On this special episode of the Odd Lots podcast, co-hosts Tracy Alloway and Joe Weisenthal did an AMA episode, where listeners called in and asked questions of the host. They were joined by producer Carmen Rodriguez. This transcript has been lightly edited for clarity.
Key insights from the pod:
How Odd Lots was born — 1:42
How Odd Lots chooses its editorial focus — 6:16
Has Odd Lots changed how we see the world? — 11:54
Who are our favorite guests — 17:58
How much do we know about the topics we cover — 20:38
Our opinions on MMT and Austrian economics — 23:57
What are we going to be talking about for the next decade? — 27:00
What are Joe and Tracy going to do in retirement? — 33:38
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Tracy Alloway: (00:10)
Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway.
Joe Weisenthal: (00:15)
And I'm Joe Weisenthal.
Tracy: (00:16)
Joe, it is a very special episode of the Odd Lots podcast. It is the Christmas Call-in Show.
Joe: (00:24)
I'm very excited. We've never done an episode like this. We've never really had listener participation. We've never had anything resembling a call-in show. We've never really done an episode about us, which feels a little narcissistic. I like asking questions more than answering questions.
Tracy: (00:44)
Right, that that's why we all became journalists! But you're right, this is a special one for us. We asked people to send in audio recordings of them asking us questions, and we are now going to attempt to answer them. We also are doing this in conjunction with our producer Carmen Rodriguez. She is here with us right now. And Carmen, you've put together some questions of your own?
Carmen Rodriguez: (01:07)
Right! I have. And I just feel like I'm being robbed of my moment to say, thanks for having me. So thanks for having me!
Tracy: (01:15)
I jumped right into it.
Joe: (01:16)
It's the perfect — wait, I guess you're not the perfect guest. The perfect host? The perfect co-host? But it is exciting that the listeners are hearing your voice for the first time. I guess maybe they heard it on some of those live episodes.
Carmen: (01:29)
Maybe. Anyway, thank you for having me. I'm happy to be here, even though I'm here every day.
Tracy: (01:33)
Thanks for coming on! We are happy to have you in front of the camera and the microphone, as opposed to behind it, for once. What's your first question?
Carmen: (01:42)
My first question is how did you meet and how was Odd Lots born?
Tracy: (01:48)
I guess...
Joe: (01:50)
You wanna take it, you wanna start?
Tracy: (01:52)
I'll start with the beginning, which is, I remember the first time I met Joe and, you know, we had both been covering finance and markets for a long time. Joe was at Business Insider at the time and I was at the Financial Times and I remember I met him in a bar in Midtown. And it must have been like 2012 or 2013, it was in the midst of the euro zone crisis and we were having a sort of Finance Twitter gathering, but Joe and I showed up first. And I remember… For those who have never met Joe in person, he can be intense . And I remember there was no chit chat. It was just like, ‘Hi, I'm Tracy. Hi, I'm Joe.’ And then Joe's first question was like, so you think the euro zone's gonna collapse?’ And that was it.
Carmen: (02:35)
That's the most Joe Weisenthal thing ever.
Joe: (02:37)
Yeah, no, yeah, that's true. Tracy is right about that. I'm not good at chit chat and stuff like that. I just wanna get right into it. But anyway, obviously, we hit it off pretty well despite the lack of chit chat. I joined Bloomberg in late 2014, so basically exactly eight years ago. And as part of my job at Bloomberg one of the first things I was given the opportunity to do is, okay, we're gonna do something digital. It wasn't a podcast or anything like that yet. And I had a chance to go out and hire some people to work. And Tracy was the very first person that I wanted to hire.
Tracy: (03:23)
Clearly I answered the euro zone question correctly. I made an impression.
Joe: (03:26)
Yeah, you got it right. I don't remember what you said, but clearly you got it right. I had always been a fan of Tracy's work when she was at the FT and she agreed to come on and, you know, it was like, she had been at Bloomberg once, so there was a little bureaucracy getting back and all that stuff, but we didn't really know what we were doing, but I was excited and that. And that's how we both ended up here.
And then I guess on the podcast question, and just before we forget about that, we sort of didn't know what we were doing and we were doing a lot of different things. And I remember one day I like turned to Tracy. I was like, ‘Can we do a podcast together?’ And you know, at the time, podcasts weren't nearly as big as they are now, and not every media company had their whole like podcast strategy and all these podcast startups. And Bloomberg was like, ‘yeah, okay, you guys can.’
We don't know what it's gonna be about or anything like that, but ‘all right, we'll give you like an hour of radio studio once a week’ or something to do, whatever. We didn't know what Odd Lots was gonna be about, but turn on the microphone. And that was late 2015. So we've been doing it for years.
Carmen: (04:30)
Did you ever have a moment when you were like, ‘Okay, we should really hone in on what it is that we're doing here because we're too all over the place?’ Like at the beginning? Or did it just kind of naturally form itself into what it is now?
Tracy: (04:39)
I think that kind of flexibility is in my mind a strength of Odd Lots. And it means that like we haven't confined ourselves to one topic in particular. And it means that we've been able to evolve along with the news cycle. So if you go back and look at some of our early episodes, some of them are really out there. I remember we did one on bananas, basically because I'd read a book about bananas. But nowadays we would look at that episode and say it's a banana supply chain episode. But then we did a lot of finance stuff. You know we just sort of like went along with the news cycle until we arrived at 2020 where suddenly a lot of it was about things happening in the real economy. And I think that's really benefited us.
Joe: (05:28)
I do think, you know, maybe late 2019, as Tracy notes, like the first episodes you could go back and look, they're super random, like bananas. We did a few episodes about like Florida real estate. We did an episode about catfish...
Tracy: (05:42)
The catfish bubble!
Joe: (05:43)
The catfish bubble. We did an episode I think about a cattle trader. Anyways, they're kind of all over the map. I think it was late 2019 we started finding our groove a little bit. You know, we did an episode I think with Zolton [Pozsar] in 2019 when the Fed was draining liquidity. But it really was early 2020 with the pandemic that it felt like we were starting to get a groove in terms of what is this show kind of about and what is our relationship between the episodes and the news cycle. And I think that's when we really found our rhythm.
Carmen: (06:16)
So I've seen you sort of follow the pulse of what's going on in markets and that kind of dictates a lot of the programming. But every now and then you kind of get these like weird unexpected connections and I think that's very particular to the Odd Lots brand. And so I want to know, have you ever seen these unexpected connections directly or somewhat directly affect the market structures that are the more cyclical things in the stories or anything like that?
Tracy: (06:45)
Well, I think the way I think about markets is it's sort of this tangled web and some bits of the web are more obvious than others, but some of them are really hidden. And so I think whenever you have something big that happens or you have a crisis of some sort, you kind of start to pull the threads and you start to see these connections. And the great thing about Odd Lots is we will have a conversation about one thing, like semiconductors, and then it just leads us down a rabbit hole to the next thing.
And the global economy and markets right now are so interconnected that you are always finding those hidden relationships. And so it's almost like it's really easy to book episodes now because one episode will naturally lead into five other episodes. And we always joke about it that we come away with an episode with five other episode ideas, but it's really true.
Joe: (07:43)
The other thing I would say these days too that makes it easy is, and we've talked about this, and listeners have talked about this, like for years I would definitely say our episode topic skewed financial for obvious reasons, coming out of the financial crisis.
And you know, and then our like episodes with Covid and the pandemic started skewing more towards physical, the supply chains. And so now you just see it everywhere, right? Whether it's prices on the menu or everyone experiencing a shortage of something.
And so the physical visible world becomes a really big source. So now you just see it everywhere. There's too many topics for us to possibly discuss. There's always more things we want to talk about than we could talk about like in a given month or a given week. Just because you look around, you're like, ‘Oh, that'd be interesting. That'd be interesting.’ And so yeah, there's just a, it's an endless fire hose of a topics that we see from just observing the real world.
Carmen: (08:40)
Do you have a favorite unexpected moment? Unexpected connections moment?
Tracy: (08:46)
Oh, I have one and I only know this because I wrote about it, but it's sawdust and housing and milk prices. So you know, when we're talking about this sort of web of relationships in the real economy, and this is a really good example, which is that after 2008 you had a rise in milk prices. And there was someone who like dug into why that was happening and they found out that the reason it was happening was because the housing bubble had burst. So there wasn't as much housing construction, which meant that there wasn't as much sawdust being produced. And it turns out that cows really liked to sleep on beds of sawdust. So basically because of 2008 and the housing bubble bursting, a bunch of cows were unhappy and were producing less milk , which translated into higher milk prices.
Carmen: (09:39)
I just wanna jump in here really quick and say that reading that before you said this actually won me trivia the other night. Because someone was like, ‘Do cows produce more or less milk when they sleep on saw dust?’ And I'm like, I don't know who wrote this question. It was one of those card games, you have to guess whether it's true or false. And I was like, ‘that is true.’ Because they have to be comfortable and happy so that they make more milk. Anyway, I just wanna say thank you.
Tracy: (10:07)
That's awesome. Did you win?
Carmen: (10:08)
Tracy, I did win, go team.
Joe: (10:11)
I think the recent one we did with Ken Jarosch where he mentioned that because of the semiconductor shortage they produced fewer cars. Because they produced fewer cars, they had less demand for hides for seats. Because there was less demand for hides, for seats, there was less, gelatin produced as a byproduct. And that impaired the production of gummy bears, was like a really amazing one that I would've never thought of.
But I do think it speaks to the complexity of supply chains, right? It's like Point A, Point B, Point C, you disrupt something, then the whole ripple effect. But I think it's like seeing these sideways things where it's like Point E. I think in that episode Ken said it's not a supply chain, it's a supply web.
That was really interesting. There is not just like some starting product and end product. There's like all these sideways movement from all the byproducts that get created, the waste products that get used and the other things. And I think it's been really hard to know how the big disruptions to society in the pandemic are really gonna play out because no one talks about these things in normal times. It's like they're so submerged, so invisible during normal times. You only see them after the fact. Like, ‘Oh shoot, the impairment of cars affected gummy bears.’ But no one would ever talk about that relationship prior to ha it having been exposed.
Carmen: (11:34)
And that's for your next trivia game listener.
Joe: (11:37)
Yes.
Carmen: (11:54)
Do you have anything that you now can't stop thinking about? I think an example for me would be, I'm reading Anthony Bourdain's “Kitchen Confidential,” and he describes how chefs design their menu based off of what's available and when they're delivered. So like if you're ordering fish on a Thursday, that might not be the best day because it's not as fresh. Whether or not this is true, now that's all I can think about whenever I look at a menu. So have you learned anything via Odd Lots that still sticks with you in the same capacity today?
Joe: (12:24)
I think for me, the one thing, and it's not like some sort of necessarily idiosyncratic thing like that, but I really notice energy waste and heat, particularly after all the episodes we've done on European energy costs and having to turn down the temperature and stuff like that.
Tracy: (12:48)
Just thinking Joe has turned into like the ultimate Dad where you just wander around the house like flipping off light switches and turning down thermostat.
Joe: (12:55)
Well, a few months ago I went to a public beach and there was a shower at the beach, you know for cleaning off your feet and stuff like that. And the shower had a warm water option. And I'm like, ‘What are you doing? People don't need warm water at a public shower at a beach to wash off your feet.’ I was like, this is a really scandalous waste of energy. Two years ago I wouldn't care. Just turn on the shower, nice warm water for feet. But I was like, ‘this is a huge waste. Why did they even give this option?’ So I do think that energy waste and heat in particular, I think about all the time now.
Tracy: (13:32)
I mean, I guess on a similar note, I think about supply chains a lot more than I used to. But also, you know, setting the real economy stuff post-2020 aside, I also think a lot about incentives and why people do the things they do, [they] often have to do much more with short term incentives than necessarily like rational long-term outcomes. For instance, if you’re talking about like, why are investors investing in risky, higher yielding stuff?’ Well it's because they have a bunch of new inflows and they have like a yield bogey that they need to actually meet. And so I think about that a lot more. How are the incentives set and how does that influence what people are actually doing?
Carmen: (14:16)
Pivoting away now and talking about crypto, was there a moment when you decided like, ‘okay, we should actually start paying attention to this and taking it seriously, ;at least for the news’ sake? I would love to know if you had a moment like that.
Tracy: (14:28)
Joe, you go first.
Joe: (14:30)
Well, you know, look. I'm a markets reporter. I always have been. And people ask me what's markets? And I always say completely unironically, it's a line that goes up and down. If there's a line on a screen that goes up and down, it's probably a market story. And crypto is like the ultimate line that goes up and down.
And, you know, in the beginning I think it didn't take very long for me, not to like take it seriously per se, but to realize that maybe some of my assumptions about like, ‘oh, this is just a flash in the pan,’ were gonna be wrong. And I probably wrote some like crypto obituaries in like 2011 or something like that. And then eventually, it didn't die and I kept thinking it would, so at some point I guess I was like, well, trying to wrap my head around like, what is this?
Like what is actually going on? And after a decade, I still don't really have an opinion or a view or an idea of where it’s going. But I guess if eventually something doesn't die long enough, if it goes on, then naturally you're, I think if you're a journalist or if you're anyone, you should sort of have some moment where you’re like okay, what am I getting wrong? Maybe I should actually pay attention.
So somewhere in 2012 or 2013, I remember write writing a piece for Business Insider where I said I was wrong about crypto, and I sort of admitted it. I didn’t say Bitcoin is gonna become the world's reserve currency or something, or anything too capitulatory. But I did say ‘Okay it hasn't died and I don't think it's going to, and there's some interesting problems that it seems to solve in computer science.’ And ever since then I've just sort of tried to be like open minded and curious and after all this time I still don't have a view. But, you know, I try to be open minded that like there's something there.
Tracy: (16:11)
So two things there. One, I totally agree with the idea of crypto as like the ultimate expression of lines going up or down, like the ultimate momentum play. And so if you cover markets, you know, there is a natural interest. The second thing is someone once described it to me as ‘far more interesting than it is important,’ which I thought was a really good way of putting it because you're talking about the creation, you know, you're talking about new technology, but you're also talking about the creation of a new type of money.
And that just opens up all these interesting questions about, well, what is money? And how do you design a new financial system? And then lastly, the one other thing I would say is I think we made a conscious decision to engage with the space and try to ask some of the harder questions like ‘where does the yield actually come from? What is the use case for this brand new technology that you say is going to change the world?’ And, you know, we have asked those questions in various iterations for many, many years now. And it's an open question about whether or not we've gotten a satisfactory answer, but we have tried to engage with the space to ask those hard questions.
Joe: (17:22)
Yeah. I think engaging with the space in good faith and let's engage with it on its own terms and talk to people who ostensibly are its most involved characters who should have the best answers. Clearly we have skepticism, we don't really know what it's for, where it's going, but we wanna hear honest answers and have like genuine questions. But it's true that even after all this time, like I literally have no idea like what it's ultimately gonna be used for, if anything.
Carmen: (17:58)
So we're gonna get to the questions from the audience soon, but do you have a favorite guest that you've had on over the years?
Tracy: (18:05)
Oh. I mean, we have so many….
Joe: (18:09)
This is like asking us to name favorite children.
Tracy: (18:13)
I really enjoyed having, this was before your time Carmen, this was way in the beginning. We had on the archeologist Arthur Demarest, who's been at various times described as the real life Indiana Jones. And I have like a very small hobby where I like to read archeology and anthropology books. And so talking to him was fascinating. And I remember the conversation was about the collapse of civilizations. I think about that episode a lot.
Joe: (18:44)
I don’t know. I really liked our recent episode with Gord Magill. Is he my favorite guest? I would not necessarily say that, but if I wanted to send someone what I would think is like a very quintessential episode of Odd Lots, it would be something like that, [where] we like dive into something deep. We talked to a guest who was not a huge household name, which is one of the things I really like, having done this show for years is like, we have had some really big guests on, big names and I'm really thrilled that they'll come on. It's cool how often, say, Neel Kashkari, the head of the Minneapolis Fed has come on, or Jan Hatzius of Goldman Sachs or people like that.
But I have to say for me, the most satisfying thing, or one of the most satisfying things that we do is when we find someone, Tracy mentioned Arthur, people who aren't necessarily household names and people are like, ‘Oh, this is someone who really is good.’ You know, Stinson Dean, the lumber trader is another one. Kind of like that. People who are like really in some area aren't necessarily huge, but because of their localized expertise can really speak to some really big macro topic.
Carmen: (20:08)
Should we take some questions from the audience now?
First Caller: (20:13)
Hi Tracy and Joe. This is Will Fang from London. Over the last couple of years, Odd Lots has become my favorite podcast. I have to admit though, there are episodes like those on market structure where my comprehension level is — in the most optimistic estimate — at 50%. Given the breadth of topics you guys cover with the perfect guest, do each of you have a hundred percent comprehension of a hundred percent of your episodes? Thanks and keep up the great work.
Tracy: (20:37)
<Laughs> Do we actually understand what we're talking about? I mean, I would say we cover a lot of stuff and I think it would be unrealistic to assume that both Joe and I arrive at every episode with a total understanding of the particular market or topic that we're speaking about. And I think that actually lends itself to a better show because often we are starting at the same level of knowledge as your average listener. And so we can ask the basic questions like ‘what do we mean when we say, whatever.’
And then the other thing I would say is, I don't know if our listeners know, but Joe and I, we go through all the transcripts of our show and we edit them ourselves and we publish them and it takes hours to do, but I actually kind of like doing it because it gives you a chance to go back and read everything and really internalize it in a way that maybe you didn't have the chance to do when you were actually speaking. So from that perspective, the transcripts help.
Joe: (21:36)
I couldn't agree more. First of all, there are episodes related to market structure or bond market liquidity or Fed plumbing, etc., where I'm like, ‘I think I'm just gonna sort of sit back and listen to Tracy and the guest talk because I feel like I know it a little less.’
But as Tracy pointed out, I do think it works often coming to a topic with not that much knowledge or maybe not that much prep because then you are sort of like asking the questions that naturally, like when I think of Odd Lots, I think we have a very intelligent listener base, but like anyone else, there's a limit to how much you can be informed on. So I think a lot of our questions are sort of like, ‘Well, what would a fairly smart plugged in person ask about a subject with which they really were unfamiliar?’ And I think that is sort of the approach that Tracy and I take to a lot of these interviews.
Carmen: (22:33)
For what it's worth, I think that's a strength of the show because a lot of people come in and like this person say they don't really know everything, but by the end of it they're like, well, I understood some of it now, so I really appreciate that.
Tracy: (22:44)
Even if you're just putting something on someone's radar so that they can go off and learn about it more after the episode, I think that's important too.
Carmen: (22:53)
Should we hear the next one?
Second Caller: (22:56)
This is Leo from Massachusetts, and my question is, what are your uncut thoughts on MMT? That one's for Tracy. And for Joe, what are your uncut thoughts on Austrianism?
Tracy: (23:07)
Should I go first with MMT? I'm not sure I can do totally uncut thoughts. A nice thing first. So I'm on the record this year as saying that my most MMT-adjacent thought is that if a problem can be solved with money, then it's probably not that big of a problem. And I think that reflects MMT’s emphasis on real resources. And I think that part of it has genuinely been useful for the past couple of years. I guess the bit that I'm a little bit less convinced by is, you know, the emphasis on… The constraint to government spending is inflation. That's what MMT tells you. It's not that a government has a budget like a household, it’s that what they're spending on actually is going to cause like inflation in the short-term or long-term?
And so you hear a lot about, you know, people saying, well, MMT changed the narrative. So now we don't have politicians who go, ‘Oh, we can't afford this.’ Instead we have discussions about ‘Is this inflationary or not?’ And I really think one of the things we've learned from the past two years is that actually we do not have a good understanding of what causes inflation or how it works.
So I'm not sure passing the buck from ‘can we afford this or not’ to ‘Is this going to cause inflation or not?’ Is that useful. And I think the idea of politicians getting together in real time and trying to figure out like, if we do this, is that gonna cause a price spike? Basically I think you're trading one debate for another.
Joe: (24:42)
I like both those answers. The plus and the minus.
Okay. Austrianism, you know, when I was a kid in college, I still have a copy of “Human Action,” the Ludwig von Mises book on my bookshelf. In fact Nathan Tankus recently, he was at my house recently and he tweeted a photo of me holding it so you could go and find it. So there's proof I have read a fair amount of Austrian economics.
I don't know, I don't find it that useful. I don't find it that interesting if I'm being totally honest. I've read a fair amount, it seems kind of repetitive. I'm not really sure if it has much connection to the real world. I want to say something nice about it., don't think that assuming that the starting point of like the economy is this pure market is even that useful even in the most abstract sense.
I'm trying to think of something like nice that incorporated Austrian thinking by and large, it just seems to imagine a world and a set of incentives that strike me as pretty divorced from anything real or useful. I'm sorry. I wanted to say something kind of nice like Tracy did. I have some, some of my best friends are Austrian!
Tracy: (25:59)
That's the nicest thing Joe can find to say about it.
Joe: (26:02)
I don't know. Yeah. All right. Sorry. I wish I couldn't say something. I wish I could say something more, but it all kind of seems kind of nonsense to me.
Carmen: (26:10)
It's all good. Okay. We can go on to the next one.
Third Caller: (26:13)
So in 2019 when I started listening, a lot of the financial conversations were around financialization and plumbing in the financial system. So the switch from Libor to SOFR, the reverse repo rate spiking, just generally questions around whether the zero interest rate policy was actually working and whether the natural interest rate had changed, and whether we were in a new era.
And now the question seems to have shifted to more real economy topics, geopolitics, oil, lot of issues around inflation, supply chains. So my question is, are we in a true paradigm shift where for the next decade or so we can expect the questions to stay focused on the real economy as opposed to financialization?
Joe: (27:06)
You know, it's a good question and I don’t know. Obviously as the questioner, as Jonathan notes, there's been this shift and we've talked about it. Paradigm shift? I do think that in the 2010s certain things like energy security, semiconductor availability, certain things like that, I think a lot of governments kind of were a little bit of sleep at the wheel, assumed that a lot of these things were taken care of, and that, particularly with energy security, it was just not top of mind.
And it was sort of like, okay, fossil fuels are gonna ride off into the sunset and then we're gonna replace them with electrical cars and other forms of renewable energy. And this is the final chapter. And I think we did get a pretty rude awakening over the last year about how difficult this process is, how much governments have to take energy security seriously. How unstable even the source of the commodities for electrification are going to be. And so even if things settle down and even if prices come down and these supply chain disruptions fade and inflation comes down, I think it'll be a while before we can forget the physical world, so to speak. These are long cycles. And so I think these are now, regardless of price, gonna be pretty top of mind topics for some time.
Tracy: (28:23)
Yeah, I would agree with that. And actually it kind of goes back to what we were discussing with MMT, which is if you can throw money at a problem and solve it, it's probably not that big of a problem. And I think this might be one reason why we moved away from a lot of financial episodes, although we still talk plenty about it. But, you know, one thing we learned, I think between 2008 and 2022, is that there's a sort of like endless number of things that central banks can do to prop up a market or fix a particular liquidity issue. And so when you get these big financial crises like in 2020, well the Fed just came out and supported the entire US Treasury market, or they announced the corporate bond buying program and things like that, right?
Whereas some of the real economy issues that were thrown up by the disruptions of 2020, they are much more difficult to solve, I think, because you're also dealing with geographic restrictions. You know, who has oil and who doesn't? And how do you actually move it from one place to another? And so I think those relative shortages have just been thrown into sharp relief by 2020. And I think it's gonna be hard for governments to forget that, which is why you've seen more of an emphasis on how we actually build up strategically critical infrastructure and resources and things like that.
Carmen: (29:48)
Shall we listen to the next one?
Fourth Caller: (29:49)
This is Sam Glover calling in from Chicago. If you were to go back a medium amount of time, so like five to 10 years, what is the take that you had at the time that is most wrong today and why?
Joe: (30:06)
Ooh. Wow.
Tracy: (30:07)
I mean, I'm pretty sure I wrote at least two or three Bitcoin obituaries throughout my career, which makes me reluctant to write another one.
Joe: (30:18)
Then it really is gonna die this time now that you're reluctant. That is a good question. I think I probably would have assumed, I mean I was definitely wrong, I did not think that we would have like a big inflationary spike like this. I would've assumed that it would've taken a lot more either from a real economy standpoint or a spending capacity or a sort of political collapse standpoint to get the sort of level of inflation that we've seen over the course of 2022. Also like Tracy, you know, probably many cryptocurrency takes I've completely gone gotten wrong. Trying to think, I guess those are probably the two big ones, two huge things that I've gotten wrong.
Carmen: (31:12)
Great. Should we hear from another Joe from Austin?
Tracy: (31:16)
This is just Joe asking questions...
Joe: (31:18)
I am, by the way, for listeners, I am in Austin. So the fact that we have another caller from Austin, that’s exciting.
Fifth Caller: (31:23)
Hello from Austin, Texas, where we're desperately trying to keep things weird. My question for you is, what's the weirdest thing you've ever seen someone make a boatload of money trading?
Tracy: (31:35)
Oh...
Joe: (31:37)
Wow….
Tracy: (31:37)
You know, um, we did a Beanie Baby episode back in the day, and I don't think, I can't remember if I mentioned this or not, but in like 1996 or ‘98, like at the top of the Beanie Baby bubble, when I was 10 or 11 years old, I sold a tie-dyed colored lizard Beanie Baby at some like market event, for $200. And that was the most amount of money that I had ever seen or had. And that was a highly successful trade for me that I have never since replicated.
Joe: (32:12)
You know, I had a trade. So after my senior year of high school, it was during the dotcom bubble, and I was trading with a friend and we did very well because everyone was doing well in those days. And we took $2,000 from a summer job and by the end of the summer we had turned it into $20,000, which was pretty great. But by the end we started getting really good and we figured out, there's like a weird glitch. We started trading penny stocks and it was like, we found some patterns that were pretty easy to replicate day after day. And there was like one stock that I traded and I knew it was gonna go up a lot the next day.
But I was also flying, I was studying abroad and so I couldn't do anything with it. And if I had like, pushed back my flight to Switzerland for studying abroad one day, I think I would've made like $50,000 overnight. I'd have gone from $20,000 to $50,000 and I didn't, so my biggest sort of like shocking thing, or the biggest thing that I remember was not making a lot of money on one day. I can tell the whole story some other time.
Tracy: (33:30)
We’ve never actually done an episode which is like Joe's lessons rom trading penny stocks during the dotcom boom.
Carmen: (33:34)
We should do one.
Sixth Caller: (33:38)
Hi Tracy. Hi Joe. This is David calling from Berlin, Germany, first time caller, longtime listener. I was wondering what do you two plan on doing for retirement? Like how, when and where? If you plan to kick the bucket in front of a terminal at the Bloomberg office, that's fine too, but I think you've got a broad enough variety of listeners, we're all on a different route.
Tracy: (34:01)
Wow. Oh, man, do we, do we plan to die in front of our terminals in the Bloomberg office?
Joe: (34:06)
I do, yes. I do not see myself doing anything else for the rest of my, my life. I mean, if I retired, I would still just be at my computer posting and tweeting, as long as Twitter exists. So I don't really see much whether I'm technically employed or not employed in terms of what I do.
Tracy: (34:23)
I believe Joe, when he says that. I think one of the great things about Odd Lots is it does give you an opportunity to talk about virtually anything that we're interested in. So I mentioned, you know, archeology and anthropology before, and I would love to get an anthropologist on at some point to talk about cryptocurrencies and Wall Street in general.
So it does give you this opportunity to do a bunch of different things. That said, I am a big fan of just going out and learning new skills and doing new things. So it's hard for me to imagine that my entire life I'm gonna be writing about finance and markets. I feel like I will do something — maybe alongside it — at some point.
Joe: (35:05)
You know, the, before I forget, the one other thing, I really want to do something with music in my life. Either sell a song or like play some concerts. I write music. I really like country music. So that would be the one other thing I hope to achieve something in the rest of my years beyond this, is like something or other to do with music,
Tracy: (35:23)
But even that, Odd Lots provides an outlet. We have done live shows where you’ve performed.
Joe: (35:28)
That’s true, that’s true.
Carmen: (35:28)
If in 2050, we have a new genre of music called ‘Financial Country Music,’ you have Joe to blame.
Joe: (35:37)
We could do that by this year.
Carmen: (35:40)
Cool. So we got some questions in from Twitter and there's no voice memos for those, but I'll read them out loud. Question for you both, which role plays Twitter in building the topics for your episodes in terms of finding guests, searching trends, getting background, etc.? Thanks for Odd Lots, it's awesome.
Joe: (35:58)
Huge. I mean, it's not everything, but it's like a huge source of inspiration in terms of literally meeting people, seeing what people are talking about. You find niche industry experts. That's actually one of the main reasons I'd be concerned if like Twitter ever went away, the ability to find random niche people who know one specific thing and have them sort of serviced to and brought to you. I can't think of another platform that does it that well.
Tracy: (36:23)
You know, I'll take the opposite side of that, which is like, you know Twitter, Twitter. Twitter can be a massive distraction, but it's also really helpful from a productivity point. And I think it basically just allows you to do stuff that you would be doing in the normal course of journalism, but just slightly faster. So instead of like emailing a bunch of people and going like, ‘Oh, hey, do you know anyone who might be good to talk about, like lumber prices or whatever,’ you can send out a tweet and immediately have it go to thousands of people who can direct you to the right person. So to me it's a productivity tool. You know, would be sad if if it went away? Part of me would be, and I would probably spend more time sending emails and stuff like. But I think we could still find good topics and good guests.
Joe: (37:14)
Yeah.
Carmen: (37:15)
I mean, this episode would've been way harder to make if it wasn't for Twitter. Nobody asked me, but I'm team Twitter So one last question from Twitter, [from] @ndronen. So Matt King of Citi has said twice on your show that it's never the analyst recommending to the portfolio manager to buy something. It's always the PM that says that we have new inflow and we have to put the money somewhere. So doesn't this suggest that there's too much investable money and not investable opportunities? After all, since 2000, global GDP doubled and increased again by half and that money has to go somewhere?
Tracy: (37:51)
So I have a lot of thoughts on this, mostly because I think about Matt King's research a lot, but this is, so I coined the term ‘ China's Great Ball of Money.’ This idea that you just have a bunch of extra money that's in a closed financial system and it's just rolling from thing to thing. So it'll go into housing and then it'll go into stocks and then it'll move back somewhere else. But if you expand that, you know, China's an extreme example of that, but if you expand that to the whole world, I don't think it's a massive stretch to say that there is a lot of excess liquidity sloshing around the financial system and it needs to find a home somewhere. And so sometimes it goes into things kind of indiscriminately, which also ties into another one of my favorite sayings, which is ‘ flows before pros,’ which is also based on a Matt King note.
And the idea there is that sometimes the way to make alpha is just to invest in the thing that everyone else is investing in, or will invest in, early. And so, you know, in an era of sluggish economic growth, which our questioner alluded to, maybe the way to outperform is just to do pure momentum plays. And so that's kind of how… I think about that in the context of crypto, which we already mentioned is the ultimate momentum play. But I also think that more and more of the market is being driven by just pure flows. And a lot of people are sort of embracing that. So for instance, the explosion in short-dated equity options, like zero-day options and stuff like that, that to me is just people like purely betting on like outcomes and flows at that point.
Joe: (39:33)
I just don't know, I'm just gonna, I agree with what Tracy said,
Tracy: (39:37)
Okay. That's the right answer. Thanks Joe.
Joe: (39:40)
Yeah. I just agree with you.
Carmen: (39:43)
Shall we leave it there, Tracy?
Tracy: (39:45)
Are we gonna leave it there?
Carmen: (39:46)
It's 12:50.
Joe: (39:47)
Let's leave it there.
You can follow Joe and Tracy at @TheStalwart and @tracyalloway. You can follow Carmen Rodriguez at @carmenarmen.