Icebreakers with Bloomberg Columnist Matt Levine
Whenever we try to tackle a confusing new financial topic, whether it’s a PSPC, NFT, or the latest memecoin, there’s only one person we turn to. : Matt Levine. The former lawyer / banker turned writer is perhaps the smartest person writing on Wall Street right now, which he does every day in his Money Stuff newsletter for Bloomberg (register here).
We talked to Matt about everything.
You left the bank to write, saying you felt “alienated” from your job. Do you think finance faces a brain drain as people seek more fulfilling and less stressful work?
I do not know. I think he’s facing a brain drain as people get into tech. In particular, I think every year there is a cohort of young people who have good grades in a fancy university, are comfortable with algebra, are ready to work hard but don’t really have an idea. clear of What they want to do it, are very focused on money and prestige, and are not too troubled by moral qualms. These people are always in high demand and there is a changing set of industries and companies that successfully recruit them. When I was in college, these people went to investment banks or consulting firms. Now, if you’re smart, hardworking, highly educated, directionless, and prone to some evil, I think you probably choose Facebook (sorry, Meta) over Goldman Sachs or McKinsey. Or you get into crypto which is like finance but nonsense.
This is the real problem of finance, which the industry is trying to solve in various ways. One solution is for banks to try to cut 110-hour work weeks for their junior bankers because Facebook seems to have better hours. Another way is that there are, like, cooler financial firms, hedge funds and high frequency props traders and stuff, that hire people right out of college because they are more like tech companies and the banking pipeline is not what it used to be.
I think people will always leave finance to blog, but not enough to worry about Jamie Dimon.
Give us an idea of your writing setup. Two monitors? Coffee? Music?
I write mostly from home on a Mac desktop with a big screen. Sometimes I go to the office, where I have a PC with two monitors and I get all the keystrokes wrong. I’m drinking coffee. I subscribe to the Flow State newsletter and sometimes I put their kind of ambient music to write.
But most of the time I don’t have a repeatable process, I wake up and panic until there’s a newsletter. I’ve been doing this long enough that the panic was less overwhelming; I guess I have a good track record of producing a newsletter every day, so the chances that today is the day it stops working are low. But I text my friends most of the time saying ‘help me, i have nothing to write’ or ‘help me, i forgot how to write’ or ‘help me this’ is the day it stops working ”.
You studied the classics at Harvard. Who from ancient times would be the best day trader?
The unfortunate answer is the pre-Socratic philosopher of the 6th century BC. Thales of Miletus, who is often credited with inventing derivative products when he determined the weather and harvest for the following year and bought options on olive presses. here is Aristotle:
Thales, it is said, because of his poverty was mocked by the uselessness of philosophy; but from his knowledge of astronomy, he had observed while it was still winter that there was going to be a great harvest of olives. , which he rented at a low rent because no one was performing it; and when the season came, there was a sudden demand for a number of presses at the same time, and by renting them on what terms he was making a large sum of money, thus proving that it is easy for the philosophers to be rich if they choose, but that’s not what worries them.
It’s sort of a famous story in the option manuals, and honestly I’ve always found it boring, but I guess that’s the point. It’s not just that he invented derivatives, or that he made a good call and got rich. Is that he did it just to prove how easy it was to get rich, which really is the legendary behavior of the Reddit day trader.
If you had to write about one company for the rest of your career, what would it be?
Oh, Tesla. He just has everything. This is the original and largest memes store. He has a CEO who is constantly doing weird stuff online, including committing petty securities fraud. His approach to corporate finance is so odd, yet oddly effective. He has wild conflicts of corporate governance. He fights with the short sellers. He’s doing cryptographic things.
I also like to write imaginary dialogues for Elon Musk. I think he’s wonderful because he’s very smart and has some interesting ideas on legal topics, but he’s not a lawyer and sort of thinks the opposite of what a lawyer thinks? So anything he does related to the law is wrong, but in a plausible and interesting way, and he’s sure he’s right and is fighting over it.
That said, if the rest of my career was six months or less, I would choose the Trump Media & Technology Group, which I think is going to have a few crazy months.
Rate your enthusiasm for living in the Metaverse on a scale of 1 to 10
I do not know what it is. I will say that I live a large part of my internet life and, in particular, a large part of my life consists of inhabiting an online character who is not exactly the same as my real self. So in some ways, you know, bring the metaverse. But if it’s “Zoom meetings but with animated avatars”, then no thanks.
Would you ever buy an NFT? If so, what would it be?
You see, I feel like the sophisticated answer here is something like, “Of course that would be a house.” Since I think what’s interesting about the idea of a “non-fungible token” is the ability to link a non-fungible thing in the real world, or a non-fungible slice of a real world thing, to something. digital transferable representation. And there’s a crypto school of thought that’s like, “we’re going to build a new financial system that will take over all the funding and payment work for the real world,” and in that vein, you need to think about ways to represent real economic activity. You want ways to scan the ownership of homes and factories and the contents of particular shipping containers and things like that.
And a lot of people who come to crypto with this way of thinking are like, well, we’ll start by creating the digital primitives first, and then find ways to relate them to real world objects. So we’re going to find a way to create and trade non-fungible tokens, starting with tokens that are just empty nonsense, but once we have this tech we can work on some trading tokens that aren’t. empty nonsense. So one day instead of getting title to your house through an archaic title book where you have to go down to the basement of a courthouse and leaf through old paper documents and determine if there are any privileges on the house, everything will be on the blockchain and house sales will be easy and you can own a fraction of a house and get a mortgage instantly etc. etc. etc. And I’m not saying that I expect all of this to happen in the short term, but at least it’s an interesting take on something, and the concept of “non-fungible token” is one of it.
Meanwhile, there is another school of thought which is like “human life is increasingly taking place online, and as people used to make sense to be seen walking around the plaza with fancy clothes, now they make sense to be seen walking around Twitter with fancy Bored Ape avatars, and we find ways to create an artificial scarcity and status gradations out there and sell those gradations for a lot of ‘money. And here, I mean, I see the point of “human life is happening more and more online”, but I don’t really see the point “so I spent $ 20,000 for a Pixelated jpeg of a monkey to use as a twitter avatar because people will think it’s cool. I might not be cool, though! 10 years from now maybe everyone will spend thousands of dollars dollars for his avatars and only weird, crisp nerds will say, “No, I’m just gonna wear a s burlap ac for walking around the plaza, it keeps the wind out, that’s all i need. “
These two relatively sophisticated ways of thinking about NFTs reflect of course a tiny minority of NFT projects. Most are just ‘let me rip off crypto brothers who have too much money’. I wouldn’t buy them.
Which has had the best parties: Yale, Harvard or Goldman?
I want to give a serious answer to this? Goldman obviously had the most money and I went to fun parties with my office, but basically those are work parties. I’m sure there are people who say, “The best parties of my life were working parties,” but these people are either very, very successful – as I bet Michael Milken thinks – or rather sad.
Probably objectively the worst nights were at Yale Law, which is a pretty small school full of very cheesy people, few of whom really came out, but I loved them. There were about 40 people going out and you would see them every weekend; it was in its own way an intense social experience.
Do you like the stock?
Look, I don’t get paid to make correct stock price calls. My personal account is entirely in cash and index funds. My incentives are pretty pure; I just want fun things to write. In any financial situation, I’m looking for just about the funniest outcome. It would be very, very funny if the crazy races of GameStop and AMC proved to be justified. So of course I like the stock.
This interview has been edited slightly for clarity.