Sacks

The first is the algorithms in the middle of all of this chaos sold about $41 billion of global equities. Okay, no big deal. except that it actually causes everybody else to have to react. And then they sell billions and billions more. The other thing that they noticed though, is that we're in a moment in time where you can see how these algorithms will behave over the next month.

The first is the algorithms in the middle of all of this chaos sold about $41 billion of global equities. Okay, no big deal. except that it actually causes everybody else to have to react. And then they sell billions and billions more. The other thing that they noticed though, is that we're in a moment in time where you can see how these algorithms will behave over the next month.

And right now, if there's relatively minimal volatility and not much changes, the algorithms will have to sell another 160 odd billion dollars of equity. And that'll pull through many hundred billions more from everybody else. So I think we're in a little bit of a delicate moment where the preponderance of the market action will be to continue to sell.

And right now, if there's relatively minimal volatility and not much changes, the algorithms will have to sell another 160 odd billion dollars of equity. And that'll pull through many hundred billions more from everybody else. So I think we're in a little bit of a delicate moment where the preponderance of the market action will be to continue to sell.

And I think it's just going to be, when we look back in hindsight, another reason why getting levered on these things is very dangerous. There's no free money, basically.

And I think it's just going to be, when we look back in hindsight, another reason why getting levered on these things is very dangerous. There's no free money, basically.

Sorry, you're saying Japan has inflation? Japan has no inflation.

Sorry, you're saying Japan has inflation? Japan has no inflation.

There's a famous quote from an economist, Simon Kuznets, who said, there's four kinds of countries in the world. There's developed countries, undeveloped countries, Japan, and Argentina. And I think the reason he said that is that Japan has been in this state since the 90s.

There's a famous quote from an economist, Simon Kuznets, who said, there's four kinds of countries in the world. There's developed countries, undeveloped countries, Japan, and Argentina. And I think the reason he said that is that Japan has been in this state since the 90s.

So they had a massive property and equity bubble collapse, and they've not had to deal with anything that looked like typical economic issues since then. And part of it is because the government plays a very big hand in the Japanese economy. There's a lot of price controls there. So I don't know. I'm not sure what it is that we can learn there that you can extrapolate to the rest of the world.

So they had a massive property and equity bubble collapse, and they've not had to deal with anything that looked like typical economic issues since then. And part of it is because the government plays a very big hand in the Japanese economy. There's a lot of price controls there. So I don't know. I'm not sure what it is that we can learn there that you can extrapolate to the rest of the world.

Let's talk about leverage for a second, Shama.

Let's talk about leverage for a second, Shama.

So for example, like if you take something like Citadel runs about $50 billion and they have extremely precise risk management systems, they're the best in the business.

So for example, like if you take something like Citadel runs about $50 billion and they have extremely precise risk management systems, they're the best in the business.

But as a result of that, they are so systematically important to make the financial machinery run properly that as they're inspected and as they prove that they have very good risk management, they're allowed to lever up to incredible levels, 15, 16, 17 times.

But as a result of that, they are so systematically important to make the financial machinery run properly that as they're inspected and as they prove that they have very good risk management, they're allowed to lever up to incredible levels, 15, 16, 17 times.

So I think that Citadel with the 50 billion of capital that investors have given them is probably running a trillion dollars on a daily basis in the markets. Renaissance Technologies, same situation. Millennium, same situation. A bunch of these funds that sit inside of the large banks, same situation.

So I think that Citadel with the 50 billion of capital that investors have given them is probably running a trillion dollars on a daily basis in the markets. Renaissance Technologies, same situation. Millennium, same situation. A bunch of these funds that sit inside of the large banks, same situation.