Horse Pilates: A Mailbag Episode

Summary

Money Stuff: The Podcast

Episode Summary: "Horse Pilates: A Mailbag Episode"

Date: January 2, 2026
Hosts: Matt Levine (Bloomberg Opinion columnist), Katie Greifeld (Bloomberg News reporter/anchor)

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Episode Overview

This episode features a lively mailbag format, with Matt and Katie responding to listener questions about Wall Street, finance, analyst behavior, meme stocks, ETFs, prediction markets, share buybacks, and even horse dressage. As always, Matt and Katie blend deep financial knowledge with their signature wit and irreverence, making for an insightful and entertaining dive into today’s quirky corners of the financial world.

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Key Discussion Points & Insights

1. Why Do Analysts Ask Questions on Earnings Calls?

(03:07–07:08)

• Core Idea: Sell-side analysts ask questions on earnings calls not just for information, but to build public reputation, impress clients and companies, and market themselves/their banks.
• Matt’s take:
  • Analysts are providing a "public-ish good," aiming to make investors think positively of them, which can lead to more business.
  • Good public questions can endear them to both clients and the company.
  • There’s a marketing & performative element: "Being a research analyst is in some sense a marketing job, right? So being good in public is good marketing..." (05:00 – Matt).
  • Even if the information is public, analysts' unique models and analysis still give them an edge.
• Katie compares this to journalists at Federal Reserve press conferences, noting the satisfaction (and competition) in asking tough, useful questions.

"Isn't there satisfaction in asking a really good question?" (06:05 – Katie)
"The competition leads to this strange place where the people who are less motivated by money make the most money." (09:33 – Matt)

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2. Puzzle People vs. Money People on Wall Street

(07:18–10:22)

A listener rants about "weird math-camp types" versus traditional, sociable financiers.

• Matt’s view:
  • Many finance stars are motivated by intellectual curiosity, not money.
  • "Solving puzzles is really good for managing money."
  • The influx of "math-camp weirdos" sometimes results in frauds, but also outperforms "lacrosse player" types.
  • Matt sides with the "puzzle people," seeing their dominance as "good for the world and also very pleasing aesthetically."
  • This shift (social/marketing to math/puzzle orientation) is a decades-old Wall Street tension.

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3. Favorite Quotes in Investing

(10:45–12:21)

• Matt fondly cites Samuel Johnson:

  "There are a few ways in which a man can be more innocently employed than in getting money." (10:55 – Matt)

  • He uses this to argue that making money is likely less harmful than other motivations like power or revenge.
• Warren Buffett’s gold quote is a close runner-up:

  "You can fondle the cube, but it will not respond." (12:21 – Matt)

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4. Proxy Advisors’ Influence & "Can Billionaires Rig the Vote?"

(14:03–16:44)

Listener asks if a billionaire could buy up ISS or Glass Lewis to control shareholder votes.

• Matt:
  • Influence is exaggerated; proxy advisors matter most in low-stakes issues.
  • If their guidance became obviously biased, asset managers would stop listening.
  • Their "bias" is shaped by the needs of their asset manager customers; disrupt that and their business model fails.
• Katie:
  • Agrees, noting reputational impact if a controversial buyer took over.

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5. ETF Structure: Why Not Route All ETF Trades to the Issuer?

(16:48–19:01)

A listener suggests ETFs could avoid NAV premiums by having all trades be creations/redemptions at NAV.

• Matt explains:
  • That would make ETFs identical to mutual funds—missing out on trading flexibility and crucial tax advantages.
  • "The trick of ETFs is that they never trade for cash... this is really important... so there are no taxes and they defer taxes for as long as you hold the fund." (18:28)
  • The arbitrage mechanism is vital for keeping ETF prices in line with NAV and allowing secondary market liquidity.

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6. Why No Meme ETFs?

(19:11–22:26)

• Listener: Why don’t we see meme ETFs trading at wild premiums like meme stocks?
• Matt:
  • It’s the ETF arbitrage mechanism. If ETF price rises above NAV, arbitrageurs close the gap for profit—preventing wild mispricings.
  • "With ETFs, there is a symmetrical mechanism... the ETF kind of has to trade at its fundamental value." (22:07)
  • Meme stock mechanisms don’t translate to ETFs due to this constant arbitrage.

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7. Prediction Markets and Sports Betting Evolution

(24:53–27:21)

• Listener: Could sportsbooks become market makers on prediction markets like Kalshi?
• Matt:
  • Sees a possible future where sportsbooks fill a "market maker" role, handling retail bets & offsetting risk on open markets—akin to retail equity order flow and HFTs in stock markets.
  • Notes legal/regulatory complications but sees a plausible parallel.

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8. How Companies Actually Do Share Buybacks

(27:28–30:32)

• Listener: How do companies execute buybacks, and what are the insider trading rules?
• Matt:
  • SEC Rule 10b5-1: Companies (like insiders) can use preset, automated plans—enabling buybacks even if later possessing insider information.
  • Historically, tender offers (set-price, open to all shareholders) were standard, but open-market purchases now dominate due to SEC rule relaxation.
  • Banks frequently manage the process and devise derivative-based accelerated buyback programs.
• Quote:

  "Not so dissimilar from what you would do with Robinhood... but if you want something more complicated like a fancy derivative product, they'd be happy to put you into that called accelerated stock buybacks." (29:29 – Matt)

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9. Katie’s Adrenaline Junkie Dressage Life ("Horse Pilates")

(30:32–32:37)

• Listener: Is dressage (competitive horse dancing) an adrenaline sport for Katie?
• Katie:
  • Dressage itself isn’t adrenaline-fueled like horse jumping, but showing is a "performance" that requires intense focus for 5-10 minutes, which she likens to being "on" for live television.
  • "It’s like horse ballet... But I love dressage for the training element of it. It’s like horse Pilates, honestly." (31:14)
  • Even activities like chess have a performance/adrenaline element at a high level.

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Notable Quotes & Memorable Moments

• On analyst questions:

  "A lot of what you're doing is letting everyone hear how smart you are." (05:00 – Matt)

• On puzzles vs. money in finance:

  "The people who are less motivated by money make the most money." (09:33 – Matt)

• On the Samuel Johnson quote:

  "People...get mad at Wall Street...but it's better than almost all the alternatives." (10:55 – Matt)

• On Buffett’s gold cube:

  "You can fondle the cube, but it will not respond." (12:21 – Matt)

• On meme ETFs:

  "You can't have a premium, not sustainably...the arbitrage mechanism means the ETF kind of has to trade at its fundamental value." (22:07 – Matt)

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Timestamps for Key Segments

• Analyst earnings call questions: 03:07–07:08
• Wall Street’s "puzzle people": 07:18–10:22
• Favorite quotes: 10:45–12:21
• Proxy advisors & billionaire influence: 14:03–16:44
• ETF structure explained: 16:48–19:01
• Why no meme ETFs: 19:11–22:26
• Prediction markets & sportsbooks: 24:53–27:21
• Share buyback mechanics: 27:28–30:32
• Katie’s horse dressage ("Pilates") & adrenaline: 30:32–32:37

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Tone and Style

The episode is classic Money Stuff: deadpan, sharp, a little self-effacing, and occasionally lightly absurd—particularly in the horse Pilates and meme ETF discussions. Matt continues to draw from deep financial lore and history with literary and Buffett-esque references, while Katie matches with wry, practical insight and journalistic realism.

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For listeners who missed the conversation, this episode delivers classic Money Stuff: a smart, breezy, slightly odd yet always insightful ramble through the idiosyncrasies of modern finance (and horse ballet).

Transcript

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[Matt Levine]

We are Friday, January 2, 2026 recording this live. Recording this live. Recording this on, I don't know, December 17th. Wow. It's been an eventful two weeks.

[Katie Greifeld]

I know.

[Matt Levine]

Between when we recorded this and when you're listening to it.

[Katie Greifeld]

Ominous. Very ominous.

[Matt Levine]

Yeah. I'm gonna regret this so much.

[Katie Greifeld]

Probably just given the pace of everything that's happening all at once. But hopefully our answers to these questions won't have changed too much in two weeks.

[Matt Levine]

Hope.

[Katie Greifeld]

Yeah. Unless something amazing happens.

[Matt Levine]

Hello and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.

[Katie Greifeld]

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

[Matt Levine]

I'm gonna stop pretending to sing the mailbag thing, but today is a mailbag episode.

[Katie Greifeld]

Yeah. Mailbag.

[Matt Levine]

Thank you, Katie. Mailbag.

[Katie Greifeld]

Mailbag.

[Matt Levine]

Yeah. Let's get into it.

[Katie Greifeld]

We got some good ones. We're starting off strong with a question from Christopher, who asks, why do analysts ask questions on earnings calls? I get why. They ask them in private meetings with the company. They then get exclusive access to body language information. But on public earnings calls, they get their information only to have it simultaneously Shared with everyone else. What do they get out of that?

[Matt Levine]

It's a good question. So basically all the questions on earnings calls are asked by sell side analysts whose job is not to buy stocks that will then go up, but rather to publish research reports for their customers saying what stocks will go up. And so like, broadly speaking, the research analysts are in a business of like providing public ish goods, right? Like they're not getting paid directly for picking stocks. What they're doing is they're providing some holistic set of services to investor clients that make the investor clients think fondly about them and about their banks. And then the investor clients, because of those fond feelings will either, you know, in the US they'll trade with the banks and pay them commissions, and in Europe they'll pay directly for research. And so what that means is that like anything that the research analyst does that like makes investors like them is productive. And providing public goods by asking good questions on the earnings call is reasonably productive. Also, if you ask good questions on the earnings call, then people will hear you and think, ooh, I like that analyst. And that will lead to things like maybe them paying for your research. It will also lead to maybe the company thinking you're good and liking you. And therefore one, having private meetings with you where they tell you stuff or give you body language that allows you to be more informed. And two, another job of research analysts is brokering meetings between companies and investors. So they do corporate access where when a company is doing a non deal roadshow or a conference or whatever, they're meeting with investors and those slots are kind of arranged by the banks, by the research analysts. And if you are in good favor with the company, then you get better access to those things and you can do more for your clients. So as part of the broad set of services they provide, asking good questions in a very public place on earnings calls is a useful thing to do.

[Katie Greifeld]

It sounds a bit performative, but I hear what you're saying.

[Matt Levine]

Yeah, it's like a market. Being a research analyst is in some sense a marketing job, right? So being good in public is good marketing, I should say also it is an analytical job and you are building your own model. And if you have differentiated views or differentiated skills and you ask a good question that informs your model, other people will get the answer to the question, but they don't have the same model, they don't have the same skills, right? So you could still get differentiated information or analysis by asking a question that everyone can hear. But a lot of what you're doing is letting everyone hear how smart you are.

[Katie Greifeld]

Yeah. You're sort of speaking to. Something that I was wondering when reading this question is whether there's satisfaction in asking, like, a really good question on the earnings call that maybe get something more candid from the executives on the call.

[Matt Levine]

Katie, you're a television anchor. Surely you know the answer to this question.

[Katie Greifeld]

Well, yeah, I guess. I mean, if someone asked a really good question on an earnings call, I would probably highlight it and also steal it for myself.

[Matt Levine]

Yeah. But also just like, isn't there satisfaction.

[Katie Greifeld]

In asking a really good question? Yeah, that's true. Or like the journalists at the Fed press conference, right? Yeah, Right.

[Matt Levine]

Same thing. The journalists at the Fed press conference, any answer to their question, every other journalist at that conference can write down, right?

[Katie Greifeld]

Yes.

[Matt Levine]

But you ask a good question, then you're like, ooh, you impress your colleagues, you impress the Fed, you impress your readers. Yeah, that's what it's all about.

[Katie Greifeld]

Or you tick off the Fed.

[Matt Levine]

Even better.

[Katie Greifeld]

Something else I also wonder about is like, whether, and I wonder this too, about the journalists in the room at the Fed press conference is whether there's any sort of sense that, like, this is a team sport, that we're trying to get something out of these people that we might not have otherwise, or whether everyone is asking their own individual questions and not necessarily building on the question that was asked before you.

[Matt Levine]

I mean, surely it's some combination, right? Like, surely you want to distinguish yourself, but also like someone else draws some blood, you move in for that kill, Right?

[Katie Greifeld]

Yeah.

[Matt Levine]

Probably somewhat similar in ending skills.

[Katie Greifeld]

Good question. Christopher.

[Matt Levine]

This next question we're going to bleep.

[Katie Greifeld]

Yeah, who wants to read it?

[Matt Levine]

Wait, I want to read it.

[Katie Greifeld]

Okay, go for it.

[Matt Levine]

What idiotic is coming from senior hedge fund leaders? It's asset management. The entire point is to care about making you money. The people that do get hired who don't care about money are weirdos who create $10 billion Ponzi schemes. Jane street hiring mathcat weirdos ra than the cross players is a literal criminal conspiracy. Anthropic is a weird cult. And it's specifically because of how weird and abnormal that the OpenAI board was that they tried to destroy the company because it released the successful product. We need more normal people in these companies and less ethereal PhDs that don't care buying a house, a plane or a yacht don't care about buying a house.

[Katie Greifeld]

I think so, yeah.

[Matt Levine]

Companies should have corporate policies that require employees over the age of 25 to not have roommates, we get better products and better corporate decisions. If people aren't living in cold houses, but rather have to deal with with a real housing market and do things like buy groceries and pick furniture. If hedge fund leadership wants to only hire socialists, then they should go lead a university rather than managing financial assets for 2 and 20 or more. I love this question.

[Katie Greifeld]

Is it a question?

[Matt Levine]

I love this rant. I don't even know what prompted it. But I have written about this that I believe, and I think I am not alone in this, that a lot of the most successful people in the financial industry are deep down motivated by puzzle solving and intellectual curiosity rather than the pursuit of money. And I just think that this is an empirical fact that might not be true, but seems to be true, right? Like you could imagine that the thing that would make you the best at managing a hedge fund was like really liking money a lot. But it turns out that solving puzzles is really good for managing money. But Graham is right that there are weirdnesses there and that like if you get into this business because you really like solving puzzles, like some number of those people do end up committing huge frauds. And there is some possibility that a world of nice, sociable, moderately intelligent lacrosse players would commit less fraud and have fewer blow ups and Ponzi schemes than one where than the math camp weirdos than the math camp weirdos are running the hedge funds. But what do you do about that?

[Katie Greifeld]

Right?

[Matt Levine]

It's a fiercely competitive business and if you are just trying to trade stocks with friendly sociability, you'll get run over by the math kids. And so the competition leads to this strange place where the people who are less motivated by money make the most money. And then some of them were weird. Also I should say I'm being sympathetic to his question, but fundamentally my sympathies are with the puzzle people, right? I mean, I love the puzzle people and I think it is on balance good for the world and also very pleasing aesthetically that the puzzle people are in charge of finance. But it's a, it's a real trend. You know, this is like it goes back to liar's poker, right? This transition from the sort of sociable, essentially marketing oriented people to the math puzzle people is one that has caused tension on Wall street for decades.

[Katie Greifeld]

Great rant, Graham. Really good stuff. Okay, here's John. Matt seems to love certain quotes because they're great at explaining a moment mechanism, trend, et cetera. For example, quot be wise to view any investing in OpenAI Global LLC in the spirit of a donation and quote hidden, poorly, internally labeled Fiat at account. 8 million. Do you.

[Matt Levine]

8 billion.

[Katie Greifeld]

8 billion.

[Matt Levine]

It's a little tilde in front of it because it's a box with Sam Beckman, Fried's famous spreadsheet.

[Katie Greifeld]

Famous. Do you have an all time favorite?

[Matt Levine]

Do I have an all time favorite quote? So I almost said this in the last answer. Samuel Johnson says there are a few ways in which a man can be more innocently employed than in getting money. I think about that a lot. Like people regularly get mad at Wall street and financiers and people trying to make a buck. And I often think it's better than almost all of the alternatives. People who are motivated by power or revenge or even a sense of mission are often doing worse things than the people who are just out there trying to make a buck or 8 billion bucks. So that's an all time favorite quote of mine. Another favorite quote of mine is Warren Buffett has a lot of famous quotes in his famous shareholder letters.

[Katie Greifeld]

He does.

[Matt Levine]

He probably quoted a lot of them. The one that I like the most is at some point, he's talking trash about gold as an investment. And he's like, you can invest. I think the number was the market cap of the S and P. You can put $32 trillion into the S and P. You put the money into the S and P, you get all the productive capac of America, all the companies, all the corporate profits, all the business. Or you can put that amount of money into a cube of gold that is like yay high by yay long by yay wide. And he's like. And then it'll just sit there. You can fondle the cube, but it will not respond.

[Katie Greifeld]

It will not spin off any dividends, anything like that. No cash flow.

[Matt Levine]

I just think of Warren Buffett saying, you can fondle the cube, but it will not respond.

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[Katie Greifeld]

Okay, from Jens, a question on ISS GlassLewis and the voting discussion. Isn't this the easiest way for a billionaire to gain a huge influence on companies? Buy ISS or Glass Lewis and steal the voting in one in the direction you want. Would this work? I don't know.

[Matt Levine]

I think you know ISS and Glass Lewis people are really mad at ISS and Glass Lewis. They're the proxy advisory firms.

[Katie Greifeld]

And you know, as discussed on this.

[Matt Levine]

Pod ages ago now. Oh yeah, only a few days before we recorded this pod, Donald Trump put out an executive order basically saying we don't like the proxy advisors and there's this notion that the proxy advisors are in charge of all shareholder voting people like a conspiracy like this where it's like two foreign owned companies control how all American public companies are run, right? The idea is that ISS and Glass Lewis tell the shareholders how to vote and then the shareholders vote that way and then the companies have to do what they say. This is exaggerated in a lot of ways, one of which is that ISS and Glass Lewis have their most influence in the least important things like there are shareholder votes on their hundreds a year on non binding proposals that companies should write reports about ESG stuff or whatever. And there yeah a lot of shareholders do defer to ISS and Glass Lewis because it just doesn't matter to them that much. ISS and Glass Lewis have meaningful influence on things like contested merger situations and proxy fights where there are real economic stakes. But there a lot of asset managers are making their own decisions because they have more at stake. Whereas the stuff where the ISS and Glass Lewis have the most impact is where people have the least at stake. But also it's just like they have no authority, they're just persuasive, they're just useful and if they stop being useful, then people would stop paying attention to them. So I think if you bought ISS and Glass Lewis and used them to advance an agenda, first of all, you can only do so much to advance the agenda because it's only like shareholder voting. And secondly, if you did it too, obviously then people would get sick of you and it can't be that hard to start another one.

[Katie Greifeld]

That's the thing in practice, if a controversial billionaire such as Elon Musk bought either ISS or Glass Lewis, I feel like whatever recommendation they make, people just know it's biased.

[Matt Levine]

Everyone's like, oh, it's biased now it is biased. They have some priors that happen to more or less align with the views of a lot of investment managers because the investment manager are their customers and they're trying to run a business where people pay for their advice. But yeah, like, you know, their bias is kind of aligned with like their customers. And if you change that, then the customers would go somewhere else.

[Katie Greifeld]

Yeah. Now we have a question from Leo.

[Matt Levine]

This is like the ETF segment.

[Katie Greifeld]

I don't really know how to answer this, but Leo asks, I feel like you could just have every buy of an ETF be a creation and every sell be a redemption routed to the issuer and remove the possibility of ETFs trading outside of NAV. Why bother being able to trade them with other traders directly at all?

[Matt Levine]

Because they're exchange traded funds.

[Katie Greifeld]

Yeah, that's the thing. They trade throughout the day.

[Matt Levine]

Right. An instrument where you could only create and redeem with the issuer as just the mutual fund.

[Katie Greifeld]

Yeah, right, yeah.

[Matt Levine]

And mutual funds have a couple of disadvantages. One is that just an administrative cost to the issuer always having to trade with you rather than you can trade on the exchange with anyone who wants to. Two, the issuer wants to trade with you at nav, but the NAV changes throughout the day. And so there's a cost in just updating that. Whereas with an ETF you're trading at the market price. And so it just kind of takes care of itself. And the way it takes care of itself is with arbitrageurs making sure the price is close to the nav, but the issuer doesn't have to worry about that. It's much more administratively simple. Also though, a lot of the point of the ETF thing is that if you're doing trades with the issuer, if the way ETFs worked is that I gave the issuer money and it gave me back shares, that is a taxable trade that creates tax liabilities for the other holders of the ETF or of the fund. Right. Because when the issuer is selling stock for cash, it creates a tax realization event. The trick of ETFs is that they never trade for cash.

[Katie Greifeld]

Famously.

[Matt Levine]

Famously. And so when I trade with you on the exchange and we're not trading with the issuer, there's no tax realization event for the etf. When there are creations, they're not like me going to the ETFs ETF with cash and getting back shares or vice versa. They're authorized participants handing in shares and getting back shares of the etf. So there's an in kind transaction and no tax event. And so this is like really important to the ETF is that there are no cash trades with the etf so there are no taxes and they defer taxes for as long as you hold the fund.

[Katie Greifeld]

So doing this would remove all the things that make an etf.

[Matt Levine]

This is just a mutual fund. The question why can't you just do every trade with the issuer is like why can't an ETF be a mutual fund? And the answer is we've discovered of better technology.

[Katie Greifeld]

Yeah. Why can't a mule be a horse? A lot of reasons. This is a really great question from Oscar. Why are there no meme ETFs? We have meme stocks and meme stock ETFs. But there is no meme ETF in otherwise completely boring ETF holding boring assets that nevertheless drums up huge retail excitement. It doesn't have to trade at some dumb premium, just build up a big nav. I read this a few times and then I understood what Oscar was asking. Because my immediate reaction was there are ETFs that hold meme stock stocks. But he's talking about why hasn't an ETF taken off in the same way that a meme stock has like display meme like characteristics? Is how I understood it.

[Matt Levine]

And the answer is because of the arb. The answer is because if I buy an ETF on the stock exchange, I'm buying it from a market maker who is probably selling me shares of the ETF and buying the underlying stock. Right. And vice versa. If I'm selling, they'll buy the ETF and they can sell the underlying stock. And so if the values get out of line, then they'll just do that arbitrage. Right. If an ETF is trading at well above its net asset value, then market makers are going to sell the ETF and buy the underlying shares and close the ARP and Do creations and redemptions to close the arp. So it can't really trade at much of a premium. And then the question is, it's not trading at a premium. We just pull up a big Navigation Like a meme stock can be fairly small, right? People can buy the meme stock and it'll go up. And a meme ETF that held a lot of shares would have to push up the prices of all of those shares in order to go to the moon. Right. You can't have a premium, not sustainably. And so the only way for it to go to the moon is to push out the prices of all the underlying shares. So you could imagine a small ETF with small memeing stocks doing that, but it's not the most obvious thing to do.

[Katie Greifeld]

A giant ETF that holds small stocks.

[Matt Levine]

I feel like that Would you have a giant meme? Yeah, like the audience for meme anything. The audience for, like irrationally pushing out the price of things is not, you know. Yeah, it's not that big.

[Katie Greifeld]

Yeah.

[Matt Levine]

I will say, like, this is an interesting question because I feel like I've written this and said this possibly on this podcast. One of the lessons of the meme stock episode is that fundamental value is a floor on stock price. Because if a stock is trading well below its fundamental value, then some private equity firm can come and buy the company and extract its cash flows. But fundamental value is not a cap on stock price. If a stock trades at 10 times its fundamental value, there's nothing you can do about that. You can short it, but you can't make it go down to its fundamental value. There's no offsetting equivalent to a private equity firm buying the company and cracking up its cash flows. And so everyone sort of thought that fundamental value in the long run was the driver of stock prices. And the meme stock episode threw that into question. It was like, no, you don't. It doesn't have to be.

[Katie Greifeld]

No.

[Matt Levine]

With ETFs, there is a symmetrical mechanism, right? There's the arbitrage mechanism means that the ETF kind of has to trade at its fundamental value. And if it doesn't, you can fix that yourself. You can extract that premium directly by doing a creation or redemption. And so that's why there's no meme etf, because you can't sustainably trade above fair value.

[Katie Greifeld]

I still feel like it could happen. Yeah, maybe it'll happen in the next two weeks. And this will be the thing that radically changes our answers.

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[Katie Greifeld]

Chris asks thank you for continuing to cover the amusing and somehow not yet illegal state of Prediction market Quote Sporting Outcome Commodities on the last podcast it sounded like Kalshi could arguably become a platform that connects bettors with market makers. Which somehow seems like a bad thing for DraftKings and Flutter. But couldn't the sports books become the market makers?

[Matt Levine]

Yeah, why not? I mean, and it's unclear what actual entities end up doing this. But I do think that one way to think about it is that right now there are sportsbooks, which are in the business of trading sports bets with retail customers, essentially. And there are prediction markets which are public registered exchanges that are in the business of trading sports bets with anyone who wants to show up. And that's kind of how the stock market works. Right. There are retail brokerages that send their retail customers stock orders to, you know, Citadel securities or Chain street or Tower or whoever, and then there's a public stock market. And one thing that happens is that those electronic trading firms that get the retail orders, they're also trading on the stock exchange. And so one thing they are doing is interacting with retail orders and then laying off risk in the public markets. And you can imagine something like that happening with sportsbooks. Right?

[Katie Greifeld]

Right.

[Matt Levine]

Maybe not the current sports books. Maybe that's more like a market maker function. But you have people who are interacting with retail traders and they're getting flows and they're getting two sided uninformed flows and they're trading against it and they're making a spread and so forth. And when they have unbalanced risk, they go lay it off in the public markets against whatever sharp traders they find there. I think that's a very reasonable model. And the way it works in the stock market is if you're a retail trader, you get a better customer experience and often better pricing by trading with an electronic wholesaler through your retail broker's platform. And that could happen here too, where the retail sportsbooks can offer maybe a better user experience. And so you trade with them, but then they are trading in the public markets to lay off their risk. There are some problems with that theory, including about the legal structure of commodities markets, but it does kind of feel like that could be a place that this ends up where the retail traders are trading with someone who specializes in retail trading. And then there's some professional institutional market.

[Katie Greifeld]

So Chris, maybe he identified the evolution.

[Matt Levine]

Yeah, I don't know that the current sports books are going to be the best situated to.

[Katie Greifeld]

Right.

[Matt Levine]

To do that. But yeah, they're all kind of. They're all basically hiring the same pool of high frequency traders. That's probably fine.

[Katie Greifeld]

All right, Dan. Dan asks. I have a question about how companies execute share repurchases and the rules around it. I know that parenthetical, back when the SEC enforced rules, insiders could use a 105B1 plan to try and 10B510. 10 5B1 plan, 10B5 1.

[Matt Levine]

Wait, did I say 10B5 1.

[Katie Greifeld]

10. 5B1.

[Matt Levine]

No, 10B5 1.

[Katie Greifeld]

10. No, it says.

[Matt Levine]

It doesn't matter what it says. I'm telling you what it actually is.

[Katie Greifeld]

Okay, sorry. Sorry, Dan. 10B.

[Matt Levine]

Wait, you just said 10B51 plan to.

[Katie Greifeld]

Try and protect themselves against insider trading allegations. Is there a similar plan for when a company is repurchasing shares? Or are they allowed to use insider information to time the repurchases also? How do they do it? I assume Coca Cola doesn't open their Robinhood account and submit a market order.

[Matt Levine]

No. Here's what they do. They call me. I mean, they used to call me when I was a banker. One thing I did was share repurchases. And so I can tell you all about this. I will try to keep it short because although it is dear to my heart, it's not that interesting. But yeah. So 10B51 is like the SEC rule that basically says when you don't have inside information, you can set up a plan to buy stock or sell stock. So, like, corporate executives will set up a 10b51 plan to sell stock to, like, pay for college. And then later, when the plan sells stock, even if they have inside information, it doesn't matter because the plan is just automated. This is the theory. There are various workarounds, but it's the same rule for companies. Companies regularly do stock buybacks using 10B5.1 plans because they have some open window after they announce earnings where they can set up the plan and then the plan can go and be automated throughout the year. And they can buy stock even when they're discussing mergers or whatever because they have a 10B5.1 plan. Sometimes companies do that. They also do other things. It used to be that the main way companies bought back stock was through tender offers where they made a public announcement. Anyone who wants to sell stock at this price can do it. And then they would buy stock at a price, and this would solve all those problems because they'd make full disclosure of everything and everyone would have the same information and they'd tender all their stock at the same time. It's a pretty annoying process. And companies do much less of that than they used to, basically because the SEC relaxed the rules a few decades ago. It used to be considered that open market stock purchases were market manipulation. And so companies didn't do it, but then they relaxed those rules. This is periodically controversial. People are like, stock buybacks are market manipulation, so they should change the rules back. And then companies would have to do tender offers. But now they mostly do open market purchases. The other thing they do is delightful derivative products with their friendly local investment banker. Basically anything you do, you're going to call an investment bank and they're going to do it for you. And the simple way is they're going to do it in the open market. Not so dissimilar from what you would do with Robinhood. Usually they'll handle the average over the course of the day rather than you hitting every buy order. But if you want something more complicated like a fancy derivative product, they'd be happy to put you into that called accelerated stock buybacks.

[Katie Greifeld]

There you go.

[Matt Levine]

I used to sell them.

[Katie Greifeld]

Sounds juicy.

[Matt Levine]

Yeah, they're good.

[Katie Greifeld]

Yeah.

[Matt Levine]

Call me for. I don't want to actually endorse Accelerator to talk more. I have complicated feelings about this product I used to sell, but just call that. In any case, here's a question from Ian. Katie has mentioned on more than one occasion that she craves adrenaline and is an adrenaline junkie. She has also discussed her participation in the sport of horse dancing. Are the two related? Is dressage and activity that adrenaline junkies flock to? I want to hear the answer to this one.

[Katie Greifeld]

Probably no.

[Matt Levine]

I feel like horseback riding in itself is like a little bit. It has an element of risk. You're on a big animal and danger. The animal could go fast. Even if during horse dancing he's probably not.

[Katie Greifeld]

Ideally they wouldn't. It's a twofold answer because yes, there is an element of adrenaline in riding horses. But if you most adrenaline junkies are more into jumping, you know, they want to go fast over jumps, dressage. Often the goal is to not go that fast. It's like horse ballet. But I love dressage. Well, I love dressage just for the training element of it. It's like horse Pilates, honestly. But when it comes to showing, I just love having to be on. It probably takes five to ten minutes for you to complete your test and for those five to 10 minutes you have to nail every part of it. You just have to be on the entire time. So I really enjoy that element. It's not dissimilar from television where the camera is on and you just have to perform.

[Matt Levine]

Right. Like any performance or competitive activity has an adrenaline component even.

[Katie Greifeld]

Yes.

[Matt Levine]

Even if it's like chess, for example.

[Katie Greifeld]

Obviously that's a high adrenaline sort of thing.

[Matt Levine]

Yes, for some.

[Katie Greifeld]

Yeah. If you're like in a high stakes match, your heart is racing but. But you're not obviously. In most cases.

[Matt Levine]

I assume is there horse chess?

[Katie Greifeld]

Probably Dressage is the most similar. I don't know. Everyone go YouTube horse chess dressage in the Olympics.

[Matt Levine]

Are there YouTube videos of Kitty Greifeld performance?

[Katie Greifeld]

Absolutely not. Absolutely not.

[Matt Levine]

Well, don't look for those then.

[Katie Greifeld]

No, please don't. All right, well, happy, happy New Year. Hope you all had a great time.

[Matt Levine]

And that was the Money Stuff Podcast. I'm Matt Levine.

[Katie Greifeld]

And I'm Katie Greifeld.

[Matt Levine]

You can find my work by subscribing to the Money stuff newsletter on bloomberg.com.

[Katie Greifeld]

And you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[Matt Levine]

We'd love to hear from you. You can send an email to MoneyPod, ask us a question and we might answer it on the air.

[Katie Greifeld]

You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

[Matt Levine]

The Money Stuff podcast is produced by Anna Mazarakis and Moses Ondahm.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

Amy Keen is our executive producer and.

[Katie Greifeld]

Sage Bauman is Bloomberg's head of podcasts.

[Matt Levine]

Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.

[Okta AI Security Announcer]

These days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Octa you'll turn risk into opportunity. Secure every agent, secure any agent. Octa secures AI.

[Matt Levine]

This is Julian Edelman from Dudes on Dudes with Gronk and Jewels. Sunday mornings I've got my game day ritual, coffee, lucky socks, and now New Morning Uncrustable sandwiches.

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It's all about that 12 gram protein boost with the new Uncrustables Bright Eyed Berry or Up and Apple flavors.

[Matt Levine]

Bright Eye Berries got a feisty receiver.

[Harvard Business School Executive Education Announcer]

Energy up an apple. Your classic do it all tight end.

[Matt Levine]

Soft, pillowy, packed with protein and easy enough for Gronk to grab from the freezer.

[Harvard Business School Executive Education Announcer]

Whether you're on the couch, driving to the tailgate or heading to the locker room, New Morning Uncrustable Sandwiches are the MVP of snacks.

[Matt Levine]

Your new Sunday kickoff ritual starts here with New Morning Uncrustable sandwiches packed with 12 grams of protein. Janice Torres here and I'm Austin Hankwitz. We host the podcast Mind the Business. Small Business Success stories produced by Ruby Studio in partnership with Intuit QuickBooks.

[Katie Greifeld]

We're back for season four to talk to some incredible small business owners.

[Matt Levine]

The big thing about working at tech is that it's ever evolving, ever changing.

[Katie Greifeld]

Everyone's a rookie. That's how fast the industry is changing.

[Odoo Announcer]

So what I'm really excited about is.

[Matt Levine]

To be part of that change. So listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.