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I thought we would start with Matt lavine's Greatest Hits and then let Matt having been a Classics major we'd move on to the Latin Classics and maybe tie the two together a bit so just to think about derivatives markets you've worked in that sector by some measures
derivatives are over a quadrillion in value outstanding but there's another way you can measure the net positions and turn it into zero so what's the right way to think about how large derivative markets are and what's the risk associated with that size the right
way to think about it is in you know the way that that you would do it at a at a you know if you were actually working in the derivatives Market is to sort of think about the like the risk exposures of it so like if you have a you know if you have an interest rate swap the right
way to think about it is the the dvo1 or you know like the right way to think about a equity swap is like the Delta of it so you know often you see these quadrillion doll numbers they're like you know they're quadrillion dollar notional of like you know short-term
interest rate swaps where like the idea that you could lose a quadrillion dollars on it it's is quite low is you know the risk of that is quite low the systemic question I don't know the answer to right I mean like how risky are derivatives in general is I think a
sort of you know there's a there's a time when it was derivatives are weapons of mass destruction and I think obviously there's like a sense in which that came true but like you know I worked in equity derivatives and like you know total return turn swaps didn't
like blow up the world right I mean it's like a specific set of exposures to specific risks were bad and were perhaps magnified by the ability to make zero some bets on them but the idea that like the notional of derivatives is somehow like itself a risk factor it was never
super compelling to me and there's a certain centralization of risk with derivatives so you put a lot of risk into a clearing house maybe you can bail out the clearing house if you have to more efficiently than individual investors but that also increases more
Hazard at the margin do you think we've centralized derivatives risk too much or too little I think we're still sort of in you like a little bit in early phases of doing it but like I think we've you know I'm I'm among those who are a little skeptical of the notion of
centralizing derivatives risks into Clearing House right like seems to me that a clearing house has more moral hazard than a than a bank right like a clearing house is is often a sort of like you know member Association where like you're ultimately relying on the
members for your capitalization and for your uh for your protection against PL up whereas like a bank like you know if you're on a desk like you're like obviously banks have a lot of moral hazard and like the sort of notion that banks have moral hazard is is is a
lesson that has been learned and probably overlearned from the financial crisis but like you know like if you're on a desk like you don't want to lose a lot of money if you're a clearing house like you're concerns about losing a lot of money are are are a little a little
more attenuated I think does your experience with derivatives make you feel better or worse about crypto kitties being priced at 117,000 K per pop uh are they just a derivative crypto I don't really is crypto Kitty a derivative on ether in the sort of you know in the is there a
fact of the matter yeah I mean like sure like in the naive sense of like did it come from ether sure like I think that like all those markets are so immature right like I think of of like derivatives markets as being a sort of like Mark of of maturity and of of like
the ability to sort of like understand what exposures exist in some instrument or in some like economic reality and then say well we're going to we're going to pick these exposures and hedge them out and we're going to pick these exposures magnify them and we're going
to have a the ability to kind of like fine-tune all of our exposures because we've like been doing this for a long time we've been trading currencies or equities or whatever for a long time you know like there's like the beginning of like a thing that you could call a
derivatives Market in cryptocurrency but it's not it's not that right it's it's like the opposite of that right it's like no one no one knows what like ether is in a sense and so like the idea that you're fine tuning your exposures to it
is just not crypto kitties are the opposite of that they're like making your exposures weirder and more complicated we have a good idea of how to price most Futures and options but when it comes to pricing say Bitcoin or other crypto assets what do you think is
the best model we have however bad they may all be for thinking about what that value should be I actually think it's you've you've said it which is which is like there's some like a pool of World Financial wealth and then there's you pick a random small number and you say
that percentage of World Financial wealth should be Bitcoin right so like people used to and I was like sort of persuaded by the notion that you could use like a currency model and say well you know like the the amount of transactions that you do with Bitcoin is
this and the velocity of is that and so this is the total value of Bitcoin there should be but I'm no longer persuaded by that because I don't think that Bitcoin is particularly I don't think that people's claims for Bitcoin now or that it's that it's a currency right that
it's a store of value and it's a store of value that isn't like Tethered to anything else and so it's just a question of like how much you know there's some percentage of people's wealth is in Gold like well if they shipped it half of that to bitcoin
Bitcoin would be worth X that I think is the bad but best available model I think there are other cryptocurrencies you could imagine a currency model where you say well you know how many how much file stor how big is the file storage market and then what would the velocity of a
file coin be but I'm not sure that you could answer that because I think that like the the intuitions that you'd have around velocity of money are not necessarily the right intuitions for velocity of like a token that you use to spend on files and how well Bitcoin does
as a hedge or store of value relative to Gold I me what variables do you think of when you try to figure that out you're trying to project 10 20 years in the future crypto assets competing against gold or maybe even stores of art fine art as held in warehouses what does that
depend upon is it transactions uses do they matter at all anymore will the dominant crypto asset be one that people also use to buy things or will those two functions be totally separate I don't know I mean like you know I was I was talking to someone today who who argued
that if Bitcoin hadn't been invented and if the the white paper had been if the white paper had been out there but if people hadn't started using Bitcoin what would happen would what would have made more sense to happen first would be the
useful the utility tokens would come first because you can explain well you know you use file coined by file storage or you use whatever to buy whatever whereas with Bitcoin it's just you can use it to buy anything but there's no there's no tethered store of value to it
you could imagine a world where like all the icos work and where all of the coins that you use to buy useful things work and then Bitcoin is is less you know doesn't have because it doesn't have a sort of obvious utility value loses value but I don't know I don't buy that
I think that like I think that people's desire to use a 100 different currencies to do a 100 different activities is probably overrated by the crypto community and I think that like bitcoin's first mover advantage and uh and popul Fame is has the potential to
entrench it I mean to answer your first question like I have no idea what variables youd look at but I think it's if Bitcoin stays above you know X th000 for a year and that just increases its likelihood of staying above 6,000 for another year and eventually it just you
know by force of repetition becomes a store value since almost every store issues gift certificates and this seems to be a profitable activity can we not imagine a future where almost every business issues cryptocurrency in some form maybe the velocity or volume will
be low but there'll be a cryptocurrency for every business and an Ico just like now we have gift certificates and this is perfectly fine we shouldn't think it's weird the real question is why not more crypto kitties I've never heard of a crypto doggy I've never heard of a
crypto Turtle right yes no no no store crypto doggy no store like quintuples its market value by issuing gift certificates right I mean like the reason like the the the crypto frenzy is not if this were a story of gift certificates I think it would it would
be a lot less interesting I mean if you say look you know it's true that people don't want 100 currencies but they use gift certificates which is not I don't know how much people use those gift certificates every day but like if you're if if that's the story then I I
suppose it's true but that's not that's a sad outcome for like a let a thousand cryptocurrencies Bloom if it's if it's just you know Starbucks except Starbucks tokens would you rather whether I give you a Ponzi coin or a banana coin a banana coin being connected to an
organic Banana's blockchain drawing upon banana Supply and La I think I would take the well I'm tempted to say like if I'm answer like I'm tempted to say I would take the Ponzi coin because I suspect that neither I think that they're probably
equally connected to like a viable blockchain and la and at least the Ponzi coin like says it on the tin but I be careful with that because like the you know the the reason I take either of them is to resell them and like clearly the like the the uh the frenzy of saying
that you have a utility saying that there's a blockchain somewhere probably does increase the resale value in the extremely short term in which i' would be holding these coins we're in New York we have Uber we have taxis they compete against each other there at least
appears to be a long history of the taxi sector being somewhat of a natural monopoly what's the final equilibrium in New York City and elsewhere and does the company Uber have positive value given that right now it's losing money per ride right Chinese investors are
subsidizing us at the margin if the price goes up I would prefer to shift back to taxis how do you think about that market as a consumer you know I really like uber and I think that uh Uber addressed some technological failings in the T just in
terms of like being being able to hail Ubers without you know going out on the street and for them and being able to Hell them around the world rather than you know like hiling taxes in New York is nice but it's nice to have an app on your phone where you can do it wherever
you go um so as a consumer I'm a big fan of uber and I think that you know our tax is a natural monopoly I mean they're certainly a a a seeker of regulatory rents in New York that you know it is it is I to some extent by Uber's rhetoric about kind of you know breaking down
there there's clearly some some taxi protective regulation that is not Pro consumer and to the extent Uber is fighting against that you know they make a good case for their flagrant disregard for the law um you know and the and the the big question is they continue to be
subsidized by investors and what is the long-term outcome of that and I don't know I think that prob I mean pres like their bet is that the long-term outcome of that is self-driving cars and that they have some sort of advantage in being the provider of the self-driving car app
which I'm not sure if that is super compelling because it seems to me it's hard to build a self-driving car it's relatively easy to build a routing app to send the self-driving car to you and so if Tesla or apple or whoever build the best self-driving car I'll just
download Tesla's app so it's a risk for Uber but like you know as a as a strategy bootstrapping by getting a70 billion market cap and then spending a lot of money to be the leader in self-driving cars it's not a crazy strategy right I mean they built from an
app to being a70 billion company so the the so-called Moe for the company it starts with the app but over time it shifts to owning a fleet of self-driving cars maybe maybe I mean it doesn't seem like a routing app is that great a moe let me ask you a very Matt it's not bad
right because it's a network effects know like around the world but it's not it but the network of drivers they'll work for Lyft and Uber that doesn't seem like much of a moat consumers will stick with Uber in so far as they're happy but
they're probably not intrinsically that loyal to Uber yeah you need someone else to get significant name recognition so like if you know Apple builds a self-driving car and apple you know Apple builds a driving app or a a ride Hing app then it can take on Uber pretty
quickly I think if uh you know if if some random interloper comes it's harder but let me ask you a very Matt LaVine question are you worried that people aren't worried enough so if we look at markets and security prices there are plenty of signs that volatility has been
quite Low by some measures it hasn't been this low for 50 years the world seems slightly unusual not only the crypto kitties there are other strange features of our country and world and is this decline in volatility is it driven by investors getting smarter by more
ETFs fewer shares out there to trade by more indexing foreign investors with nowhere else to go what's your best hypothesis there a general background answer to that I'm like such a like in my personal life I'm such an efficient markets guy like like the answer to the
question are you worried that people aren't enough about anything is like I'm not because because I sort of like assume that there's like a giant pool of people who are smarter than I am and they're coming to a reasonable conclusion they're reading you of course
and thinking what does Matt leine say but so like you know in general if if people are like our stock price is too high as well is you know the vix too low I'm like ah if it was too high it'd be lower right but so um and the volatility thing Ian look it's it's a thing that I
find incredibly weird because I think like you I find the world right now incredibly weird and and you know one wants to explain it and I don't know the right explanation the explanation that I sort of like is that the prices of financial assets have somewhat decoupled
from human emotion about the world that is not Financial assets and you know why would that be you know I would love it to be a story and I think there's probably some argument for it to be a story of markets have become more technological we've you know there's
famously markets stock prices overreacted to news as measured by subsequent dividend changes you know forever and you know eventually that's an anomaly that someone will exploit right eventually you'll build a thing that reacts correctly to news I think
that there are I don't think that's a wholly compelling thesis I think that what I like the story to be is that financial markets have gotten smarter and they've they react less to news and so even though the news is noisier they react react less to that noisy news
because it turns out not to affect asset prices in as noisy a way as you'd think by just watching TV I think that there is something to compelling to that because we actually have seen smart people build smart things that do a good job of you know making investing
decisions and so you'd sort of expect over time as people build more rational investing tools investing would become more rational the good counterargument to that is that investing is not a sort of technological problem in the world that can be solved it's a interpersonal
fight it's a you know trading in particular is a is a sort of attempt to to be better than someone else and so you can never make trading more rational because as you get better you know someone else gets better and like you're you the residue will ultimately still be
your sort of human biases but I don't know I'm I'm biased towards the view that that we have gotten gotten smarter at kind of decoupling our emotional reactions to the news from financial asset prices and part of that is just like whether or not that's true globally
there's like a local sense in which like you know like the first day of like Trump's election everyone panicked and then he said another crazy thing and then he said another and like there's just like eventually you tune it out right and that's a form of this thing of
like reacting less to uh of financial assets reacting less to to sort of human reactions to the news there are three sets of market prices that that bug me one is Bitcoin and other crypto assets other is all the negative real yields on
government securities and sometimes even negative nominal yields and then there's Blue Chip stocks being so high could it be those three are part of the same general phenomenon namely that good stores of value are relatively scarce compared to Growing Global wealth and
that money flows to each of those it has nowhere else to go they all look high they're going to stay high it's a sign of osity of insurance markets and other ways of protecting wealth and in some ways it's a pessimistic sign so the price can be permanently high and we
should be worried about our own inability to deal with risk yes or no sure I mean you know like it's it's a it's a sort of like transmuted story of the financial crisis of like the supply of lowrisk assets was insufficient to meet the demand and so people built
things that were lowrisk Financial assets that turned out to be risky right I mean now it's a Bitcoin can replace cdos maybe like there's a there's a there's a of a lot of money chasing assets that are good stores of value investors who index again a Matt LaVine
question first how worried are you about the spread of indexing but also if you think of indexing as somewhat endogenous so if more market research is needed you would expect fewer people to index because there's a higher return to learning something so the flow of funds
in and out of indexing how rational or efficient a process do you think that is at the end of the day and as we move more and more to to indexing how will this affect securi markets please address any combination of those you care to so so the the thing that I like
is that uh you know us public markets the companies that are in there are fewer companies they're older they're they're bigger they're more profitable and so that's that's a sort of interesting fact about like the composition of markets and one sort of
straightforward thing to take away from that is that in a world like that it makes sense to index more right in a world where you can't find the next Facebook in public markets in a world where like all companies are kind of the same they're kind of you know they're
established they're profitable like the spread between companies is sort of narrower the returns to the stock picking are going to be a little lower and and it's more rational to index and then like the next question is like which side of it is causal and I think
that there's probably some story you could tell about the rise of indexing and the sort of focus on cost in investing generally leading to a real focus on scale in investing and when investment funds are trying to operate at an enormous scale the attracted of
hundred million IPO is lower the attractiveness of like a weird company that doesn't fit into the index is lower and so you have the rise of indexing driving the sort of phenomenon of company of there being fewer and larger and more profitable public companies and
so you have a you have a feedback Lube in that sense I feel like I've Tred away a little from your question but um some activities are what we might call ndy and others are not so country and western music is not very nerdy there are plenty of bars say in lower
Manhattan that are not very nerdy a finance has become pretty nerdy what makes an activity nerdy has Finance become pretty nerdy I don't know like so I think that what makes an activity nerd like I think there are two like sort of you know clusters of factors one is having some
sort of academic like barrier right where you have to be smart to do it or you have to learn something to do it right and the other traditionally is unpopularity right like you're a nerd because you're not cool right um I think that like the like what's happened with
Finance like Finance in the last you know n years has become nerdier in the academic sense right like it's just you know the the threshold to be hired at a you know on a trading floor you know in like the day of of liars poker was like you know you needed to like you know be
like a fun guy to hang out with and maybe have gone to high school right and like and now it's like you need a PhD in physics right and so um and so like like in that sense it's become nerdier but like there's also like I think of tech as be having be you know computer
programming when I was like a kid was quite nerdy because it was academic but also people are like why are you doing that like go play sports right whereas now I think computer you know you see enough like Mark Zuckerberg stories and it's like computer programming is like
the way to become a billionaire who like controls the world's not just like has not just power but like controls the world's like social relationships and finances like that weird point where like you know in New York you like go out to the club like there are a lot of
Finance people there right it's it doesn't have like quite the nerdy the sort of like pure nerdiness component I and has Finance become less unpopular just because of passage of time since the crisis or is it in part because Tech is now so unpopular with the media and
some intellectuals that it's taken over that pride of place and finances pushed to the side and we can be ignored a bit maybe like highly skilled Carpenters but nerdier I think there's there is some of that I was sort of like taking a broader
view of your question I think Finance was like unpopular in the sense of just sort of like Niche and then it became extremely Central to the world in like 2005 and then it became extremely unpopular I think extremely unpopular is almost as good as popular in terms of
like not being nerdy right if you're if you're a villain you're not a nerd right but no I think there is some of that like you know the world the world is you know I say memories are short in finance but it's actually been 10 years since the crisis like the world you know
there's there's some reason for the world to have found new things to be interested in here's a question from a reader and I quote are there huge bets being made on Wall Street now that could end in something like the CDO MBS Financial crisis debacle maybe that I
don't know about I think that like my general impression is that like the reform of financial regulation since the financial crisis has had a lot of its intended effects and one of those is that systemically important financial institutions by some reasonable
definition probably aren't making huge directional bets on things like huge lever directional bets on things that aren't sort of traditional banking products anyway so you know you never know right like what someone 's getting up to but like I'd be surprised if like
there are huge lever directional bets existing at regulated financial institutions do you have a single biggest worry however tiny tiny tiny it may be I don't think I do I mean I don't think I do like I the thing that I find weirdest is the lack of volatility in the face of
a very strange and volatile world but I've reconciled myself to that so if you were running the division of inform this is my like efficient markets like optimism where like I just you know I just I assume that if someone if something bad was happening it would
happen but efficient markets is also pessimism right it's harder to make the world better than it already is because you can't see past what others are seeing very easily sure it's in efficient markets like conservatism or something yeah if you're running the
division of enforcement at the SEC right now what would you be telling your people to concentrate on well like Ico frauds like is the simp they're all informed investors right grandmas in this country are not buying Ico so much let them lose their money to each other
or not you know I just have an aesthetic objection to to Ico no you know yeah I mean like I think if you're the division of enforcement at the SEC like your number one priority is protecting uninformed retail investors from from well very high on your list is
protecting uninformed retail investors from fraud also pretty high on your list is protecting dumb retail investors from egregious frauds that undermine that just like they just make you look bad you know like there's a sort of like you don't you don't really
want to be the country where people are committing fraud and you know running pumping up groups and talking about it and having articles written about it and high-fiving each other doesn't seem to like encourage confidence in the markets and the other thing that like you know
as as the SEC division enforcement you might consider is like larger more systemic things than retail fraud and I've gone back and forth on this like I think that the Grandma's losing their pensions to boiler room operators in Florida like it's a very clear harm I
think you know there's a lot of interest in in among Regulators in like the people lying to their customers about large structured credit trades because those are bigger trades and you can like get bigger penalties because they're you're defrauding a bank or whatever and
I think that like you know you have to weigh like the bigness of the potential harm and like the the just the sort of overall size of the transaction with like how morally and aesthetically abhorent the transactions are and I think that like the person defrauding
the grandma in the in the boiler room is like very clearly doing something wrong I think there's a lot of gray area behavior and like institutional Bond markets that have like that has gotten a lot of focus because it is gray area so it's more interesting to bring a case if
you're an enforcement you know if you're a prosecutor or an enforcer and it's institutional so it's just sort of a sexier thing to deal with and like retail fraud and Florida but in some ways it's less bang for your buck because you are kind of just like
tweaking the rules in a in a market that is that is essentially among informed investors who can kind of take care of themselves now like you I'm mostly an efficient markets guy but I when I look at initial public offerings I'm very baffled because investment Banks take
such a huge cut if you needed to argue well they need the cup because they talk up the security and in the absence of their efforts no one would be interested and it's worth it maybe that argument works but it seems somewhat to stand in tension with an efficient markets
hypothesis which suggests the thing will find its appropriate level without any particular investor having to talk it up and furthermore attempts to get around the current mainstream system of IPOs have not always been successful auctions
have been tried Israel has tried other methods Spotify is giving it a go we'll we'll get further data but they're not obviously doing better but how do you reconcile IPOs in their current form continuing the investment Banks taking such a huge cut and some version of
efficient markets hypothesis actually making sense do you see what I'm asking yeah I mean how do I reconcile um one version of efficient markets is that in the absence of news the price yesterday is going to be the price today or whatever like there's some sort of like
continuity of prices and the IPO is a huge discontinuity right I mean like you don't have a price and then you have a price and so you'd sort of like if your notion of efficient markets is like a sort of straight line of like the price not moving very much or like of the
price you know sort of instantly incorporating information you sort of it's not unintuitive that you'd have a big squiggle at the start right like that you wouldn't really know what the price is for three days and then you would um and so that's like like I don't
think it's unusual that like the first trade of a stock would not be the price that it settles to in a week but then the second week would be pretty close to the first but that the direction is so predictable though that's odd the pop right the direction so so there's sure
but that's like like what's happening like one thing that's happening is that the banks are doing the thing that create that like they're doing the work that they're getting paid for which is going out to a bunch of buyers and talking about the stock and sort of
trying to to generate a price and that work is is like sort of non efficient markets work right it's like m&a work where it's like there's no like sort of visible price and you're sort of negotiating you oneof with big investors and then once they have that price they
sell it for Less I me that's not really true but like that's kind of like intuitively what's happening is that once they have that price they sell it for less for a variety of reasons right like you're like the stories for it are I think somewhat compelling right I mean
it's like you sell you you want a pop because you want want the early investors to be rewarded for taking a leap of faith in the company that's like maybe a little silly in like a you know giant IPO but like it's not that silly in like a tiny IPO
where there's like some hair on it and where it's a small company and you have to give someone some expectation of returns to get interested and yeah I mean I think like that work before the pop that figuring out what the thing is wor worth and selling it to investors
and doing research and everything that's like what the banks are getting paid for right like the pop is not the same thing as the bank's fee right the bank is like doing work to try to get to a reason price and then they're selling it for 15% less than that price the other thing
the other thing about the pop is that investors in the IPO have an interest in the stock going up the sellers in the IPO have no interest in the stock going down right it's bad for them it's bad for them for a variety of reasons the main one being that they are keeping
most of the stock and they don't want the stock to go down and so when you have that set of Dynamics no one is sad when the stock goes up everyone's said if the stock goes down like why would you overprice it now Matt speaks Latin and he was a class Classics major as an
undergraduate at Harvard I don't really speak Latin you once told me that law was easier than Classics what did you mean by that I mean they're both like sort of you know like the activity that you do in your academic job as an undergraduate or law student is like
sort of sitting around analyzing dense texts but like in law they're mostly in English right so like that's a big it's very straightforward like if you if you're not raised speaking ancient Greek it is much easier to read even like a 19th century legal decision than to read
you know fdii I don't know I mean like law is so so just like embedded in our society and know like sort of like you know you grow watching you know Law and Order or whatever right like there's a sort of like it is like it is very much
part of like the fabric of how we live whereas you know reading Greek poetry when I was in college was an extremely Niche activity and so required a little bit more investment to just kind of like come up to any familiarity with it now I brought my copy of horus's Epistles to
this conversation been terrifying me all and I actually think of a lot of your Bloomberg writings as being a kind of modernized Horus so you read Horus there's a preoccupation with wealth with law there's a humor in it the way he Segways from one topic to another there
even mixed feelings on how the pursuit of wealth would translate into happiness the length of a lot of Horus letters is actually about the same as the length of some of your Bloomberg columns so there's a little quiz here I'm going to read a few sentences and you need to
tell me were they written by horrus or were they written by Matt LaVine this better be easy this is are you going to read them in Latin or in English here's the first one quote I store up and organize material so that I may be able to draw upon it before
long Horus or Matt can I say Horus that's Horus very good from the RS poetica and he's trying to tell you he doesn't speak Latin that was in English that was in English what is to prevent one from telling the truth as he laughs the Horus Horus okay very good
two for two no you're not here's another quote football player derivatives are the best derivatives Horus three for three and finally quote in laboring to be concise I become obscure wow I mean Horus but but thumbs up Horus thumbs up Horus the other like I feel like um I
feel like when you you know when you're when you're like an undergraduate Classics major you read um you read like Horus and culus are sort of paired with each other and and culus is the like sort of like hot-headed young romantic who are sort of like quasi pornographic
uh love poems and Horus is the like sort of older wiser like you know backed away from the world you know like the famous Horus love poems are are sort of more cynical and more um ater removed from the world and that's something I also admire and attempt to emulate in my own
in my own work to be like a little like I'm probably like you know I tell people I'm an opinion columnist and I don't have any opinions I try to be a little less like a little more removed from the like the passionate engagement as is often the case in some of the Latin
Classics oh yeah now what's the best thing you've read or reread in Latin in the last five years I don't read a lot of Latin in the last five years I mean the answer honestly is is uh is um and and and the answer is because I don't read a lot is
is Horus ods15 is the sort of famous uh it's Chris molta graculus T in Rosa it's the sort of most famous World weary renunciatory Horan love poem it's good stuff what do Latin speakers and readers get about ancient Rome that non-latin speakers Miss I don't have like a
substantive answer what what you get is like a sort of sense of like what I took from a from like a classical education is like this like sense of like direct engagement with like humans who lived 2000 years ago right of like a like a being able to like Cicero's letters are
like a sort of classic piece of Latin because Cicero is this like sort of like famous like Stern oror who like you know wrote These very serious Law Court speeches but then he also has a lot of letters that have come down to us and there some of them are sort of like for
publicity and some of them are much more personal but like they're all at least ostensibly personal and like you get the sense of like this actual human who's this like sort of famous figure and this famous lawmaker but like you experience
his Consciousness more directly in his language and that to me was like just sort of like the weird and interesting part of being a Classics major was just like being able to sit with people from 200 years ago and and see how many of their concerns are similar and see how
many of their concerns are so different and so weird in a in a pretty direct way now as you Matt know in every conversation with Tyler there's a middle segment called underrated versus overrated I toss something out you tell me if it's underrated or overrated
you're always free to pass of course and the first one is writing in legal underrated or overrated you know under like I mean it's not great but like underrated I would say like I think that like in general people like I don't know what that means but like in general people
are like too quick to to to criticize jargon and legales and all these things right I mean like there's often a set of technical meanings that are just easier and more efficient to use when you're using the jargon of a field and I think aesthetic criticisms of
legal Lees are are often overblown um that said I've read some really bad like legal writing and like some mixed feelings but like that's under legal realism overrated or underrated it's it feels like it's gone from the academy and it's gone from you know it's not
something that people talk about in daily life and I you know to me it explains everything soid say under Buffy the Vampire Slayer oh my God underrated I mean you know well like highly rated but like um but comparative like among the most important American cultural
products and not rated that way what makes it special what makes it it's you know like part of it is like you know you go back and watch it and it's not as good as you think because like it has had such an influence on later things that that it like the it's it shocking
has been attenuated um so part of is just its influence on on subsequent television but it's it's like it's a it's a perfect example of dealing very intelligently with serious themes in a way that on its surface and particularly in its title is
silly right and so and is and is is not presented as serious which I think is obviously something that I often aspire to do but I also think it's just something that like the internet aspires to do like I think a lot of like just sort of like modern internet culture has
that sort of vein of like like using colloquial language and being casual but like you know attempting to address more serious issues and I think you know Buffy didn't invent that but Buffy is such a like um is a is a cultural Touchstone for some of that approach
hearkening back to the Romans Virgil's magnum opus the aid overrated yeah sure overrated I you know um I've I told you I you know when I was in college I did a a summer program in Rome run by father Foster who the who was the Latin secretary to the pope and he does this
he's a carlite FR from Wisconsin and he would have a program forever wants to come we come and read and speak Latin and uh we read some gorgeous passage of Abid and he concluded and he said isn't that nice isn't that better than Virgil Virgil is gray and wicked Virgil yeah I
was always biased against Virgil after that but he you know so this is not true but like he's a propagandist and he sort of like a you know I don't know what's the most underrated neighborhood of New York City I was saying I don't I don't have an answer to that because I I've
only lived in extremely highly rated neighborhoods I I live in I live in Park Slope now is some magazine a few years ago declared the best neighborhood in America which like it would be hard to it may be better yet um I don't know other like Park Slope adjacent neighbor
like guanas maybe I'd say guanas is underrated it's like a great like food destination It's like got create like a like industrial Chic architecture s going on us footnotes over overrated or underrated underrated but like fairly rated now I don't know people people
have come around on footnotes a lot of footnotes started in medieval times is commentary on the Latin Classics of course including Horus sure I mean right I like the the you know the notion of like a sort of like like intertextuality or like you
know like a like a having multiple lines of the text like having a main line and having asides as a sort of valuable notion and one I think has been like kind of valorized by internet writing in a way right like I think it's just easier to you have links you have you
know you can the notion of having like a single narrative with no distractions and having that be the sort of like highest achievement of writing is I think a little diminished by the internet and and therefore footnotes have become more appropriately valued
what Financial stories or issues do you think are not getting enough coverage and why it's hard for me to answer questions like that because I'm such a creature of coverage like I wake up and I read the news and I write about it so I rarely take a step back but um I don't know I
like the thing that I would like to read and hear more about is I came to this from a bank and I think banks are interesting objects like Banks and hedge funds are not like perfect substitutes for like Banks do something interesting and there's a lot about it but I I'd be
interested in seeing more because I don't feel like I have a good answer on like what will happen to Banks like what you know we're in the early days of seems to be pretty wholesale Financial deregulation and obviously banks in 2006 were different places from what they are
now and one possibility is they'll go back to doing exactly what they did in 2006 right another possibility is they'll do go back to doing something precisely analgous to that but in totally different instruments and ways and whatever but like we'll be similarly
free willing fascinating dangerous places another possibility is that like something like a switch has been effectively flipped in the culture and they won't go back and I just don't know and I'd love to see like I think that banks have become very
boring I think like the coverage of like what banks are doing to be more interesting has kind like you know things have moved on to like more interesting places you know there's a million articles about Bitcoin and it's possible that banks will be becoming
more interesting and I I don't have a handle on on the ways in which they're doing that Bloomberg aside who would you say is underf followed as a writer not counting our colleagues I always want to pass on these like I just like forget people Aid once wrote in our Leisure we
reveal what kind of people we are do you agree I guess yeah sure I mean right I in my leisure I I read the internet and do Crossroad puzzles and hang out with my daughter I'm pretty boring in my leisure which is probably accurate you once wrote I think this was a
speculation rather than a definitive pronouncement but you're wrote everything is I think more and more about how all of Western culture is a footnote to Iliad book n what did you mean I have a sort of idiosyncratic take on on book nine of
the ilad you know the ilad is the story of like Achilles is is the great warrior in the on the Greek side in the trasan war and he gets mad at some slight and he goes back to his tent to sulk and the Greeks start losing and so then they send emissaries to his tent to say
please come back and he says no and then the Greeks start losing some more and he eventually comes back and he gets killed and that's basically the story of the ilad and in book nine is the is the where they send the emissaries to say please come back and he says no and and
he gives this speech this response that is weird where he says you know effectively the prophecy is that if I go back to fight here I will die here and my name will be immortal and if I go home I you don't go back to fight I'll go home and live a long life and will be
forgotten and he chooses to go back and be forgotten and then later he changes his mind because his friend gets killed and this like Crux point of the ilad is this like really existential almost like examination of like like you know this this Greek warrior in this heroic
culture that uh that you know like clearly valorizes like heroism and deathless fame and everything and who is like the you know canonically the most famous heroic Warrior and the one with the most deathless he's the one who he says no I'd rather go back and live a
long life on my farm and you know the the the forcing of that choice is like the central point of like the the highest work of Greek art prefigures a lot of like existentialist and sort of like thought in the future I think what makes nabokov's pin an interesting
novel been reading my secret T um I will not put a link up to it's just very like naok cvan it's just like a bunch of you know he's just this great like ese of like of like sort of almost pointless pleasure in writing and so there's this
there's this scene that I love where fine the like um absent-minded Professor character is like heartbroken after a run in with his uh with his ex-wife and he's like dejectedly walking through the park on the way home and he's pondering the meaning of life and vov say
something like he's about he's almost come upon a sort of solution to one of the Great mysteries of life and then he's interrupted by a squirrel who runs up on a water fountain and demands that he help the squirrel drink from the water fountain like and so he helps the
squirrel and then he moves on it's it's just like sort of random interlude of just gorgeous writing and bizarre scenery and just sort of like random pile up of weird delightfulness with no point that I find very appealing if we think about mergers and Acquisitions one
of the standard results in the empirical Finance literature is that acquiring firms do fairly poorly that is Acquisitions don't seem to pay off yet of course Acquisitions persist and you've done m&a work in your life how do you think about this process if it
doesn't pay off is it about Empire Building is it about Winners curse do you somehow not trust the data you would challenge the interpretation of the result or how good are Acquisitions for the acquiring firm and what goes wrong so I wouldn't challenge the DAT I mean
like to to me like it's a it's like a similar story to to active management in some ways right like the fact that m&a is bad doesn't mean that your merger will be bad right and so like there's a sort of so one there's like obviously a bias towards Empire building right and
then two you can you you don't you don't say that right you're not like well I'd like to have a bigger company to run what you say is this merger will be good and you believe it right and and like the data is not overwhelming that all
mergers are that right the data is like you know on average they're a little bad and so you say here are the reasons why we're better right and so everyone can say that and 49% of them will be right and you throw in some Empire building and it's a people want to do stuff you
know it's it's I think it's very similar to the active management story you want to do stuff you see an active manager who seems smart has a good rating right like you see a charismatic Banker or charismatic corporate development guy or whatever and you want to do some stuff
and then uh you can you can persuade yourself that you're in the 49% the Shad Johnson agreement should the SEC and cftc be independent agencies or should they be combined into one I don't have a strong view on that I I mean I don't see a compelling difference among them but I
also you know like if you combined them there'd be departments for Commodities and departments for equities and you know like if you split off the SEC into like this equities and like the bond Department tomorrow like the I'm not sure that I'm not sure what the
institutional Dynamics are that matter very much I suspect that most of the time the agencies are like roughly on board with each other and a sort of like broadly like like how much regulation should there be sort of perspective obviously there are times that there
aren't right um the cftc fighting against derivativ in the you know early 2000s is a famous example of that but I think like in general I'm not I'm not sure what the Dynamics are where it matters that much one way or the other is American Financial regulation too
feralis and too fragmented or not you know in my experience the existence of like State financial regulation was only like a weird footnote but I think in general it is almost certainly too federalised and fragment and in particular the example that was not Accord to my experience as
a as a person in finance is Insurance regulation is like very clearly to state based and fragmented and gameable and I think that there are probably some Securities cases that are that are similar but like the insurance regulation is kind of the big one and
then like you could argue that corporate law should be federalized I don't think that there's a huge case for that just because in practice corporate law is a creature of Delaware and so it's essentially there's only one corporate law anyway and what's the most overrated
neighborhood in New York City I don't know pass why is William gtis an interesting writer why is William Gattis an interesting writer because he's part of that like he's part of like the I don't know there's like a there's like a period of like interesting modernist
experimentation that sort of I feel like the peak of it was like from like Joyce through like you know mid-50s or something and I think gatis is the sort of like most contemporary like weird writer um like weird kind of like mid-century esoteric yeah you know I
sometimes like to say Matt LaVine only you can do what you do so my final question is about what I call the Matt LaVine production function so so many days in the week early in the morning typically you have produced something that is perfectly clear and lucid and
witty and informative and original so many days over the course of a year more than anyone else I know spanning law economics finance history other things so there are many facets of your day and your work routines but if you had to explain to someone what is the Matt
LaVine production function what is it you would draw our attention to I think like a lot of people a lot of it is panic and I'm just sort of like you know like I talk about you know I um I at various points thought of being a law professor I thought of being a Classics
professor and I never could write papers like I turned in my final paper in law school like two weeks after graduation and when I thought about leaving my job as a banker to become a blogger my girlfriend now wife was like remember how you didn't write your papers in law
school are you sure you want to do this and uh and you know like what I think is like people have like the their like proper metabolism for producing stuff and like for me I wouldn't say it's easy it's like incredibly difficult but it is
like reliable that I can produce something in a panic every day whereas if I think I think if I had to produce something every week and I have some experience with this I have to produce something every week I do it about every three weeks so that's like one thing is
just the the sort of Drive of panic the other thing is like I try to be pretty ruthlessly focused on places where I have an advantage or where I like can add value and like I try not like nice thing one nice thing about working at Bloomberg is that there's like if I
don't write about something someone else will write about it so I don't ever write about things because like someone needs to write about it right like if I write about it it's because I have something to say about it and that I think is a rare and valuable flexibility
to have like my beat is not you I'm not like doing things because I have to do them those are those are main things I mean the like the other thing that I have is like I worked on this weird derivatives desk at a bank where I was as an investment banker so I covered
corporate clients I went to meet with corporate clients with like coverage Bankers who did m&a but I was also selling them Equity derivatives products which were booked against our trading desk and where we were acting as a principal and I was also underwriting
convertible Bond so I was seeing a lot of different sides of banks of of a bank and exposed to a lot of different like ways of being in finance right I mean like the life of an investment banker is very different from the life of a vault Trader and I was sort of like to some
extent bridging those lives which was helpful the other thing I was doing is I was explaining fairly complicated products to smart people who did not know anything about them and so you'd go to a CFO and be like what you want to do is an unkempt colored ASB with you know
valuable maturity and they'd be like and then you'd have to explain to them not what the thing was because they don't care like what the set of legal documents are but what the like economic intuitions behind it are and so that like explaining economic intuitions to a
smart person about a thing that is complicated is I think valuable in my current job the other thing that was valuable about that is that the economic intuitions I was explaining to the CFO were not necessarily the economic intuitions that we had like we were
doing the trade for something for some exposure that we wanted or some set of payoffs that we got and they were doing the trade for some other set of payoffs and it wasn't like we were betting against them it was like we had sort of two sort of overlapping set of interests
in the trade and so having some awareness of that is useful in sort of looking at complicated Financial things that like different people can be getting something different and complicated out of a trade that that uh that is not necessarily described in the
in the public documents for that trade Matt LaVine only you can do what you do and thank you for the conversation we now do have some time for questions I will call on you a mic will come to you please note these are questions not speeches the goal is to
hear from Matt LaVine I will cut you off if need be so questions for Matt there's one right here thanks a lot I just had on the topic of efficient markets and crypto assets uh I wonder if you think it's uh possible that the prices of many of these assets are far too high now and
if that might be because the risks of buying and the risks of selling are very different and whether in particular whether there's other assets like say binary options or something that might result in more accurate lower prices I'll preface by saying in general I'm an
efficient markets believer like I never want to be like all these cryptos are too highly valued and they're all going to crash to zero because you know what do I know that said do I think that there are some let's say technical reasons that a lot of crypto assets are
too highly valued like I do think that there are like some obvious limits to Arbitrage one is that there's a perception that it's hard to short a lot of crypto assets some people tell me that's not true and you can you can borrow Bitcoin no problem but like there
is a perception that it's hard to short them even if it's like easy to borrow them you have like you know it's always more dangerous to short something super volatile than to to belong something super volatile the other thing that like I don't really understand about Bitcoin
is like exchange withdrawal limits that make it seem like there are a lot of places where you can buy Bitcoin and then not sell them never mind shorting but like where it is very easy to put as much money as you want into an exchange
to buy as many Bitcoins as you want but selling those Bitcoins and taking your cash out is a more complicated and lengthier process I don't know if that's true at all exchanges but it's clearly true at some exchanges so yeah I mean I think there are some technical factors
that that probably lead to bitcoin overvaluation can technical things solve that maybe I mean like the Futures the spread between Futures and cash has converge would suggests that there is some there is some like price Discovery going on in the Futures market and maybe
it is being helpful in Bitcoin I've never heard an argument that binary options make pricing more efficient in any asset class but who knows next question is here in the front if you could bring the mic uh my question for you Matt is how do you avoid writing on
political topics when it feels like that's what the whole rest of the world is talking about or does an editor just kind of strike the paragraphs right before posting no quite the opposite my god um sometimes I strike the parag right before posting but not often I
don't know I think it's actually pretty easy to avoid writing what everyone else is writing about as I said to Tyler like you know my interest is in places where I have an advantage and it seems to me that even if I write a really good take on trump it will only be the 50th best
take on Trump of the 12,000 written that morning whereas you know if I write about Kodak coin I'll be only one of 20 people writing about Kodak if I write about you know gaming of FK regulations I might be alone right so like there you know like you don't want to you don't
want to only write about total esoterica but I think it's really easy to figure that people are fill up on on Trump news and want something else and I think that's empirically true because people when I do like occasionally write about political news people email me like man
your newsletter is such a nice relief from political news I'm so mad that you read about Trump today so front row there's a question we're in Midtown where there's an extreme clustering of the finance industry an industry where rarely do we actually need to meet each
other do you think that will grow continue Decay I guess it'll Decay I think that like I worked in as as an investment banker and like there is something in high dollar sales about people really believe in inperson meetings and I experienced it where I'd
like go to a meeting where like a colleague would dial in and you could tell how much better my experience was in the room than her experience was on the phone so I think that like yeah on the one hand like to the extent that like trading consists of computers
trading with each other it does seem somewhat unnecessary that we all sit within 10 blocks of each other on the other hand to the extent that Finance is like the business of m&a and of like very high dollar sales businesses I'm not sure that it's as as amenable to
fragmentation as you might think three rows back this question in the middle apologies for another crypto question but uh to me the fact that Bitcoin took off some would say because it has a fixed supply has made me question even how much low and stable inflation has
political costs so my question would be how has the rise of crypto changed your mind about some of your beliefs around finance and economics it's hard I mean like in some ways like you know so so I think has probably you know at the margin weakened my general view of
myself as an efficient market fundamentalist right I mean it just feels so weird it feels so weird and it feels so like you know when you say that you believe in efficient markets like one aspect of that is believing in like you know that markets incorporate
fundamental information in some way right that's whatever Bitcoin is doing it's not that right so it is just it is just it's just weird on that basis beyond that I I don't know I like this is not a good answer but like I'm used to believing in a financial system right
where it's not just like a series of like actors but like where there is a sort of like sociological set of connections between like the banks do this and the prime Brokers do this and the hedge funds do this and like the retail investors do that and there's
like this very sort of structured system and Bitcoin really is just Spike that that kind of is totally unrelated to that system and that has nonetheless had pretty big impact and also like had pretty big impact on that system where like all the actors in that system are
recalibrating themselves so that's just like a weird like you know I wouldn't have guessed that X Bitcoin if you had said can some fintech new entrant disrupt banking or whatever I'd have been like it's like really hard a a lot of like relationships already and
Bitcoin is like a pretty good argument that like something big can dup the financial system next question yes here thank you if uh if we were to look at the most frequent words used on this stage I'm guessing that weird would be probably one of the most popular so
what's your framework for deciding whether something is weird I don't know that I have one I mean it's just like sort of like if it matches with my sort of Prior intuitions I mean it's it's I like weird so so when I use weird it's it's often just a sort of synonym for
interesting and it's just like my own I wouldn't say I have a framework what I would say is that like whatever sort of set of biases I have to find things interesting and weird and funny and quirky I just write about it and like that seems to have resonated with some
audience but like I'm not sure that I can articulate what that framework is next question hi uh what's a rule that should be amended or repealed I should always be prepared for these things you know I don't know like I'm gonna give a weird one which is um this is not an
answer to your question but I've been thinking a lot recently about regulation FD which is the rule that says that companies can't disclose material non-public information to one investor unless they've simultaneously disclose it to all of their investors seems like
a very straightforward fairness Rule and which is the the weird aspect of it is that weird aspect of it is that um companies meet constantly with their investors and their investors are very excited to meet with them and like want research analysts to set these meetings
like there's a whole economy of these meetings and yet they're never disclosing material non-public information and then the investors leave those meetings and go trade and it's like well they didn't learn anything in those meetings it's just a we it's a
striking set of facts and what I think is striking about it is that it's clearly how the world should work that companies should talk to the people who own them and those people should be able to like ask questions and propose you know and say hey you should really be
doing this and then watch the executives reactions and yet at the same time like the law says you can't do it so I don't know how I would amend it but I think that there is a tension between the existence of this rule that on its face you would think would prohibit
substantive meetings between companies and their investors and like the lived practice of Finance in which companies meet with their investors and have investor relations departments and are owned by those investors and a fiduciary duties to those investors it would be
strange if they never met with them but it's also strange that they do meet with them because this law this rule exists that that you would think would uh would cast a shadow on those meetings next question you write pretty frequently on information security and hacks are we as
worried as we should be about that and non have we reached Peak beard I was I was noticing when we were backstage that Shipley and we both have beards I guess we're I'm at my my beard is cyclical I I my beard runs from like end of December through like
spring I suppose we're at the peak of my own beard cycle I'm actually I have no expertise in information security it seems overwhelmingly likely to me that we're not worried enough about hacks because when I I occasionally read people who are experts they're like the
world will end and you will die horribly because you don't change your password and they're probably telling the truth and I don't change my password so I'm certain that the answer of your questions were not sufficiently wored about asks I mean you know there was a
there's a story today I just like saw the headline that someone conducted a successful jackpot attack on a US ATM which means that you do the thing where you like somehow get the ATM to give you all the money that was in the ATM that seems like a good hack and uh and like I
you know I always read about Bank hacks and they're like well they had this bank and like they got some email addresses and now they're sending them spam and I'm like that doesn't seem like a very good hack but um but you know on some time frame like they'll get the money
right and then that'll be really bad right like not just because like they'll take money from a bank but that like you know like our whole world exists on like a series of computers and like if you hack one of those World those computers
that is like Central to like the world and our identity and our financial lives and like this really bad and like you know they're stealing the the the email addresses right they're hacking the ATMs like well I don't know last question in Democracy in America in America Tok
phille called lawyers America's priest of Egypt because both professions are the only interpreters of an occult science which I take to mean sort of uh that they're both responsible for explaining enough of their systems that people retain their faith in them but
not so much that people lose their faith or they put themselves out of a job I'm wondering if you could put that same mantle on finers or on financial journalists and if you think the sector as a whole has achieved sort of an efficient sweet spot in the extent to
which it's understood its Mysteries are understood by the American public softball question that you know I think that like like sure yeah but like I think that's true of a lot of sectors actually right I mean I think we just like live in a specialized economy right
where like if you ask like are finers like a priesthood because they explain like just enough to like maintain a mystery like yeah but like Facebook way more so right like I mean I think that like we live in a specialized economy and everyone is sort of angling for that
notion that what they do is complicated and mysterious and important and you can sort of get a glimpse of it but like I need to maintain the secrets I do think Finance is like you know high up in the sweet spot where like people think it's very complicated and and they need to
they need to like defer to a priesthood but I also think that like Finance has like come down a bit where now like people think ah it's complicated we need to ban it or ah it's complicated and we need to need to radically simplify and get rid of Leverage rules and you know
like or like you know add simplified leverage rules and all these things that are that are that suggest that like the general public does not believe the Mystique they find it confusing but not in a not in an a inspiring way it's true of lawyers too Matt LaVine thank you
very much two announcements first you all should subscribe to conversations with Tyler there are also chats with Malcolm Gladwell Steven Pinker Cliff azus Kareem Abdul Jabar Martina aova to come David Brooks to come and thank you all again and Matt great job thank
you thanks for listening to conversations with Tyler you can subscribe to the podcast in iTunes Stitcher or your favorite podcast app and if you like this podcast please consider rating it on iTunes and leaving a review this helps other people find the show