| In most jobs, the way your employer finds out that you have accepted a new job is that you come to them and say "I quit, I'm starting a new job in two weeks." Investment banking analysts are unusual in that they traditionally accept their next job (in private equity) two years before it starts, and then spend those two years working away at their investment bank. So if the bank wants to find out whether or not they have accepted a new job, it has to ask them periodically. The banks have not always wanted to find out, but now Goldman does: Goldman Sachs Group Inc. plans to ask junior bankers to confirm their loyalty on a regular basis in a bid to limit advances from talent-hungry buyout firms. The investment bank will ask new analysts to certify every three months that they haven't already lined up jobs elsewhere, according to people familiar with the matter, who asked not to be identified discussing the confidential plan. ... The move is meant to thwart poaching by private equity firms that have been signing up junior bankers near the start of their on-the-job training, a practice known as on-cycle recruitment. Some buyout shops are even approaching newbies before they show up for their analyst programs, stoking tensions across the industry. I hope that on-cycle recruiting now moves to one day after Quarterly Goldman Loyalty Oath Day. Still, two months and 29 days is a lot less than two years. Banks have tried this from time to time over the years, but it has never really stuck: The banks say to analysts "it is unethical for you to take another job while you're working here," and the analysts say "sure whatever," and then the private equity firms call them and say "can you come in for an interview at 1:30 a.m. tonight?" and they say "of course," and then all the analysts do the interviews and take the jobs, and the bank could fire all of them but then who would do all the work? So the banks grumble periodically and then go back to grudgingly accepting that all their analysts have a foot out the door. But this time seems different: Jame Dimon did the standard grumbling last month, and Apollo and General Atlantic quickly came out and said "he's right you know," and since then, the Financial Times reports, "no large buyout firm has launched its 'on-cycle' recruitment process during the traditional June window." I mean, maybe they'll launch tomorrow, but it feels like this truce might hold. The good interpretation of that is "ahh, a sensible recruiting process that will allow private equity firms to assess people based on actual experience and interest." The bad interpretation of that is "ehh, in two years, will anyone even need private equity associates?" The fundraising market isn't great, so it's not clear that they'll have many deals to do, and in two years maybe the associates can be replaced by artificial intelligence anyway. Then what? Will the analysts be … stuck at their banks? Horrors. For them, but also for the banks, whose hiring model assumes that most of them will leave. The FT goes on: Banks have also started to worry that they may end up with a surplus of junior analysts amid a slowdown in recruiting for post-banking roles across private equity, hedge funds and big companies. One senior banker at Goldman Sachs said banks could now find their own hiring models upended, with a lower rate of natural attrition than anticipated — and potentially more difficulty securing the best candidates to start with. I guess that's another reason for Goldman to check in every three months. "Have you taken another job yet? No? Why not? Are you working on anything? Can we help?" The basic idea is that the US stock market will pay $2 or more for $1 worth of Bitcoin. If a company buys $1 of Bitcoin, its market capitalization will go up by $2. Companies want to increase shareholder value, and this is a free-money way to do it, so lots of companies do. It is at least possible that there are diminishing returns to this, and the 20th company announcing a Bitcoin treasury strategy will not get the same premium that the first gets. (The evidence is mixed.) So companies have branched out into other cryptocurrencies to keep things interesting; there are Ethereum and Tron and Solana and BNB and Trumpcoin treasury companies. The list of big crypto tokens is pretty picked over at this point. If you want to do this trade now, you might try something else. "Maybe the US stock market will pay $2 for $1 worth of _____," you think, where what goes in the blank is (1) big and attention-getting, (2) relatively liquid (so you can buy it incrementally as money comes in and mark it to market as the price goes up), (3) somewhat crypto-adjacent in spirit but (4) not a big obvious crypto token. What about gold? Gold is a big market, it has some spiritual overlap with crypto, but it is not actually crypto. Obviously there are gold mining companies, but never mind that; there are Bitcoin mining companies too, and that doesn't stop the Bitcoin treasury strategy from working. If a company just bought gold, would its stock trade at a premium to the value of the gold? If it also put out big crypto-flavored announcements about how buying gold on the blockchain is the future of finance? Sure, maybe, why not. Here's this: BioSig Technologies, Inc. ("BioSig" or the "Company"), which recently merged with Streamex Exchange Corporation ("Streamex") (Nasdaq: BSGM), announced [Monday] that the Company has entered into definitive agreements with a leading institutional investor for up to US$1.1 billion in growth financing, positioning the Company to become one of Nasdaq's largest public holders of gold bullion. This transaction positions the Company to capitalize on its goal of reshaping the future of global finance by beginning to bring the approx. $142 trillion commodities market on chain through real world asset tokenization. ... The Company believes that this transaction will secure its position as a gold treasury company and anticipates a continued investment in RWA blockchain technology. The Company looks ahead to securing substantial financial flexibility and seizing opportunities within its core markets. … BioSig CEO and Streamex Co-Founder Henry McPhie, says, "This financing marks a pivotal moment not only for Streamex and BioSig, but for the evolution of global financial markets. By combining the value of physical gold with the innovation of blockchain, we are building a company grounded in what we believe to be the world's most trusted store of value while enabling a scalable, high-return business model through tokenization. Our mission is to unlock liquidity, transparency, and accessibility across the $142 trillion commodities market, and this milestone is just the beginning." Terrific! In May, BioSig, then a medical technology company, announced its merger with Streamex, "a privately held company specializing in the tokenization of real-world assets," and the stock has gone up since; I am sure I do not need to tell you that it has no revenue. Its market capitalization at yesterday's close was $1.1 billion (before this new investment), suggesting that the market is putting a premium on its notional stash of gold. The system works. Tokenization, and particularly real-world-asset tokenization, are big themes in modern crypto, but crypto treasury companies are also a big and very practical theme: It is great to talk about how you will transform the financial system by putting real estate or commodities on the blockchain, but it is free money to put $100 of crypto in a pot and sell shares in the pot for $200. Transmuting real assets into tokens is innovative, but transmuting tokens into stock is lucrative. Perhaps transmuting real assets into stock could also be lucrative. It is possible that an important discovery of crypto is "corporations can own real-world assets and sell shares of themselves on the stock exchange." [1] Also, I realize that this might not be feasible, [2] but I feel like someone should try a "MicroStrategy treasury strategy." Like, you take over a small public company and you announce that you are raising $200 million to buy MicroStrategy Inc. stock. Maybe that would be worth $400 million? If you went to a Major League Baseball starting pitcher, and you said to him "I will pay you $10,000 to lose your next start," of course he would say no. Even if you could absolutely guarantee that no one would ever find out. Like: - He got to where he is by being a tough competitor and a team player, and losing a game and letting down his teammates will cost him more than $10,000 of psychic harm.
- His career depends on winning baseball games, and he gets paid a lot more than $10,000. His ability to stay in the majors and get further lucrative contracts depends on his performance now, and the expected value to him of winning a game, instead of losing it, is quite high. The dollar value of a baseball win is on the order of $9 million. [3]
On the other hand, if you went to that pitcher and you said to him "I will pay you $10,000 to throw a ball on the 43rd pitch of your next start" … maybe? Like: - It's one ball; he can still be a tough competitor and win for his team and so forth with the rest of his pitches.
- The dollar value to him of throwing a strike on that pitch, rather than a ball, is not zero, [4] but it's plausibly well below $10,000.
Obviously if he gets caught that's bad; it would be awful to be banned for life from baseball for taking $10,000 to throw a ball on the 43rd pitch of a random start. But if you could guarantee that no one will find out, sure, whatever, free $10,000. Why would you pay him $10,000 to lose his next start? Well, because you bet $50,000 with someone else that his team would lose, of course. Very straightforward. People like to bet out the outcomes of baseball games. Why would you pay him $10,000 to throw a ball on the 43rd pitch of his next start? Well, because you bet $50,000 with someone else that he would throw a ball on the 43rd pitch of his next start. People like to bet on … wait, what? Why would anyone make that bet with you? There are at least two problems with that bet: - Is that fun? People like to bet on the outcomes of sporting events, but betting on some micro-outcome within the game seems less viscerally entertaining.
- It's a huge adverse selection problem. If you come to me and say "I'll bet you $50,000 that the Mets will lose tonight," that is a normal thing for a person to say, it is hard for you to have any edge, and I might take the bet. If you come to me and say "I'll bet you $50,000 that the Mets' pitcher will throw a ball on his 43rd pitch tonight," I would never take that bet! Why the 43rd pitch? What do you know that I don't know? "What about the 41st pitch," I would say, and if you said "no I don't know about that, only the 43rd" I would run away. If you are proposing this ludicrous bet you obviously have edge.
Or that is my intuitive analysis. But it is not quite right these days: - People do seem to like making bets on lots of random propositions in sports games; this is a big growth area for sportsbooks. People don't just want to watch the game and bet on the winner; they find it entertaining to make lots of little bets along the way. And sportsbooks like to keep them engaged by giving them lots of little bets to choose from.
- Which means that, if you can bribe athletes, you can adversely select the sportsbook. You look at the list of prop bets, you find some non-outcome-determining bet that gamblers care about but athletes don't, you bet it in size, and you bribe an athlete to make it come true.
My impression is that the main limit on this problem is that the sportsbooks are keenly aware that anyone betting $50,000 on some in-game prop is bribing an athlete, so the size of these bets is limited, but perhaps there are trades here. The Wall Street Journal has a story today about spot-fixing: When Cleveland Guardians pitcher Luis Ortiz spiked a slider in the dirt to begin the third inning of his most recent outing, nothing seemed out of the ordinary. Ortiz has thrown more than 1,500 pitches this season, and a third of them have been balls out of the strike zone. There was no reason to think twice about one that slipped. But within the gambling industry, alarms were blaring. A betting integrity firm had identified unusual wagering activity on that specific pitch being a ball—a pitch Ortiz had just hurled so wildly that it couldn't have been hit with a tree branch. … [It] potentially signals that one of the most pernicious forms of corruption in global sports has finally arrived in America. "Spot-fixing" is the practice of manipulating small, discrete events that have little to no bearing on the outcome of a game—the timing of a yellow card in soccer, a wide ball in cricket, a single double-fault in tennis. Or, in the case of Ortiz, the result of one of the roughly 300 pitches thrown in the average baseball game. How much are we talking about here? The story mentions an analogous case from the English Premier League: Last year, Brazilian soccer player Lucas Paquetá, of West Ham, was accused of intentionally receiving yellow cards in four separate matches across 2022 and 2023. All of them coincided with suspicious betting patterns, according to England's Football Association. Specifically, the FA highlighted around 60 bets reported in the British media to be worth between roughly $9 and $550 for the benefit of Paquetá's family and friends. Paquetá, who faces a lifetime ban from soccer, has denied wrongdoing. Sixty times $550 is $33,000. Paqueta reportedly makes £7.8 million per year. I do not quite understand the economics here. We have talked twice this week about an action that the Securities and Exchange Board of India brought against Jane Street Group LLC, accusing Jane Street of manipulating the market for Indian options. The gist of the allegations is that there is a huge liquid market for Indian options, but a smaller and less liquid market for the underlying stocks, so you can buy a lot of options, buy less stock, push up the price of your options, and sell them for a profit. And Jane Street allegedly did. But more generally, it is a structural problem when a small illiquid underlying market sets the prices for a large liquid derivative market. It's too easy to make a lot of money in the derivatives market by spending a little money in the underlying market. The Libor scandal was perhaps the purest form of this, with trillions of dollars of loans and derivatives fixing to a market that sometimes didn't trade at all. A reader pointed out that spot-fixing is a sports betting analogy to this. ("Wagering a ton on a single pitch being a ball is the same as buying a ton of deeply out-of-the-money options on an illiquid stock," he emailed. [5] ) There is a big liquid market for bets on who will win baseball games, but there is also a big efficient market for winning baseball games, with millions of dollars at stake, and you would have to pay a lot to manipulate that. The market for betting on individual pitches in baseball games seems a lot smaller and less liquid, but it is getting bigger, and the underlying market for individual pitches is also quite small. Perhaps you could pay a pitcher a little money for a ball, and get a sportsbook to pay you a lot more for it. I write occasionally about the Money Stuff S&P ESG Fund, a hypothetical fund that would consist of all of the stocks in the S&P 500 Index, with the same weightings as the index. The advantages of this fund are: - It closely tracks the S&P 500 (because it is the S&P), and
- It has "ESG" in the name.
I first proposed this in 2019, when having "ESG" (for "environmental, social and governance") in the name was unambiguously good: Many investors wanted to be able to say that they were investing in environmentally conscious ways, but some of them didn't care too much about the details. Putting the name "ESG" on a regular index fund would probably satisfy some of them, and I could charge them higher fees. In 2025, having "ESG" in the name is more of a mixed bag, and there is a rising trend for "anti-woke," "anti-DEI," "anti-ESG" or what have you funds that market to people who want to be able to say that they are not investing in environmentally conscious ways. Some of these people probably care a lot about the details (just as some ESG investors do), but some probably do not. Some just want to be told that they are investing in an anti-woke way, but don't care very much about exactly what stocks are in their portfolio. So there's an obvious opportunity for the Money Stuff S&P Anti-Woke Fund, which will also consist of all of the stocks in the S&P 500 Index, with the same weightings as in the index. There are huge efficiencies here, since the same portfolio manager could run both the ESG Fund and the Anti-Woke Fund, and also she wouldn't have to do much because they are index funds. At the Wall Street Journal, Gunjan Banerji writes that anti-woke funds "can mirror the mistakes of socially conscious investments that were wildly popular on the left, either dressing up broad-based investing in ideological terms, or sacrificing returns in the name of ideological purity": A look under the hood of the American Conservative Values fund, for instance, reveals something a lot like an S&P 500 index fund with higher fees. Of roughly 370 holdings, some 335 also belong in the S&P 500, according to Dow Jones Market Data. Its top holding is Nvidia, followed by heavyweights such as Microsoft, Broadcom and Berkshire Hathaway. Those stocks also loom large over the broad S&P 500.
Yes, right, the combination of (1) tracking the S&P and (2) being told that you are investing in conservative values is obviously appealing; of course someone built that. Elsewhere: "New research by Scientific Beta's Giovanni Bruno, Felix Goltz and Antoine Naly looked at more than 200 ESG factors used to optimize a portfolio to balance performance and risk, and found that they offered no improvement over traditional financial factors." In 2006, Warren Buffett "offered to bet any taker $1 million that over ten years and after fees, the performance of an S&P index fund would beat ten hedge funds that any opponent might choose." This was an unbelievably good deal: For the low price of $1 million, you could have spent ten years talking about how you and your buddy Warren have a friendly little wager on the markets. I mean, you might have won (pick Renaissance), but never mind that. The point is that lots of people clearly should have been happy to pay $1 million to get 10 years of checking in with Warren Buffett about the bet, mentioning the bet to friends and clients, and even having Buffett mention the bet — and your name! — in public. Justin Sun paid $4.6 million for one dinner with Buffett! A million dollars for 10 years of this schtick is nothing. Bizarrely it took him more than a year to find any takers. Eventually Ted Seides, who at the time ran fund-of-funds firm Protégé Partners, [6] took the bet, though he talked Buffett down to $500,000. $500,000! Obviously Seides lost. (He conceded defeat in May 2017 at Bloomberg Opinion.) But his real winnings were the friends he made along the way, like Warren Buffett for instance. Seides writes today: The bet led to unanticipated connections, relationships, and experiences. Warren and I met for dinner nearly every year, typically accompanied by a guest or two. Those guests included Todd Combs; Ted Weschler; my partner at the time and now Treasury secretary, Scott Bessent; hedge fund founder Bobby Jain; podcast star Patrick O'Shaughnessy; Permanent Equity founder Brent Beshore, and investor Steve Galbraith — which led directly to Warren honouring Steve's close friend Jack Bogle at Berkshire's annual meeting in 2017. I had a chance to meet Charlie Munger, who stereotypically said my bet was "stupid."
Again, a lot of money managers would happily have paid $500,000 just to be able to begin a sentence "Warren and I," but he also got multiple dinners with Buffett, plus one with a podcaster. [7] An absolutely insane bargain, a brilliant trade. Hard to repeat, though. At FT Alphaville Seides published a proposal for another bet, this one that private equity will beat the S&P. Three problems with this bet are: - Buffett doesn't appear to be involved,
- there is no money involved ("It might be fun to create a shadow wager," he writes), and
- even Seides doesn't believe it ("I'd put the odds of private equity outperforming the S&P 500 net of fees at around 40 per cent").
Still! Losing the first bet was a great trade; maybe there's a way to recreate some of that magic. Copper Market in Turmoil as Trump Touts 50% Tariff on US Imports. Two Kevins Battle to Be Next Fed Chair in Trump's Apprentice-Style Contest. Pentwater's Hedge Funds Soar 21% on Billion-Dollar US Steel Bet. "We are firmly convinced that the active equity management of tomorrow will only be hedge-fund like." BlackRock Acquires ElmTree Funds as It Continues Private-Markets Push. How Unilever Used AI to Make Soap Go Viral. Citi Employee Accused of Making Racist Comment Sues for Discrimination. Elon Musk's Grok AI chatbot praises Adolf Hitler on X. "Shut up, Dan": Musk takes dim view of Tesla-xAI merger idea. If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks! |
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