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H Matt, it's nice to be back in studio with you.
Yeah, we've we've we've each had a series of adventures. Yeah, the car crashed into my house. You went to Ireland's insane.
Those two events are not related.
No, it would be rader they were.
I'm a year older, two.
Weeks old there, but yeah, across the mouse A happy birthday.
Thank you. It was last Monday.
My birthday is, it's around, it's coming weird, it's fine, social Security number is.
Some people are so caged about their birthdays.
I guess I shouldn't be. It's like, don't don't be ashamed. Birthday, Katie, thank you. Everyone's on your birthday is just Katie.
Yeah for me and Matt, just you can send.
Them to we have We have a close to overlapping birthday.
Yeah.
You and I had like birthday parties a day apart once, right.
Yeah, I went to your birthday party.
Yeah.
I was going to say the number leap the number. That was fun. Okay, I didn't go.
To yours because I was like in the far reaches of New Jersey, but I heard it was a wild time.
You should have gone, I should have gone. Well, my baby showers there, so you should go to that.
Yeah, yeah, wild fire trucks.
No, maybe, I don't know, depending.
On depending how he Wow and Welcome to The Money Stuff Podcast, new weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff Call for Bloomberg Opinion.
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
I got so many emails from people being like, are you on vacation, because it's like a bit yea that every time I go ahead becation, Elon Musk does some wild thing and it's not like literally only when I go on vacation. And in fact, I was not on vacation last week, but you were.
Yeah, you were ready and waiting to.
To write about the SpaceX ip Yeah, which they made the public filing for an IPO that is supposed to go in like a.
Couple of weeks like mid June. Yeah, there's a it was interesting to see all the different numbers. Is you said, it seems like the AI is taking up a lot of cash.
Yeah. Right. The basic financial situation here is like they have, you know, a kind of goodish business of flinging satellites into space and more importantly like charging people for satellite service. They have had until recently a sort of money pit for building a front of your AI lab that is not necessarily the most renovator generating front of youer AI lab. But now they've sort of switched, like like a little
too late for the IPO filing. They're now like a AI infrastructure company that basically rents data centers through anthropic you know whatever. Yeah, they've spent a lot of money on AI. They've made more of their money on space.
But to me, the interesting thing is that sort of projections they talk about their total addressable market, which is a number you throw around for here is like where we could make money, and you know, they say, we've idented about the largest dam and human history or whatever, twenty eight trillion dollars. But almost all of that is enterprise AI. Right. The perspective begins with twelve pages of photos and illustrations of rocket launches and Mars colonies, and
then it's like we're gonna do enterprise AI. Yeah, and there's like a near term play of we make money actually sending rockets into space. And then there's like a medium term play We're gonna make trillions of dollars doing enterprise AI, even though we just started that a couple of months ago. And then there's like a long term planet we're gonna build Mars colonies. Right, it's like a strange, like you know, U shaped curve of space and then AI and then more space. There are projections of like
how we're going to make money. It's like this is an AI company, and I don't know if that's the story that investors are hearing are interested in, but it is sort of the when they look around to be like how can we justify a two trillion dollar valuation, it's like, well, we're gonna sell a lot of enterprise AI software.
Yeah, this is what we're going to do in the meantime. Before before the.
Mars colony becomes vilt that in orbital data centers, which are now like they have gone from like a glimmer and Elon Musk's side to everyone being like, oh yeah.
Urbal data center like a thing that you say with the straight yeah.
Exactly exactly, like I have laughed the first time.
Well, yeah, of course, where else would you do with them? It makes sense. Yeah, it's gonna be interesting. This is also something else we've talked about on the podcast is the Elon Musk premium that Tesla shares enjoy and I I wonder if that's going to transfer to SpaceX.
They have, you know, like a eighteen billion annual revenue run rate lose money, like then like all of the numbers that are being talked about for the IPI or load a mid one trillions to like two trillions to there, that's a hundred times revenue for a money losing company. I think that's an Elon Musk premium.
It sounds like it quite a large one. Yeah, that's fair.
I make fun of Elon Musk, but like if you put money into SpaceX, you have more money now like necessarily on a like profit basis, but on a valuation basis. Like people have made a lot of money with the Elon Musk and so there's a reason that people keep putting a premium on investing with them, and like you know,
like like will that eventually run out? Will people like who buy on the IPO be disappointed that like it doesn't justify a two trillion dollar valuation like Marrie, I don't know, but there's going to be an Elon Musk premium. Even if this is a super disappointing IPO, It'll be an Elon Musk premium.
And it'll also be in a bunch of indexes and be in a bunch of it. There's a lot of consternation.
I was thinking about this, Like I had an email from one person, you know, like a regular retail investor. I put money at the SMP. Is there anyway for me to short Elon Musk And the answer is like, sure, short space AX if you want to get your you know, and then it goes up to and you lose your shorts. I totally understand, and I think I'm more sympathetic than most people to the idea that, like the big indexes have to include SpaceX on an accelerated basis. Like I
think that's right. Like I think when you're like the S and P or the Russell three thousand or even the Nasdaq one hundred, like you are more or less saying we are the stock market, right, or at least we're the large cap companies, or like in the ass case, we're like the big tech companies. Listen, on ethic, Like it would be a dereliction of their job to not include in their index a gigantic return driving, super high profile company that is a public company, Like they just
have to include SpaceX, Like I totally get it. And people are mad because they're like waving their rules and it's like they're waving their rules. They're really mad and they're waving their rules to include this giant company. And I'm very sympathetic to it, but I will say that so many people are mad about it that there should be a competitor index that's just like the S and P five hundred without Elon Mosk. Right, my general view is like if you are a passive index investor, you
can't like have standards. You can't be like, oh but this company is bad, Right, that's not how it works. Like you're you're taking the market's judgment. That's the market's judgment. Is that SpaceX is worth two trillion dollars, then, like that's the markets.
So you signed up, that's what you sign up for.
But like just empirically, a lot of people don't want to sign up for that, and so you should give them the other thing, Like it doesn't matter, Like it's like esthetically displeasing to be like, wow, that's an index fund with that Elon mus but the best people want give it to.
It's like ex China, you know exactly.
It's like ESG indexes where it's like most of the s and P five hundred but not the bad companies, right, Like you do the same thing with Elon Musk. Yeah, it would sell like hotcakes.
Well, and if it didn't, that also too would be interesting. Like all of this hand ringing.
Was just that, right. Part of the hand ring is people are mad about like their index funds being invested in Elon Musk. Yeah, this drives me a little nuts.
But like part of it is active manager being like, well, we're benchmarked to these indexes, and SpaceX is going to be a huge driver of under or over performance, right, Like either it'll go up a lot or it won't, right, And the only way for us to be safe in keeping our jobs is to like, I don't know, hug the index on that one, right, and if like we buy no SpaceX and ten xes, then we will look
terrible against the index that we're benchmarked too. Yeah, your job is to actively manage when they're supposed to get it right. But then unless people are really mad about it, and it's going to be the most like attention getting company in the index until it open a goes public.
It's interesting to point out that we also saw Russell, Yeah, make the decision to fast track sure SpaceX, Like.
It's like the Russell three thousands. Every company they have to it's crazy.
But it's probably worth pointing out that Nasak did win the listing for the SpaceX IPO after they agreed to let SpaceX in early to the NASAQ one hundred.
I know, but I don't like, I don't think that these index providers, I mean, like maybe past that because playing three dimensional chests or whatever. Like, I don't think these index providers are, oh we have to kiss up to Elon Musk. I think they are consulting with the users of the indexes, index ones and investors generally, and they're like, is this a public company? Yes, well then it should be in the list of public companies. I don't know.
Yeah, Well, the fact that it isn't just nastact is yeah, add credence to that.
People are mad about indexes monking with their float requirements, and in fact it looks like SpaceX's float will be it's actually available, free float will be pretty low for the first six months or so, like a lot of shares will be subject to lock up, and so only in the order of five percent of shares will trade. And so if you force all the index ones to squeeze into that five percent of shares are going to push out the price a lot. I don't know how
binding that is. A lot of the indexes have like float adjustments where it's not like you have to buy the entire free float. And also the biggest index of the S and P which is not going to add it for six months or Yeah, so it'll be they'll have more free float by then because the lock ups will explare. But yeah, like the there's gonna be a lot of index or day five in the case of the Rustler, day fifteen in the case of the NAZAC, which is when these when that will be eligible for
the index. There'll be a lot of like index demand and not a lot of supply, and that could be have weird dynamics for prices.
Yeah, you pointed this out in one of your columns. But fifteen days, I mean fine, five days does seem a little quick, like it'll it feels like it'll still be funky at that point.
When a company goes public like s and P five hundred funds are not buying in the IPO because who knows, and I'll be added to the SMP. There's gonna be significant, like Russell and Nazac, index demand for this company very predictably within three weeks after, you know, one to three weeks after the IPO, and so you know, like we'll hedge funds be buying in the IPO to deliver in their index arm strategy. Yeah, and so there's going to be essentially index demand for these shares in the IPO,
and that's like a little unusual, right. I don't really know the numbers, but like people have said, seventy five billion dollars of stock coming in the IPO, which is a giant IPO. Yeah, the valuation is one thing, but then the amount of stock being issued is huge, and some of that is going to go to institutional investors who like the stock and go to meetings and build some valuation model and come to some price and put in an order at a price and get allocated the stock.
But some of it is going to come from really like price in sensitive demand, which is like, you know, thirty percent or whatever the deal is going to retail, and retail is like generally in offerings is assumed to be priced and sensitive, right, Like the retail just prices
at what the institutional prices. And so if you have thirty percent going to retail, you have a lot of price and sensitive demand, and then some of it is going to effectively go to index funds, which are like effectively priced and sensitive.
Yeah. Well, we brought up with the seventy five billion dollars, and definitely the amount of the float that's available is also one of the reasons why people are upset about sort of the rules being bent here because I think that's like five percent. Yeah, but think about that absolute number, like seventy five billion dollars. I feel like the percent becomes a little bit less meaningful.
Well depends if there were eighty billion dollars of index demand. That would be a big deal, I don't think, because it's not. The S and P day one and the indexes all have like adjustments. The index inclusion is not based on the entire market gap, but it's based on some multiple of the.
Foot something I was just thinking about. So this IPO is expected by June eleventh, it's expected on a Thursday. What are we going to do well? I don't know, live podcast. Yeah, we should come out with a really.
Strong start trading as we walk in here.
Yeah, Jeese Louise.
Maybe we can get them to move it up.
Yeah, I mean, just tom him a.
Price on a Thursday. I think so, and then I'll trade on Friday, so it doesn't matter.
I need to think about this. We were trying to plan it for television.
I have a governance a little bit. The governance is crazy. It's not that crazy because you know, we talked about the Elon Musk prenant. It's like the governance of this company is Elon Musk can do whatever he wants, right, he has eighty five percent voting control his super voting stock. He also gets to a point more than you know, fifty one percent of the directors regardless of his voting power.
Because he has the special stock, he doesn't have to He's no obligations to like give the SpaceX any corporate opportunities. So if he wants to start a new AI company or a new space company, you just do it, and he can't be sued for like preaching his fidy SIA duties. He can basically not be sued for securities fraud. If you super securities fraud, you have to do it in
Texas State court. And there's all this stuff and you really can't sue for like preaching forty sharded is you need to have three percent of the stock to do that, which like there's tens of billions of dollars, and you wouldn't do that if you didn't like Elon Musk. So it's really just there's no checks on him whatsoever. And I do think that that is how SpaceX has been run up till now. He has worked out well for shareholders.
I think a lot of the sholders of SpaceX are There's some quibbles about the ex high merger or whatever, but the most the shareholders of SpaceX are pretty happy with how Elon Musk is round the place. Yeah, And I think that Elon Musk and a lot of investors like, yeah, just letting Elon Musk do whatever he wants is the right way to run this company. And the stuff that happened to Tesla in Delaware where he got sued for
getting paid too much. Was not the right way for Elon Musk to be governed, and he should get to do what he wants. And they are fixing the mistakes of Tesla by going public this way with SpaceX. I think that's a reasonable analysis. But I also think that as we just talked about, a lot of people who will buy the stock in the near term are index funds, Yes, and they don't like that. No, that's not their kind of thing.
If you don't want SpaceX exposures, just buy an ESG fund. It seems neat.
The ESG and Elon Musk relationship is interesting, right because it's like, you know, he has in many ways very environmentally friendly and in other way is not so ESG. It's not so much there's this really bizarre precedence setting management friendly governance of this company. And they were like, yeah, that's what people want investing in SpaceX. That's what you want to be. Like, what about the index ons, index ones?
Like the deal with indix ons is they don't get what they want, they get what the market wants, right, So that's that's the deal they're signing up for. But it is a real new president now public companies are governed and if it goes well, what we saw with the Elon Musk like Winshot pay package is that every other texto is like, I want a trillion dollars if the people copy the Elon mus president because everyone wants
to be Elon Musk. And so I think you'll see other companies go public with no constraints on their CEOs and like not all old Elon Musk. So Robin Hood like announced they're gonna let you like hook up your AI agents to our trading account and you'll have a special sandbox where they can't lose all of your money,
but they can lose as much money as you give them. Yeah, and then you can like type in a box like they have some examples, like an active trader can backtis the mean reversion strategy to see how it performed historically and to play it automatically buy over sold stocks and so when they revert to the means, So stuff like that, you can like type in a box like, hey, here's a trade idea, and then your bot will do it
for you. And I read about this this week, and I what I said was like you and I have talked and I've written about how eventually every trade will be an ETF. Yes, and like the ETF will be like the universal rapper for trade ideas. And now I'm like,
now I'm wrong. It's not that it's agents. Agents will be the universal rapper because like you'll be able to think up whatever trade the idea you want, and instead of like laboriously piecing together stocks and options and what not to implement it, you'll just type the idea and then your agent will do the laborious piecing together.
Yeah, I think it makes sense for trades. But and if you're just you want to buy indexes.
Indexes, fine, yeah, yeah, but what has happened in the last few years is that like ETFs have been not just a rapper for index fund buy on hold ownership, but also long short pair trade.
Strategy, stock auto call, all.
Sorts of nonsense. Yeah, and all that nonsense is going to just be agentic AI and ETFs will be index fense again. And like, you know, it's a little.
Sad for me, but I mean this is in your for you, this isn't your vision of the world. There's a lot of steps to make that happen.
Yeah, we're early days of agent Rabinhood trading. In fact, they don't. They only have stocks right now, Like eventually it will be your agent can do options and crypto and prediction markets and then all the reil fund will happen, but for not stocks.
And uh, it's also credit cards, right, like you can instruct the agent to make purchases.
Yeah, which it was just not a thing that only Robinhood has been working on. But neither is the record stuff like public had a Bignoun's been about agentic brokerage stuff. But bid Yeah, like your credit card. You can like type in a box like buy me these sneakers if they get cheap, and then it'll do.
It's just fun. I feel like you can imagine a myriad of ways where this goes wrong. Yeah, sure, especially I mean trading, yes, but also with the credit card.
Sure, I think like you can set like hard limits on which the bot can spend.
That's true, But even still I could see the bots being like, I don't know, this is a really good deal, maybe we should just go for it.
Well, I think the idea is that the limits are not internal to the bot. They're on the credit card. Yeah, we're on the broker's account. If you say the bot can have ten thousand dollars on my robin Hood account, then like in theory, if your robin that if that pot gets to zero, then the bot has to stop.
I do like your your vision of the world where this replaces all these one click trade ETFs. It seems like for the time being that Robinhood itself has less ambitious desires here, they think. The write up by Bloomberg's Page Smith quotes their vice president of product management for Brokerage saying that you know, they're looking forward to learning how different people use the product, which will inform how the team develops it.
So yeah, I'm always exaggerating here, like probably like twenty Like really you know, hardcore sophisticated people will use it to like fairly sophisticated trades, right, and then like will someone be like hey, if there's a dip by the dip, yeah, sure, yeah. Like one thing that might happen is like there might be like just sort of like emergent like common behavior mm that that's codified, right, Like if everyone sort of wakes up and like, oh I have a bot, what
should I have to do it? By the dip or like whatever then like you might see I don't know, you might see like different developments in the market where like instead of instead of like retail traders all having sort of random reactions than it is, they can all sort of pre program the same reactions, and like they might have more coordinated behavior. The other thing I want to say is I wrote about this is this thing only makes sense. It doesn't. It's not just a matter
of AI. It only makes sense because hood is offered free trading for a long time. Right, I you know was writing a financial column before free trading was a thing. Right, Like, free trading is a development of the last eleven or eight years. And in a world without free stock trading, the idea that you'd tell you're bot like automatically buy over sold stocks and sell when they revert to the mean is crazy. It's like nine ninety five each time
you do that trade. And in a world where there are no visible transaction costs, and like, there are definitely invisible transaction costs, right, because you're definitely like dealing with a market maker and paying a spa at each time you trade that. In a world no visible transaction costs, you can be like, yeah, do you like one hundred trades a day, no problem. Right, So this is like a technology that exists because Robinhood innovated in free trading.
But it's also a technology that is very lucrative for Robinhood and for its like market maker partners, because it'll if people use this, this is even more trades, right, Like, if people use it, they're going to program a bot that will do one hundred trades a day to take advantage of some technal the they think of, and then that'll generate a lot of revenue for the market makers who fill orders on robinin everyone wins perhaps, yeah, I mean like right, Like.
You might lose as the trade if you're.
Doing those hundred trades a day, Like, what are the odds that you and your bot have come up with a with a trade idea that not only beats the market on a back desk, but that beats the market after the actual transaction costs of trading.
On robin The dozen or so people who take up this tool.
Someone's going to do great on it.
Yeah.
Also it's going to be sports betting.
But well, it just feels like you know the arc of humanity sports.
Best the credit card, Like the first idea they have for the credit card is like by this like cool sneaker when it goes below whatever price. And it's like lad Zenda has talked about like democratizing finance by like introducing the new asset class, which is sports betting. I
mean sorry, pre sports betting. And it's funny to think of, like like rob had started as like a stock brokerage, and there's a world of asset classes out there, some of which are like sneakers and sports bets, and yeah, if you want it to be and like between the credit card and the brokerage, soon all of the like retail phasing asset classes will be sort of like fungibly tradable and you can be like I mean trade you know, I mean you tell your agent if these sneakers get
cheap by them, but if the stock gets cheap by that, and if the sports bet gets you just have a sort of like fungible dashboard of bets that you can make.
I do want to call out a line in your column about this that I just really loved this sentence that if in your shameful secret heart, what a beautiful phrase you want to do a trade like by every stock whose ticker begins with C, so out of the money call options on every stock who sticker begins with D. Nobody will sell you an ETF like that, and you'd be too embarrassed to ask. I love thinking about like the human psychology element, right.
I probably could have come up with a more shameful idea, But then I was like, I'm really going to spend like ten minutes sitting here like the most shameful.
What's the most embarrassing trade I could ask to be packaged into an ETF?
I did.
I did love that, though, I will say I was sitting on the path this morning reading that, thinking about my own shameful secret heart, and like, I don't know, I didn't get very far. I didn't come up with a shameful trade, but it's fun to imagine.
Tell me about your sci fi novel, Yeah.
I don't.
I think we aired it well.
I don't want anyone to see you told.
Me about it extensively on MIC and then we cut it all that.
It's all about blood anyway and space. But listen, we'll come out by twenty thirty and then everyone could buy it.
We're going to talk about this.
I'm going to really lock in finally and write this GD book. Do you want to start with baseball or do you want to start with drugs?
You're like, round to go with drugs.
I want to talk about drugs because longtime listeners of the Money Stuff podcast will remember me talking about like the drug Olympics that I wanted to happen, where like all the athletes are on drugs and we just let them battle to the death alone.
No, brothers also want that.
Yeah, and Peter Tile apparently yikes. So the Enhanced Games that was exact. That was exactly their idea as well. They had their first event Sunday in this past Sunday in Las Vegas, and uh.
It was a bit of a bus we've talked about they're like, Onion, sorry about doping and tressage?
Have we have we not bring me back up to speed.
There's like a truly insanely funny, like long form Onion, sorry about doping and dressage. That's hope.
I don't think I've read this one of.
The funniest Onion things that it might be quick, but its the Onion franchise.
What's the thrust of it that they gave the horses drugs? Yeah, yeah, oh well, yeah, well there is a lot of you know, athleticism involved anyway, don't drug your horses. Okay, So there were some technical glitches in the Enhanced Games. Apparently the live stream froze for more than ten minutes during the first competition. The bigger thing was that you had three athletes who were described by the organizers as clean. They didn't take any drugs, they won their events. There was
only one world record set in the entire games. I think it was in swimming.
Record is pretty good. It's better than nowhere, Like for your first for your first outing, to set a world record is pretty good because.
I feel like I feel like people wanted and I think the event itself also said that you know, we're going to see like we're going to break all the records.
Sure, I feel like you're not going to get the very top tier of Olympic level athletes to compete in the Drug Games, but you get the next tier or three tiers down, and then if taking drugs allows them to break our world record, like that's a pretty good case for drugs.
That's true.
I don't want to get here like kids take drugs. That's Peter till Job like I'm persuaded, I'm going to go take some steroids.
Well, you can also sort of take the other side of this trade going on, because enhanced group shares fell to an all time low after the event. I didn't know that this was publicly listed. It is. It was down like forty I think on Tuesday, which is nuts. It is interesting though, I feel like we did prove something, which is that it takes more than drugs.
No, it took it. They got a world record in one event. How many did they do?
They did a bunch like how many Okay, I don't have the number in front of me.
But they run a whole Olympics, did they?
They did a lot of different stuff.
Come on.
The thing that I cared, the thing that I care about is of course the sprints as a runner myself. The one hundred meter dash. The winner was Fred Curley. He's an actual Olympian. He was one of the clean ones, and I mean he won the field clean sure, which I don't know. I just I feel like we proved that you need more than drugs you need in.
One hundred meter dash. Well the first time, like if this thing like we're real and ten years later it has like a big prize pool. Then like somebody who's going to finished seventh in the Olympics, he'll be like, yeah, you know what, screwt, I'll set a world record in the handscams and win a prize pool. Like, I don't know, it was a good start. Actually, I have bush on the drug games.
The payout does look pretty good. I think the world record that was said, I think the winner got like a million dollars.
It's yeah, I don't know what the general payouts for like it really.
Not a million dollars. I take the more like human optimists then, which is like, you need god given talent really hard drugs.
But but surely their point is that is that people who have that plus drugs, you know what that's worth it.
What we really need is to, as you said, take the absolute best athletes from the Olympics and give them drugs and then we'll really.
Like the seventh best, like that's that's who they're going for, right. The person is not going to win a medal, but like with drugs.
Yeah, with drugs, you could I feel like I've been we really got to look into your shameful secret heart.
Anyway, speaking of people who have taken performance and had some drugs to play sports. Yes, it's true.
So I don't know anything about baseball. So so.
Fernando Tatis Junior is a guy I've written about a few times because he's involved in a fascinating piece of financial structuring. He was a minor league baseball player in like twenty seventeen who was wined and dined by this company called Big League Advance, and they were like, we'll give you two million dollars right now in exchange for ten percent of your future earnings in Major League Baseball if you make it to the majors. And if you're a minor league player, you live on peanuts and your
chances of making it to the majors are slim. And so he took the money and gave up ten percent of his future earnings, and then he made it to the majors in fairly short order and did really well and fairly quickly, and then pretty quickly assigned a fourteen year, three hundred and forty million dollar contract with the Padres and was like, wait a minute, I'm giving up thirty four million dollars, you know, a two million dollar advance three years ago or whatever. Yeah, and so he sued.
He waited a while to suit, like this is this all happened? And he signed as the the Padres twenty one or something, and he sued last year saying, this was a you serious loan, This was you loaned me two million dollars and you're charging me one thousand percent interests.
Just predatory.
It's predatory. And he's like, I was a naive seventeen year old kid. There's some quotes in the story. He's like, you know, I want to protect those young players who don't yet know how to protect themselves from these predatory lenders and illegal financial schemes. Baseball should be about our passion for the game, not dodging shady businesses driven only by profit and greed. Okay, so he lost last week, Yeah, basically because he didn't object to arbitration soon enough, and
so he still has to pay big league advance. They are millions of dollars. I have a couple of views on this. One is that I read all the time about businesses that by equity and people. I'm like, yeah, this is the trade, right. Sometimes you invest in a minor league player, you give them an advance, they never make the majors, you can get zero dollars back. Right. It's like a venture capital portfolio. Right. Sometimes you invest in a minor league player and you give thellion dollars
and they sign a gigantic contract and get thirty. You know, it's just it's a portfolio. And if you are the players, and you're the minor league player who takes in advance and then doesn't make it to the majors, that was a good trade for you, for sure, But you're sad because you would have rather made the majors. If you're Fernando Tettis Junior, on the one hand, you are paying back a very large multiple of the money you got. On the other hand, you make three hundred and forty
million dollars. Fine. But so also, every time I write about this, I get several emails from people and they all say the same thing. They say, Fernando Tuttis Junior is a junior. His father is Fernando Tuttis's And they always say that Fernando Tuttis is the only person to hit two Grand slams in the same inning of a Major League baseball And this is the most notable fact about the Tuttis family apparently, But they also say, look, he was doing fine. He was a successful major leaguer.
His son was, first of all, not like some hopeless prospect. He was like the top prospect in baseball. He knew he was going to have a major league career. And secondly, he wasn't like broke, no like.
So I went on a real educational journey here because I don't know anything about baseball. But you linked to the New York Post story about this, which anytime I don't think we often discuss like New York Post stories on this podcast. But I didn't realize who his dad was. Twenty million dollars in career earnings. Why on earth would his son need a two million dollar advance, asked the
New York Post, Which is a good question. But they also say, and again, I don't know anything about baseball, So I'm just believing them that anyone with two eyes could see that he would one day become a star, and baseball's bloated contracts in a league without a salary cap, ten percent of his future earnings was going to be much greater than a two million dollar upfront payment. Yeah, you lay it out like that.
No, so right, Like one thing is maybe it's evaluation playing. Maybe he's like, ah, I'm gonna suck. Like one thing that has happened is he had a great start to his career and let people are a little mad at him now because he's stopped to home runs.
And also, well he got his money.
Yeah, he got his money, but also he was suspended for eighty ams for performance enhancing drug finding and he was injured. He's been less successful in recent years then in the years and forty million dollar contract. But anyway, a lot of people have the same reaction as the post, which was like he didn't need this two million dollars so much that he was making a good financial decision signing away. Yeah, Like it's a good hedge, right, it's I mean, depending on you know how much money his
father still has. It's a good hedge. Right, you get two million dollars. Now if it doesn't work out, people get injured. Even doesn't work out and you don't get the three hundred and forty million dollar contract, then like you have the money now, and like when you enter into a hedge and then things work out great, their hedge is a waste.
But it's like you know, sometimes you lose money on a hedge.
But that's good.
Yeah.
Do you want that as opposed to the thing where the hedge pays off, because like the good thing didn't pay off.
I hope he's listening, you know, maybe that would make him feel better me saying I don't know anything about this, but this guy.
And that was the Money Stuff Podcast. I'm Matt Levine and.
I'm Katie Greifeld.
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