Prediction Markets with Rebecca Ungarino and Nick Devor

Summary

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Better Offline — “Prediction Markets”

Date: March 18, 2026
Host: Ed Zitron
Guests: Rebecca Ungarino (Barron's, Wall Street reporter) & Nick Devor (Barron's, gambling industry reporter)
Length (main content): Approx. 02:15–55:48

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Episode Overview

This episode explores the rise and realities of prediction markets—platforms where people can bet on the outcomes of future events—as both a reflection of and catalyst for societal trends in finance, speculation, and regulatory evasion. Host Ed Zitron speaks with two financial journalists: Nick Devor (on gambling and prediction markets) and Rebecca Ungarino (on Wall Street and regulation). Together, they unpack the mechanics of prediction markets, their proximity to gambling, issues of regulation and manipulation, and the broader societal and economic consequences of their explosive growth.

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What Are Prediction Markets?

[02:58 – 05:32]

• Similarity to Gambling:

  • From the consumer viewpoint, betting on a prediction market is much like gambling: you put money on the line for a potential payout.
  • Core difference: In gambling, you bet against the “house,” which sets the odds. In prediction markets, your counterparty is another trader.

• Mechanics:

  • Participants buy “event contracts” (binary options on yes/no outcomes) typically worth $1.
  • Example: If one person thinks there’s a 75% chance of an event and another thinks it’s 25%, they buy in at $0.75 and $0.25, and the winner gets the total.

• Crypto and Regulation:

  • Polymarket (offshore, mostly using stablecoins) – lightly regulated, accessible via VPN in the US.
  • Kalshi (US-based, CFTC regulated) – more compliant with US law.

• Quote — Nick Devor

  • “In a prediction market… your counterparty is another trader. So prediction markets are just essentially brokers that are putting two traders together on one contract.” (03:19)

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Manipulation & Dystopian Risks

[06:30 – 13:00]

• Ease of Market Manipulation:

  • Anonymous, easy to create markets allow for manipulation, e.g., someone bet on a “Will someone streak at this event?” market—then streaked, won, and only paid a trivial fine.
  • Raises the question: Are prediction markets “thermometers” (measuring what will happen) or “thermostats” (making things happen by existing)?

• Overlap with Wall Street:

  • Banks are wary, awaiting regulatory clarity (compared to crypto’s early days).
  • Most major banks avoid direct involvement due to regulatory and reputational risks; investment side may use these markets as sentiment inputs.
  • The possibility of banks or private equity firms entering these markets introduces substantial risk of abuse and systemic fragility.

• Quote — Ed Zitron:

  • “Does this also set us up for something kind of dystopian… sudden bank interest in whether a place gets blown up? This is where the fringes of insanity begin.” (11:43)

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Regulatory and Ethical Complications

[13:04 – 16:30]

• Private Credit & Hedge Fund Involvement:

  • Private credit firms are lightly regulated “non-banks,” making them potential participants in these murky markets.
  • The line between legitimate hedging and dystopian speculation on real-world disasters blurs.

• Dystopian Quotables:

  • Kalshi CEO Tarek Mansour: “We want to make a monetizable asset out of every difference in opinion.” (15:07; cited by Nick Devor)
  • Ed Zitron: “This is the kind of thing you do in, like, RoboCop.” (15:32)

• “Death Markets”:

  • Examples discussed of betting on whether political figures (e.g., Iran’s Supreme Leader) would leave office by a certain date—including the contracts’ ambiguous handling of death/resignation/etc., and platforms’ inconsistent resolutions.
  • Rebecca Guarino: “It just opens a whole new source of potential liability [for banks].” (12:03)

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Broader Societal Consequences & Financialization

[24:32 – 29:41]

• Financial Nihilism & Accessibility:

  • The collapse of rational long-term investing (due to market distortion, e.g., high-frequency trading and rampant corporate obfuscation) creates a climate where people seek alternative ways to “win”—prediction markets as symptom and accelerant.
  • Prediction markets and sports gambling use marketing tactics targeting everyday needs: “My bet will pay for my coffee.” (25:27; described by Rebecca Guarino)
  • Gen Z’s “financial nihilism” and a sense of futurelessness drive engagement.

• Market Functionality & Exploitation:

  • Majority of prediction market users lose money: “Only 32.5% of prediction market customers are profitable. Right. So two thirds of players are losers.” — Nick Devor (28:04)
  • Betting on trivial, unpredictable outcomes (slap fights or Trump’s choice of words) blurs the lines between information, investment, and spectacle.

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Regulation, Enforcement, and Manipulation

[29:41 – 44:30]

• Gambling Regulation vs. Market Chaos:

  • Gambling in Vegas is heavily regulated; online and prediction markets are less so—creating broader availability and risk, especially for young or unskilled bettors.
  • Sports betting is described as “extremely bleak. And I think it’s evil.” — Rebecca Guarino (30:51)

• Financial Markets:

  • Traditional banking regulations (e.g., stress testing banks via hypothetical disaster scenarios) are being rolled back; prediction markets add further complexity and opportunities for hidden leverage.

• Manipulation via Corporate Semantics:

  • Companies drive stock movement using ambiguous agreements (MOUs, letters of intent) instead of real deals, without regulatory intervention.
    • “If that isn’t stock manipulation, what is?” — Ed Zitron (34:38)
  • Prediction markets can be easily manipulated with rumors or “semantics,” further destabilizing an already unstable market ecosystem.

• Access and Rampancy:

  • The ease of creating markets (“if there’s activity on Twitter,” a market can be created on Polymarket), combined with minimal upfront money and anonymous trading, facilitates manipulation and insider trading on a broad scale.

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Banking Industry, Insider Information, and Enforcement Challenges

[42:36 – 44:30]

• Liquidity’s Role:
  • Weakly-traded (thin) markets aren’t attractive to banks due to a lack of profitability (or “edge”).
• Compliance Issues:
  • Traditional mechanisms for policing insider trading don’t adapt well to prediction market structures, especially in banks with complex, siloed data.
  • Regulation and compliance teams are “actively figuring out” how to enforce ethical standards in this blurry environment.

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The Myth and Reality of ‘Analysts’ and Conflicted Incentives

[44:30 – 54:57]

• “Analysts” as a Category:

  • Not all “analysts” are created equal; only “sell-side analysts” (typically at brokerages/banks) are subject to FINRA/SEC standards and disclosures.
  • The general public is confused by the proliferation of talking heads called “analysts” who may lack professional or regulatory accountability.

• Analysts’ Incentives & Conflicts:

  • Sell-side analysts benefit from providing clients not just with research, but with “corporate access”—connections to company management that depend on maintaining positivity in public research, even when reality is grim.
  • Quoting Nick Devor’s summary: “To be able to connect clients to management and make money for your firm, you have to…be a little more positive...That would be the cynical take.” (52:48–52:55)

• Access Journalism Parallels:

  • The journalists compare the analyst–company dynamic to access journalism’s ethical troubles: “Access journalism doesn’t work. It doesn’t get you anything. If a PR firm...doesn’t answer your question…that’s their fucking problem.” — Ed Zitron (53:24)

• Proposed Disclosure Reforms:

  • Zitron suggests all analyst–management introductions should be logged/disclosed, to clarify the scale of access-based conflicts.

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Notable Quotes & Memorable Moments

• “Are prediction markets a thermostat or a thermometer? Are they accurately pricing the outcome, or do they make something more likely to happen?” — Nick Devor (06:30)
• “We want to make a monetizable asset out of every difference in opinion.” — Kalshi CEO Tarek Mansour (quoted by Nick Devor, 15:07)
• “It’s very, like, near-future dystopian.” — Nick Devor (15:48)
• “It is really scary. I feel like someone’s going to die from this...Like Running Man.” — Ed Zitron (16:14)
• “My bet will pay for my coffee.” — Example ad cited by Rebecca Guarino (25:27)
• “Only 32.5% of prediction market customers are profitable...Two thirds of players are losers.” — Nick Devor (28:04)
• “Analysts are...by and large...a very bullish group...” — Rebecca Guarino (50:01)
• “To be able to connect clients to management and make money for your firm...maybe you have to be a little more positive...” — Nick Devor (52:28)
• “I don’t think this should be legal, the cynical take. But it is.” — Ed Zitron (52:55)

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Key Timestamps

• 02:15: Ed Zitron introduces the topic and guests.
• 02:58: Nick Devor explains prediction market basics; comparison to gambling.
• 05:03: Crypto's role in Polymarket, regulatory contrasts with Kalshi.
• 06:30: Concerns about manipulation and "thermometer vs. thermostat" analogy.
• 07:36 – 10:30: Rebecca Guarino on Wall Street's stance, regulatory lag, & differences in bank behavior.
• 13:04: Private credit’s risk and potential involvement discussed.
• 15:07: Kalshi’s CEO’s monetization quote and dystopian implications.
• 16:03–20:56: “Death markets,” hedge cases, and ethical schisms.
• 24:32: Zitron’s take on prediction markets as both symptom and cause of financial nihilism.
• 25:27: “My bet will pay for my coffee,” the marketing of gambling.
• 28:04: Most prediction market users are net losers.
• 29:41 – 32:18: Regulation and exploitation: why sports gambling is more regulated (and less dangerous) than prediction markets.
• 32:45 – 36:03: Private credit, hidden leverage, and regulatory ambiguity.
• 34:23 & 34:38: Stock manipulation via ambiguous “deals” (letters of intent, MOUs).
• 41:28 – 44:30: Ease of creating markets, compliance headaches, and enforcement gaps for banks.
• 44:41: The blurred meaning of “analyst” and absence of accountability in finance media.
• 46:24 – 47:31: Sell-side analysts defined, their obligations, and the big grey area in public communications.
• 50:31: “Corporate access” as an analyst value proposition and conflict source.
• 52:28 – 52:55: The (uncomfortably) symbiotic relationship between analyst positivity and firm profitability.
• 53:24: Zitron’s rant against “access journalism” as parallel to finance.

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Conclusion

In this episode, Ed Zitron and his guests dissect prediction markets as a collision point of new financial technology, market manipulation, loose regulation, and societal insecurity. They conclude that these markets are an inevitable, but deeply fraught, outgrowth of an already-distorted financial system—raising urgent questions about ethics, compliance, and the future of investment and speculation. The episode closes on a call for stronger regulation and transparency, particularly as the boundaries between gambling, investing, and outright manipulation continue to dissolve.

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Transcript

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My, like, tunnel vision of like, I

[Rebecca Guarino]

gotta achieve this was off the strengths of like, I want to make a

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If youf Knew Better brings real talk from women who've lived it, unpacking, career pivots, relationship lessons, and the mindset shifts that changed everything. Listen to if youf Knew Better with Amber grimes on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Nick Dickenpole Show Host]

On paper, the three hosts of the Nick Dickenpole show are geniuses. We can explain how AI works, data centers, but there are certain things that we don't necessarily understand better version of.

[Nick Dever]

Play stupid games, win stupid prizes. Yes.

[Nick Dickenpole Show Co-host]

Which, by the way, wasn't Taylor Swift who said that for the first time. I actually, I thought it was. I got that wrong.

[Nick Dickenpole Show Host]

But hey, no one's perfect. We're pretty close, though. Listen to the Nick Dick and Paul show on the iHeartrad Apple Podcasts or wherever you get your podcasts.

[Rebecca Guarino]

Media.

[Ed Zitron]

Welcome to Better Offline. I am, of course, your host, Ed Zitron. Better Offline. Now we're back in the studio in beautiful New York City, New York State. You need to Check out the show notes. Of course, we have these beautiful Fuck Data Center T shirts. Subscribe to my newsletter and so on and so forth. But today, joining me at Swaggage Claim are two of Barron's finest reporters, the legendary Nick Dever, who handles the gambling industry, and the Wall street reporting legend, Rebecca Guarino. Thank you so much for joining us. Now, Nick.

[Nick Dever]

Yes.

[Ed Zitron]

We have had so many people emailing about prediction markets, and you cover the gambling industry as well. How are they different? How are they not the same thing? Because they very much seem similar.

[Nick Dever]

Yeah, I think from a consumer point of view, there's very little difference between these products. You put money on the line. If your team wins, you get paid out.

[Charlamagne Tha God]

Right.

[Nick Dever]

So from like a layman's point of view, I think there's very little difference. However, there is a difference on a gambling. In gambling, you're betting against the house. So the betting firm sets the odds that you're betting against. Right. Whereas in a prediction market market, your counterparty is another trader. So prediction markets are just essentially brokers that are putting two traders together on one contract. And I can explain that in a little more detail if you like, please. So prediction markets sell what are called event contracts. So event contracts are futures contracts. They're also called binary options, and they're built around yes or no questions. So each contract is worth $1, and it has two traders. There's a trader on the yes side and there's a trader on the no side.

[Wilmer Valderrama]

Right.

[Nick Dever]

So, like, will this podcast go well? We can make that a prediction market, I hope.

[Ed Zitron]

Right.

[Nick Dever]

I hope it goes well.

[Ed Zitron]

Let's get this. I'm just gonna set that up right now. Yeah, yeah, yeah, yeah, yeah.

[Nick Dever]

So if person A thinks there's a 75% chance that it will go well, and person B thinks there's a 25% chance that it will not go well, person A pays 75 cents and person B pays 25 cents.

[Nick Dickenpole Show Host]

Right.

[Nick Dever]

So if it turns out yes, the yes trader gets the 25 cents put up by the no trader and makes and now has a dollar. Now, let's say on a second contract, person C thinks there's a 25% chance of yes. Person D thinks there's a 75% chance of no. So these two contracts where the odds are flipped average out and there's a 50, 50 chance that this podcast goes well.

[Charlamagne Tha God]

Right?

[Nick Dever]

Right. So the price of the contract is the predictions and prediction markets are just brokers. The businesses themselves are just connecting two traders.

[Ed Zitron]

So where's the Crypto side as well, because I remember when polymarket started it was a weird crypto thing. But is it still that?

[Nick Dever]

Yeah, I would say it's still a weird crypto thing. Most of their business is still their international side where they just take. I think it's USDT or it's some stablecoin. One of the Stablecoins, all of the contracts are traded on that. That's polymarket. They're an offshore run company. Cool off. Yeah, offshore, yeah.

[Ed Zitron]

I love this.

[Nick Dever]

Yeah, yeah, yeah. Meaning not regulated in the us Not a ua, US based company. Contrast that with Kalshi. Kalshi was the first registered designated contract market by the cftc. That's the Commodity Futures Trading Commission. They regulate all of this stuff. And so Kalshi was the first firm to actually do this in what we would call like the legal way. Whereas polymarket does not have to abide by the US regulations because they are not a US firm. And they're trying to become. They've gotten permission to operate in the US but they're like slowly rolling that out. A lot of people in the US don't have Polymarket US accounts yet. If you want to trade on polymarket in the US you're mostly using a

[Ed Zitron]

vpn, but you need crypto to do it.

[Nick Dever]

Yes. Yeah.

[Ed Zitron]

For the international site, this feels like it'd be rife with manipulation though.

[Nick Dever]

Yeah, yeah, definitely. I think that there's. Because polymarket operates, you know, on the blockchain, it's generally all anonymous and it's very easy to get any kind of market you want created. There's a lot of concern around manipulation. I think a helpful example is there was some football game or some sporting event and there was a market for will someone streak at this event, you know, run onto the field naked? And someone did end up streaking. And the person that ended up streaking was someone who was trading on the market, you know, betting. Yes. That someone would end up streaking. And then they went and did it. And so they made, you know, hundreds of thousands of dollars, paid a small fine relative to the sporting people. And you know, now we have. So you get into this question. I think a helpful metaphor is like, are prediction markets a thermostat or a thermometer? Are they like accurately pricing the potential outcome? You know, are they saying that something is going to happen? Or by their very existence, do they make something more likely to happen?

[Ed Zitron]

Right. Rebecca, how's. How are the bankers dealing with this? How's Wall street looking at this? Because this, it's tough to really grasp whether this is gambling or a futures contract, like betting on the chance the stock will go up, will go down.

[Rebecca Guarino]

And there's such a big difference right now. It's really interesting because the banks themselves, and this is separate from like the market makers or like, you know, high frequency trading firms.

[Ed Zitron]

Yeah.

[Rebecca Guarino]

The banks themselves are very highly regulated by like three main agencies. The occ, the Office of the Controller of the Currency, the Federal Reserve and the fdic. So they're very highly regulated. And then they have a bunch of like state agencies that regulate them too. So far, the biggest banks have stayed pretty quiet on how they're thinking about these and they're, you know, kind of waiting for this regulatory, you know, clarity. It reminds me a little bit of, you know, bitcoin and crypto going mainstream, you know, 10, 11 years ago. We're waiting for regulators. We're waiting for regulators. And banks are, they're really complex. They have a bunch of different businesses where they could come in and you know, for example, on the banking side, the investment bankers, you know, have an interest in. Well, do we want to help them raise money? Do we want to help them raise capital or take them public?

[Ed Zitron]

Oh, they know, touching any of the

[Rebecca Guarino]

fundraising, they, they could. My understanding you would know better than me on Calcium Polymarket who their investors are as a VC. Is it PE?

[Nick Dever]

Yeah, I think it's mostly VCs right now, but they're both targeting. There was recent reporting in the Wall Street Journal that they're both Polymarket and Kalshi are targeting $20 billion valuations now.

[Rebecca Guarino]

It's not.

[Ed Zitron]

That's crazy business, though.

[Nick Dever]

Yeah, that's kind of the thing is there's not like the, there's not a lot of difference between trading on polymarket and trading on Kalshi. Like you're trading the same kind of the same contract in effect, like it's the same kind of product that's being traded. So you kind of. To a similar thing that the sports betting businesses had to deal with, where FanDuel and DraftKings are essentially, you know, identical products selling, you know, identical products and trying to differentiate themselves. And so we'll see in the coming months how, how that ends up working.

[Ed Zitron]

Rebecca, on the, on the. Actually, go ahead. What were you gonna say?

[Rebecca Guarino]

Well, I mean, and on the trading side, it's a whole other, like on the other side of the house.

[Ed Zitron]

That's actually kind of where I was going.

[Rebecca Guarino]

Exactly. Yeah. And like at the bank. So like, you know, these massive trading businesses, it's so some of the reporting that we have so far and we're you know, working on this now and banks are being very tight lipped on what they're saying about what they're getting involved in or not getting involved in. This is something that, so the investment banks, they're like the bankers, the trading desks and then the research and that's totally separate and there's like this firewall. Right. So research analysts are definitely like looking at these things just like any other input, any other source of information. Of course it's yes, there are differences but it's like, okay, well what is Kalshi saying about this when maybe a commodities analyst who's looking at.

[Ed Zitron]

And it might be kind of a sentiment analysis at that.

[Rebecca Guarino]

Exactly, exactly. And just another input to look at. So that's all well and good. You can look at that. On the trading side though, it's more complicated because again the cftc, like Nick brought up the Commodity Futures and Trading Commission that regulates crypto and is now regulating some of these prediction market activities. They have to weigh in and they have to some extent, but they're waiting for kind of a more complete look at, okay, Goldman Sachs traders or enter any other big bank traders. What are we able to trade? That is still kind of out there. Right. There are event contracts, like political elections and you know, things like that quote, event contracts. Right. And then there are other markets where on securities where it's like that culture,

[Nick Dever]

Polymarker, poly market you can do like will Nvidia stock end the day up or down?

[Ed Zitron]

Right.

[Nick Dever]

Like this is something that is happening every day.

[Rebecca Guarino]

Right, exactly. And that's a little more complicated because then you are dealing with securities rather than just like some amorphous like event contract.

[Ed Zitron]

So it's like complicated but legally speaking. Sure. Someone will argue, well this isn't a security because I'm betting on an outcome rather than the security itself.

[Rebecca Guarino]

Correct, Totally, totally, totally.

[Ed Zitron]

Does this also set us up for something kind of dystopian though? If these, if banks or traders start trading on these markets where you have suddenly a bank interest and whether, I don't know, a guy streaks.

[Nick Dever]

Yeah, yeah.

[Ed Zitron]

Or whether a place gets blown up. Like this is where I think the fringes of insanity begin.

[Rebecca Guarino]

Definitely, completely. And I just like, I'll want you to weigh in more here but like it just opens a whole new. For banks that are so tightly regulated, it opens up a whole new source of like potential liability. And like you've done more reporting on that?

[Nick Dever]

Yeah, yeah, we've, we've from what we've heard there, the banks are not as interested in those kinds of markets just because there's no like you know, they don't have an election every single day. And like these desks need to make money. Right. So there needs to be like a sustainable constant kind of liquidity and enough events for them to actually participate in the markets and the kind of securities related markets that maybe these banks would be more interested in that they would have a better edge on whatever. Those are still mostly on Polymarket and I really doubt that a tightly regulated US based bank is going to want to be trading in stablecoin on polymarket against potential insiders. All of this stuff that just doesn't sound appealing I would imagine.

[Ed Zitron]

But what about asset management like the Aries of the world or like private equity firms or private credit firms? Aren't they different? And might they be dumb? Like might they get them, might they get themselves involved in. I just like yeah, yeah, yeah, yeah. When I see the data center stuff, when I hear all this private credit. The private credit stuff are like Trickler and First Brands and Posigen and I forget whatever was it. There was the, there was the one, there's now one in Europe which mfs. Yeah, yeah. The random ones where it's just like yeah. You know when we said we promised you this collateral we also promised it to 17 other people.

[Charlamagne Tha God]

Sorry.

[Ed Zitron]

I worry that they are going to start like are they allowed to.

[Rebecca Guarino]

It's a great question and my reporting and it's a great story. It's a great question. I'm not entirely sure like where, if and how they're coming into these things. In other words I wouldn't be surprised. I don't know but I wouldn't be surprised if one of the big private credit players which is again like some of these things are. They are just very lightly regulated banks like to be clear. Right. Like they are lending money like and private credit. Yes.

[Ed Zitron]

It's so cool.

[Rebecca Guarino]

Huge point. So cool.

[Ed Zitron]

So good.

[Rebecca Guarino]

So good. I love that it's a huge debate right now. Like is private credit means a lot of different things, whatever. But at the end of the day it is lending outside of the banking system. Okay. Like that is safe to say so I don't know but I wouldn't be surprised if there's you know like a calcium like a Polymarket if there is you know, kind of lending from these firms. I don't know but they are being, becoming the private credit players are becoming so much more active in the private sector and just all these privately held companies where there's a whole matrix of areas where they could become involved. I don't know that. And I would be curious, but it's probably an input that they're looking at too. Like just a research input. Right. We look at. Oh, what is it saying about that? We take it with a grain of salt, but it's still something we're gonna look at. But it's an interesting question.

[Nick Dever]

Sorry. They are quite accurate. There can be arguments made about whether or not they are good for society, whether it's an okay thing that we can bet on every single kind of. I think the Kalshi CEO, Tarek Mansour, his quote is that we want to make a monetizable asset out of every difference in opinion.

[Ed Zitron]

Jesus Christ.

[Nick Dever]

Which is like, love it. That's like. Yeah.

[Ed Zitron]

To paraphrase Will Manaker of Chapo, when he was seeing a video of a new sport where two guys run into each other. This is the kind of thing you do in, like, RoboCop.

[Charlamagne Tha God]

Yeah.

[Rebecca Guarino]

That's what it's giving.

[Nick Dever]

Yeah.

[Ed Zitron]

Yeah. It's like, yeah, we can.

[Charlamagne Tha God]

We're gonna.

[Nick Dever]

It's very, like, near future dystopian.

[Rebecca Guarino]

It is dystopian.

[Ed Zitron]

As someone who spends a lot of time, lives in Vegas, I just want to say this is an insult to my beautiful gambling.

[Nick Dever]

Yeah.

[Ed Zitron]

Beautiful, honest odds of a dice roll. Even our crapless craps are not this crappy.

[Nick Dever]

Yeah. For real.

[Ed Zitron]

It's very strange. And as I think we've discussed this,

[Rebecca Guarino]

that's the new state motto, by the way. I really like that our craps are not this crappy.

[Ed Zitron]

Exactly.

[Rebecca Guarino]

I love that.

[Ed Zitron]

I love that. I'm.

[Rebecca Guarino]

You should look into that.

[Ed Zitron]

I'm going to put it on a T shirt.

[Rebecca Guarino]

I love that.

[Ed Zitron]

No, it's. It is really scary, though. I feel like someone's going to die from this. Like, it's going to be this person dies by December 31st and they're going to get hunted. Like Running Man.

[Nick Dever]

Yes. Yeah, that's. Okay. So we're almost there.

[Ed Zitron]

Yay.

[Nick Dever]

Recently, actually, there was a bit of controversy over, like, I guess what we would call death markets on Kalshi. So when the US attacked Iran, there were lots of markets on both polymarket and Kalshi related to military action in Iran, whether it would happen or not, by when it would happen. Usually these are formatted in, like, you know, military strikes in Iran by X date.

[Ed Zitron]

Right.

[Nick Dever]

So one of the contracts that both Kalshi and Polymarket had was Khamenei out by X date.

[Ed Zitron]

Right.

[Nick Dever]

So this is the Supreme Leader of Iran. Will he be out as Supreme Leader by this date? So the like layman's interpretation of that would mean if he dies, he's out. Right. You know, that's probably how you would. Oh, is he in office anymore?

[Ed Zitron]

Come back in.

[Nick Dever]

He's dead, he's probably out. Right. So when on that Saturday, Trump announced that he had been killed on Polymarket, Polymarket resolved their contract. Yes, he is out. Right, Right. But Kalshi did not do this. They froze. Well, they like paused the market for like eight hours to like figure out how to handle this.

[Ed Zitron]

And what is the consequence of pausing the market Just home clear.

[Nick Dever]

Oh, it's just that there's no more trading happening.

[Ed Zitron]

Right. Does the price move at all? So it's just frozen.

[Nick Dever]

It's just frozen.

[Ed Zitron]

Got it.

[Nick Dever]

And what they did is they reset when they made their decision. They refunded everyone their stakes, the value of their contracts at last traded price before death. So if there was like a 74% chance that he would be out at 1259 and he died at 1, then they would pay the. Yes. Contract would pay out 74 cents. Right, right. So they did that in order to isolate the death component. Right. Because Kalshi, in what they have told me, they don't want to allow people to profit on death. That's just not something they're interested in doing. However, there was very large controversy around this because all of the Kalshi traders who hopped onto Kalshi and were like, oh, cool, yeah, he's probably going to be out, I'll bet on this. They were suddenly. They did not get the money that they expected to.

[Ed Zitron]

Right.

[Nick Dever]

And Kalshi had like in its rules, in its rule book that was like laid out. There was some fine print. But yeah, we get into this, like, weird question of like, but why didn't they pay?

[Ed Zitron]

Because he was out. Like, what was the.

[Nick Dever]

They don't want people death was a carve out. There was a death carve out. So out by any other means but death. Now, the Khomeini was like in his mid-80s, so it's kind of hard to imagine that he was gonna resign or like, you know, they don't hold snap elections in Iran, so I don't really know.

[Ed Zitron]

So it was just resignation, I guess

[Nick Dever]

that, you know, or like kidnapping like we saw in Venezuela maybe. I don't know.

[Rebecca Guarino]

That was its own episode.

[Nick Dever]

Yeah, that was its own thing. Was what happened in Venezuela? Does that count as a war? Or just an incursion. So we get into all these really weird questions when the quote unquote oracle of these prediction markets is only resolving based on very specific outcomes. And so at a certain point, the entire point of these prediction markets is that they provide ways to hedge outcomes that you can't find in other markets. There's no way to hedge against that happening in the stock market in a clean way.

[Ed Zitron]

Right.

[Nick Dever]

But okay, so let's say that I'm a business owner and I want to hedge against the possibility that Trump does not finish this term in office. From my point of view as a business owner, if he dies or resigns or is impeached, none of all of those three things fulfill the same thing for me. And I need to hedge against all of those outcomes. But if we don't allow these markets to resolve on death and you know, we can argue whether or not we could, we should, they by definition become less valuable hedging tools.

[Ed Zitron]

Right.

[Nick Dever]

And so you kind of get into this point spot where you're like, what are these actually for? Like, who is the person that's hedging against Khomeini resigning? Like, yeah, you know what I mean?

[Ed Zitron]

Alright, I'm back talking about quints and their great clothes that I've loved both before and after they became an advertiser. Most recently, their responsible down hooded parker has been saving my life as New York oscillates between beautiful sunny days and punishing wind and snow seemingly at random. It's warm, it's light and it was $200 and feels like a high end piece of clothing. I really love quints. They have high quality essentials, jackets, jeans, T shirts, cashmere sweaters and even travel gear too. And they keep prices low by selling direct to consumer, cutting out the middleman to save you money. And they only partner with factories that meet rigorous standards of craftsmanship and ethical production. Right now go to quince.com better for free shipping and 365 day returns. That's a full year to build your wardrobe and love it and you will now available in Canada too. Don't keep settling for clothes that don't last. Go to Q U I n c e.com better for free shipping and 365 day returns. Gwince.com better run a business and not thinking about podcasting.

[iHeart Podcast Announcer]

Think again. More Americans listen to podcasts than ad supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. So whatever your customers listen to they'll Hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart streaming radio and podcasting. Let us show [e-mail] that's iheartadvertising.com.

[Wilmer Valderrama]

hey, I'm Wilmer Valderrama and this is Freddy Rodriguez.

[Freddy Rodriguez]

Welcome back to Dos Amigos.

[Wilmer Valderrama]

Dos Amigos, Season two, baby.

[Freddy Rodriguez]

This time we're going even deeper into our careers, our lives, lives, our art, and everything in between.

[Wilmer Valderrama]

Each episode emanates from our very own speakeasy, where we swap stories about the moments that really shaped us on and off camera.

[Freddy Rodriguez]

What do we invest in right now? What is the immediate advice you give

[Wilmer Valderrama]

people right now is to value time, to be cognizant of time and how important time is, because once the time is up, it's up, and then that's it.

[Freddy Rodriguez]

And the relationships, collaborations, and even the failures that pushed us to grow. And the common denominator is that we have the same people with us since like 30, 40 years ago, right? Like, we have a lot of the same homies that stuck around.

[Wilmer Valderrama]

Plus, the door always stays open for a third amigo to pull up a chair. Listen to Dos Amigos as part of the Michael Tuda Podcast network, available on the iHeartRadio app, Apple Podcast, or wherever you get your podcasts.

[Podcast Guest (Convict)]

I went and sat on the little ottoman in front of him.

[Ed Zitron]

Hi, dad.

[Podcast Guest (Convict)]

And just when I said, mom comes out of the kitchen and she says, I have some cookies and milk. This is badass. Convict me just finished five years. I'm going to have cookies and milk at mom

[C Show Podcast Host]

on the C Show podcast. Each episode invites you into a raw, unfiltered conversations about recovery, resilience and redemption. On a recent episode, I sit down with actor cultural icon Danny Trail to talk about about addiction, transformation and the power of second chances. The entire season two is now available to binge, featuring powerful conversations with the guests like Tiffany Adish, Johnny Knoxville and more.

[Podcast Guest (Convict)]

I'm an alcoholic and without this trouble, I'm gonna die.

[C Show Podcast Host]

Open your free iHeartRadio app, search the C O Show and listen.

[Charlamagne Tha God]

Now.

[Ed Zitron]

It feels like. I don't know. I have a weird view of this in that I think prediction markets are scary and vile and they enable something. But I also think they're a condition created by the stock market galaxy brain take. But I think that the stock market has stopped being logical in any way, shape or form. And regular people do, despite, I would say, what it's like three or four years ago and Robinhood went really nuts on options. Yeah, I think that regular people do not have access to a logical or rational way of investing. Like you can't just invest in a company for being good. You can't invest in a clean outcome because you're going to go up against hedge funds and whoever fast trading and such that you couldn't possibly keep up. They have information you don't have. There's no way you could possibly keep up. I'm not saying prediction markets are good. I think they're terrifying. They are. RoboCop share. But it feels like something that could only occur in a world where there is not enough other ways to accumulate wealth.

[Rebecca Guarino]

I could not agree more. And I think that one thing, like to this point, it was a few weeks ago and I might have even said it to you, but there was an ad and I don't want to say for certain it was either Kelshi or Polymarket, but it came up on TikTok or Instagram and it was an ad or like a user generated content type thing where a woman was holding a coffee. And the, did we talk about this? And the tagline again, it was for one of them and I don't want to, to misspeak but it said, you know, like my bet will pay for my coffee. You know, like my, you know, da da, da. And I was like, oh my God, that is so bleak because it really speaks to this broad like. And again, financialization of everything. You know, that's a big conversation right now. It's talking about a world in which it is hard to accumulate wealth. I mean just to state the most obvious thing, you know, and like you know, just broad inequality, my bet will help me pay for my like again. And I get it. Like I get that on, I get why that would be an advertisement. And like I understand, but that is so, you know, it's like young woman, young person. And it's like, oh my God, that is what that is a symptom of, you know, sort of like the world we're living in. And I'm not saying that's good or bad. I mean it probably it's bleak. It's like very bleak.

[Ed Zitron]

It's the growth. It's the same thing with sports gambling.

[Rebecca Guarino]

Yes.

[Ed Zitron]

And sports gambling seems for now like a lot more exploitative because they have the account managers who come and like, hey, you've lost three grand, why don't we give you two grand worth of credit?

[Nick Dever]

Yes, yes.

[Ed Zitron]

And all of these, these ways that you could Leverage that it is exploiting the fact that. Because if you think about how the stock market is these days, what the fuck are you meant to do if you, if you actually, if you invest in a company based on its fundamentals, you're going to lose money. Probably.

[Nick Dever]

Yeah.

[Ed Zitron]

Like it's like oracle is 12% up right now. I think this is going out in a week, so who knows where it will be. Even though they had like negative $24 billion cash flow, they're obviously misleading people when it comes to how like their capex because they're going to spend only 50 billion this year and they've already spent over 40. Not really sure that worked. But if you, if you. Because the market and the hedge funds have decided there's something else they'd like to do, you cannot join that. So what are your other options? You've got, I don't know, betting on the slap fights, literal slap competition. You've got sports gambling and you've got this big impenetrable thing of the stock market. But then you've got these seemingly honest, easy bets of, oh, I can just bet on an outcome that's fair. Unless the outcome is full of asterisks.

[Nick Dever]

Yes, correct. Yeah, yeah, yeah. I think there was some research recently. I don't know how I should. I saw this on Twitter disclaimer, right. That like only 32.5% of prediction market customers are profitable. Right. So two thirds of players are losers.

[Ed Zitron]

I mean, that's gambling, right?

[Nick Dever]

That's gambling, you know. So, yeah, I think, yeah, when we get into this, I think Gen Z especially there's a certain amount of financial nihilism, just general like dread vis a vis the future and how am I ever gonna have a house and et cetera, et cetera. And oh, here's polymarket. They let me bet on, you know, whether Trump will say China in his

[Ed Zitron]

speech and how many times he'll say it.

[Nick Dever]

Yeah, yeah, yeah. This could be a fun thing that I could make money on.

[Ed Zitron]

They could get into it. They're carrying, they're like, you could make money, you could pay for your coffee with it.

[Rebecca Guarino]

Yes.

[Ed Zitron]

And I will admit my favorite Kaushi story is the one that I'm sure both of you have read where it's. They tried to hire a 15 year old streamer and I quote, yo brother legal team confirmed that we can't work with minors. Rn kind of sad. Tbh fucking.

[Rebecca Guarino]

The RN and the TBH are really the cherry on top. It really just brings it all together.

[Ed Zitron]

It really Brings it together. But also, you need to watch Running man, because all of this just reminds me of that movie. Just like the I get your slop in a bowl and bet on whether Trump will say a different. It's called nuclear, the N word. Like, how many times will he do that? And he's done that many times, by the way. I'm not joking. Which is yet another dystopian thing.

[Rebecca Guarino]

Yes.

[Ed Zitron]

It just, it feels like the actual solution here would be more regulation of banks and also getting rid of all of this. I think sports gambling's. I know you probably can't come out on this directly, but I think sports gambling is like one of the most noxious things, because living in Vegas, gambling is everywhere. But it's also very, very regulated.

[Nick Dever]

Yes, indeed.

[Ed Zitron]

If you look anything close to 21, they will come and card you.

[Nick Dever]

Yeah.

[Ed Zitron]

And they will chase you around. Like, they will follow you up. I'm coming up on 40 and they still ID me sometimes. I'm beautiful. I know.

[Nick Dever]

But, yeah, you look, you don't look a day over.

[Ed Zitron]

You look youthful.

[Nick Dever]

20 in 364 days.

[Ed Zitron]

But nevertheless, it's you. It's because they know that gambling is scary and that it's addictive and that a win can make you think. Every other win will happen, except now it's just, you can do it anywhere. You can just do it everything. Phone you've got every device. You can gamble. There are Instagram accounts.

[Nick Dever]

Yes.

[Ed Zitron]

That just. There's this one with a guy who just dresses up like an old man and has a beer full of Bush. Fridge full of Bush Light. And it's just him being like. And he's on a gambling site, like an online post.

[Rebecca Guarino]

Yeah. That is extremely, extremely bleak. And I think it's evil. Yeah. And I think that, like, it is prompting, like, in the more traditional, like, so in banking and kind of like, I think it is prompting these bigger questions and kind of existential questions about, like, yeah, what is the difference, you know, in what we're doing and kind of like, what is, like, what are we doing here? I mean, you know, again, it's like it is going back to the regulation that is playing out right now. And that is why it's such an interesting conversation where you do have the Trump administration rolling back so many aspects of banking regulation separate from prediction. You know, forget prediction.

[Ed Zitron]

What kind of things different.

[Rebecca Guarino]

So one example is, you know, for years, banks have tried to get regulators to go a little bit, make the stress testing process, again, super important. Posting stress testing process where Regulators every year will kind of simulate different disaster scenarios. Again totally hypothetical employment shoots up, stock market crashes, these hypothetical scenarios. And they test the banks and they test the banks currently with the amount of capital that a Wells Fargo or JP Morgan has. Can you weather this? Can you withstand. They always do very well with caveats obviously but they come and say okay, you know that could be a weakness, that could be a weakness. Private credit has also introduced an interesting kind of wrinkle here because it is by definition there is kind of this hidden leverage and regulators have talked about that.

[Ed Zitron]

But they're not banks. So they don't.

[Rebecca Guarino]

But they're not banks. Correct. And so that's a whole other fascinating kind of ecosystem where it's like okay, you are a bank, I'm going to stress test you, you are lending, you bank. Our Ed Bank Incorporated. You are going to lend to private credit lender. Okay. But when you lend to there there's not as much tracking what your borrower is lending to. So you can see it is hard to track where that money is going.

[Ed Zitron]

And I read the other day, I think it was middle of last year the Boston Fed I think it was said that 14% of large banks loans went to private credit and private equity.

[Nick Dever]

No way.

[Rebecca Guarino]

It's a massive, it is a massive chunk of loan growth overall. And I think that like when you go to. So when you take prediction markets and you kind of take the current regul backdrop it's like an, adds an interesting wrinkle because it's like okay, by and large a lot of the financial regulators are like yes, we want to be like the bottom line is they are rolling back like traditional guardrails, you know like around the banks. But now prediction market's like okay. And that is currently being like, you know, kind of, that is being sorted out right now. So we'll see. And like the CFTC I want to say is like the only regulator. Again it's like the most relevant one here that's like come out with like some guidance but. But it remains to be seen. So we'll see kind of how the administration handles that.

[Ed Zitron]

I feel like right now this personal opinion not held by my guests. I think that there is a massive regulatory problem with lying because right now my favourite example is OpenAI. So OpenAI signed a deal with AMD. Except they didn't. It was just an agreement without any formal contract. AMD has not increased guidance. Oracle $300 billion deal with OpenAI can't afford to serve it, don't have the has to raise debt. Data Centers aren't built. SK Hynix and OpenAI. Samsung and OpenAI signed a big deal to take 40% of RAM. Except they didn't. It was a letter of intent. All of these stocks have popped off of these deals.

[Nick Dever]

Yeah.

[Ed Zitron]

Nothing happened. It's very obvious. There was never anything official. There should be regulate because. Because people in the audience might hear this and say, that's not stock manipulation. But what is.

[Nick Dever]

Yeah, yeah, yeah.

[Ed Zitron]

If that isn't. If that isn't. And people could say, oh, it's marketing. Oh, we used weasel words. But it's like, it feels like things like this will lead to outcomes that lose a lot of money. There's a lot of people a lot of money. And unless we do something soon, it's only going to get worse. Because every time someone like this is not stopped, someone else does it. They're just like, fuck it, why would we bother? And that will lead into the prediction markets as well. Because you could just start saying whatever. But that's actually. That is the biggest thing with prediction. You can just say stuff now.

[Nick Dever]

Yeah. There's like the extent to which the stock market is reliant on increasingly complicated bits of semantics.

[Ed Zitron]

Yes.

[Nick Dever]

Is like we've just never. We're at like a semantic. The semantic index is obviously the asterisk.

[TikTok/iHeart Radio Promoter]

An asterisk.

[Ed Zitron]

An asterisk, like letter of intent, agreement, consideration to.

[Nick Dever]

They're all deals.

[Ed Zitron]

They're deals, they're agreements. But we've not changed guidance. We've not put anybody. No one's actually doing anything, but you know, it. It's just.

[Rebecca Guarino]

Lest we forget, a memorandum of understanding.

[Ed Zitron]

Memorandum. Mous are the best. I love a good mou. They mean nothing, but they mean absolutely everyone. Love anou.

[iHeart Podcast Announcer]

Run a business and not thinking about podcasting. Think again. More Americans listen to podcasts than ad supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Radio. Think podcasting can help your business. Think iHeart streaming radio and podcasting. Let us show [e-mail] that's iheartadvertising.com.

[Wilmer Valderrama]

hey, I'm Wilmer Valderrama and this is Freddy Rodriguez.

[Freddy Rodriguez]

Welcome back to Dos Amigos.

[Wilmer Valderrama]

Dos Amigos, Season two, baby.

[Freddy Rodriguez]

This time we're going even deeper into our careers, our lives, our art, and everything in between.

[Wilmer Valderrama]

Each episode Emanates from our very own speakeasy where we swap stories and about the moments that really shaped us on and off camera.

[Freddy Rodriguez]

What do we invest in right now? What is the immediate advice you give

[Wilmer Valderrama]

people right now is to value time, to be cognizant of time and how important time is. Because once the time is up, it's up, and then that's it.

[Freddy Rodriguez]

And the relationships, collaborations, and even the failures that pushed us to grow. And the common denominator is that we have the same people with us since like 30, 40 years ago. Right? Like, we have a lot of the same homies that stuck around.

[Wilmer Valderrama]

Plus, the door always stays open for a third amigo to pull up a chair. Listen to Dos Amigos as part of the Michael Tura Podcast network, available on the iHeartRadio app, Apple Podcast, or wherever you get your podcast.

[Podcast Guest (Convict)]

I went and sat on the little ottoman in front of him.

[Ed Zitron]

I hi, dad.

[Podcast Guest (Convict)]

And just when I said that, my mom comes out of the kitchen. Kitchen. She says, I have some cookies and milk. This is badass, convict, right? Just finished five years. I'm gonna have cookies and milk at mom. Yeah.

[C Show Podcast Host]

On the Ceno show podcast, each episode invites you into a raw, unfiltered conversations about recovery, resilience and redemption. On a recent episode, I sit down with actor cultural icon Danny Trail. Talk about addiction, transformation and the power of second chances. The entire season two is now available to binge, featuring powerful conversations with the guests like Tiffany Adish, Johnny Knoxville and more.

[Podcast Guest (Convict)]

I'm an alcoholic and without this probe, I'm gonna die.

[C Show Podcast Host]

Open your free iHeartRadio app, search the Cino show and listen now.

[Rebecca Guarino]

Come check this.

[TikTok/iHeart Radio Promoter]

Iheart and TikTok have come together to create something new.

[Rebecca Guarino]

I love it.

[TikTok/iHeart Radio Promoter]

Where the world of TikTok. Meet your playlist.

[Charlamagne Tha God]

Three words that will change your life.

[TikTok/iHeart Radio Promoter]

IHeart Tik Tok radio. The biggest hits across iHeartradio. What's trending for you on Tik Tok?

[Rebecca Guarino]

Only a sound that's better than this.

[TikTok/iHeart Radio Promoter]

Plus Tik Tok's most influential creators all in one place. Search for iHeart Tik Tok Radio, make it a preset and stay connected all day.

[Ed Zitron]

It's frustrating because. Because I am not a particularly sophisticated trader. I may have only recently started putting money in the S&P 500 after a period of not. But it's. And that's in an index, by the way.

[Rebecca Guarino]

It's very responsible, very responsible, very responsible.

[Nick Dever]

But the point loves the 8020 portfolio.

[Rebecca Guarino]

We love diversification.

[Ed Zitron]

Here's the thing. My worry is that it's very obvious how you manipulate these markets. And without regulations to stop people, people, it's only going to get more ridiculous. You're just going to get CEOs that say things to create a market, possibly creating them themselves. And if they're a private company, that's not illegal, I believe.

[Nick Dever]

Yeah. So when we talk about like mention markets are a good example of where I think a lot of the like, manipulation concerns are. So a mention market is like, okay, during this podcast, will Ed say, fuck yeah, we're like, we're betting on that. Yeah, like that.

[Rebecca Guarino]

The odds are high.

[Nick Dever]

The odds are high. You just did it. Okay, resolved the strike.

[Ed Zitron]

I've resolved the fuck wit bet.

[Rebecca Guarino]

I won.

[Nick Dever]

Yeah. So like Will Caroline Levitt at the next White House press conference say the word China, right? People, these are mention markets. So we're literally just betting on the words that will come out of someone's mouth. Right. So a very high profile example of this is Coinbase CEO Brian Armstrong. You know, at the end of an earnings call there was a poly market, mention market for what will Brian Armstrong say on the earnings call? And at the end, you know, literally, like right before the, like moderator was like, thanks for joining everyone. Like, right before he's like, oh, someone just handed me the poly market for what I'm going to say. So I'll just get through all these, you know, Bitcoin Web3 just like went down the list and like paid all of them off. Right, right. So he has come out and said that he was not trading on that market or involved in any way. But like, we are opening ourselves up to like new ways that we can like manipulate markets and insider trade. And like, when we create a market for everything and everything can become a bet, more people than ever can become insider traders because there's just so much more things to insider trade on.

[Ed Zitron]

Well, here's the question. How do you. How much is necessary to create a market? Like what? How much money does it require?

[Nick Dever]

This is a good question. So polymarket PR has told me that the primary criteria for if a market can be created because they field suggestions from their users. Yeah, the primary criteria is if there's evidence of demand for the yes side and the no side. Right. That's it.

[Ed Zitron]

What is evidence in this case?

[Nick Dever]

You know, if there's activity on Twitter about it, if people in the Discord are like, please, I want to bet on this. It seems pretty ad hoc. I don't have much more detail than that because they give me more detail.

[Ed Zitron]

I imagine they don't need to.

[Nick Dever]

Yeah.

[Ed Zitron]

So it's not money.

[Nick Dever]

I mean it's just like evidence of trading demand. Right. And then they'll open it and then people can start betting on it.

[Ed Zitron]

Right. But you don't have to to. They doesn't have to be, they don't

[Nick Dever]

have to be like, all right, you all have $500 ready to go on this. Like there's nothing like that. Like there's just as long as they can see that people will want to trade on it. They will make it makes sense.

[Rebecca Guarino]

And that kind of goes to the question of just like thinly, like with banks like thin. Thinly regulated versus not or thinly traded. Excuse me, versus not. Right. It goes to the question of like when banks look at something they're like we can't make a market out of like you know, trading on this one

[Nick Dever]

spot, this one is like $200,000 in volume. Like there's just no way that like a huge bank is ever going to like. Yeah, you just open yourself up to so much.

[Rebecca Guarino]

So it goes back to that as

[Ed Zitron]

to me, I mean. Oh, so I guess banks, I didn't even think of that. But yeah, banks wouldn't want to touch it because there's not enough money in it.

[Rebecca Guarino]

I think it's when I think of like a thinly traded like stock. Yeah, exactly. It just goes back to liquidity and like the volatility and like if banks can find a way to make, make money on something legally. They will. Oh yeah, yeah they will. And so it's. I, you know, you could see a world in which, and I'm not saying like there is no regulatory framework that would allow this. No, I'm not saying that. Because in the future, in the future you could see like who knows what that could look like. And so the banks are just like, okay, we are going to like wait for the regulators to say something. But it comes to a question of also like internal enforcement. Like banks all have like very, very clear kind of rules around insider trading. Someone has non public information. If you trade on that, you will be fired. That's very well worn, kind of. But now with prediction markets, how do you enforce that? It is hard. And so banks are actively. And again I'm just talking about banks specifically. You could also talk about tech companies, healthcare companies, whatever. But banks where we have talked about this a lot, being this nexus of the markets and they do have a lot of information that you know, okay, that's different from someone in another sector. Like how does a compliance team Enforce that. That is an open question right now that banks are like actively figuring out. And it's a really interesting question of compliance and enforcement. You know, internally it's just, it feels

[Ed Zitron]

like the walls are breaking down around everything. Because before when we do the prep call for this, we talk about analysts, for example. And I named someone. I'm not going to name people on this just for professional reasons, but people know who.

[Rebecca Guarino]

I'm very. We're very professional.

[Ed Zitron]

We're all very professional.

[Bob Pittman]

Fuck.

[Ed Zitron]

But there are these. I named someone and you were like, that's not an analyst.

[Rebecca Guarino]

Yeah.

[Ed Zitron]

And it's becoming obvious that because they're on cnbc, they're on Bloomberg. It's like you've got these people pretending to be analysts. You've got these entities like private credit pretending to be banks. You've got prediction markets pretending to be stock.

[Nick Dever]

Yeah.

[Ed Zitron]

It just feels like the walls are being torn down. And I know that this is going to. People aren't going to like this. I don't think most people should have access to the stock market or gambling. I think that they are dangerous and I think or at least they should be regulated in such a way that it's less dangerous, not just open season. And then every third guy on Twitter is like, I'm an analyst, mate, you are a poster.

[Rebecca Guarino]

Well, that's the interesting question. And I mean like I couldn't help but think in that moment of journalism. Right. I mean like obviously, okay, there are journalists and writers and then there are like people who do not have the same, are not held to the same standards. And that's a whole other conversation. But like with analysts. Yeah, totally. I mean like it's. There are very clear kind of things of like you are regulated by finra, which is the self regulated, you know, they're a regulator and they regulator, they regulate the brokerage industry and like any quote sell side analyst. So like you know, an analyst who is again held to these standards like industry standards of disclosures and like conflict of interest and things like that. Like that is quote, an analyst. Yeah, you can be an. Of course there are like other ways but like that you can be an analyst and that is legitimate in like another sector or like another like on the buy side. Okay, fine, that's all legitimate. But there are certain standards that you're held to if you're like for example, you know like a FINRA analyst and like that's not capital A analyst, a capital A analyst. And that's not always clear to like a viewer of cnc so this is

[Ed Zitron]

actually a question, what is a sell side analyst? Because I have listeners who have asked this before and I realize I haven't really defined it myself very well. And you would know for sure.

[Rebecca Guarino]

You're at a brokerage, something like brokerage inside a big bank or you're just like a standalone kind of brokerage, a Morgan Stanley, a great, great example. They have their investment bank and that's like okay, they have their bankers over here and on the other side and it's not this simple but like on the other side you have the sell side and that is these analysts who are writing research reports. They are held to FINRA rule 2241. I think section 6 or 2241, go Google it. That covers everything that like a sell side analyst must be held to. They are on the sell side versus the buy side. So they, they are selling research versus they're not managing a fund. They are giving information, they're issuing a buy hold sell. They are giving price targets. They are looking at financial models. They are in a different spot than again someone on the buy side that is reading the sell side.

[Nick Dever]

Selling research.

[Rebecca Guarino]

Selling research, selling knowledge and wisdom. I don't know how the SEC defines that. I'll be very clear. And it's kind of like, I mean it's kind of outdated at this point. You know, it's almost like an antiquated thing. Sell side versus by high. Just, just kind of how like a wirehouse. Like that's a very antiquated way of saying like a big wealth manager, big

[Ed Zitron]

thing that's getting me at the moment. And I'm not naming anyone specific for, for professional reasons. But why is it that these analysts always set these massive targets and don't seem to be affected by reality? Because there is a non specific prominent data center analyst who quite literally went out on television yesterday and said that Oracle was a good buy and it was that it's actually better when you look at the report. This is factually incorrect. It's not even an opinion thing. These sell side analysts always seem very positive even when reality isn't reflecting that. Shouldn't they know better? Is there a reason they would be more positive in general? Not talking about this person?

[Rebecca Guarino]

Yeah, I mean it's like this is like one of my favorite issues. It's just, it's really fascinating because it kind of speaks to like this proliferation of like anyone can put out research and like anyone can kind of like a lowercase a analyst versus capital a analyst. I think that the thing to always Go back to is, you know, 2001, I think 2002 new regulations were put in, you know, spearheaded by Elliot Spitzer, who was the New York AG at the time after, you know, Merrill Lynch, Morgan Stanley put, you know, certain analysts had put out research, were like, was super bullish and was total mismatch to how they were privately describing Amazon. You know, Henry Blodgett famously, you know, put out a report banned from the industry. That's all. Well, you know, chronicled all new regulations were put in place around from security regulators around, like, okay, you are an analyst. Okay, you have to include all sorts of new disclosures, which is great. I mean, you know, and again, some very high standards. A member of my household, I think the language is something like me or a member of my household owns a security in XYZ or something like that. And also, you know, kind of these charts you'll see at the bottom of a report where it shows the stock price, like Apple, for example, the stock price relative to like where their price target is to hold them accountable for like, you know, kind of what that's looking like. And.

[Ed Zitron]

But that would require someone to hold them accountable.

[Rebecca Guarino]

Yes, exactly. And analysts are like, by and large, I mean, there's plenty of data on this, but they are a very bullish group. I mean, the data, if you just look at buy, hold, sell, they continue to be that. And the whole industry has really evolved where this is a whole other conversation. We talked about this a little bit. But people should be aware that corporate access is just a much bigger part of the analyst job and all that.

[Ed Zitron]

When you say corporate access, what do you mean?

[Rebecca Guarino]

Yeah, you're an analyst at a, again, a Morgan Stanley or a ubs just to call out two random ones. You, your clients, like a hedge fund investor, like a big institutional investor. Access to the management team of the company that I cover as an analyst. So I'm covering the. I'm a healthcare analyst and I'm covering Johnson and Johnson. And like I can connect, you know, like the investor who's reading my research with the CFO of Johnson and Johnson. I'm just calling out random companies. But it's that connection. It's that like, link and it's, well, it's access. It's just access

[Ed Zitron]

that feels like a bad thing. Like that doesn't feel like it benefits.

[Rebecca Guarino]

It is definitely, you know, it's one of these things that analysts have to manage and like these. One of these. And I don't want to call it a conflict because it's not inherently a conflict, but it is another kind of piece of the job that frankly. And there are many fantastic analysts out there who do manage that well and put out, you know, have great relationships, but put out critical research, you know, like substantive research, and you just have to manage that. And there are many fantastic analysts who do. But I even said it's not unlike sometimes being a beat reporter where you have to maintain just like good working relationships with the people you cover. Even if you're going to say an accurate but like critical, fair thing, and then you just have to like, move on. Again, very different from the role of an analyst, you know, but it is. There are similarities.

[Ed Zitron]

I don't know if it's different.

[Rebecca Guarino]

There are similarities.

[Nick Dever]

I just wait, I just wanna make sure I have it clear. Right. So a sell side analyst writes reports about companies in a certain sector and puts those reports out publicly and disseminates them to other banks, et cetera. And then hedge funds can go to the analyst and say, I want your specific research that you've done on these companies. And also, can you introduce me to their management team?

[Rebecca Guarino]

That's part of the offering. Exactly.

[Nick Dever]

I see, Exactly. And therefore, to be able to connect clients to management and make money for your firm, you have to, maybe you have to be a little more positive in your report on that firm than you normally would in order to be able to connect your clients with them. That's it.

[Rebecca Guarino]

That would be the cynical take, absolutely. But the very fair criticism, I would say, yes, absolutely.

[Ed Zitron]

I don't think that should be legal, the cynical take. I don't think this should be legal,

[Rebecca Guarino]

the cynical take, but it is. It's just like a feature that. And again, they're like excellent, excellent, excellent analysts who just like, manage that.

[Ed Zitron]

That's why we're being nonspecific, of course.

[Rebecca Guarino]

And who just manage that. And it's just like being. And again, yes, okay, there are differences, but it is not unlike. You write a tough story on a company, you are fair, and then you gotta move on. And then you gotta like, move on. You know what I mean?

[Nick Dever]

But the thing is.

[Ed Zitron]

I don't know.

[Rebecca Guarino]

I know, I know.

[Ed Zitron]

I think access journalism is bullshit. And I think we're in the beginning of history. As I wrote last week, it is. It's no longer useful to do access. Access journalism doesn't work. It doesn't get you anything. If a PR firm or a PR person at a company doesn't answer your question because they're mad at you, that's their fucking problem. This is not the opinion of my guests. This is just me. I just. When you told me this for the first time in the prequel, I was kind of. I sat and thought about it a lot because it's like, you don't have to agree with me here. It feels antithetical to good analysis to be like, well, I can't be too many. Mean, especially when your job is, hey, should I invest in this? It's like, well, you maybe should because I gotta. I gotta get you the company. I gotta make sure the company. Fuck that. I don't know. This is the thing, though, gets back to my wider feeling about the stock market. It's like, that feels rigged. It feels like you've got analysts who go on cnbc, Bloomberg, and I'm sure people will say, oh, Bloomberg, real traders use the terminal, whatever. But. But it's like the growth of retail investors is what makes this dangerous to me. The fact that it's the easiest time ever to invest in stocks. If I felt like buying a stock right now, I could do so in a few taps. If that's the case, having. Or that should be the disclosure. Here's a good centrist path. I think that they should have to write down every introduction they've made. They should say every time, every time they've introduced a hedge fund and they don't even need to know name them. They just need to say, made introduction on this date. That way we could see because. Oh, I bet there'd be a lot of them. Yeah.

[Rebecca Guarino]

Also, I'm getting all new ideas for FOIA requests.

[Ed Zitron]

Do it.

[Rebecca Guarino]

Not that they would be. Not that I. Many would actually fall into that at all because it's all private sectors. But that's, you know, like. But I'm just. I'm just getting ideas. I'm just getting ideas. Again, totally different. But.

[Ed Zitron]

No, but this is the thing. It's like, this is what good journalism is. Cause it's like these messy little lines between information that are not disclosed.

[Rebecca Guarino]

Exactly.

[Ed Zitron]

And it wouldn't be be as big a deal if they disclose this stuff. But also the term analyst is used very vaguely these days.

[Rebecca Guarino]

Totally. It's confusing to people.

[Ed Zitron]

Citrini Research, for example.

[Rebecca Guarino]

Right.

[Nick Dever]

Yeah.

[Ed Zitron]

Oh, my God.

[Rebecca Guarino]

People who are, for example, again, get to the heart of people who are like, held to an industry. Regulated, industry standard that is very closely held, closely watched, versus not. That's a perfect example. Perfect example.

[Ed Zitron]

All right, I think we're gonna wrap it there. We've had a great time. Where can we find you two?

[Nick Dever]

I'M on X at Nickdevor. Or you can check out my newly launched website nickdevver.com and you vibe Coded and beautiful. I vibe coded. Sorry. Don't cancel me, Ed. I can't believe you outed me at the end. Literally used Never mind. Or Barrons.com yes, you can find me

[Ed Zitron]

on Barrons.com all right, everyone, you can find me, of course. Where's your ed.betteroffline.com this podcast that you're already listening to. You'll have a monologue later in the week. Thank you all.

[Rebecca Guarino]

Thank you.

[Matt Osawski]

Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osawski. You can check out more of his music and audio [e-mail] m a t t o s o w s k I.com you can email me at easyteroffline.com or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat wheresyoured at to visit the Discord and go to R betteroffline to check out our Reddit. Thank you so much for listening.

[Rebecca Guarino]

Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, Visit our website coolzone media.com or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Charlamagne Tha God]

Peace to the Planet Charlemagne Tha God here. And listen. We are back. The Black Effect Podcast Festival is back in Atlanta on April 25th at Pullman Yard. Yeah, and the full lineup is nuts. We got the Grits and Eggs podcast, Deontay Kyle and Big Ice Cup Cat. We got Club 520 with Jeff Teague in the gang. Don't call me White Girl Mojo will be there. Keep it positive, sweetie. With Crystal Renee. We got Reality with the King with Carlos King. And yes, Drink champs will be in the building. Plus, you know we're gonna have a lot of guests, so you need to join us. And we got the Black Effect Marketplace, the picture podcast, and everything you expect from the Black Effect Podcast Festival. Tickets are on sale right now. Go get [e-mail] podcast festival. Don't play yourself. Okay, pull up.

[Nick Dever]

Then she says, have you seen a

[Rebecca Guarino]

photo of my son?

[Nick Dever]

And I'm like, who is this person?

[Boys and Girls Podcast Host]

Welcome to the Boys and Girls Podcast. Arranged marriage is basically a reality show and you're auditioning for your soulmate. And who's judging? Only your entire family. I sacrificed myself to this ancient tradition hoping to find love the right way. And instead I found chaos, comedy and a lot of cringe. Listen to boys and Girls on the iHeartRadio app, Apple Podcasts, or wherever you get your podcast.

[Bob Pittman]

Hi, I'm Bob Pittman, chairman and CEO of iHeartMedia, and I'm kicking off a brand new season of my podcast, Math and Stories from the Frontiers of Marketing. Math and Magic takes you behind the scenes of the biggest businesses and industries while sharing insights from the smartest minds in marketing. Coming up this season on Math and Magic, Magic CEO of Liquid Death, Mike Cesario.

[Nick Dever]

People think that creative ideas are like these light bulb moments that happen when you're in the shower where it's really like a stone sculpture. You're constantly just chipping away and refining.

[Bob Pittman]

Take two Interactive CEO Strauss Selnick and her own Chief Business officer, Lisa Coffey. Listen to Math and magic on the iHeartRadio app, Apple Podcasts, or wherever you get your podcast.

[Nick Dickenpole Show Host]

On paper, the three hosts of the Nick Dickenpole show are geniuses. We can explain how AI works, data centers, but there are certain things that we don't necessarily understand.

[Nick Dever]

Better version of Play stupid games, win stupid prizes. Yes.

[Nick Dickenpole Show Co-host]

Which, by the way, wasn't Taylor Swift who said that for the first time. I actually, I thought it was. I got that wrong.

[Nick Dickenpole Show Host]

But hey, no one's perfect. We're pretty close, though. Listen to the Nick, Dick and Paul show on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[iHeart Podcast Announcer]

This is an iHeart podcast. Guaranteed Human.