The Liquidity Event Podcast: Episode 86

 

Episode 86: Cord Spaghetti, Chat GPT4, and Big Macs

Welcome to the Liquidity Event podcast, where we dive deep into the shit you read about but are too busy to care. This week, we discuss Stripe's impressive fundraising haul and their plan to provide employee liquidity. But before we pop the champagne, let's not forget about the banking crisis deepening with Credit Suisse's merger into UBS suspended and Moody's negative outlook on the US banking system. Meanwhile, are we finally going to get universal USB-C charging for all devices? Not if Apple has anything to say about it. Join us for another exciting episode of the Liquidity Event podcast!

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Presenter:

This podcast is for informational purposes only, and should not be considered tax or investment advice.

Welcome to the Liquidity Event, a show about all things personal finance with a laser focus on equity compensation. Hosted by AJ and Shane of BrooklynFI, each episode will take you through the week's news on FinTech, IPOs, SPACs founder wins and fails, Crypto, and whatever else these nerds think is interesting. Learn more and subscribe today at brooklynfi.com.

AJ:

Oh, hello there. Didn't see you there. Welcome to the Liquidity Event. We're your hosts, AJ.

Shane:

Oh, let me get some pants on real quick. This is Shane.

AJ:

Jesus. This is episode 86 being recorded on March 22nd-

Shane:

It's Friday, and I don't know what we're doing.

AJ:

... airing on March 24th. Happy Friday, everyone. This week we've got a fabulous episode for you. We've got sexy new features with ChatGPT-4's new release, more banks collapsing, banks being bought and sold as if they were Big Max, and then, we've got executives engaging in insider trading schemes way worse than Martha Stewart ever did. Hope Martha's doing okay. How you doing, Shane?

Shane:

Martha's still rich. She's fine. We actually met. Did we meet someone on her team last summer that gave us the behind the scenes on all that? And Martha's good, right?

AJ:

Yeah. Martha's great.

Shane:

She's more of a badass now than ever before. She did time, now.

AJ:

She did. I mean, her best friend is Snoop Dogg, and they have a successful winery together. It's called 99 Crimes.

Shane:

Yeah, everyone should do a little time. She's a part of that?

AJ:

Yeah. Yeah, I think that's her.

Shane:

Oh, I didn't know that.

AJ:

Yeah, they have a talk show together. Or they have a cooking show. Anyways, no one cooler in the world than Snoop Dogg, and by association, Martha Stewart, in my humble opinion. I know you're deep in tax return review as our fearless leader of the tax department, but anything good that you're reading or watching outside of 1040s?

Shane:

I've squeezed in a couple of hours of a video game called Valheim just to take care of myself.

AJ:

Cool.

Shane:

It's pretty fun. You play a little Viking dude. It's tough.

AJ:

Yeah.

Shane:

But no, a little Harry Potter here and there, just mainly focused in on getting clients their tax returns.

AJ:

Cool.

Shane:

And I'm not the fearless leader of the tax team, by the way. But you're talking about Mr. Dan Byer, our director-

AJ:

Oh, of course.

Shane:

... of tax.

AJ:

Of course, of course.

Shane:

I'm just a lowly tax manager these days.

AJ:

Of course.

Shane:

I report to him.

AJ:

Correct, correct, correct. Yeah. I think he was telling you to hurry up on some of those return reviews, but I think you were just playing video games. So, maybe he has to have a word with you.

Shane:

Occasionally, yeah. Occasionally, you've got to be an individual contributor. Just ask any middle managers at Facebook in the year of efficiency.

AJ:

Sucks to suck. Well, speaking of video games and reading, I just read this book called Tomorrow and Tomorrow and Tomorrow, which is one of my favorite books of all time, I'm going to say. It came out last summer. I'm late to the party on it. Just a beautiful, beautiful novel about a business partnership in video game design, and I think you would very much enjoy it. It's very much up your alley, as they say.

Shane:

Yeah, yeah. I already purchased it. I've just got to get through a few more titles, a few more tax returns, about 50 more tax returns. Then, I'll read your-

AJ:

Right.

Shane:

... fiction published in 2023. High on the list.

AJ:

Thank you. Thank you. Cool. So, we actually, we have a listener mail question this week. Shall we dive into that? This comes from Bruce in California. "My question is, is there," okay, let me back up a little bit here. "Just about time I heard that you were covering the SVB collapse on your podcast, I heard the news somewhere that billions of dollars of outflow has occurred from the retail broker, Schwab's, money market funds following the SVB collapse. Now, money market funds, what they tell you, is a very safe investment so you can sleep easy. In this crazy mixed up world, however, what I'm really hearing is that they are investments for fuck's sake, and they have gone down in the past. And when they go down, no one cares. You get nothing, and it could be really not good."

"So, my question is, is there some subtle hidden contagion that could affect money market funds that us little guys don't know about, like in 2009? Well, no matter what you invested in, it was ultimately very risky real estate. What about tax-free money market funds?" Ooh, great question. Oh, also, "Thanks and keep up the great work on the podcast," from Bruce in California. Great question, Bruce. So-

Shane:

Thank you, Bruce.

AJ:

... basically he's asking, "I've heard about these banks collapsing. Those are banks. What about my cash that's in a money market fund in my investment account?" There's been some outflows from Schwab. Should he be concerned? Any immediate thoughts here, Shane?

Shane:

Well, I want to highlight that not everybody was invested in risky real estate, but the economy is a reflection, or the stock market is a reflection of the economy. So, yes, where we're all impacted by risky real estate, having your money in money market funds is not an investment in real estate. But, yes, of course it can be impacted if the person you're selling things to no longer has any money, your business is worthless. And so, when one part of the economy collapses, then other parts of it will also be impacted by that. And tax money market funds, I don't know. You want to talk about interest rate risk? I mean, they're very short term investments, unlike what's going on with Silicon Valley Bank, who had three plus year investments in treasuries. And because of the interest rate hikes, that could happen to money market funds, as well, but they're usually not as long-term investments as those treasuries that SVB was holding

AJ:

Yeah, we could talk specifically about is Schwab one of the largest retail brokerage firms going to fail. If Schwab fails, is your money market fund protected because it's not technically in a bank. And Schwab CEO actually just released a My Take as Schwab's CEO on the recent collapse, and he highlighted something called S-I-P-E-C insurance, or SIPEC insurance, as we call it, which is basically that we have FDIC insurance for banks, but securities insurance for certain securities within brokerage firms. So, you as the investor, up to a certain limit of $500,000, your assets are protected. So, Bruce, if you've got $500,000 in a money market account, yes, the money market interest rate could, of course, change. But the risk of your $499,000 going to zero is zero, it's nonexistent because the federal government will come in and protect those funds from you. So, you can rest easy at night knowing that the government has your back, and we'll just keep borrowing and borrowing and borrowing until tomorrow and tomorrow and tomorrow.

Shane:

Yeah. And I do want to highlight the difference between two different types of risks that you're being exposed to. Deposit risk, if that institution was to disappear, SIPEC would stand in just like FDIC would stand in for your deposits. But money market funds are investments, and you have an investment risk when you put money into them. So, they could decrease in value just like other investments.

AJ:

Yeah.

Shane:

But you're not going to be covered by investment risk. Nobody really is, that I can think of.

AJ:

No.

Shane:

There is no, oh, there's portfolio insurance. Do you remember that from the eighties and the nineties?

AJ:

Oh, my God. Yes.

Shane:

It essentially just, yeah.

AJ:

Snake oil. Let's put that on.

Shane:

Never a good idea. Yeah.

AJ:

All right. Shall we dive into the weeks' news? ChatGPT-4 is out. It is kicking. I've been talking to it by myself late at night, having a great time. Have you played around with it at all? Have you noticed any differences over the 3.5 release?

Shane:

It's a lot slower is all that I've noticed. But supposedly, it's more accurate.

AJ:

Yeah, I've noticed my history is now gone, which is very valuable to me because I would like to look up searches I did last week.

Shane:

Yeah, it's gone. I noticed that, too. We had 50 chats in there saved that are all gone now.

AJ:

Yep.

Shane:

Yeah, besides that, I haven't really played around with it too much. I know it can accept images, but I don't know how. I couldn't get an image submitted to it. I was going to ask it to review my tax return for me. One of the big announcements that OpenAI did is they said that ChatGPT could prepare a tax return, and then you watch the video and really they just-

AJ:

LOL.

Shane:

... give it some inputs, like what someone's tax liability is going to be. And people have no idea what goes into taxes at all. It's really a shame. Yes, it can read a document and say if this than that. When someone's income is this level, their tax will be that. And it is truly impressive, and I'm excited about it. But unless you attach some robotic process automation to it, it's not going to be able to prepare a tax return and submit that to the IRS. But it is a leap forward in terms of reducing the labor necessary to submit information to other people. So, on track.

AJ:

Yeah. And I think it's, also, a good step forward in the right direction to take a lot of the concentration out of Intuit and TurboTax because TurboTax has invested literally billions of dollars in engineers to build these tools to pull this information. Maybe ChatGPT is is going to be a little bit more democratic for firms like ours to use some of that technology to speed up our processes so we can spend more time on the analysis and talking to clients as opposed to what's the information from the W-2 that can get entered. But what's funny to me, Shane, is, sure, it can read a beautiful PDF.

But as we all know, and clearly, I'm not blaming you, but this is just the reality. You get the W-2 in the mail, you pull out your phone, you take a shitty picture, it's a little blurry. That eight might look like a zero, and is going to throw off your tax returns. So, there's still so much human input into tax returns that I think we're really far away from true automation. I would love to see automation in this space even more. And everyone has to file a tax return. So, certainly, there's market demand for this. It's definitely profitable to try to figure this out for firms like ours.

Shane:

Yeah. Yeah. I think what's even more exciting is the automation of automation that we're seeing with the release of Copilot just today, actually. As of this morning, there was an announcement that OpenAI has released Copilot, a plug in for GitHub, that will allow coders to have code explained to them, and then the AI will be able to go and pull code and insert it in. So, maybe in the near future. I've seen a lot of memes on Reddit in the programming humor channel about how people are staying up late at night worried about their jobs being replaced. It is a very expensive job. A computer programmer, to write programs, software engineers get paid a lot. So, maybe we'll see some changes in salaries, not just in the creative spaces, but also in the technical spaces, as well.

AJ:

Yeah. And I have a promise to make to our listeners is that we are going to interview someone who actually knows what the hell they're talking about in this space, in the automation and coding space. And we're going to have them on, and we'll talk in depth about this because I think you and I have a cursory interest in this, but don't actually understand what the fuck's going on. So, ooh, speaking of robots versus humans, we've got this article from the New York Times, May I Speak to a Human Please? And it's talking about the outflows and disappointments of retail investors in the robo-advisors, like the Betterments, the Wealthfronts, the Ellevests of the world. Essentially, robo-advisors are great if you're a first time investor and the market's only going up about eight to 15% a year. Everything's cool.

What happens when the market's down? 2022 was a scary year in the markets for, I would venture to guess, most of these robo-advisors' clients. It was probably their first market corrections. It was the first time they had actually seen their portfolio go down, or the money that they invested actually be less than what they actually invested in the first place. And anecdotally, I had friends who were first time investors say, "I don't understand. What is going on?" It's almost as if their entire interface was built around the market going up, but they didn't exactly figure out how to handle what happens when portfolios actually start sinking in value. What else we got here in this article?

Shane:

I mean, it tries to say that traditional financial advisors are expensive, and as a financial advisor that's rude. But there's also a link to a research article in here about the behaviors of people during 2020, during the pandemic, and they compared three different cohorts. People that DIYed, people that had a mixture of advice in DIY, and then people that just had managed accounts via third parties, and the people that had managed accounts via third parties did not trade as often, and trading is what creates losses. There's a theory called the behavior gap in that the market traditionally provides 7% of ROI, but actual investors only get 4% because they trade too much. So, they're trying to highlight the pros and cons of financial advisors. You're not going to trade as often, if you're a bad DIYer, if you have a financial advisor, which should work out in the long run. So, just wanted to highlight that.

AJ:

Yeah. I mean, arrogance is expensive, right? I feel like nineties sitcoms and nineties movie. I think of the guy in Rat Race, the cheap dad. The dad doesn't want to go to the mechanic, so he tries to fix the car himself and then the car blows up on the road trip and the family can't go on vacation. To me, that's what this DIY investing narrative reminds me of. Why should I pay for that? I can figure this out on my own. And, yeah, you probably could, except when shit gets really bad, do you trust yourself to stay invested when your portfolio's down 13%? A lot of people would say yes, When your portfolio is up 8%, it's easy to say yes. So, there's been a lot of outflows from these robo-advisors. Not a fun year in investing in 2022.

Shane:

Speaking of outflows, we have an outflow of the value of Stripe, who have announced their new round of funding has closed, and they have finally provided employee liquidity. The last valuation in 2021, we saw a $95 billion valuation, which we've talked about a lot on the podcast. The most recent valuation had to come in at 50 billion in order to close the deal in the suppressed valuations of 2023. We have some fun insights on this. One cool insight is that there was going to be a lot of unlocking of liquidity for the employees that have been there a long time. There's a secondary offer on the table. Unfortunately, it's at evaluation that is more realistic than 2021. So, we have some emails from management I'd like to talk about. What's your take before we hop into this, AJ? What's going on with Stripe?

AJ:

I mean, they had to do this. It's interesting. Why isn't Stripe going public? Why don't they just go public? And I think the answer is that they've been so successful, and they've had this incredible growth that once you go public, you have so much more accountability and so much more pressure to continue to grow and build and keep producing more. So, I think they're just basically saying, "Hey, we have so much value here. We need some time to figure this out. We're not ready to go public in this market. That's not going to be friendly to us." They're just worried that they're going to go public, and then, immediately, the value of the company's going to drop just because of how the market's going to perceive them as not meeting expectations or, just generally, the market sucks. So, I don't know. My take here is they had to do it. There probably, as we discussed ad nauseum, should have gone public in late 2021. They didn't.

This is a great way for employees to not sue them for not holding up their end of the deal. So, this is good. This is my take here. One thing I wanted to point out is in the press release, Stripe is a payments company, right? They create ways for people to pay for services on the internet. And the way that they've described themselves is, "Stripe is a company that builds economic infrastructure for the internet." I thought that was such a dramatic way to say that. Imagine BrooklynFi is a wealth management company. What if we rebranded ourselves as creating financial stability for an entire generation? Let's amp up the drama in our next press release. You want to share something?

Shane:

Press releases are so frustrating.

AJ:

So funny.

Shane:

No. Yeah, no. What I do want to share is something interesting. We got an email, somebody tweeted the email that the CEO sent to all their employees, and it says, essentially, "We think this is a fair price. Keep in mind that it's not our last valuation price of 95 billion, but in 2018 we were only worth 20 billion. So, if you would've said four years later we'd be worth 50 billion, we'd be very happy." And it says, "Please do not get anchored. Don't fall victim to anchoring bias at series H at the 95 billion." And we have to deal with this with our clients all the time. And once something that you own is at a high watermark, you get anchored to that price. And that is one of the values of financial advisors, besides managing your assets and making sure you don't trade, is that we have to get you off that anchor.

We have to get you away from biases that you have so that you can achieve your goals despite fluctuating valuations. Another thing that he mentioned, which I find very interesting from his perspective, it just shows you what they're thinking is that, "More broadly we want to think about what we're going to be worth in 2030, in 2040." And it's like, bro, these people just want to sell their damn shares. They've been working for you for five, 10 years. They don't want to be working for you in 17 years. What percentage of your employees think, "I still want to be at Stripe in 2040?" They work at a small startup that was feisty, and now you guys are just fucking with their liquidity. Just let them get out and be free agents and move on with their lives.

AJ:

You sent them compensation packages that included a 30% equity grant, and now you're saying they can't get it out for another two years? I mean, this is a bandaid to fix the folks who have been there for the past five to 10 years, but I don't know how. They have to go public at some point because now with this deal, all future vesting RSUs are going to be single trigger, which means that employees are going to have to pay taxes on them and might not even have an opportunity to sell them until this damn company goes public or does another tender. So, I don't know.

Shane:

It seems to me with the single trigger thing, AJ, that they're betting that they can raise and do a secondary offer whenever the hell they want.

AJ:

Yeah.

Shane:

It's almost like VC money and Goldman Sachs has just promised them, "Whenever you guys need money, we're going to be able to get for you."

AJ:

Yeah, "We'll buy in."

Shane:

It's easy for us. Yeah.

AJ:

Right. So, it's tender forever.

Shane:

Yeah.

AJ:

Love me tender forever. Like Yule.

Shane:

Not private, not public, but a-

AJ:

What are we?

Shane:

... secret third thing. What is this company?

AJ:

We're dangerously private. Yeah, I mean, how long will this company-

Shane:

We can get that liquid whenever we want.

AJ:

Yeah, you need liquidity? I got you. Let me just call up Lloyd.

Shane:

Lloyd. Definitely, Lloyd.

AJ:

Oh, boy. What else do we have here? Yeah.

Shane:

Anything else happening over the weekend? Anything interesting? Pretty chill news cycle.

AJ:

Spring. First day of spring yesterday. Happy spring.

Shane:

I saw your bit about the banking crisis. Oh, we still have to talk about Bard real quick, I think, and some insider trading, and then we're going to talk banking.

AJ:

Oh, yeah. I mean, I could spend the next 40 minutes talking about insider trading. So, let's make this quick. But yep, insider trading. The geniuses at ProPublica were sent a lot of IRS records that revealed some super sketchy trades by executives at companies, a lot in the biotech and healthcare space. I want to shout out one guy in particular, August Trundle? Troendle? An Ohio billionaire made a remarkably well-timed talk trade. He sold 1.1 million worth of shares of Syneos Health, which is a competitor of his. Basically, these fuckers are engaging in insider trading, they have information about their competitors, and they're just very greedy.

Shane:

Allegedly.

AJ:

Allegedly. Thank you. Thank you, lawyer.

Shane:

Allegedly. Allegedly.

AJ:

Sure.

Shane:

I don't want to get sued for libel on the Liquidity Event Podcast.

AJ:

Sure. Allegedly. Thank you. Let me add that one in. Why go looking for trouble? It's perfectly possible to invest in the stock market without investing in companies when you have actual non-public information. What is going on here? I mean, this is never going to stop. This has been going on since the beginning of the existence of public markets. In fact, it's, I would say, probably at an all-time low considering the 20th century. But what really gets me is the size of these trades. This guy's a billionaire, and he's engaging in insider trading for $2 million of profit. This is a dent on his little balance sheet. Why take the risk here? Just because he can, I think? Anyway, I'm pissed.

Shane:

Yeah. Yeah, I guess so. I mean, my stance on holding individual stocks. I mean, diversification is the only free lunch. We've known that for about 30, 40 years, and yet the people that have access to this information and financial advisors are the only ones that are, these days, investing in individual stocks, and it's people, like Nancy Pelosi, and it was a great example. And then, these people that are trading in their direct competitor stocks. My two takeaways are, for one, why are you doing this in your own damn accounts? These are traced to your tax return. You don't have a consigliere as a billionaire that you can advise where they have a different social security number attached to a brokerage account? First of all, that's just embarrassing the lack of street smarts. And then, also, we shouldn't allow people with insider information to even have individual stocks in their own sector. Why is that allowed? Why do you hold stock in your competitors? For diversification reasons? No, just don't. Don't allow it.

AJ:

Yeah. I mean, anyone who's ever worked at a bank, if you work at these large institutions, you typically have to keep all of your investments at that institution to prevent this kind of thing because you're just, by nature of your job, you're going to be looking at reports. You're going to have this non-public information. So, why wouldn't they extend that to the people who are actually making the decisions, leadership at the top of these publicly traded companies? I'm with you. That's never, ever going to happen. But regulation in the space, I'm pessimistic about it, actually, making a difference.

Shane:

Oh, well. Moving along.

AJ:

What you got? ChatGPT Bard? I didn't read this article.

Shane:

Yeah. I mean, I don't know. No, I guess Google has released Bard. I don't want to talk too much more about AI. I just want to highlight that Google has also released it, finally. It's racing to create a competitor to OpenAI's ChatGPT. I think they're really ought to. I'm excited about ChatGPTs, I'm sorry, Microsoft's implementation of Copilot 365, which means that we'll be seeing ChatGPT in Google Sheets. I'm sorry, not in Google Sheets. In Excel and Microsoft Word. And it looks like Google's also trying to release Bard into Google Sheets, just trying to keep up. And they just issued this ultimatum last week that, "Everything that we have, we're going to pump some AI into it."

So we're going to have to be dealing with this. It's going to be forced down our throats. All these AI updates are going to be coming, whether you're a Microsoft person or a Google Workspace person. You're going to have to learn it or ignore it. I probably think we're going to have to learn how to use it, just like Gen Z, Millennials, Gen X know how to Google things as compared to Boomers. I think this is going to be a skill gap that we're going to see between generations. If you don't know how to use AI to get to the answers faster, just typing 50 years ago and then Googling things, just internet, et cetera. So, that's it. So, just watch out for that. Let's talk about banks, huh?

AJ:

Yeah. If we had a sponsor, we would go to commercial break, and then we'd come back to our big story, which is Banks in Crisis and Your Cash. What do we got?

Shane:

Dun dun dun.

AJ:

Should we have a fake sponsor? Should we have the IRS fake sponsor this podcast? Anyway.

Shane:

Yeah, $80 billion went to the IRS and .00001% Went to the Liquidity Event Podcast. Yeah. They're trying to change their image over there.

AJ:

I mean, if anyone can do a chain, I think you and I can do it. We can save the IRS's image.

Shane:

I don't know. I don't know if I want that smoke.

AJ:

Speaking of your image, Moody's cuts the outlook on US banking system to negative, citing rapidly deteriorating operating environment. I'm going to read your comment on this chain, which is, "Rut roh."

Shane:

That's all I've got. I think that sums it up. I had a Scooby-Doo response to this article.

AJ:

Rut roh. Yeah. So, basically, one of the three credit rating agencies said, "Based on the fact that two regional banks have collapsed in the past 10 days, probably the US banking system is not necessarily stable." So, they downgraded it to negative as opposed to stable.

Shane:

Yeah. Somebody is yelling fire in a crowded theater.

AJ:

Yeah, this was almost 10 days ago. This is 10 days ago, and I haven't seen any updates from many of the other agencies or anything yet. So, I don't know if we've even felt the repercussions of this yet. What else have we got here? Big Mac inflation attack. I snuck this in here. There's something called the Big Mac index, which is what is the price of a Big Mac in various states and across the world. Congratulations to you, Shane. Out of the 13,000 McDonald's in the US, those in Mississippi were found to have the cheapest Big Macs at only $3.91 cents when the average is $5.15 cents. So, as you're looking to evade taxes, you might want to consider Mississippi where you can get the cheapest Big Mac in the nation.

Shane:

And I'd like to thank God, first and foremost, He on high. Second of all, I'd like to thank my father for stuffing Big Macs down my face for 15 years down south. Why is there a Big Mac article next to this First Republic article?

AJ:

We were talking about-

Shane:

Is this just to fuck with me?

AJ:

It was a little bit to fuck with you, but it was more of a theme of Invest It Your Cash and Inflation. And did you know that the most expensive Big Mac in the world can be found in Switzerland, where it is the US equivalent of $7.75 cents. Anything weird happening, happening in Switzerland this week?

Shane:

Thank you for the excellent transition into the UBS acquisition of Credit Suisse, two of the twin towers of banking in the great country of Switzerland, which makes chocolate watches and hides cash from international tax regimes.

AJ:

Wait. So, wait. So, Credit Suisse is Kiereth Engall, and then UBS is Bara Door?

Shane:

I am not bougie enough to know. I don't know what you're doing.

AJ:

Okay.

Shane:

Help me.

AJ:

You said Twin Towers.

Shane:

Dear listener, help.

AJ:

Oh.

Shane:

Anyway.

AJ:

Oh, oh, oh. Yes, yes, of course. Sorry. I was in the middle of my spiel-

Shane:

Sorry.

AJ:

... and I was not in middle earth.

I had a little middle earth interruption. Go ahead.

Shane:

It's hard to go from middle Europe to Middle Earth so seamlessly. We'll have to make a Palantier joke pretty soon. So, for those of you that don't know, the banking contagion has spread. Credit Suisse was the B player in Switzerland of the two banks, has been experiencing scandals for the last 15 years, and is generally just a little bit scruffier than UBS, the Union Bank of Switzerland, which has experienced about 150 years of prestige. And, essentially over the weekend, we experienced a little bit of 1800s style marriage making when one of them, due to their scandals and their issues, was suddenly almost valueless. Credit Suisse was worth $45 billion as of 2017 market capitalization wise. It was purchased by UBS for $3 billion over the weekend, effectively creating a-

AJ:

How many Big Macs is that?

Shane:

... Swiss banking Monopoly.

AJ:

I'll tell you. One second.

Shane:

Do some mental math here. Enough to kill a donkey. Yeah. So, it looks like somebody who woke up with a new partner over the weekend, and UBS now has inherited all of their partner's issues. AJ, you're married. Tell me a little bit about that.

AJ:

Well, just quick note. It was 387 million Big Macs was the purchase price of Credit Suisse. Yeah, this is basically a forced marriage. I think that's a great analogy, which is, "Hey, you're in distress. Maybe you're pregnant on the night of your wedding, and you've got to have a quickie marriage to save your honor is essentially what happened here. I think the interesting thing to note here is Switzerland has always been seen as this pillar of banking. The regulation is strict enough, but also lacks enough that you can stash a bunch of money in Switzerland. So, it's basically a banking country. During World War II, they were neutral-

Shane:

Nazis.

AJ:

... and were very friendly.

Shane:

Oh, sorry, excuse me.

AJ:

They were very friendly to anyone who needed to stash their war chest there. So, yeah, the big news here is that the government basically facilitated this merger. They're like, "This has to happen. We've got to save this guy. We can't have the complete failure of our number three bank, or number two bank." They were the second-biggest bank there. What else have we got here? There's a bunch of stuff about bonds here that's really interesting that echoes what happened at Silicon Valley Bank, but I don't necessarily think we want to get into it. It's boring. But the fallout here, what have we learned this week, or the past two weeks, is that strong governments will come in and, not necessarily bail you out, but will come in with a solution. This was a pretty creative solution here over in Switzerland.

Shane:

Yeah, I mean, yeah. My take is that some people are saying that the Swiss, they could have let the company go bankrupt, but it would not have reflected well on one of their primary means of production in the company, which is, in my opinion, size, stability, and secrecy would've all been impacted if this bankruptcy had gone through. So, instead, all the assets were purchased by UBS for pennies on the dollar. I don't think we're going to try to explain AT1 Bonds-

AJ:

No.

Shane:

... which were a product of the 2008 financial banking crisis and financial crisis.

AJ:

All right, other news out of Europe. European Union hurts Apple again. Wah. Poor Apple. Look, Apple has been going ham on the stupid goddamn lightning charger. I hate this thing so much. It's so dumb. So, as a robot, I just want to talk about chords for a second, folks. So, basically the deal here is USB type C ports, which are great. They're rapid charging, they're great for data transfer, they're universal. The European Union is like, "Hey, by 2024, everyone needs to be using USB type C. Get out of here fucking Apple with your lightning chargers." As a person who is literally a robot, because of my heart implant, I have to carry a charger with me all the time. So, I have to carry this lovely carrying a case around with me wherever I go with all of my fucking cords. So, I am pro USB-C all the way every day.

Also, get yourself a nice little cord organizer pouch instead of just throwing shit in your bag. So, when you're on an airplane, you won't fling your headphones across the aisle and never see them again. It'll save you 250 bucks, folks. With that, I will say farewell and ado, and thank you so much for listening to the Liquidity Event. You can email us your financial problems and suggestions at liquidityevent@brooklynfi.com. You can leave us a voicemail at memo.fm/liquidityevent, and we will play it on the air. And of course, the show notes for this episode can be found at brooklynfi.com/episode86. We will see you next week. Thanks so much.

Presenter:

Thanks for listening to the Liquidity Event posted by AJ and Shane of Brooklyn Fi. Head on over to brooklynfi.com where you can subscribe to the podcast or YouTube channel, or if you want to learn about their full service financial planning, tax, and investment firm specializing in tech professionals and creatives on the path to financial independence. We'll see you next time on the Liquidity Event.