Your Time, Your Value, Your Money.

Greetings and welcome to Inside Baseball with Old Chestnut. I'm Liam Allen with my friend Morris Sachs. How you doing, MB? I'm doing great. It's so good to see you. Yeah, welcome back to the big show. You got your you got your sabotage there, my friend. Um Thank you. What are the chan what are the chances, dude? We s we wasted ten, you know, whatever, five minutes last week talking about Ed chasing fee.

And then boom, Sunday night out of nowhere, at a at a twelve a twelve year hiatus. I know what do they dust off? Which to me is one of the most Bewildering. uh like additions to your playlist because like whatever fifteen year ten or ten years ago or something I asked you to send me your favorite fish songs

And I got a classic MB. I got a photograph of a yellow legal pad with a handwritten playlist. Okay. This is, you know, like forget an email or forget like here it comes. This is the handwritten deal. So there's 15, 20 songs, all of which None of them made me scratch my head, but then the one on the list, which was new to me, I didn't know they had covered.

But yeah, he's got sabotage on the list. So I'm like, wait a minute, this is Beastie Boys and M B? Like I was like, What I was like, what is the how does this Venn diagram overlap exactly? Uh it's pretty simple if you really wanna know. Um the Sachs family, all generations are big fans of the Star Trek. genre and in one of the iterations James T. Kirk steals a Corvette. Okay. He's just blasting sabotage. Okay. And then I was watching a fish concert.

I wasn't added. I think it was a regular field. And it it reminded me of that song. And so I looked it up. I'm like, this is a pretty cool fucking song. No, but before we get too far, I just wanted to Say to you in the cool shade of the banana tree on the run it's real toward the balcony. A child of the 20th century tied up Goliath and a weasel named Fee. Okay. Cheryl and I have been spending a little more time together than normal being empty nests. And I've been bombarding her with fish.

To the point she's starting to listen to the lyrics, which we all know where you want to go with that. But uh yeah. So I wonder if down in the villages they got a a fish group. There's gotta be dude. They've got all walks of life down there. There's gotta be some crusty old ooks down there in Florida, okay? Left over from Big Cypress in 2002.

Well let's jump to the meat of today's show because I think we got a pretty good pretty good uh Can we talk about the caning on Friday that we got? Because I know you enjoy a good Friday caning, okay? Yeah, you know, the truth is I was sort of preoccupied with some other stuff. Okay, fine. Um, but uh Yeah, Friday canings. You know, it's a little bit of a gut check, which I'm a big fan of. You know. I don't know for uh the listeners out there.

If any of them are extreme skiers, there's a phrase when you get to the top of a run, which is at or beyond. your comfort zone. And when you're looking down. at basically just a straight drop there's always some asshole expert screaming at you point them right point shut up you Yeah. And... I'm one of those guys, you know. I just I just like being pushed, you know. I I I can't explain it. I I think it's made me a better person. And uh Uh you know, now all I'm left with is pictures.

Nothing wrong with that. That's fine. You made it out. Dude, you got through it. You made it out. Dude, they just they had a CI a CEO of Audi falling off a cliff in Italy this past week, dude. Yeah. Climbing some mountain, seven hundred foot drop, some big shot tech you know, tech in the out. Like it's enough. Like you're you you've you're not twenty two anymore. Like you it Cheryl explained that to me earlier today. Oh. Um

Oh because I said to her, I said, how quick do you think? Because I haven't been exercising much lately. Sure. And um Yeah, I just tired. Yeah. This is where the Gerital commercial should come. But I said, How how soon do you think I can get back to doing some of these extreme things? And she looks at me and her typical Compassionate Stone cold deadpan. Look at me like, uh, never. Yeah, exactly. Like, what are you joking?

Uh, you're not gonna be on a thousand-foot wall anytime soon, dude. It's enough. You like what what's the what's the upside? Okay. I'll explain it to you. Okay. So there is a psychological phenomenon.

And I think... For the common person, it manifests itself in intimate relations with another person. We're of course being heterosexual here. But um when you have an intense activity with somebody like mountain biking at Leadville or climbing the Matterhorn, you form an emotional bond with somebody that's pretty profound. And the thing about the climbing, unlike the biking, is

The climbing is very team oriented. Like you're all gonna make it or you're all not. And that's why when I look at my relationship. with uh Marty Molatoras. I I feel like he's a younger brother. I've known him for twenty something years. We've climbed everything there is together. Um I've shown some of these pictures of stuff we've done. To friends and they're like My ankles hurt just looking at that.

Yeah, dude, I those seeing you on those walls, like yeah, makes my stump makes me nauseous. Like I see that and I'm like Humans aren't supposed to be there, let alone like this fifty five year old Jewish guy from Connecticut. He doesn't belong there. It's not physically. Let me ask you a question. Did d do you ha did that did you get that same phenomena, that same bond and that same fraternal like

Like that same did you get that same experience trading on going through shit on trading like on bad day on on bad days or bad or shit going bad? I did. You know, which is why I I have such a close personal feeling to Eee because um You know, when You're in the foxhole is not really a fair representation because it was unlikely we were gonna die.

But you know how I always talk about don't tell me how you're gonna feel when so and so happens because you don't know. Yeah. You get in enough of those situations. And you learn how people are going to behave. And you know, that was one of these things I wanted to talk about today. Um, and hit this thing hard, which is We've been very fortunate to garner a large audience, many of which are younger people looking to learn. Um in fact the response has been so profound.

It's been pushing the border of our budget. Dude, I can't believe that touchdown checked in. Okay. So for anyone that listened last week, MB mentioned his uh his amigo named Touchdown, okay him down. Yeah, who shows up in the comments but Touchdown himself, like hey MB, love the show. Like what are the chances? It's crazy.

Yeah, can I tell you? Some people like me. I don't know. Beats the shit out of me. But we proceed. So uh You know, one of the things, and I've mentioned this article before, when successful men retire. They're not prepared for it because they're used to having people consulting them, looking for their guidance all the time. And that very quick quickly evaporates. I I found it, as I mentioned, ad nauseum. I struggled a great deal with that.

And Tom Cromie uh sent me an article talking about, you know, how to prepare for your life in retirement. And the the The reader's digest version is The great minds, when they retired, found almost no satisfaction in terms of trying to find their new. you know, science discovery or New concerto, whatever they all did very well by teaching. And so for me. Uh it was discovered relatively early on that It I had the ability. to explain complicated financial stuff.

to people in language they they could understand. And I was happy to do it because it was part of what was going on at Grunge Capital. Um it was a rather disappointing experience to talk to people who were stewards. of other people's money and realizing how stupid the whole thing was. Um, because they didn't understand and they were charging people, you know, twenty percent or something. And I remember being in a meeting with IG and he's explaining. the the basic of the basics, the basis trade.

And he's doing a very complete job on it, but I'm watching these knuckleheads and they're just their eyes are just glazing over. And after the meeting Two things happened. E.G. came up to me and said, you know, I I forget his words, but he basically said he he did a shitty job. And it hurt, but I said Yeah, you did. But by the time you've done 20 of them, you're gonna be fucking genius. Yep. And I think he would agree with that. Yep. But the one point I made sure I got across was

You gotta dumb it down for these people because they don't they're just they're never gonna get it. Yeah they want you to tell them you have a little black box. Like a jack in the box and you turn the crank.

And it spits out hundred dollar bills. Yeah, I remember you talking about no nobody ever wanted to hear you say like like what's your process and you'd come in and be like, Yeah, I come in in the morning, I ask what the over it's like go read the paper. Where's the order I read? I go read the paper.

So I think this might I would never deign to want to give the titles to these episodes, seeing as you do such a great job. But this would be the tough love episode. Let me proceed. As opposed to the warm and cuddly ones. Okay, go on. Go ahead. Proceed, please. I sincerely I know as you do, as do all our sponsors, all one of them. Um You guys tuning in on a regular basis. And we've gotten enough notes to let us know we've cut a nerve. There's a demand for what we have to offer.

But there's only so far You're gonna go listening to inside baseball with old chestnut. I think you'll go a long way, but this is where. It falls to the listener because If you want to be a professional trader, you have to have a lot of tools in your toolkit because you never know where there's going to be an opportunity. And so what I've concluded is. What? You need to do, you being the listener is You need to make a commitment to yourself. That you ought to be great to be.

Okay. And that's the thing I admired about Eiji, even though he was worked for me. There was an element in his DNA that would not accept anything other than maximum effort and greatness. And that just was profound on me. I'll explain in a minute how it ma manifests itself in the trading, but as far as the individual listener goes right now, I have a legitimate background in accounting. Accounting is really not all that hard.

But it's one of those tools that if you don't have You're going to be at a disadvantage because somewhere along the line, there's going to be a situation, for instance. That poor woman with that um diagnosable mental illness, the um uh what do you call that thing? The uh narcissistic personality disorder. Kathy Kathy Wood. Um, I'm still trying to get sued here. Um

She makes the comment, well, you know, we have these short-term capital losses, which is our underpreciated asset. Love it. I have enough accounting to go. You I didn't think you could be stupider, but I was wrong. Borderline criminal, right? Is that borderline criminal to say that? Well, not with Gary Gensler. I mean, he might try and get rid of the manic, for all I know. That guy is so incompetent. But

The reason I know what she said is just farcicles because of my training and accounting. Right. And I have to be honest with you. There's very few examples in life where you can prove whether you get the right answer or not. And that equation, which I will repeat, assets equal liabilities plus net worth. It's all there. If that equation doesn't bounce, There's something wrong and get out your shovel and your treasure map and start digging. Yep. And find out what's wrong. And that has served me.

Forever. And so I'm sure there's a YouTube channel or, you know, even I took an online college course, which I thought was very valuable. Um so. Do you want to be great? Do you want to be a great trader? Then you need to get some stuff. in your basket. That's number one. Number two is as part of the CPA exam, you have to take a class in business law. A business law distills down to something called the uniform commercial code. Basically what you need to learn is

What is a contract? And you think you know what a contract is. But probably not. And it's pretty straightforward. I make you an offer. You agree. There has to be something. called consideration, where you know normally they'll write a nominal amount for one dollar consideration. MB agrees to do this, Liam agrees to do that. You sign, you wait for a disagreement, then you get out the operating agreement, and that's when the pissing match starts. But again, I'm not asking you.

To do the paper chase, you can take a very simple tutorial and understand. what a contract is. And again, that simple thing through all these real estate things I've done. Um has been very helpful. And when you go to any of these tutorials, I'm not saying take contract law you know, at Harvard's online and pay a thousand dollars. I'm talking about contracts for dummies. Yeah. Right. Dude, there's an online course available for everything you can imagine.

days. If you want to be an expert in contract law, you can get on the internet and you could spend two hours a night reading and in a month you could probably go pass an exam with the amount of information of Good. And and I'm not asking you to be an expert. No, no, but be literate in it. Yeah. The other thing is you have to look in strange places. The first example is, you know how critical I am about research.

There's these guys who put out a newsletter called Doomberg, I think. Yeah, Doomberg, yeah. Something like that. I don't know what it is. Yes, you do. You know that it's Doomberg, okay? Don't sell them short. Bloomberg. You gotta love the name. It's a rip on Bloomberg, you get it? Oh yeah, I'm a little slow. Um, but these guys write about stuff all over the map. And again, you wanna be great?

You always want to have an eye on what your competition's doing, but you always want to have one of those guys that thinks outside the box. And I think these guys do. And I from my simple Perch, it seems as if their analysis is valid and rigorous. A recent example is, I think. They talked about how there isn't a refinery that can produce gasoline to the standard that California is going to need.

you know, within you know hundreds of miles of huge chunks of people. So, you know, I have a checkered past trading energy. Um I don't have any plans in the near future to trade energy, but I know that. California's fucked itself in a lot of ways. And I've seen what's happened in Greenwich, Connecticut, when there was no gasoline.

I'm talking about armed guards keeping the meekest of white people in line so there wouldn't be a riot to get their their gasoline. Um Yeah, I I I think Doomberg might actually predict that California is going to be a failed state. There's an earthquake and it falls off into the ocean. And then FEMA will come in and take over. And they'll get that idiot lady who bought the house near the Merritt Parkway.

She'll get out of there quick. All right. So let's get back. So just to recap, you gotta be a CPA, you need a law degree, and you gotta read Doomberg, and then you're on your way to greatness. You don't have to be a CPA. You don't have to have a law degree.

But you just have to throw everything you have at it. And so. I look back to one of the largest trades we had on for many years. It involved the futures contract. And the futures have a lot of things going for them. It's homogenous. You buy it, you sell it, it goes away. You you don't get left with a tail like a swap or an odd piece. But there's rules, you know. And without rules, we're like the animals, right? If you learn the rules. You can use them to your advantage. So

People would tell you there would be no money in basis trading. And to the untrained eye, Maybe they're right. But what we did. Was We went through every stinking cash flow. involved. Okay. Um, that's number one. Number two, we had a very

professionally but intimate relationship with our repo trader. Cause it's all money. What does that mean? What do you mean you professional and intimate with your repo trader? Oh Intimate to imply we had a close relationship, professional meaning it was not sexual. Everything was on the up and up, everything was everything was above board, or you just had a nice listeners sent us a note asking I review a

Uh a series called Industry. Yeah, everyone's been telling me MB has to watch industry. Everyone's I watched one episode. There we go. There was a young woman jerking a guy off in the men's room. That was another I gotta go. This doesn't check out, I'm out of here. Every week I got people like, Oh, did MB watch indu did M B watch industry? He'd love it. He'd love it. Yeah, there are the actual trades and I was like, All right, well

I was like, I don't know. I was like, I'm sure if he loved it, he would be on top of it by now. Well, that's good. That's a good idea with all the sexual harassment that went on in Grand Capital in my day. Never once. Did I even come close to the inference? Okay. So we can put that one to bed. Yeah. But um you know, when you talked about this this basis trade, okay. There were a lot of moving parts. So for instance

If the futures were cheap, you would belong the futures. If the cash was rich, you would be short the cash. Now Billy Ackman learned this the hard way. When you short something, you have to go borrow it. And that's where your repo trader would come in handy. So we had this guy who was best in class. And you'd walk down and you say, Hey, what do you think about these old five years? Because they look rich on the curve. And you'd say something like, you know. They're a little snug today.

But I see UBS has got a lot of them. They don't know how to trade. I think they'll come out. I think if you wanna sell some, you'll probably be okay. So we go out and when Bill uh From Pimco. What's his name? Ah, come on, don't which one? Uh

You know, the crazy guy with the first I know I can picture him with his fucking track suit on right now, looking ridiculous lately with his white long hair. Bill Gross, Bill Gross, Bill Gross, right? He'd be uh beating the shit out of five year futures. Yeah. And we'd be just gobbling them up and shorten the five year, old five year. And our repo trader would go in and we'd scoop them up, right? But on top of that.

There's a notion of compound interest, which you've heard me discuss. So we went and analyzed if you short an issue. Are you better borrowing the issue for term repo, meaning you borrow it for a specific amount of time? The advantage of that was you knew your rate and the rate was locked. I can't remember which way it went, but depending whether you term repo them or not, there was an effect of the compounding of the accrued interest.

Again, if in the words of John Ectein, if you trade ten million of them. treasury bills, if you trade a billion of them, they're like anything else. So if we're running a short portfolio of 40 billion dollars, And that would add up. And so that would be part of the decision-making process. And so at the end of the year, maybe there was an extra 20 or 30 or$40,000. to get cut up over everybody. Yeah, yeah. Um if you're long the futures and short the cash and the market goes down.

You're sending cash out to the Board of Trade every day. You're you're not getting any interest on that cat. So you gotta come up with the entry the cash and you gotta pay interest on it. Again you paying that repo trader for that advice that he gave on that trade, or does he just say you're on your way? You know, he he's a listener, so he can feel free to opine. But I felt like I made sure anybody that touched our group.

was number one, most importantly, melt meant made to feel like part of the team. Yeah. And two. well paid and definitely paid based on the performance of how we all did.'Cause that's not free advice he's giving especially if it goes badly, you know, but that's that's so cool that you could go over there, ask him

get an opinion and go and work off of it. And there's not, you know, there's not there's no barriers to that. Whereas nowadays you you know, you got guys in between, you know, and people watching out for themselves. But when it's a team that works like that, Somebody asked me a question.

about the difference between us and Bobo. Bob Cobb. Yeah. Let me read the let me let me read the question. Yeah. I know MB is a bit sensitive about the differences between Greenwich Capital and the infamous hedge fund run by Bobo. Bob got Bob got that. Okay. But I wonder if you guys would be interested in delving into a bit further into why Bobo is so painful to work for, or generally, what makes a good trading manager versus a bad

Okay. Well, I'm a little cautious about commenting on Bobo. First of all, Bob. The fact that you've referred to him as Bobo, you made my weekend. That is that is huge. Everything comes we're talking about. Which is one of the w w wonderful accomplishments of Just to do the full wraparound. Yeah, Bobo. She's fucking her trainer right now. And she's not thinking about you. That's like that Alanis Morris said. What? What? Does she fucking? Sorry, I you know. I know. Since PG thirteen. Right.

We'll get Lena to edit it out in post production. Come on, all right. I know you're excited about Bobo, but now focus on Bob's question. Come on. Well generally what makes it a good training. I wanna be I wanna be a little careful'cause Bobo is a litigious guy. So first and foremost. Greenwich Capital. was, with all firms, had its warts. But there was a benevolence there that you felt. You felt Ted Netzker made you feel like you were important. Okay. That wasn't the regime at Bobo.com.

It was all about Bobo, who surrounded himself with substantially incompetent people. who were afraid of being summarily dismissed. And um, you know, I give you an example, and if it costs me money, so be it. The guy who was my office manager. uh Dr. Amir Sadr, who teaches math at the most prestigious math college. In the United States. It's called Conant, which I was actually a guest speaker at once. He was doing all sorts of work. F fatigued, got a very bad headache.

Well it's like four o'clock. So he's like, Yeah, you mind if I go home early? I don't feel well. What's wrong? I got a really bad headache. Said, let me get your town car. Take you home. End of the month, that expense, which could not have been$75, was denied. Um, I probably ended up paying it. Um But this man, I've I I can't praise this guy enough. In the unlikely event I would ever go back to work.

I I would have to it would have to be an arrangement that he would come work with me w whatever it costs. It just it's just that simple. Um uh best in class. Um You know the the Friday pizza parties that I had at Greenwich? Yeah. You know, what could six pies cost? Ninety bucks. Call it a day. So I would just say So the executive assistant. Get six pizzas delivered. Just expense it. Now you want to say MB Cheap Jew?

Uh okay, but it wasn't how I saw it. It was just like, just get the pizzas in here. And a little known fact is. There's a really crummy uh bar. Near the top of Greenwich Avenue. It's on the left as you're looking up Greenwich Avenue. It's across from Chipotle. Okay. Yeah. Forget the name of it, but you know. Routinely on Fridays, I would have an open house there and invite everybody from Greenwich Capitol to come up. Anyone that had anything to do with our group.

You know. You guys came in and took it over. Yeah. And it was nothing but what a different world, dude. What year is this? What year are you doing? I don't know, nineteen ninety-eight. Yeah, ninety eight through oh five or whatever. Yeah. Incredible. Incredible. Um, you know, I turned the bill in, I don't know. Yeah, yeah. You know, it it there was just uh A very benevolent feeling. And I've I've told you about the time I saw a Brinks truck show up.

Drive up on the the portico. Mm-hmm. And they gave every employee ten thousand dollars in cash. And they even paid the taxes on it. So it was like, here, no one needs to know about this. Just go have fun. Yeah. Yeah, so for Um it's not fair. You can't we can't take we can't take you we we can't take this like as as if this ever happened anywhere else. You're like we need somebody from like

the trenches over at like I don't know, somebody out of like Bear Stearns or Lehman talk about how terrible it was. And I mean this is like it was like fan it was like a fairy tale land it sounds like you know, it was A fairy tale, except I would say, I mean you know me.

You send me an email four seconds later, you got a reply. I was taking naps in the afternoon because I was working. Yeah. All day long. Same thing with E. G. We would get up, go home, and just sit down in front of the fucking computer. and just Work it, work it, work it.

Dude, how long did you do that for? You talk about guys want to be great, but like to you it was nor but like to you it was normal. Whereas like I don't want to say like my generation, but like guy guys don't do that. I remember Leslie talking about how like on Friday He'd go back and on like Friday night they'd break down the day's trading with other guys he worked with. Um you know, like where you went home and worked. You would go home and continue to work, go to sleep and get back to work.

Yeah, Cheryl would make dinner for the kids. I'd come down and have dinner. Yeah. Because I was a prince. Yeah. Oh yeah. I remember going in one of the little rooms upstairs. Long time ago, if if you own JGB futures and you had to do the role. They didn't have a roll market. You had to leg everything. Yep. Yep. So I'd go up and start legging these rolls from my little annex. And hoping the internet didn't go down. Wow. And sure would bring up a couple of slices of pizza on paper plates.

And you know. Historians will argue, but I had a very high hit rate of successfully legging. these roles. It's just it's the Laird Hamilton. You get in the wave. You get the wave. And uh um but um So going back to this notion of wanting to be the best. You know, I had a lot of support. I had great people around me. I had great management. I had most importantly a great spouse who was willing. to perpetually take one for the team. And uh yeah, I mean I was sleep deprived and you know, but uh I

You didn't bounce around either. How much how mu how much? did consistency and being in one place.'Cause you you didn't bounce around in your career a lot, did you? You like in the beginning you moved a couple of times, but you've only been Oh yeah, I didn't I haven't been that many places I started. you know, part-time from Muni broker dealer. You know, that was number, it was never designed. Yeah. Then I went and got a job at Continental Bank. They blew up.

And I got lucky enough to get an intro into a a great spot at RBG Lanson. I was content to stay there forever because I was learning a lot and it was a nice place. Again. But that's interesting. You were content you would have been content to stay there. So you didn't have some ambition of like, I'm gonna do Aubrey Lanson and then I'm gonna go to wherever and I'm gonna go to wherever. You said I'm I'm happy here, I can succeed here. Well, the only counter to that was We were a primary dealer.

With all the attendant rights and privileges. Why go anywhere else? Yeah. But I knew right then that that was not a long-term career. Making markets. which I won't go into now. Uh you know, y you can do pretty well at it, but it seemed to me that eventually technology was gonna put you out of business. I had no idea. Look what Ken Griffin's done with that. Um kudos to him. So an opportunity arose at a firm called Lewis Dreyfus Corporation.

a French family and they were very um insular and thought Wall Street might have an insight that they didn't have. So they went out and hired a headhunter and I met. And I knew at that point, based on the management of Lanson, I had to make a move. Because the guys running the place were going backwards. And I knew my skill set at that point wasn't going to grow. And this Lewis Dreyfus. had a reputation for being good at making money. So I interviewed up there and they hired me and uh

I always felt like an outcast there. That's where I met this man, Cliff Wald. who befriended me and made it tolerable, taught me a great deal. R one of the potentially top five traders I ever worked with. He went to MIT with all the uh long term capital guys. Cliff had some um physical ailment, which I won't go into. It made him uneasy with the notion of traveling to Manhattan.

And I understand that. But it it was profoundly expensive because Louis Drivers doesn't pay for shit. And um once they figured out he wasn't leaving.

They you know, they didn't pay him well. Yep, understood, yep. I went through my first bonus cycle and literally quit as soon as I could find a job. I felt estranged. Yep. Uh in fact the guy Jim Wayne there, I don't know I just felt like he was mean to me. I don't know. Interesting. But I learned a lot, especially from Cri Cliff. And then there was another guy named Robbie who uh Smart enough, but i he was an irritant. I actually saw Cliff. Who have you met Cliff?

Maybe one day you will, because he lives in our neck of the woods. Robbie was such a pain in the ass. Cliff picked up a phone and threw it at him. Which is I fucking Loved it. I was laughing. The two Reaper girls were horrified. They got up and they ran out of the trading room. I'm like, this is the best. Yeah, yeah. This is what we came for. Yeah. This is what I'm here for. Um But the the the best part of the whole thing was

This Jim Wayne guy was constantly claiming all I did was turn up to steal their ideas. Wow. Okay. The best part is all of the information and I have this to this day. All of the trades they did were ideas that they had gotten from Goldman Sachs. And put on. And I have sheets that say Goldman Sachs, fourteens of eleven, yada yada yada. It's like, hey. It gets mad. Paul Jacobson, the bond trader at Goldman, found out that Goldman was telling.

um Louis Dreyfus about these trades, he lost it and he was a partner. So he shut that all down. But yet the uh the genie was out of the bottle. Yeah, yeah. And then uh You know, um I had met Ray Humiston. uh who worked at Greenwap through playing golf with another guy. And uh he had a friend who heard there was an opening at Deutsche Bank. And on my behalf, Ray called him up and said, look, I know this guy Morris, if you if you give him some wood to chop, I think he can do some stuff.

And that was my introduction to the working on direct payout. Do that. Talk about the carrot and the stick. This is Deutsche Bank what year? What like is this like not late nineties? Uh late nineties. Yeah, just after Around the time Drexel Lambert. Okay, Drexel Lambert. Yeah, yeah. So Deutsche Bank, go on, go tell me about Deutsche Bank. So uh I met uh briefly von Ribbentrop, who was Hitler's right hand man at one point during World War Two. That was a little creepy. Um but uh

They gave me the rope to hang myself and uh I got a I did a couple of trades and just got lucky on them and crushed it. And what were they? Since I know you remember them. Come on.

It was a synthetic trade. So I'll never get to it today because I'm too long-winded, but I learned a lot about options. Because of the guy that worked for me at Greenwich Capital. And he lost a lot of money and options. So I delved into them as one does. There's ways you can create. trades different ways using options. As people know option is a derivative security, meaning it's priced based on. Other components. And when this fellow lost a bunch of money.

it got my attention'cause as you recall, I I was the I was the plug figure. You know, there's that saying a good hanging tends to focus the mind. Um I do remember distinctly Sitting on the Concord flying home from London, reading paper. It's posted on our website. I think that uh those guys Myron Scholes and they um won the no Nobel Prize for. And The the bell went off. Like seeing what this guy did and how he lost money.

It just opened up a whole new world for me. And uh in fact, you've noticed the yield curve has started to move in a more positive way. I suspect in a year there's going to be a trade which will be available that I have done numerous times. I'm certain in aggregate we've taken billions of dollars out of. And as you know, my wife was not able to provide me a masculine child.

But I have a son-in-law that I I I love a great deal. And I'll be up there visiting with him, awaiting the arrival of granddaughter number two. And if he has an interest, I will teach it to him and pass along this knowledge. And just so you don't need to worry if it's there. You just Jump in my car. Got it. Um I can get a ride with you. You can ride with me. So you just need that c you just need that that uh you just need the what, the tenure to uh

You just need the yield curve to invert or to disinvert. Yeah, steepen. You need a steep curve. Yeah. Which brings me to this second thing about the tough love. So we've talked about accounting. We've talked about law, right? This is more important than either of them, but it won't replace either of those two.

You have to, have to, have, to, have, to, have to understand time value of money. You probably learned about it as a young man watching Popeye, where he would say, I'll gladly pay you tomorrow for a cheeseburger today. Yeah. Or we'll just put it up here on layaway. Yeah. Um but The time value money is everything. And you need to get to the point where you understand what a 25 basis point change in the funds rate does.

Because it changes everything. And I can tell you at this time, this is what I had Leslie and I had confabded over the weekend. I said, you know. You didn't need to know what that payroll number was going to be on Friday because it wasn't going to change how you were positioned. Because we both knew that. You know, twenty five basis point move and this and that. you know, but it affects everything from your repo hedges to your your options.

to credit spreads and you know you need to know that intimately. And um I learned that just by brute force. I and and I did it in a way which was fairly simple, yet practical, because And the trading floor. You know, there'll be this. wave of time. You know, sort of the Edith Keeler must die, right? There'll be a moment in time where there's somebody selling what you want to buy. Okay. You gotta buy it.

And you gotta worry about selling something when you get done with this guy's got to sell. So much to my wife's current chagrin, helping me balance my books. I just buy, buy, buy, buy, buy, and I get a rough number and then I start selling. Because if I buy in them right, the slippage. This and that is not going to be material. Okay. And I've regaled you with the story where I got hit on a huge block of five years. It was so large I was shaking, I couldn't

And I asked the guy what's I had an idea in my mind. I thought it was like six to one kind of. It was it might have been five to one. I don't know. But I got it done. But um same thing with unwind. When guys are you know buying back what they sold ya. Yeah you don't got you're too big. You're not in a position to negotiate. Yeah. Yeah yeah. There was there was a time uh I forget specifically But there was a time EG and I were trading. Some guy, some guy kept coming in buying fiver futures.

And the guy on the phone, Bobby Franklin, would say, 8 bit 500. And I'd say to E. G., so, another 8 bit 500, so remember. and he said it another time and i said do that And I don't know what it was, but we went out and bought a thousand or you know a billion ten, you know, so I don't know. But it was that moment in time, right, where you knew You just gotta move what they want. Yeah, wow. Yeah. And uh um

Anyway, you gotta miss that, dude. You gotta miss being sitting on that desk and and f and and banging stuff out like that. That had to be good times, though, no? Fuck yeah.

But do you know the best part and why it succeeded? The best part was if you had a big day, let's say you made million bucks trading, pick a number. You could go home that night. And you knew. You just earned 200 grand. You didn't have to worry about some fuck nut at some other office blowing something up. You knew you earned 200 grand. Didn't mean if you lost it.

Yeah. Yeah, you have to give it back. Yeah. I can't tell you, just you're a young guy, you have family, you have a commitment. Just imagine. Going home every night. for 365 days wondering what you're gonna get paid. Think about the amount of anxiety you feel when you don't know what that paycheck's gonna be. And you can imagine for me. There were it was big numbers, it was life changing numbers. And not only that,

If I fucked up, I was f taking a lot of people with with me. Yeah, yeah, yeah. And um But do I miss it? Yeah, there's there's elements of it I miss. Yeah, there's elements of it. But you know, that's part of part of why I like talking to you about it. And you know, when the other people write in or this or that, you know. I really like seeing people do well. Um we have a mutual friend who

Has done well in his career. And it there was a story about how because how well he had done, he had become a billionaire. Who it is is not important, but I know the guy. And I wrote him a note and I said, I just wanted you to know I saw this thing in the newspaper, and I probably a little inappropriate of me to bring it up, but I I just want you to know I've known you a long time. I know how you've thrown everything you have at this. And to see you hit that number.

Gives me such great pleasure because I think you've that's the only person I've ever felt that way about. Like I'm happ like I'm like I'm psyched for. Like you'd like like you you you were in the trenches. You stuck there, you you know, you've been at one shop the whole time. You're a good dude and you got it, you know? Everyone else can fuck off. There's everybody else that hits that number, like you said to Anthony, it turns out to be a cunt.

time but you know but like eat crazy. Yeah that but no and that's For you that's so cool because you guys are peer. And like for you know, like to reach out and like and send that no'cause a l cause I I bet a lot of people didn't do that or felt that way, you know? But and like for you to reach out and say it to'em is just cool, you know? Like I like And you've always been ha you've always

been psyched when people do well. Like you've always you've always that's all I'm I'm talking to the audience now when I say that, but like you come across sometimes as like, you know, you can be abrasive and like you can be grumpy and abrasive. But the fact of the matter is, it's the total opposite, and I and like the vibe. If you got that, that you vo that was the vibe at Greenwich Capitol. I mean, that's that's just

the holy grail to have a team that has that mentality where like everyone's gonna do well and we're gonna make sure we take care of everyone and all being on the same page. Whereas like a lot of other places it's night of the long knives every day, you know? Night of the long nights, which when we go back to the other place I was asked about.

You know, I got out and out lied to. You know, verbatim, lied. And uh uh the incompetence of the risk people was just Gnawing away at me when you know you have uh an arrogance. And you know, i i i it's just a different version of the Kathy Wood thing saying, you know, losses are assets. Do you want me to make an argument that losses are assets? Sure, I can make an argument. The argument is that down the road, if you have revenue, you will offset some of your taxes.

On the other hand, assets are supposed to be marked on your books at the lower of cost or market. Now, losses that you have. Are worthless because you in most instances, Bob, in most instances, you can't sell your losses. I think there's a way uh you can But They're certainly not marketable. And so I I I find myself having a hard time even trying to theoretically um spin that.

It doesn't suit me to spend it that way, but uh you see that house in Arizona that the uh listeners sent in? That thing was uh that house over on uh whatever the fuck that thirty two million dollar concrete fucking smoke. Yeah. How's Arizona how's your house in Arizona? Is that thing is is the is the is that thing still doubling in value every uh every I'm gonna base it on our our new new pals at Doomberg.

If if they think Arizona's going in the shitter, those people are just they're just moving to f a to Arizona. Yeah, I know. I don't know. You know, I I i if I could sell it. That thing be gone in a fucking heartbeat. I can't I can't stand having profits and not monetizing them. Wanna talk about you wanna talk about taxing unrealized gains? Didn't do you have do you have any space in the show for that? Well I I think there's a way Things should be done.

Taxing unrealized gains is got all sorts of difficulties. Insane. What they do in Canada, which I think they should do here, is let's say Bill Gates. Has a billion dollars in unrealized gains. And he goes to the bank. And borrows$500 million against his unrealized gains to spend. In Canada that borrowing would be Cont considered income. Um yeah. That that makes sense to me. Okay. Right?

Otherwise, these guys are never paying tax on the money, right? Because it goes into the estate, they get the base to step up, yada, yada, yada. Um, I don't think changing the estate tax laws generates a lot of revenue. But it's it's political. It sounds good, exactly. So like, you know, the the the regulars here, oh, tax the rich on the unrealized gains. It's shut up.

wrong. I'd like to uh I'd like to delve into some uncharted territory for all means. This is what I love at the one hour mark. Let's go. Yeah.

Well You know, live TV. If Cheryl's not there, you can keep going. No, she's here, but I that's what I'm afraid of. We're at one hour and you want to go into uncharted territory. We go ahead, let's go. So On the September 10th of 2000, I was driving from my house to go to work, and um there was a story about the Middle East. and them blowing each other up. And I I remember stopping the car.

Putting it in park thinking, I can't listen to this anymore. It has nothing to do with me. I'm sick of it. I'm gonna just fucking tune it out. And I drive to work and lo and behold, the next thing you know. That the world changed forever, right? And um fortunately, in the market, as I mentioned. We were well positioned. And I'm not bragging that we made a lot of money because a lot of people died. I just mention it because it's proof of concept for all of these weeks when I urge caution.

You know, what's more of a black swan event than that? So the point I want to make here is Not long after that time, one of the few people at RBS who had two brain cells to rub together, Peter Nielsen, sent me a book. It was called While Europe Slept. And it talked about how a lot of foreigners were moving to Europe. and they were importing the culture from their society and changing the society of Europe in in in a nefarious way.

And a lot of people ignored it. And consequently you got to the point in France where, you know, even on this podcast we talked about carbecues. And there's areas in France where the police won't go. And You know, why do I mention, you know, my ignorance on 911 and the ignoring it? Well, At this point, according to sources that are believed to be reliable but cannot be guaranteed, there are currently seven Americans who are being held hostage by Hamas.

Now, a lot of people can say, you know, that's over there. It's a Jewish problem. Got nothing to do with me. If that's how you feel, that's how you feel. But I want to make the point or I would invite you I wouldn't tell you because we're trying being apolitical, but we are an uncharted territory. So you have an American citizen. being held captive by an officially recognized terrorist group, aided by the United Nations. Right. Recently, Hamas took two of the hostages. And after keeping them

you know, under lock f for six several days. Just summarily executed them. So, you know. Does it matter to you if you're not Jewish? You know, I think it does. I'll tell you why. Because Y you could just be part of a collateral dam. Walking down the street, right? Some guy sees a couple of kids from a Chabad with the fuzzy hat and the payas. And they decide they're gonna make Yeah. Um, you know, i it uh Cheryl tells me we could never do this because it violates

Yeah. Rules of War, but um if it were me, I'd line line up one of those B-52s. and do a little Dresden on that whole Lebanon corridor, uh, turn it into glass. Um I you know, people have strong fe feelings about that. And I respect that. And you don't have to agree with me, and you can hate me for saying it, but I will invite you to read history.

Everybody knows what the United States and the Allies did to Dresden. Dresden had no Heavy manufacturing had no military importance, yet they leveled it. And they did it because in war, the ways war end is by breaking the enemy's will to fight. And I think that's what we need to do. And again, a little political for Sunday Ibwak, but I think this last thing where you've got an American citizen.

That's hostage in a terrorist organization. And we're going to tolerate that? Well, what happens if you and Amy go to France? And they nabbed you and Fiona, and they said, Well, he knows some Jews. He's from Westchester County, looks kind of Jewish. All of a sudden.

I'm getting the sign to wrap it up so Listen to this though,'cause it's interesting you brought it up because I got a good email from a listener last night. Um and it's long and it I'll send it over to you. But the bottom line, he gets he boils it down to a question. He says, since MB has talked previously about how people with different cultural heritage excel in different roles, e.g., the Irish women, I was wondering whether he might talk about his experience being Jewish in finance.

and whether he thinks there are certain cultural aspects that help him excel. For context for context, I am not Jewish, but I admire Jewish resiliency across space and time and I'm interested in learning more. So I'm gonna read you that I'm gonna send you the email and then I'll do it. And then next Sunday you next Sunday, let's start off with an awesome question. Yeah, exactly. Yeah, thank you. Anyway.

Well that's been pleasant. That was pleasant, thank you. Doctor Amir what's Amir's la what's doctor Amir what's Amir's last name?'Cause you spell you said you said I love when you speak highly of people on the show because we spent f you know, we usually take the time doing it the blowtorch to people, but yeah, what doctors A D R

Say it. Say it. Just say it out loud so people know. Amir Sader. Amir Sader. Yeah. I've oh yeah, Dr. Amir Sader. Okay. So like those are the kind of moving parts on your team. Everyone that listens to the show knows who's on MB's team. So you gotta think yourself, if you wanna get there, do you have guys like that on your team?

Do you have a guy that you want to bring with you? Do you are you building those relationships? Are you are you are you making yourself available to be a guy like that if you want to become all that there is all that you can be in this in this? Because I'm sure MB did it with a team, the other guys that we know did it with a team, and you're not you can't do it by yourself. So once you get your CPA and your law degree and you read Doomberg, okay

Then you're on your way, but you need a team. Um and next week we're gonna start with fee. Yeah, we're gonna talk about Jews and money. Yeah, I might do some Warren Z Von next week. I've been I've been I've been immersing myself in Warren Z. Poor guy. Didn't need to go so young. Well yeah, well we yeah, well let's focus on the good and uh and what he did while he was there. We don't have to ch yeah sign off on it, okay.

All right, dude. You enjoy. Um yeah, we got more to talk about. We'll pick this up next week. We'll leave it there. Okay, if we have enough money. Goodbye. It's a little thin. Okay, thank you. Goodbye.