we are any closer to understanding the
Speaker 1: history of market liquidity? I mean, I think we may
Speaker 1: be muddling the concept of liquidity with just service provision
Speaker 1: in that conversation. But that said, the thing that's endlessly
Speaker 1: fascinating about liquidity is the fact that everyone has different
Speaker 1: definitions and views of it. So even when it comes
Speaker 1: to the corporate bond market, you have all these investors
Speaker 1: or traders who will say anecdotally that liquidity has deteriorated
Speaker 1: in the market. I was speaking to one credit guy
Speaker 1: today who told me it took him a week and
Speaker 1: a half to sell one million worth of bonds. And
Speaker 1: then you have the regulators who will come out and
Speaker 1: do these studies and say, well, based on these hard
Speaker 1: data points, we see no problem with liquidity whatsoever. And
Speaker 1: it's just really interesting to me how you can't really
Speaker 1: get to the bottom of what ostensibly should be a
Speaker 1: fundamental concept in markets and finance. Absolutely, but you know,
Speaker 1: I think like all of those different examples, some were
Speaker 1: more like financial markets than others, I think they tell
Speaker 1: us something profound, which is that I think if from
Speaker 1: a naive point of view, you could imagine that with
Speaker 1: the Internet, everything could suddenly just become a liquid market
Speaker 1: where there's no more need for brokers, there's no more
Speaker 1: need for anything. You just put your information out there.
Speaker 1: I'm a person working in here I want to I
Speaker 1: have these skills, or I'm looking for this kind of
Speaker 1: person to date, or I'm looking for this kind of
Speaker 1: apartment or whatever it is, and even and uh, but
Speaker 1: it's still really hard and and different markets really do
Speaker 1: have fundamentally different structures, or at least they have players,
Speaker 1: as you are alluding to. In those markets that have
Speaker 1: can prove pretty effective at resisting change. And so in
Speaker 1: the same way, we just sort of imagine that in theory,
Speaker 1: electronic trading markets will disintermediate everything and you can just
Speaker 1: buy whatever you want by putting it out there. Uh,
Speaker 1: It's really not that simple. Yes, And maybe the lesson
Speaker 1: is that even in a technological age, you can charge
Speaker 1: for liquidity as a service for certain assets, I guess right.
Speaker 1: And then even in a technological age, there people have
Speaker 1: ways of sort of preserving the existing order and not
Speaker 1: everything is just not everything is just so simple as
Speaker 1: a you know, a gigantic eBay market or whatever it is. Right,
Speaker 1: if something hasn't been disrupted before, there might be a
Speaker 1: reason for that. That's well play, all right, should we
Speaker 1: leave it there, Let's do it. This has been another
Speaker 1: episode of the Odd Lots podcast. I'm Joe Wisenthal. You
Speaker 1: can follow me on Twitter at the Stalwart, and I'm
Speaker 1: Tracy Alloway. You can follow me at Tracy Alloway. And
Speaker 1: you can find Karthika on Twitter at Karthik s. And
Speaker 1: you can find our producer Sarah Patterson on Twitter at
Speaker 1: Sarah pat With two teams to a