Matt Levine makes sense of Wall Street like none other
nytimes.com
nytimes.com
https://www.bloomberg.com/opinion/articles/2019-03-13/you-ha...
Here is one thing that U.S. Attorney Andrew Lelling said in announcing the charges:
“There can be no separate college admissions system for the wealthy, and I'll add that there will not be a separate criminal justice system either.”
Level playing field! Here is another thing he said less than a minute later:
“We’re not talking about donating a building so that a school’s more likely to take your son or your daughter. We’re talking about deception and fraud.”
There can be no separate college admissions system for the wealthy, except for the extremely well-known one where you donate a building in exchange for getting your kid in! “Lol just donate a building like a real rich person,” the U.S. Attorney almost said.
America enjoys a reputation of being a rather non-corrupt country. To large degree, this is true: bribing scandals are rare, and most Americans would be completely aghast at the idea of passing an envelope under the table to the official who is responsible for issuing building permits.
Instead, the corruption in the US operates through completely transparent and legal means. Instead of cash-filled envelopes, you see campaign contributions, board seats, consulting jobs for children, and, yes, donations to designated causes. All of this is just How Things Are Done, and people are so used to them that they no longer even consider it corruption.
Just more layers to peel off from the same basic concept: greed. His description of how unacceptable it is when it looks transactional but how it is fine, and even expected, if it comes from the traditional ways of indirect corruption summarises it rather well.
Living in fear everyday, just in different ways. I think that has an impact in someone's life.
Considering how this could possibly be a public good, the most obvious way is that money into these institutions produces knowledge that then produces benefits in wider society. This fits mostly with the definition:
> In economics, a public good (also known as a social good or collective good) is a good that is both non-excludable and non-rivalrous, in that individuals cannot be excluded from use or could benefit from without paying for it, and where use by one individual does not reduce availability to others or the good can be
It is true that in some cases education produces knowledge which itself becomes non-excludable and non-rivalrous, or that knowledge produces some other good which is both those things, but the multi-million dollar donations to Ivy-league colleges made by the super-rich so that their children participate in elite networks is pretty tenuously tied to this mechanism of 'education as a public good'.
The US's strategy of funnelling the power through visible, legal channels with some levels of consistency is by far the best. If they want their kids in prestigious universities then that is what will happen. There isn't an alternative where the powerful shrug sheepishly and let their position erode.
Let's tax the rich more and give everyone access to higher education, even the playing field out. Yes you can redefine what rich means, and what poor means, over time through policies.
That last part sounds like almost a threat regarding what rich people might do if you block their corrupt behavior. That's already a sign there's a problem with the power dynamic here.
Someone getting in by buying the institution a new building isn't denying anyone access to higher education. In fact, since the institution has a new building it is likely it is increasing access to either education or research opportunities.
> Let's tax the rich more and give everyone access to higher education...
30% of the US does get a degree, so higher education isn't exactly an elite marker.
[2-4 years of time] X [70% of the US that doesn't have a degree] is an enormous number of hours. If someone is not going to use it then they have better things to do than academics. The risk of most of that 70% just looking back at a couple of wasted years is pretty high.
I suppose in fairness it might work out, but even now there are a lot of people getting degrees who havn't managed to parley it up into better outcomes. But it is likely to be a terrible plan, expensive and with marginal positive outcomes.
I mean you can literally witness it with your own eyes right now when you look at the US on the world stage. Compare the quality of governance and selection of candidates to a country like Singapore, or hell even China whose ruthless political apparatus weeds out people who don't perform quite effectively.
There’s a spectrum of “rich successful” people, many are rich but not “successful” in the way you like to believe, spend 5 minutes around them and it’s easy to know.
Also, what’s up with that “less-brilliant children” saving face statement?
I don't know if that is reasonable to say, or if it is like talking about "trickle-down economics".
Further, it's not a good idea to prevent rich entities in particular from being effective at it because with enough resources, they will be effective anyway. So the ineffective prevention mechanisms will just end up being regressive and/or even more corrupt at the end of the day.
They rate USA 3/4 for corruption (Section C2 [0])
Comparing other similar nations for corruption
Australia 4/4 Canada 4/4 New Zealand 4/4 United Kingdom 4/4
[0] https://freedomhouse.org/country/united-states/freedom-world...
Compare vs. China https://freedomhouse.org/country/china/freedom-world/2020
To that end, if you don't subscribe to him and want a sample to consider joining the free newsletter, let me suggest his column "Arbitrage Discovered" from 2015:
https://www.bloomberg.com/amp/opinion/articles/2015-02-27/ar...
So idk how bloomberg.com works under the hood so I can’t specifically explain this case, but rules that match URLs won’t necessarily see the two versions as identical. This is actually something worth testing your own sites against, to make sure including the root domain doesn’t do something dumb like bypass authentication or whatever.
Edit: also, forgive me if I’m explaining things you already know w/ regard to the root domain and stuff.
This breaks the ads but also breaks any interactive charts, etc. that need data from the API.
The site itself loads fine though, because DNS still works and whatever routing layer in their app probably doesn’t care about the domain, just the path that follows it.
They asked me to stop 'mirroring' their content, and didn't understand I was just pointing my domain to their servers. I stopped, but part of me didn't want to.
Edit: Looks like archive.org picked it up: http://web.archive.org/web/20110623134639/http://thebergenef...
"So that leaves the option of Aviva settling with him. How much should he take in a settlement? Well, how much is his claim worth? Conservatively, I would ballpark it at an infinite amount of money."
> Insurers were offering a product that paid you, when you died, the greater of (1) the amount you put in and (2) the return on some risky investment. So he'd buy two of those -- one long the risky investment, one short the risky investment -- and be guaranteed a big profit. The catch is you have to die, but he solved this by enlisting dying patients in AIDS hospices to put their names on the contracts.
This column truly is a classic.
Compared to Levine, who has me, in the UK, as a subscriber.
He has a way bigger potential audience than the LA Times.
I actually met his wife when I was going through the SDNY. I was hoping to meet him, but the attorney did not recommend I talk to the "media".
Matt once wrote about something I was working on. His analysis was way more on-point and technically accurate than that of any other article I read about it. I wanted to email him at the time but like you wasn't exactly in a position to talk to a journalist.
So I made this app where you get early earnings and a graph of prior stock prices and you try to guess one of two paths (they were inverse of each other). Even with all of those myself (and Matt Levine) were correct about 50% of the time.
I emailed him and he actually told me he was worse than 50% , which seems like a good thing because then you could just do opposite of your initial guess and have a profitable strategy. He was very nice in his correspondence, although he didn't give me a heads up saying he was going to blast it out. It's a static site [3] so it wasn't a problem, nor do I really care too much. But it gave me the ultimate flex when another super-fan at work spotted it and spammed it out.
From the article.
> Elsewhere here is “Matt Levine’s Insider Trading Game,” though I actually have nothing to do with it.
[0] https://www.bloomberg.com/opinion/articles/2019-12-16/we-kep...
[1] https://insider-trading-game.netlify.app/
[2] https://www.bloomberg.com/opinion/articles/2019-11-26/knowin...
Perhaps that would improve players results?
My guess would be that expectations wouldn't help much. The analysts at banks that provide estimates are relatively conservative (don't want to stick out from the crowd too much). For instance, it's much better to be way off from actual as compared to other analyst estimates. Because you can always say everyone else believed the same thing as an excuse. If you're way off from others and you happen to be wrong, then thats more embarrassing.
The analysts also rely on internal estimates pretty heavily, and companies aren't dumb, so they usually downplay expectations. So much so that the majority of companies beat their own estimates (over 70% of the time). So I think these numbers are gamed and without being a sophisticated practitioner, they wouldn't help IMO
[0] https://insight.factset.com/record-performance-vs.-eps-estim...
https://www.bloomberg.com/opinion/articles/2017-05-22/fitbit...
> Also forfeiture doesn't account for the fact that you may have paid capital gains tax. I feel like they really shafted me on that one.
As someone also charged but not convicted, I learned hypothetically you also don't get to account for expenses if you lose. Meaning you could run a $10 billion gross revenue drug empire, it costs $9.9 billion to run so you walk away with $100m and you still have to pay $10 billion in forfeiture.
Here is a random press release from justice.gov https://www.justice.gov/opa/pr/six-additional-individuals-in...
>The Sherman Act offense charged carries a statutory maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $1 million. The false statements offense charged carries a statutory maximum penalty of 5 years imprisonment and a $250,000 fine. The obstruction of justice offense charged carries a statutory maximum penalty of 20 years imprisonment and a $250,000 fine.
These fines are on top of the forfeiture so if the person in this article earned $1 million gross, $100k net they would have to repay on a guilty finding $1 million + say $500k in fines = $1.5m when they only "earned" $100k.
Feel free to not respond or anything, not trying to get you to incriminate yourself or whatever, I'm just nosy.
I do not think it is a case of pandering to your audience. The following quote (about his time in Dealbreaker) captures it perfectly:
>Part of the problem was that he couldn’t really access a contempt for Wall Street titans. He was of the place, and he found its workings genuinely interesting.
I am in the industry.
It's a missed opportunity, IMHO. It is easy to dismiss some uniformed politician criticizing your industry norms. Much harder when it's coming from someone who clearly understand what is going on.
I can decide for myself if something is immoral or offensive or whatever, I don’t need my news sources to decide that for me.
Matt Levine's columns often goes one step beyond the "neutral way". They often describe them as cool ingenious schemes done by smart people.
I can see it the other way too though, now that you mention it.
That's why people watch heist movies and play GTA, too.
Not sure Matt Levine has the power to change what is perceived as cool by western culture.
Why? Both sides of the game are Informed. This isn't screwing over the dentist, it is fund A outthinking funds B and C. Is it a social good? Don't know, nor does he (seemingly). So why bother pretending
I also wonder if to understand is not, in some inevitable sense, to forgive? Is it really possible to fully understand on an emotional level how a quant trader feels when they spot an arbitrage opportunity and be angry about it?
https://www.rollingstone.com/politics/politics-news/everythi...
"...an image that captures..."
I think it's you who misread Taibi's meaning rather than him having missed something there, fwiw.
Taibi does not write with a style I particularly like. Taibi's politics are not my own. What he does is write masssive stories that are being ignored elsewhere. Wall street criminality. Russia-conspiracy theories discrediting media. Defence funding and contracting. There is always a campaign to discredit him becuase he upsets wealthy, corrupt assholes by shining a light on their behaviour. I wish journalists whose style I cared for more did that. I wish jouranlists whose politics are closer to my own did that. Taibi does do it and that alone is deeply, deeply impressive. We need a lot more of that with many different perspectives and different writing styles. I'll happily start with Taibi because he's doing it and support him totally that he actually does it.
I'm sticking up for Taibi even though I dislike his style and his politics because he's a journalist practisising journalism and not a cheerleader who is playing an acting role of a journalist on tv. Journalism is to be encouraged. Unfair criticisms of journalism should be called out. Yours is such, be that intentionally or not.
Theres a really book called traders, guns and money that goes into the details on this.
When the government started going after the ratings companies they downgraded US bonds (as if the US would ever default...)
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Programming note
I don’t know. Mostly I am dazed and heartbroken all the time, and it seems trivial and disrespectful to write a column about finance these days. But this is a financial newsletter, and like a lot of my readers I like having a mostly safe space for finance, so here we are.
A theme of this column over the past few years has been legal realism, the idea that “law,” really, is just what officials do about disputes. Rules, the written laws, the constitution, are all “law” only insofar as they predict or explain the actions of public officials, or persuade those officials to do things. “That is all their importance, except as pretty playthings,” as the great legal realist Karl Llewellyn put it. If this column sometimes seems cynical, it is mostly Karl Llewellyn’s fault.
It seems to me that one central argument of the past few days has been about whether people with power should have to follow rules at all. America has good rules about freedom of speech and assembly and religion; it has a president who violently dispersed a peaceful protest and drove priests from their church so that he could pose for photographs outside of it. America has good rules against unreasonable searches and seizures, about the right to a trial by jury and due process of law; it has a long history of police killing black people with impunity.
A message of the protests is that the police should have to follow the same rules as everybody else, that when they break the law they should face consequences. A message of the response to the protests is: No, they shouldn’t. Is the law what it says? Or is it the raw fact of what the people with the guns and the tear gas do? I think I know the answer and it makes me sad.
I can't fault him for being a bit "over-neutral", for lack of a better way to put it. It's how economists are trained to express themselves and, more importantly, I don't think he'd ever get a fawning piece written about him by the fNYT if he took the approach of, say, a certain other gifted writer whose name cannot be spoken here.
As a civilian it's important to understand this mindset when dealing with the financial industry at any level because if you don't, you're going to be on the short end of the things Matt writes about.
Matt spent about 20 minutes on the phone with me walking me through a few derivatives-related topics and it was the most interesting and fun part of the summer by far. That guy is smart and funny -- it's not an act for his column.
He may have thought he was bad at his job but from my perspective he exemplified the good part about working at GS -- really smart people, often with a wicked sense of humor, who go out of their way to help each other out.
He uses a style that sometimes takes an obscure and bland topic to become very interesting; Thereby making the reader interested in the topic.
That he has done this consistently over a period shows the mettle of the man.
Reading through his early career background leaves clues to his current success. It reminds me of how Jamie Dimon went about his early career in https://leveragethoughts.substack.com/p/early-career-tactics...
I can't wait to see what he writes about once he comes back from paternity leave.
> When Dimon finished from Harvard Business School in 1982, he placed a call to Sanford Weill, then chairman of the executive committee of American Express, to ask for advice.
"Asked about the Etruscans, Mr. Levine said he thought Mr. Mystal might be referring to one of his favorite anecdotes from Herodotus. It was actually about the Persians, he said. He fetched his copy of “The Histories” and read it to me.)"
http://perseus.uchicago.edu/perseus-cgi/citequery3.pl?dbname...
(Maybe it's technology? Micropayments still aren't effectively a thing?)
At least a million a year is quite a lot.
-I love reading Matt's stuff. The praise of his writing is totally deserving.
-In my daily life there's rarely a topic I come across that I'm unable to understand. In an otherwise boring day full of mundane work tasks, his column gives me intellectual challenges that I really appreciate.
-Matt's ability to understand and synthesize topics reflects incredibly highly on his intellect. I don't know anyone on Wall Street... is his level of intellect common among investment bankers and such there?
-He was valedictorian at Harvard and became a public high school teacher after!?
-Apparently MoneyStuff has 150,000 subscribers, the total income+power of which is gigantic (multiple billionaire readers along with presumably many thousands of high 6-7 figure readers). But yet they don't seem to do much at all of monetizing it (there's an easily bypassed Bloomberg paywall and a tiny ad in the text of the email newsletter).
-I would really love a weekly Matt Levine podcast. But sadly I don't think we'll ever get that.
Investment banker here.. "Wall Street" is a pretty big concept, not unlike "Silicon Valley".
So in the best banks and the best groups, yes – I'd say he's among the very best, but there are plenty of similarly smart people around.
Having said that, I obviously have no insight into whether he was actually good at all the other things that make a great "banker". To stick to the same analogy, one can be a prolific coder but be absolutely terrible about writing docs and tests, keeping a sane git workflow, prioritizing, communicating, being a team player, etc.
Probably quite a bit of self depreciation on Matt's part though given that when he decided to quit his boss essentially said, "Why don't you just, you know, take some time off to think about it?"
I'd say someone with Matt's background and general mannerisms - even at GS where eccentricity and raw intellect, for lack of better descriptors, are traditionally valued - would be a significant outlier.
I worked at GS and I think the only people that fit the Levine mold were in weird structuring desks, like Matt was. In particular, PFI had quite a few characters that remind me of Matt. Ali Meli, who left GS recently and was written up by Bloomberg, comes to mind. Clearly intellectually above others with weird, interesting perspectives on things. Also given leash to go dream up and do weird and interesting things.
I don't think people like Matt actually have much value add in most areas of a modern investment bank, unfortunately. As Matt says: banking is boring now. I don't see how someone like Matt would succeed is traditional banking - or a flow trading desk - over the "average" GS employee who studied finance at Wharton or whatever. Most areas of banking strike me as having become very commoditized or routinized and outliers are viewed as more apt to cause tail risk than anything.
You probably noticed at GS that a risk desk won't put an employee in front of a book just because he got good grades at UPenn.
I too would love that podcast.
Intelligence is 100% absolutely not a prerequisite but anyone who rises above a certain level in finance has to be talented at something. At a bank that's likely to be either sales or politics.
I don't know that you do. I've found him to be a much better writer than speaker - the content was similar (brilliant, funny, interesting, etc) but his spoken delivery simply isn't very good, and where do you put a footnote in a podcast?
Does anyone have recommendations for anything similar to scratch that itch?
Am I correct, that to do that I need to click 6 (years) * 200 (work days) / 20 (articles per click) = 60 times and wait for the page load to do that?! Is there really no other way to access these articles? Aren't they effectively unaccessible for most users because of that?
(I found a way to manipulate a JS variable to get to the older articles, but this is clearly not the inteded use.)
The same seems to be the case for the youtube videos of a very active vlogger. You can easily access current videos or the first ones, but not like from 4 years in the past.
I am asking this, because I always wonder if I am just to dumb to see the obvious easy way to use these sites or if there just is no way to do it?
HN and dilbert.com are shining example of how to do it RIGHT. They provide calendar archives, filtering by tag, predictable URLs.
I keep this in mind when designing my systems. Because I think it is important for the user to own their data, my forum systems makes user profile downloadable by default, in the smallest possible format readable by both software and humans: text (with some tokens).
https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...
https://blog.plover.com/ref/money-stuff.html
I said "Almost every issue teaches me something interesting I didn't know, and almost every issue makes me laugh" and I showed four examples. If you're looking for a quick intro to what he's like, maybe check it out.
He's still on paternity leave but I hope he'll return soon.
It was working up until he went on his parental leave, I expect it to get updates when he is back.
That and the other few times a month I need to check some data.
https://www.rollingstone.com/politics/politics-news/the-grea...
> They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational
What does this mean? Why wouldn't the other banks short the post-IPO tech companies if they knew the "real prices" and make off with a killing.
And what even is a bubble? If you had invested in a tech ETF at the peak of the 2000s bubble, you would have still outperformed the market by 2020. So were the 2003 prices that far off?
but hey, that's just, like, my opinion, man. to each, their own.
I believe there was a thread on twitter about this, but can't find it anymore.