Comment by fanzhang
6 years ago
Agreed that Money Stuff generally technically accurate. The only gripe I have about it is that it has a bias in the direction of "everything is so messed up / comical". This is an irreducible bias as it's the job of the journalist to make a topic seem engaging and interesting.
However, if you take the theme of Levine's articles too literally/thematically, you'll think that finance is filled with quirky rules that produces comically inefficient outcomes most of the time. You'll think that there are easy system changes that any layperson can see that would make the system run much better. You might even think that finance is clear swamp ready to be drained -- this plays into the confirmation bias of readers who come in already with the thesis that "the system is totally broken".
In fact, against this theme, 90% of the time the story is incredibly dry and uninteresting because the system works exactly as intended. 90%+ of the time, stock A + B bundled is worth exactly the sum of it's parts. 90%+ of the time, the regulations do protect investors, are cheap to check off, and causes no weird behavior. 90%+ of IPOs are textbook win-wins and not Adam Neumann playing Softbank or a sell-side banker eating grandma.
To be constructive though, what's the solution? Start with skimming over the most classical textbooks (Mankiw or the recommended non-heterodox textbooks from the relevant classes by your local colleges). This is the classical theory of both how things are supposed to work, and how 90% the value generation actually occurs in 90% of the cases.
I agree that he gravitates towards quirky ends of the market - it's a big part of what makes it enjoyable to watch. To his credit, however, whenever he discusses a mechanism breaking, he usually starts by explaining how the machanism usually works. To wit, he did a good job explaining how the aluminum market works when discussing the GS market manipulation accusations and he explained how index inclusion works (and what an index provider's job and incentives are) when discussing the Snapchat IPO.
But yeah, for someone coming in with 0 knowledge, some more fundamental, drier texts may be more efficient in imparting knowledge.
I'm a daily reader of Matt Levine for probably four years now and I have to admit I've come to precisely the opposite conclusion about how he writes. He points out quirky situations that may appear superficially stupid, but in reality are somewhat justified given the way the system exists. And he does a superb job in pointing out the humor of these situations while still breaking them down to show why things are not as simple as they seem.
I've always gotten the impression that under the jokes and sarcasm, Matt Levine loves finance, though I agree that he focuses on the interesting in a way that might skew a layman's perception of the likelihood of various things happening.
He really does love it in an intellectual sense, which is an infectious passion that is hard to find in an industry where many are optimizing just for financial success.
As someone who accidentally got into finance as a software engineer, he more than anyone has made me really fall in love with the domain.