The Wall Street Bets Episode


You’ve probably been hearing a lot about a place on the internet called WallStreetBets. Depending on who you ask it’s the epicenter of a revolution, the biggest threat to financial stability since COVID, or a fun place to post memes.

We were tired of baseless hot takes about this, so we decided to call my friend Liz Zhang for an insider view. She has been active on the forum for three years or so, and has been trading options for fun for about that long. She’s a software engineer by day and a part of my “bubble,” which means we were able to deliver something unprecedented on this episode of Free Money: an in-person interview.

Liz experienced the growth of interest in GameStop stock firsthand, and she tells the story of how one disciplined poster managed to gather unheard of interest in a stock that most investors had left for dead. And now, “his position is worth tens of millions, and he’s treated in some ways literally like a god.”

She also shared some of the biggest legends of WallStreetBets with us, like the time a user exploited a glitch in their Robinhood account to gain something close to unlimited leverage.

And of course, we talked about what comes next for this group of redditors. She shared that recently “they have become an almost socialist ‘let’s take down the hedge funds’ group. But that’s more recent and honestly I don’t see it lasting.”

This is one of the few opportunities to hear someone talk about the ongoing short squeeze from a place of experience. Don’t miss out.

The Canadian Model/Pension Accounting Episode


Pension accounting is a cursed subject.

It’s a crucial one though. Because how do we know if a pension fund is doing well? Like, obviously we have to count the money and we have to figure out if it's enough money. But how are people actually doing that?

To answer this question, we needed to talk with someone who understood the politics of governance, investment processes, and actuarial sciences. Many of the people with credentials like that are afraid to go on anarchic podcasts like ours, because the subject matter is inherently somewhat controversial.

So we called Hugh O’Reilly, who was happy to wade into the discussion with characteristic Canadian politesse. He has loads of experience putting this knowledge into practice as the former CEO of OPTrust (One of Canada’s largest pension funds) as well as a pensions attorney.

We’ve excerpted a couple of choice quotes from him to get you excited. Here’s Hugh on the mechanics of setting an appropriate discount rate:

“the higher your discount rate, the lower the value of your liabilities, the less money you have to put into the plan. That's where it comes from. The way the discount rate is established, in theory, is— well, here's how the actuaries do it. They look firmly backward to predict the future.”

And here’s how he did it while he was working at OPTrust:

“In the investment world, there's this concept that returns will revert to the mean, so in good times, bad times could happen, and in bad times, good times would happen. So what we would do, is we would lower the discount rate as far — subject to actuarial principles and the rest of it — as we could to maintain the fully-funded status of the plan, but to preserve a margin such that in a bad year, you would be able to raise the discount rate, release the surplus that you had preserved by lowering the discount rate, and it would be keeping with investment theory, because returns to do go back up over time. And that way, you're protecting the members. Because the fundamental issue for members is, they don't care what you earn in a year. What they care is, are you going to keep your promise and will there be sufficient funds to pay me when I retire? 

Here’s the way he evaluates the health of other pensions:

“What's it's funded position? Is it fully-funded, is it underfunded, is it over-funded? And then second— and this is where the rubber hits the road on a going concern assumption— is, what's the discount rate? So if the plan is underfunded and has a high discount rate, you've got big problems. If it's underfinanced, got a low discount rate, you may have some room to maneuver. And in an ideal world, it's got a lower discount rate and it's fully funded.” 

And his take on why American pensions haven’t had the same successes as their neighbors to the north:

“So the issues you have in the US are one: politics. The legislatures, by and large, set the contribution rates, or the legislature asks for the government contribution to be as low as possible. That's problem number one. Problem number two: no independently governance. Problem number three: they’re not assessed in accordance with, I would argue, appropriate actuarial principles.”

And in closing, here’s what he’s working on building now:

“You need a new long-term asset class where the long-term investment strategy promotes innovation, promotes— this word's overused— but resilience, so that these companies can withstand the disruptive elements that are coming their way, that they invest in R&D, they invest in technology, they stay on top of it, they treat the people who work for them well”

As always, we took questions from our listeners at the end of the show. You can ask a question easily. Just email freemoney at gmail dot com with whatever’s on your mind.

  • Simple, a widely loved bank that provided its customers budgeting tools and other personal finance aids, announced it was shutting down last week for “business reasons.” Why is it so hard to make a good bank? 

  • If you were a software engineer, who wants to work somewhere that contributes to the world in a net positive way, where would you want to work right now (companies, not locations)?

  • In honor of Donald trump getting banned from Twitter, who would you bring back to Twitter (from getting banned or beyond the grave, etc)? 

The Forward-Looking Statements Episode


It’s the time of year when Wall Street analysts take out their Ouija boards and attempt to divine the future.

There are a million reasons not to do this, ranging from “it’s a performative waste of time” to “it’s devil worship” depending on the particular method employed by the prognosticator.

So we prefer to make sense of what’s already happened. In this episode, we touch on:

  • What the rise of the adult content platform OnlyFans tells us about investment management.

  • Why pensions should employ a chief resilience officer.

  • Why so many organizations are “all talk” when it comes to diversity and inclusion.

And lots more! But I’ve got a cold at the moment, leaving me way too fatigued and sneezy to write them all out here. So you’ll need to listen to the episode to hear more, as well as Ashby’s answers to these three listener questions:

  • What's the most loco thing that happened this year that you forgot about until answering this question?

  • What dubiously plausible thing do you think could happen in 2021?

  • What would you say is the most amusing prediction of all time? 

The ESG Christmas Special


It’s a Free Money tradition to answer questions from our listeners.

We generally do this in the Dear Ashby segment at the end of each episode, but upon receiving the very special letter below, we realized it needed a response immediately and in writing.

But first, we must express our deepest gratitude to each of our readers and listeners who have made this year so special. And also to an editorial from 1897 in the New York Sun that responds to a letter from Virginia O’ Hanlon, eight years old. Her letter asked a simple question: Is there a Santa Claus?

We also ought to note that you ought to subscribe to our emails if you haven’t already.

Earlier this month, we received the following missive by mail at Free Money world headquarters.

Dear Sloane and Ashby -

I am sixty-eight years old.

Some of my little portfolio company friends say there is no such thing as ESG.

Papa says, “If you see it on the Free Money podcast, it’s so.”

Please tell me the truth: is there such a thing as ESG?


Larry Fink

40 East 52nd Street, New York, NY, 10022.

Larry, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe in anything unless it accretes to the bottom line in this quarter. And they think that if their little minds do not comprehend something, it cannot possibly be.

All minds, whether they belong to investors or management teams, are little. In this great universe of ours, human beings are mere insects - ants - in intellect compared with the boundless worlds around us. We could never hope to grasp the whole of truth and knowledge.

Yes Larry, there is such a thing as ESG. It exists as certainly as love and generosity and devotion exist, and you know that they give your life its highest beauty and joy.

How dreary this world would be if there was no ESG!

It would be as dreary as if there were no Larrys. There would be no childlike faith then, no poetry, no romance to make this existence tolerable. We would have no hope that capitalism could be a force for good, not just good investment returns. The eternal lights that innovation and social entrepreneurship fill the world with would be extinguished.

Not believe in ESG! You might as well not believe in earnings! You might get your army of analysts to watch all the corporate filings each quarter to catch a glimpse of ESG in the making, but what would it prove if they were to see nothing?

Nobody sees the whole picture with ESG. But that is no sign that there is no such thing as ESG. The most real things in the world are those that neither children nor adults can see.

Have you ever seen companies consistently deliver shareholder value? Of course not, but that’s no proof that it’s not there. Nobody can conceive or imagine all the wonders that are unseen and unseeable in the modern market economy.

There is a veil covering the unseen world that not even the strongest person, nor even the united strength of all the people that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and picture the supernal beauty of ESG fully implemented.

Is it real? Larry, in all this world there is nothing else so real and abiding. ESG is here in our hearts, and a thousand years from now it will continue to make the hearts of all market participants glad.


Sloane & Ashby

A few programming notes

You may have noticed that we have released an episode alongside our response to Mr. Fink’s letter. It’s a great one, featuring a discussion between Sloane, Ashby, Shawn Wooden (Treasurer of CT), Daryn Dodson (Illumen Capital), and Jean Rogers (SASB/LTSE). It was recorded a little under two months ago at SOCAP.

You’re gonna love it.

It has also come to our attention that the Free Money Atelier has been closed by Etsy because our products are “too good.” Well they can ruin Christmas, but they won’t get Easter too! We’ll be back before you know it.

And oh yes, before we forget, if you enjoyed the letter above you might also appreciate Frank Sullivan’s classic: Is There a Republican Party?

Sincere best wishes to you all. We’ll be back again before you know it.

The Impact Episode


Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.

If you’re new here, thanks for signing up!

If someone sent this your way or you found this post through Twitter or some other channel, be sure to sign up below. We publish most Tuesdays.

And now, a look at the world of impact investing.

Your money does something after you invest it.

What is that, exactly?

At some level, the most salient answer is “produces a financial return.” We tend to structure investment programs around such things, since growth in principal is the primary reason people go to the trouble of investing in the first place.

But it’s not the only thing that matters. Investments are the engine that turns abstract concepts into actual undertakings. And sometimes getting a certain type of enterprise off the ground is what matters most.

That’s where impact investing comes in. Defined as an investment intended to produce a measurable social or environmental impact alongside a financial return, it sounds absolutely wonderful on paper. And that’s kind of the problem. Remember: this is finance we’re talking about, an industry that’s known to exploit good ideas so much that they produce bad outcomes.

What’s to stop someone from saying their initiative produces outstanding social and environmental impact, raising a bunch of capital, and actually producing an outcome more akin to the image above where an asteroid permanently and profoundly restructures earth’s surface?

Third-party verification, we hope. There’s not much of it at present, but a few groups are organizing to give allocators greater transparency into the impact of their allocations. So we reached out to the CEO & Co-founder of one of them, Christina Leijonhufvud, for her take on how the market is evolving.

Her company, BlueMark, is an independent impact verifier. So we asked the natural questions: how exactly does one do that? What elements of impact are even verifiable? Is the issuer-paid research model truly aligned with investor interests? How does one ensure that the investment’s outcomes align with community needs?

This being Free Money, we also answered three questions from listeners. If you’d like to ask one for an upcoming episode, please don’t hesitate to reach out to!

  • NYC comptroller Scott stringer is facing sharp criticism from progressive democrats for investing in Blackstone PE funds. Has this been an issue in other campaigns? How often? 

  • JP Morgan is saying that their full year earnings could swing +/- 15 billion based on the effectiveness of govt stimulus. Should we interpret this as posturing? Their bottom line is helped by stimulus, after all. 

  • Zeisberger et al are arguing that venture capital funds are under-performing because they over-diversify. Is a five position vc fund a workable vehicle? Isn’t it just a co-investment at some point?

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