February 7, 2021

$700B in Revenue From a Short Term Trading Tax?! ๐Ÿ˜ฎ

Mesh Lakhani Headshot
Mesh Lakhani

Hey All,

Welcome to Talk Money Weekly - where I cut through the noise and curate the best money related topics from Twitter and the occasional podcast.

This week we launched Episode 4 of Season 3. "Back to School with Cara Phillips of Commonbond."

Cara sits at the cross-section of students, teachers, parents, and universities, giving her a concrete understanding of the student debt crisis and decision-making during a fraught time.She gives her best tips for how students can plan for their financial future.

๐Ÿ“ˆ Markets & Business

Incentivize People to be Longterm Investors

Apps like Robinhood gamify stocks so that users buy and sell, or trade. Trading is hard. Trading is also stressful and it doesn't optimize for long-term growth. There is a difference between short term capital gains vs long term capital gains. Chamath suggests decreasing the capital gains tax the longer you hold. That way we're actually supporting businesses and companies vs gambling.

Hedge funds that have high-frequency trading strategies, trade in and out of stocks in seconds. A bill was once introduced to increase taxes on those short term trades. According to this tweet, that tax policy would create $700B+ of tax revenue. The bill was killed. I wonder why.

Elon Musk Spoke on Breakout App- Clubhouse

Clubhouse is the latest social media platform that is all the rage. Users host rooms on the app, where people can talk. You can bring up members of the audience to join in or have them just listen. Think about a live 1:1 podcast, or a lecture, or a panel. Elon Musk surprised users last week, where he spoke about aliens, Bitcoin, Robinhood, and space travel. This Twitter thread by Shaan Puri gives the best points of the talk.

If you want an invite to the app, I have a few. Leave me a nice review on Apple Podcasts and I'll happily send you one. I'm totally being serious. :)

Bernie Madoff Came Up With Payment For Order Flow- Robinhood's Business Model

Last week we discussed how Robinhood makes its money- Payment For Order Flow. This is where a retail broker (Robinhood, E-Trade) sell their customer's orders to hedge funds (wholesalers). This practice was actually pioneered by Bernie Madoff, the Ponzi scheme running hedge fund manager.

Now to be fair, it's not necessarily shady. The wholesaler gets the order. They then fill the order at a price close to the bid/ask, and they make the spread. We're talking pennies. This Bloomberg piece breaks it down really well. Of course, there are other areas of this that have been shady, where we as users have no transparency.

Crazy Fundraising Stories ย 

This is a fun one. If you've ever had to raise money for a business you'll enjoy the comments in this tweet. My craziest fundraising story? When my partner and I were raising money for our fund. I had someone ask if I was a money launderer because I was from Pakistan. It was a very awkward moment.

India Should Buy Bitcoin

Balajis is an expert in the crypto/Bitcoin space and is a big advocate for decentralized systems. Think of a world without middlemen or gatekeepers- no banks, no media companies etc.

In this post, he goes deep into why India would benefit from adopting Bitcoin. I won't do it justice, so I encourage you to read it yourself. :)

That's all the news from this past week! Let me know if you prefer receiving this newsletter on Fridays or Sundays. I've been testing different days on purpose. :)

If you haven't already subscribed to my podcast, Talk Money, do so here. New episode next Wednesday!

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