We have a little saying over here on The Derivative, The More, The Merrier, and on this week’s episode of The Derivative, we’re not chatting with one guest, but THREE! Class may no longer be in session, but we are taking a trip down the SIG/Susquehanna memory lane and having our own class reunion with Kris Abdelmessih, Michael Steiner, and Tina Lindstrom.
If you’re interested in learning how big trading firms find and teach their traders, hold on to your seat because these three give you the answer key! Kris, Tina, and Michael are in session with Jeff and discussing competing with peers, finding an option’s fair value, making markets, and being in the game of trading, educating kids with board games, and of course Steiner’s new trading board game: Stock Slam! Discover how the game works and how you can join up with these three in NYC for a live session in this three-of-a-kind episode — SEND IT!
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Check out the complete Transcript from this week’s podcast below:
The Game of Trading with SIG Alums Kris A, Tina L, & Steiner
Jeff Malec 00:07
Welcome to the Derivative by our RCM Alternatives, where we dive into what makes alternative investments go analyze the strategies of unique hedge fund managers and chat with interesting guests from across the investment world. Have Happy first day of fall everyone and have a nice three months we have here in Chicago. Oh well, still rather nice out and we can batten down the hatches with some good podcasts coming up. We’ve got Simon ho the creator of the spikes volatility index, sort of vix competitor, and possibly Mike Harris, formerly of Campbell and company and now heading up quest partners, and maybe an episode talking through the US Dollars recent strength onto this episode, which is a rather unique one. So we’ve got three guests, and we’re not talking about a hedge fund or macro view or where markets are going but about a board game called stock slam, which these former market makers all love and which they all think can be a great teaching tool for aspiring traders and all sorts of professionals who would benefit from learning how to make a market in real-time. Our Trio are all former Susquehanna vets. We’ve got Chris Abdelmessih the writer of the fantastic party at the moon tower blog, Tina Lindstrom, a partner at first New York rented an oil ball book and Mike Steiner, a high school physics teacher who helped hire and teach both of those talents back in the day. Send it This episode is brought to you by RCMs vix and volatility specialists in its managed futures group. We’ve been helping investors access volatility traders for years and can help you make sense of this volatile space. Would I did that? Check out the newly updated vix and volatility white paper at RCM old stock calm under the education menu, then White Papers link and now back to the show. Okay, we’ve got a little class reunion going on here. Welcome, Mike. Welcome, Chris. And welcome, Tina.
01:59
Hello, thanks.
Jeff Malec 02:00
So let’s start with how you three all know each other who who met whom first? wants to jump on that grenade?
Tina Lindstorm 02:08
I’ll start. Um, yeah. So Steiner was there first. I think I started before Chris at Susquehanna. I met Steiner Steiner was assessed by habit first, and I guess I met Steiner first. But he, he was my teacher. So we would, we would clerk during the day, we would be an assistant for any number of few senior traders during the day. And then after work a few times a week we would go to mock trading and or options, theory training, and Steiner would teach it.
Jeff Malec 02:50
That was like mandatory or this was you, you wanted to learn and you would go if you wanted to learn more.
Tina Lindstorm 02:56
This was mandatory. And so So what Susquehanna did was they hired the best and the brightest. So, back then, when I started Susquehanna was about 300 people, and they would hire maybe 20 to 30 people per, you know, every every year, I’m guessing. And they would be in Chicago, Philadelphia, New York, where you would, you’d have to compete, you compete with your peers, and stuff. And, you know, whoever did the best would get selected for a class. And it usually took between, you know, the expected values a year, but some people go in nine months, some people would take one and a half years, but that that was your job. Your job was to compete with your peers to get into class. If you didn’t get into class. You were you were fired. Yeah, so.
Jeff Malec 03:51
So what was compete with your peers look like? Because you had real money, you’re trading and you’re competing on a p&l basis or competing in other ways.
Tina Lindstorm 04:02
Um, you would have muttering Steiner, why don’t you talk about that? What would we what would How would you judge us?
Michael Steiner 04:09
So there was a, once they got to me, they got basically hired to be assisting traders to become traders. So when they would come to my sessions after the trading day, we would do some option theory and mock trading. And the mock trading was just synthetic relationships and being able to make markets and adjust, adjust things and report to report their trades and respond to brokers. They would have to get to a level of proficiency in just finding arbitrage capital capitalizing on it maximizing expectations, beating all of the other people in the class, and then some with if we were if I was ready to send them to the next level, which was class as Tina calls it. The class was at the headquarters of the company in Philadelphia. And they would they would Yeah, basic. I was a gatekeeper to the talent, New York sent to Philadelphia for fine
Jeff Malec 05:18
tuning, and then you ended up at Susquehanna?
Michael Steiner 05:22
That’s right. That’s right. Right after the army, a couple of months after leaving, I just got a phone interview and then just kept going through it and got the job.
Jeff Malec 05:33
And how, how was that fortuitous? Or you pushed your way in there? Like, I have this argument with a lot of people like, like, Oh, you just want to get the seat. And then you have to learn and you have to do this. And I’m like, Yeah, but getting the seat seems like the hard part, right?
Michael Steiner 05:47
Oh, yeah, it was really, that was just, there’s a kind of a gate you got to get through with Susquehanna and ask any answer some math question if the answer some math questions, and this is how it was for as long as I was there, and that’s kind of like once you once you get to an interview, answer some math questions, some personal questions, some deeper questions about, you know, statistics and. And then and then just keep pushing you up into higher levels and making sure that after they know, you know, the math, and they just want to make sure you’re cool enough to hang out with the people on the floor.
Jeff Malec 06:27
All right. What do you remember what the math questions were?
Michael Steiner 06:30
Oh, yeah. My, my, my favorite one that I asked my students, my stats students is it kind of, I guess I can say, three coins in a bag. And one of them is unfair. So it’s a two headed coin. And then the other two coins are fair coin. So they have a tails and a heads. So there’s a biased coin, and then two good ones. So you reach into the bag, you don’t really look at the coin very carefully. You flip it three times, and you get heads each time. So you’re now you have to think the chances that I pulled out that the two headed coin are pretty good. Exactly. How good are they? And it’s a Bayesian. It’s a Bayesian Bayesian probability question. And I remember I, I said to the guy, that was the last question, he asked me and I said, I don’t I know, it’s a Bayes question. I don’t know the answer. And, and I’m kind of bummed, I’m kind of bummed. And he said, Okay, well, maybe we’ll be in contact. And I hung up the phone. And then I remembered if you draw a picture of it, really quickly, you can get it. So I drew the picture of it. And I and as I was finishing the picture, I picked the phone up, and I dialed the guy and I, I said it’s 80%. And he said, When can you come down for the next for the night? Yeah.
Jeff Malec 07:50
So some grit there to read. I’m like, Hey, I pick up the phone and call back probably.
Michael Steiner 07:55
Yeah, I just I think I just needed to hear the click of the phone. And just and then like, just not be on not be on, on pressure on the pressure. But I, I just love you, all of those questions were great. And they some of them get really, some of them get really deep. Like one of them is a one mile race track and you go, you go 30 miles an hour for one mile, and then how fast you have to do the second lap in order to get your average speed over the entire two miles up to 60 miles an hour. So it turns out that the question is, the question is easy to understand, but hard to answer. And I’m not going to give the answer away. If unless you want me to tell you the answer. Yeah, sure. Oh, it just turns out it’s impossible. Because you need two seconds knows most people will just yell out the answer 90, because 90 is average is 60. And speeds don’t average that way. And so So you ask that question in an interview, you make sure that the person understands it. And sometimes I’ve had, we’ve had interviewers, one particular one stands out where he said, he said the answer is 90. And I said no. I was like and then he just snapped, and he just said all the answers 150. And I said, well, we’ll just hold on a second, like can like maybe just work it out, work the math out. And then he said, I said, Well, he said there must be there must be some answer. And I said, Well, it turns out, it’s impossible. And he said, he said, No, it has to be possible. And I said, Why do you like, right when I asked the question, you seem confident, right? So then I wound up. I wanted to ask him, I said, if I bet you that it’s impossible. Like I’ll bet you $1 And he said, Alright, fine. And I said, Okay, I’ll put another dollar down. If you put $10 down, I’m sorry. I’ll put $10 down more if you just put down one more dollar like you get better odds now, right? And he said, he said, Oh, that’s great. And I said, Okay, if you put one more dollar down and I yield to a friend of mine, I said, Hey, Bill, would you like to make $1 And if you give me 5000 I can At $1 I know he always carried a big stash with them. And I said, Okay, fine. So I took the 5000 and put it down and and I said to the kid, I said, How do you like your first bet now that I’m just like, This is how sure I know that you’re right. 5001 Yeah. And he’s like, he’s like, Well, I like my bet now and I’m just thinking, There’s no way you’re gonna work for this for this company. So I only took the I only took I only gave Bill his $1 pay off the other rest of them, I get back to
Jeff Malec 10:29
them. As part of that, just how they react under that sort of pressure. Isn’t doesn’t sound like he did very well. Yeah.
Michael Steiner 10:36
Yeah. Overconfidence is something that we Susquehanna really doesn’t really wants to weed out like, if you’re, if you’re smart, but you’re you’re you’re you think you’re smarter than you actually are, then you’re not going to be able to, you’re not going to be able to come up with some some some deeper ideas that are really important. Like you have to be able to know you have to be able to think how wrong can I really be here? In order to understand maybe risk or a piece of the puzzle? You’re not? You’re not seeing in pricing something.
Jeff Malec 11:08
So Chris, you came through that program? So yeah, I’m impressed Steiner somehow.
Kris Abdelmessih 11:13
Yeah, I’ll I’ll back up for a second. Yeah. Just to because I joined. So I joined in 2000. I was part of Tina mentioned, this, there was about 300 people when, when she joined, when I joined there was already the firm had probably doubled from that point, just two years later. And I think you’re two years ahead of me. And so when I was when I was coming through, I was the largest cohort C have ever hired. They there was about 80 Assistant traders that were hired my year because we were coming the.com bubble was going on. I was hired right in 2000. So they just needed bodies on that floor. And so I always kind of joke, but, you know, I kind of slipped through that selective process. And they were hiring lots of people. But I think that that was a that was an interesting, there’s an interesting story in there. Because I got hired to there was an on campus recruiting session. And the guy that was at the career fair at was I went to Cornell was up at Cornell and I was walking around the career fair. And there’s like, tons of peers that are wearing their suits. And they’re all hobnobbing with the bankers, because everybody wanted to be a banker. It back then. And this guy key had some dice, and a deck of cards on the table. And there was really nobody around him. And I would say great, cratered it. Totally, yeah. So he’s, so I’m walking through. And you know, I kind of pause in front of the booth. So he, you know, he’s like, okay, like a good salesman, he comes right in on me here. It’s like he’s paused. Yeah, I got him here. And he started just talking about some kind of a, like a game idea. And as we started talking, I said, Oh, this doesn’t sound like work at all. This sounds like fun. And so he invited me for an interview on campus there. So he asked me a bunch of math questions. And I don’t do very good at this. But I asked a question at the end of the interview, that I think was really important. I said, I don’t know the answers to these questions. But I like this. How, what can I do to learn more about this? And he recommended to me getting the best of it by David Sklansky. And he specifically said, read the first chapter. And so I did that. And I went home, and I read the first chapter, and then the, the phone interview was taken straight out of the first chapter. So this guy gave me the answer key, which told me, you know, partly, he must have liked me for some reason, even though I couldn’t, wasn’t competent enough to get the questions. Right. And the other thing was, he probably cared a lot that I was teachable and ask the question. So I think and I think that’s an important story, because it it tells you a little bit gives a little more context to how Singh hired it wasn’t just best and brightest. It was also are you teachable? You could be super bright, but if you were not teachable, they weren’t interested in you. So I probably was more teachable than best and brightest, but that’s how I got in there.
Jeff Malec 14:33
And somewhere along the way, change from Susquehanna to say
Kris Abdelmessih 14:37
that happened while I would that have I remember, like the
Jeff Malec 14:40
Latina cause the whole release about that? Yeah, I remember that.
Tina Lindstorm 14:45
First person was Susquehanna Investment Group and it was Susquehanna international group. Then they would just call it si G and the joke was there, there is no there is no i and si G like because we were very team oriented. Right? But that would be the joke. There is no i And Sid.
Jeff Malec 15:05
So talk a little bit like you said, they go for the best and brightest. And we’re generally speaking, this is how most big firms work, right? Like whatever else. Other TRW or Citadel, those are my Chicago ones, but you’ve got your New York Wednesday as well. But to me, it’s always like you’re searching for the LeBrons. And you just plug them in? Or you’re saying like, no, there’s there’s a massive amount of training to get them up to speed. Is it like the the theory of it versus the application? Or what’s different between the coming in as a blue? Is a blue eye as a young I? Someone who wants to do this versus actually doing it? I’m not sure if I asked a question even sorry, but
Michael Steiner 15:48
Well, what Chris said about finding people that were teachable, one of the things that as an interviewer, for just after the resumes were scanned, and we would come maybe take people in just testing for overconfidence. So if, if you were a kid who just could understand what a 90% confidence interval is, and state back to me what a 90% confidence level was. And then then I gave him a bunch of things to to give him a test of his abilities to make 90% Confidence rules and 10 different facts. If he was if he was overconfident, he would get very few of them correct because he would tighten up his markets or tighten up his ranges and wind up getting lots of them wrong. And so just that that kind of test for overconfidence is someone that we would not, you know, want to want to proceed with or, you know, we would just make a note that the person was overconfident or seemed to be overconfident. There was there’s other there’s plenty of other ways to ask questions of someone to see if they’re going to be disagreeable to to Susquehanna his way of thinking, whether it’s Susquehanna doesn’t, we don’t read charts historical data to predict the future. And so when, when we show if I were to show a bunch of truly random walks, and some stock graphs, and ask them to make predictions based on the patterns, and then ask him, like, what one of these is actually is actually not a stock? It’s actually a random walk generated by a computer? Can you figure it out? And then, you know, to see just to see how they, how they kind of reacted to that?
Jeff Malec 17:30
Are you coming up with this stuff on the fly? Or you would spend hours and days coming up with these, these tests and quizzes? Oh, that’s
Michael Steiner 17:38
no, well, on the floor, there’s a lot of downtime. And because you need customers to come in to do transactions, to so during the downtime, we would, we would rehearse in our heads what we would what we would do if some broker came in with some particular order at that time, and then there’s still more downtime. So we would come up with, you know, just ideas in general. And then when we got done with that, it was it was more hilarity and just goofball antics. So
Kris Abdelmessih 18:08
to Steiners point here. The first time I met Steiner was and he says here, he might kind of remember this. But the first time I met Steiner, it was, after I had, I had already received an offer from CIG, and I was visiting the trading floor, because after lots where I was going to work. So this was before I started working, I was probably still in college, but they wanted me to go walk around the trading floor. And I ran into Steiner on the AMEX. And I don’t know if Steiner knew that I was already hired or not, but he decided he wanted to kick the tires on me. So, which is a bit telling of six culture in general, it is, you know, coming up with questions and sort of interrogating people and all that was very much part of their core part of that culture, like every puzzle kind of culture. But I remember he asked me the question he asked me, I still remember was, if player a had a higher batting average and Player B for the first half of the season, and then player a had a higher batting average than Player B in the second half of the season. Is it possible that player B has a higher batting average for the entire season? And I did happen to get the question, right. So somewhere along the line, I improved at my arithmetic or whatever. And then much, many, many, many years later, probably 15 years later, I learned that that’s called Simpsons paradox. I didn’t know it at the time. But yeah, Steiner thought it was only only right to kick the tires on somebody that was just standing there like a lamb on the floor.
Jeff Malec 19:45
Right. So give us the answer. What’s the answer? What’s the math behind it?
Kris Abdelmessih 19:49
Oh, yeah, you can play or be can because it has to it just has to do with to get much closer. Yeah, because it’s just like a weighted average thing. Yeah. You’re if you’re, if you’re, you know, the player or a hits 400. And Player B hits 300, but it’s on a small sample size, then player B can have a higher average over a much or kind of a slightly lower average at a higher number over a much larger sample size in that would the waiting would make Player B have a higher average for the whole season.
Jeff Malec 20:20
And so Steiner, you taught senior trainers, not just to say great, but all sorts of different places.
Michael Steiner 20:26
So know that the the it was primarily New York, and it was all assistant traders to become traders. So these were the fresh the fresh people right out of college. Before they would go to the headquarters for the for the funnel. And it wasn’t just out of college, I mean, these, some of these, again, like how Susquehanna thinks about things, some of these fellows were. And girls were just like gamblers like they, they were just really good poker players or lawyers and they just they just really could understand things. Or, you know, under understand things just as just at a granular level that we could really appreciate
Jeff Malec 21:18
Tina, and one of your tweets, you said that you helped Stan or help develop wintech Ioway pricing model for commodities that got bought by ICE, what’s that all about? caught my
Tina Lindstorm 21:30
eye at the time I was on the nearby I was in charge of high cap indices, options on indices. So I ran, they had a sort of a weird element program. I was the specialist for the Russell 1000. Russell 3000 Sorry, for my birds. And, and the options on them. So while I was there, you know, we were the only financial pig with $1 Pit next to us. There was sugar, coffee, cotton, cocoa, orange juice, and then the COMEX was on the same floor. So I started back testing sugar, Calendar Spread options. And we started putting a little position on my my, our Chief Risk met global risk manager. At sick, they always wanted to go into new products. So they let me put a little position on and sugar and ended up making a bet a million dollars on a small position. So they said, why don’t you start a commodity while creating operators and for Susquehanna. And at the time there was no, we did not trade commodity vol we only traded index vol and equity wall. So they gave me four or five guys. And we started we started an operation. So the pricing model that we had before micro hedge didn’t really you couldn’t you couldn’t price things properly, you couldn’t price a SKU properly. You couldn’t price the bases properly. It just what they weren’t good models. When I first tried to start trading and I was writing things down, I was managing the position on on if you could believe on paper, the deltas were wrong. So one day Steiner comes over. And he he comes to my my booth and he’s like, look, look at this, look, look at this, and he shows me this tablet looks like an Excel spreadsheet. Like look, you can click on here, click on here and look for commodities. And he had this FRED DE winder. And they would come over and show me this. This, this piece of software. So then later Dave Winder incorporated this software and made it a little little prettier. And they called the one tech then later so so I was the first person I Susquehanna to use one tech and then a friend of mine, Jason Rockland. They wanted him to stop because my my, my operation was successful. Trading agricultural commodity options. They want to start an oil operation. So Jason went to college with me, we went to the Ross business school together. And he said all T What should I do what you know, what kind of pricing model who should I talk to what brokers said, Okay, we got to use this thing called wintech. So So then, you know, we bought a bunch of licenses for one tech. And the funny thing is, so now the ice bought them. And every I would say more than half of all commodity options traders. Use one tech still because it’s called IoT. Now, ICE offers analytics, but to the old people, it’s always one tech
Jeff Malec 25:00
wintech and what’s the difference because of the different expirations and whatnot in the commodity, so you have to plug in basically the curve.
Tina Lindstorm 25:09
It’s different models and different bases, you know, with, with financial products, it’s, you know, interest minus the dividend is, you know, the forward. But here, there’s all kinds of different futures, it just didn’t interact very well, plus the different models, the futures, futures models versus the the equity models. So, you know, this this way was much better. And it had a lot more functionality for use to price things quickly.
Jeff Malec 25:38
And, Chris, get into that for a second, if you can’t like, to me, I’m always thinking like, it’s the whole at a prop firm like, this is the whole game, we’ve got the prop firms model, and then you’re just waiting for prices to get out of line with the model and either buy or sell to get back in line with the model.
Kris Abdelmessih 25:53
That’s not not really
Jeff Malec 25:56
good, because that oh, well, you would.
Kris Abdelmessih 25:58
So you would have you would have waited this notion of fair value. Okay, so what what is, what is fair value? It is, it’s not something that comes out of a model, it’s a consensus, it’s a wisdom of crowds consensus. So if we back up just for one second, if you are a Sikh traitor, whatever the stock price is, that’s fair value, like, midpoint, let’s call it midpoint. And let’s pretend that there’s no spoofing or funny business going on on the bid ask, the midpoint is sort of, you can think of that as kind of a fair value. In options, we have the same concept. And you would kind of fit your models to some notion of fair value. But the way we figured out what fair value was, was by reading the order flow. So for example, if the market is I’ll use modern firms today, but if it’s like Goldman Sachs on the bid and Jane Street on the offer, and the markets a penny wide, well guess what you found fair value? Yeah. So if you can, if you can take that number, and then set that set your sheets to that number. And then and then say, given this, what opportunities exist in the world, you can find relative value trades between different different instruments across asset classes, if you can, the whole game, like, the way I think of trading is, is a big normalization game is a big measurement game. It’s not, we weren’t necessarily looking at history and saying, you know, this is what the pattern was, in the past, it was a lot more like real time poker, like, everybody’s saying that the market for this is x. Well, given that X is worth this, what is less liquid that stands out?
Jeff Malec 27:47
So why worth what’s it worth what’s PQ? Got, right?
Kris Abdelmessih 27:51
Whereas, whereas we would take with a lot of a tremendous amount of respect for liquid transparent market. So if a market was liquid and transparent, we were pretty much like, hey, that’s fair. I’m who am I to disagree with that the world has voted with infinite mortally more dollars than even Susquehanna has. So it really starts with humility, and then trying to find what was what, what was off the line in other markets. And then, and if you had a fair value, part of that fair value was how you traded around a lot of the techniques or how you traded around that, you know, if what are people’s tendencies, this, this brokers coming in? And he’s quoting, this calendar spread? Well, have I seen this broker before? If the broker buys the calendar spread, and in the next couple of years, you have to have a good memory. So you’d have a trade memory and say, hey, you know, the last two times this person did this x happened? I don’t, I’m going to shift my, my Bayesian updating, right? It’s like, I’m going to shift my probabilities of what can happen, because this person seems to be informed order flow. And what’s this person’s tendency? Like maybe they bought calls in the stock rallies? How do they how do they behave after the stock rallies? Do they roll their calls up? Or do they close them? Do they do they diagonal them into another month? And if I know your habits, I can now make markets in, say, another month, anticipating your flow that’s coming in.
Jeff Malec 29:24
And a lot of that’s automated now. Right? Like they’ll create identities that they don’t know who the flow is, but you could create an identity and say this, basically have an automated memory of what that flow usually does.
Kris Abdelmessih 29:39
I so I couldn’t speak to that directly because I haven’t been at CIG in a long time. And my my expectation is that them and their competitors have advanced well beyond where we were when we were there. So I would imagine that they’ve really leveraged technology to answer a lot of these questions, but the underlying the blueprint of what’s going on there. That’s always the same. Yeah, because this implementation is varied.
Jeff Malec 30:07
I know from our algo group and their anti gaming logic, that there’s gaming load, right. And so if you come in with a 10 lot every day, and it ends up being 1000 lot that was iceberg in, they build a little profile. And I’m not saying sake, but generally these big firms and they’ll build a profile on that order type, and call it trader x one, four something, right? And then they know every time that 10 comes in, there’s 900 behind it, or 100. Come in, there’s 909.
Kris Abdelmessih 30:35
Yeah, I think it’s probably the same thing as poker bots, right? If you’re not a poker bot, and says, hey, this person, this person raises pre, they raise preflop, with a hand threshold that is extra higher, right? It’s just the seat, you’re just building profiles on competitors. But the basics
Michael Steiner 30:53
are still there. So find a positive expectancy, trade and explore it and
Jeff Malec 30:59
slam it for as long as you can for as big as you can. But yeah, and
Michael Steiner 31:03
if it starts going a different way, you just keep evaluating and trying to see figure out where you’re wrong. Yeah, constantly ask questions and
Jeff Malec 31:12
dig into that a little more. So you talked about there was that way of thinking and I think is common to most all prop firms and traders, right of like, okay, I have to think in probabilities I have to think in risk. To you told me you sponge that all up. So tell me a little bit about that. And how kind of they view the world versus the rest of the
Michael Steiner 31:31
world? Oh, yeah. Oh, yeah. And then a lot of people do this, I’m sure but but we just felt it just felt great. They just kind of flew to have this language that we all shared. And if you kind of, like, if you wanted to explore something, we have this great way to be able to explain it to the trader right next to us, and what was happening or what we were thinking, and that was kind of the and that was kind of the smell test. If you had an idea to do something, you just kept talking to people. And yeah, it was just easy. It’s easy when you’re all when you all agree what the what the goal is to maximize expectancy and minimize risk. And then, and then think about all the different ways you can be wrong and explore those bets. And then how you can test it right? Up to
Jeff Malec 32:19
would you would you be fair to categorize as thinking in terms of options versus thinking in terms of linearity, right, in terms of kind of thinking 3d Instead of linear really?
Michael Steiner 32:30
Oh, yes, no, no, absolutely. As a matter of fact, a lot of a lot of the stuff that I’m fascinated with is building implied distributions from from underlying butterfly prices and options and trying to think about, like what that really means about the distribution of prices and then and and then derivatives on those prices, other derivatives, so,
Jeff Malec 32:52
so curiously, as fun as this game is, Tina, you’re the only one still in the game. What’s that all
Tina Lindstorm 32:59
about? I’m the only dumb one still in the game.
Jeff Malec 33:03
I don’t know about that.
Tina Lindstorm 33:04
Maybe the only the greediest one in the game. Maybe? Maybe I can’t stop I’ll be bored. Maybe I’m afraid of hanging out of hanging out with all the housewives around here.
Jeff Malec 33:21
I think it’s I think it’s option C for sure.
Tina Lindstorm 33:24
It probably is I probably would want to kill myself. Um, I hope nobody none of my friends will definitely they won’t hear this podcast so
Jeff Malec 33:34
that’s great podcast is huge in Long Island were huge in Long Island amongst the housewives. But Steiner, what was it like for you to get out of the game? Refreshing? You miss it?
Michael Steiner 33:51
No, I don’t think I miss it. I get my I get my fill in other ways now. And I? Yeah, I loved it, though. I mean, I’d loved every minute of it. It’s fat. Absolutely fascinating. Yeah, it’s not like I got it. That’s like, I got sick of it. I was just like, timing out and like, life was just changing. Not in bad ways. But no, I mean, they they I felt a little weird for a few months, as I was trying to work on some stuff and think about things. But if they didn’t, I just got I just got more excited about some other projects. And to teach always, always teaching thinking about finance. Absolutely. But not not not being in the game.
Jeff Malec 34:33
It’s funny in Chicago here a lot of the old floor traders and stuff and there was you know, what are they going to do, but a lot of them made a lot of money by their seats in the IPOs of the CBSE and see me merging and all that. So they’ve done quite well and really never had to figure out what to do. They just kind of sat off in the sunset bought some real estate. Did some different things. Chris, you had a good time. goes on your moon tower. Anyone doesn’t subscribe to moon Dara go do it immediately. It’s awesome. It’s caught my eye. I love playing games with my kids Catan Ticket to Ride clue backgammon. And just kind of teach them right? Like, hey, think in terms of game theory think in terms of strategy, which seems like it’s a good life lesson. So how do you? How do you think about games in general and how it applies to, to life in general, right.
Kris Abdelmessih 35:27
So, growing up, we I played a lot of board games with my sister and my family, that was just a normal thing to do, there was nothing, it was just totally normal, you would play life or you play Monopoly, or, you know, you play some cards or whatever. And, but we played a lot of games, although he’s a big fan of it. And then I guess around. And then at that SIG, I learned how to play poker properly. I didn’t, I didn’t know how to play poker when I went into sick. We spoke only a little bit about games going into I remember talking about monopoly actually going into sick because, you know, if you don’t know, like, in Monopoly, the most valuable properties are the ones on the corner, right after free parking, the orange ones like Illinois Avenue and stuff like that. And that’s because they’re the ones you’re most likely to land on. And, because they’re also the ones that you’re probably going to land on coming out of jail, for example. And so, you know, games are always fascinating things because there’s, it’s, you know, it requires some combination of strategy and computational thinking, and reading other people and possibly teamwork, possibly, you know, forming alliances and then maybe backstabbing somebody, or how to even think about how you might do that. And the game culture was big and sick. And that kind of kept that alive. For me, I learned how to play backgammon, not especially good or anything like that, but I learned to play backgammon when I was sick and and then, around 2008 2007 2008, somebody gifted me a copy of Settlers of Catan, I realized they call it Catan. Now, but back then it was Settlers of Catan.
Jeff Malec 37:11
And which I think I see on your bookshelf there says it is. And
Kris Abdelmessih 37:15
that’s the same copy. I mean, that’s it. That’s an ancient copy right there 15 years ago, or whatever. And so I remember I remember I was on a beach, reading the rulebook to this, and I said, Well, this is kind of feels kind of complicated. I’ve never really seen a game like this. And then that was a gateway into what we all now know, is the European euro, euro games, and Euro board gaming, and you sort of went to the world, I went to go watch, or want to go to the world board gaming championships in 2008, which was in Lancaster, Pennsylvania, and you just got the chance to play all these super nerdy games with these crazy themes. And you know, it’s a bit of a weird culture, kind of, probably like going to a Civil War reenactment or something like that. My, my wife was one of the only females there. And that was interesting, but the whole idea, but we really enjoyed it, we really enjoyed kind of being in that setting and seeing all the creativity around games. And then as I got and then we were playing a ton of games, I was playing a ton of games in at that time buying tons of games and playing them we had a group and then fast forward, I have kids, the games kind of go to the wayside. You know, there’s no I don’t longer have those taught that time where I can just spend four hours playing with like three friends. So the games kind of go out of my life for a few years. And then my older guy, he turns four or five years old, but six years old, I was able to teach him Catan and we just start playing games at home a lot and it just reemerged in the last few years. And it’s so fertile it’s such a fertile ground for teaching concepts because you get to do the same thing you do in mock trading which is why did you make that it’s a lot of debriefing Why did you make that decision? Why didn’t you know WHY DIDN’T Why did you make that trade? Or do you realize that like you’re you’re stopped out at like in Catan you have a if you get a two to one harbor trading situations like I’m stopped out at two to one on this thing. Why would you trade to have that thing to somebody else because if you make that trade with somebody else instead of trading it with the harbor and Settlers of Catan you’re making them both of you better off but if you trade with just a harbor you just get to be better off so so you increase your lead over everybody else if that. So the concepts like value over replacement things that you like, that’s a fantasy football concept, but that exists everywhere. So like what is the proper games teach you the proper baseline for comparison? In and and then they of course they teach you like the basic stuff like odds how you know DICE DICE odds, those kinds of things. But you can give all that to children without ever having to get into a classroom and teach that you just play a game with them and they’re going to pick it up. I’m Mike, my, you know, it’s amazing to me to watch my older guy like because we’ve been playing so much like he’s he’s very quick on this stuff now. And it’s I think it’s because he developed some patience and focus and tolerance for being able to sit through these sessions, because they were fun while he was learning.
Jeff Malec 40:39
Tina, are you a gamer? You got any favorite board games?
Tina Lindstorm 40:44
I like to play risk. Chris bought me a crude game, which I haven’t played yet. Power Grid. Power power. Oh, well, I You bought me power grid in the aisle. I bought myself a crude crude board game. But I haven’t played because I’m kind of wiped after work every day, because it’s sort of like I’m playing. Right? The whole Susquehanna thing. You’re playing poker all day with your opponents, right? Like, I kind of do that all day. So I’m kind of tired that night. So
Jeff Malec 41:17
give me like a hungry hippo or something. Right? I don’t have to strategize.
Tina Lindstorm 41:20
Yeah, give me a drink. Give me a drink. Give me some karate. Let me go to sleep. So I can do it. Do the same thing the next day.
Jeff Malec 41:29
The and then Steiner, bring it back to us. Tell us how you view games.
Michael Steiner 41:34
Yeah, I love games. And I like the idea of like, in a classroom, my classroom having a leaderboard of like, who’s you know, and maybe anonymous. So just like with, not with, they’re not with their names, but they know where they are. Especially because like, the kids at the top are going to want to stay at the top. And the kids at the bottom are going to say, Oh, wait, you know, like, I gotta get up here. I got to make you know, that like so I like I just like the idea of competition in general and teaching with with competition in mind. For but I but in terms of of games. Yeah. Like any, anytime, anytime someone has a puzzle to figure out and, and it’s presented that way. As as a game is, is much more fun. And you start to you start to invent things, like invent ideas and try them out. Right? So maybe invent invent new language to describe like, what’s happening. So
Jeff Malec 42:35
the but that’s interesting to me. So you’re thinking of in terms more like the game, the power of the game is the competition side of it. Versus to me the power of it is the strategic thinking side of it, but no one in the same.
Michael Steiner 42:47
Oh, and figuring stuff out. And especially if there’s like a chance element like what like, what roll of the dice are gonna get you this? And what are your, you know, like, where’s your playing Monopoly, even though you can’t control the dice like, you kind of know what’s what, you know, you’re expected to get about a year expect to get a seven, right? Yeah. And so like thinking thinking, whenever they’re games with with dice, like thinking strategically, how you’re going to how you’re going to win, or make the best choices. The thing that’s great about teaching with games versus regular teaching where you you know, give a lecture or antacid or the even even if you give someone the, you know, the hands on experience of of taking apart a motor and putting it back, the one thing that games give that that gives you that doesn’t, it does that it’s not provided in any other context, I think, is this, this choice, and this, when students get to make their decisions, and they get the feedback, no, no kid of no student of mine, right now gets to decide, in my physics classes, what the velocity is, and what the time is, to find the distance, right, I’m gonna give them the velocity, I’m gonna give them the time and I say find the distance. There’s not a lot of, there’s not a lot of choices in that, right. So so to teach and to test in the standard way, and just to teach in general is there’s not a lot of choices that the learner gets to make. But with with games, you know, that you get to the person gets to decide on what they want to do shoots not Chutes and Ladders and we have posts, but in other games, right, you get to decide whether you’re going to buy that piece of property and monopoly, whether you’re going to build houses. And the other the other thing and I kind of lifted this from Sal Khan, who has something he’s got, he does something similar to stock slam the game that I started, but one thing that that my game does with with when I do it with middle schoolers, and he Sal Khan mentions this also is that the participants will develop their own language for describing different parts of the game. You don’t have to you don’t have to tell them what a bid and offer are. Before they play my game. They’re going to come up with the what they’re going to come up with the language Sal Khan in his version even goes so far as to say that when he was playing it, he noticed that some his game his game, that people, the participants figured out what it meant to short something, they actually figured out how to turn to the guy next to them say, Hey, can I borrow that? I’ll give it back to you later, I’ll buy it back later, I’m gonna sell it now. So that’s, that’s the thing that games do better than better than regular teaching. Like I said, it’s
Jeff Malec 45:30
gotta be the right kind of game. But that’s what Backgammon is interesting, right? Because people got so fed up with the strategy, they’re like, We need to reintroduce an element of chance. I think that’s where people eventually go back to back gaming, because they’re like, I want the element of chance to kind of juice up the the odds a little bit, when it comes back to the market of there’s always is, as much as you know, you never know. Right? So let’s move on to your game stock slam. So, let’s start in the beginning, tell us what you came up with.
Michael Steiner 46:09
So I knew I always wanted to make something like stock slam, when I was teaching at Susquehanna because I just, there was something that that King gout did with us. He’s, he was a senior trader to us. And he had when I was a junior trader, the education wasn’t as direct as when I took over. So what would happen is a senior trader would be there and say, okay, whatever, I’ll run mock trading until, until the poker game starts. So so so one day King Yao walked in, and he had a plan, he showed us a video of a basketball game that none of us had ever seen before. And, and we made markets on the total number of points throughout the game. So, so it was it was this, it was this basically a random walk, we didn’t know where it was going to end. And we had to make a market around it. It was it was amazing. So in the back of my mind, I always knew that there was a there was a key to the one of the keys was to figure out how to make the make a series of random walks that you could make bets on. And, and that’s something that I wanted to figuring out with stocks land, but so so so I wanted to develop something that would teach the fundamentals of trading in a way that was more repeatable outside of our mock trading sessions that we would run because I think Chris would say also, that the when, when I would, Chris and Tina would agree that after they saw saw stock stocks land that my job is to teach them if I had stock slammed back when I was teaching them if I had that I probably could have gotten them to to the next level in half the time. That’s that’s that’s that’s what my game does. It prepares people to become essentially pit traders. But you could you could take that those skills and move them somewhere else upstairs, but it was to teach to teach the penetrating skills as quickly and strongly as possible to, to these new prints. This
Jeff Malec 48:28
is your chance to hold up the box. Yeah.
Kris Abdelmessih 48:34
So do you have a copy of the game right here and you can pull it up to the screen there.
Jeff Malec 48:39
It was good. Chris 13 Eight, whoever wants to jump in. Tell us what you thought you looked at it. You think it’s fun? You think it’s a teaching tool? A little bit of both? Where do you see it going?
Tina Lindstorm 48:50
I saw it. I thought it was very cool. So when we when Steiner was teaching us first of all he has Steiner has a good personality, for teaching. That’s first of all. You know, he did a few things to me and other kids out of college I’d say you know, first thing he broke down any kind of ego you know, my first the first day I met Steiner, my first day of work, the guy I was clerking for went to the bathroom or something and Steiner walked over. And I talked like a valley girl. I was saying like every three seconds, and he looked at me and he said, Are you fast track? There were two kinds of assistants that Susquehanna people who were assistants for life and there was, you know, assistants who are fast tracked to the treating role. And I first I was shocked I’m like, oh my god, I can’t believe he asked me that. That And I was like, okay, okay. Um, so I think I think that’s, that’s number one right down to ego, right? Everybody was everybody was somebody solid. Everybody was a hotshot at high school in high school in college. Right? They’re all the hot shots, right? So now you have to come over here and you have to start from scratch. Know that you don’t know anything. Okay, so so so in that sense diner, that’s the first thing he did for me. The second thing when we did mock trading was we saw back then there were no random number generators until until Belkin would, you know, we would move the stock around, and he would teach you synthetic relationships, and we had sheets, there’s no computers, you have to learn, you know, put call parity, you have to do math in your head. Okay, the puts here, the stock is here, the strike is here. Okay. And the reverse conversion is here. What’s, what’s the, the the other option? valued? Okay, here’s the call spread, what’s the put spread worth? Some broker comes in ask for? What’s a box? Whatever. Right. So that’s, that was sort of complicated, but his game, you can you can figure out how to how to trade and figure out expected value and a lot of different options, things. So in this sense, there is a big market, I think, for people who want to learn sort of the way to think about trading, the fast paced nature of thinking, and I think this this game simulates it very well. So I thought it was I thought it was a great thing when he when he showed it to me.
Jeff Malec 51:42
And Chris, what are your thoughts?
Kris Abdelmessih 51:45
Yeah, so first of all, I’ll just add, because I agree with everything Tina just said there. But what I will add to it is, when I saw it, one of when I when I when I, the whole reason I went to the internet in the first place is because I don’t know thing one about investing. I didn’t know thing was a really weird thing to say. But I was a trader, but I didn’t know anything about investing. And you got to remember, if you step into you step into the pit at SYG, the first thing they teach you is like, everything’s fair, like you there’s no edge here at all, like your opinions are completely worthless. The stock is this price, that’s what the stocks worth that’s, it’s a very, hey, markets are really efficient. Given that they are super efficient, what can we do in that context? So, you know, ultimately, we didn’t use this language, but that concept of markets are efficiently inefficient is sort of what they were saying without using those words. So when I was, came to the internet was I came to Twitter because I realized I didn’t learn I didn’t know about investing, and I wanted to learn about it. So I started consuming blogs. And I started reading Twitter and trying to figure out like, is this person know what they’re talking about and all that stuff. And when I started writing, it was because it was it was that gradual process of bridging with the people on the investing side we’re talking about and the people that had come from this SIG for trading floor not just sick, but the traders trade or for trading floor people in general. It was
Jeff Malec 53:26
sort of bridging book smarts and street smarts.
Kris Abdelmessih 53:30
Yeah, and I mean, you know, this book smart and smart and streets are people on both sides of that investing in the floor, but it was more of this, this this concept of not having an opinion like floor traders. Any not just a cig any floor trader at any firm, for the most part, is not getting married to a position. They are think they are fluid they are they hold their opinions very loosely, they update very quickly. You know, if I buy this, and then you reload to sell like a whole bunch more, I’m very quickly like, Okay, I’m wrong, you know, like I’ve been had. So this combination of two different ways versus say like maybe a an investor who dollar cost averages and trader doesn’t really dollar cost average like are you right or, you know, if you’re wrong, then you should cut and get you should you should get out unless you have a good reason to think that you should add these kinds of mentalities are very different. And so what I also saw in his game was a bridge to taking some of the things that live inside this game, and bridge them to real world concepts. And so in addition to learning sort of a meta of how to trade, there’s also Hey, this is you’ve seen this in the wild and this lives in the game and you might not have noticed that this isn’t the game. But let’s, let’s highlight that. So that was kind of the other piece that I saw it as a cool way to maybe talk about some of the things that I’ve written about that I’ve noticed on Discovery of trying to reconcile these two points of view.
Jeff Malec 55:16
And just quickly on those points of view, like, both can exist at the same time, right? I can be like, Oh, this energy crisis is stupid. There’s gonna be tons of uranium demand and in the future, and I want to own as much uranium stocks as possible. I can have that view and a five year timeframe and be totally at odds with the trader who has a minute by minute time view and is getting sold into and says, I gotta get out of this position. Right. Not just what makes a market. Right. That’s it?
Kris Abdelmessih 55:45
That’s that’s absolutely, it’s absolutely right. I mean, it, a lot of it is, what is your strategy? And what are the inputs that would go you know, I always have a thing I like to say that, you know, your dashboard should match your strategy. Warren Buffett doesn’t care what the chart looks like. Yeah. And likewise, if you are an options market maker, you don’t give a crap what that company’s cogs are. Right? Yeah. So your dashboard should match? What is
Jeff Malec 56:12
widgets? You mean? Like it’s right. You don’t even care what it does?
Kris Abdelmessih 56:17
Yeah, when I first I mean, it’s a little embarrassing to say. But for the most part, when I started trading equity options, I really didn’t know all the only thing I really knew is what sector they were in, I really didn’t care what the hell they did. Because to me, I was in a heads up poker game with the brokers that came into the pit. I don’t care what the company does. I don’t care what your opinion is. I just, you know, I didn’t, I didn’t know, that’s not, you could have gotten away with that, I think 20 years ago, because the markets were wide enough. Today, you need to have a little bit more of a hybrid approach. It is much more common today, that a market making group is going to have a fundamental research desk, if anything, just to make sure that their options traders have a solid calendar to go off of which is super important. Making sure you know when the events are, you know, when the dividends are you know, when there’s a conference, you know, when a peer has a conference, you need to know all that stuff. We were this was not as well fleshed out 20 years ago, as it is today.
Jeff Malec 57:21
Yeah. Which is another whole interesting topic of this, that whole thing damp and realized, well, if everyone knows all that stuff, it’s like this, the surprises get removed from the market. So it doesn’t get realized as much. But we’ll save that for another day. So Chris, or Tina, do you want to explain the game as you think of it? If so, how it works and what the components are?
Kris Abdelmessih 57:48
Sure. So I think designers used this example before, I think it’s exactly right. You can think of it as a race that goes off that you can you have your you have your ticket of what bet you made. And everybody in the beginning starts with a portfolio, everybody starts at the same amount, the same portfolio and same amount of money. And so the horses, if you just imagine a horse race goes off, and some some, you know, some, some of them go ahead, and some of them are lagging. And you know, the ones that are lagging, their odds are dropping, let’s say everybody starts off equal, and some of them are lagging and their odds drop and some of them are going up and are taking the lead their odds increase. So the question becomes, how much do you want to pay for any particular ticket so people can offer to make trades, I’ll buy your ticket, you know, like, let’s say, for example, when the game starts out every every horse is worth has an equal chance of winning and the amount the maximum amount you can win is, you know, the winning horses with 100 bucks. So if there’s eight horses, every horse is worth 12 and a half bucks at the start.
Jeff Malec 59:02
I just pulled it up on the screen here while we’re talking about
Kris Abdelmessih 59:05
right right there. So here you can see that, okay, so in this case, the red horse has a authentically yellow horse and the great horse are tied for the lead right now. And we know that they are going to move 28 steps or 30 steps, depending on which horse we’re talking about here. They’re going to move either one of those or they’re going to be unchanged. So the question is, is how much are you willing to pay for the ticket for one of these winning horses? So these two guys are in the lead? And if at the very beginning every horse starts at 12 and a half bucks in terms of expectancy? What are you willing to bid for the yellow or the gray horse right now? What’s the right market for the yellow or the gray horse after we see them leave? And here you just ran it again. The grey horses jumped out to a come Manding LEED of 151, yellow is now dropped to 93. And purple has jumped up to 125 to be in second place. So how much do you update Gray’s odds of winning the entire thing. And at the same time, the number of periods is declining at the at the same time, so it’s very similar. It’s exactly the similar to betting on NCAA Tournament, or who’s going to win the Super Bowl. Everybody, if we assume that every team is equal at the beginning, which we know that’s not true, but if they were, everybody would start as one, let’s say NCAA, everybody starts off worth 160 fourths of $1. If we settle the contract at $64. So as people move as teams move through the tournament, harder their odds change. And this is not just you know, it’s not just theoretical. This was betting on NCAA odds like this, treating NCAA teams, this was super popular on Wall Street, still super popular on Wall Street, not just on the trading floor. But the brokers on the trading floor. Were talking to the guys on the bank desk, or the gals in the bank desk and say, Hey, I got a guy on the floor that’s willing to pay, you know, 14 for Kansas, where are you on Kansas?
Jeff Malec 1:01:18
Oh, yeah, well, we buy. I’m sure a lot of our listeners have done a Calcutta or anything where you bid on the teams, right? So it’s similar. There’s a few famous Chicago, the the, I think the FBI came in and shut down the mark one at some point because it got too big.
Kris Abdelmessih 1:01:35
Right. So I think that this is, it’s not that this is familiar to this will be familiar to traders. But it’s put together in this very tidy package. It’s got this great online scoreboard, it can support a lot of people can play it at the same time. And you have. And then you have Steiner, who is an amazing facilitator, and this is something I really want to emphasize. If you just saw this game on a shelf, it might be you need sort of a you might want a guide at the beginning to kind of get you started. And Steiner is sort of the perfect guide to start focusing your maybe start pushing you in the direction of what kinds of things you need to be thinking about when you play a game like this, and facilitating transactions. You know, facilitating, just like in mock trading, you would have everybody standing around as if they were trading options in a pit. And the senior traders who are running mock, they would come in and they would just throw out an order. They would say, hey, eight trainees who were standing in the pit here, what’s the market in the Nov 2530, call spread, I needed, you know, a 500 up market. And the traders are going to make a competition they’re going to who’s going to be the fastest to make a market who’s going to be able to price that thing the best. So and the broker is going to trade with the best offer. How where can you price that thing so that you have edge and you still have margin, but the broker will trade with you. You know, if you are constantly conservative in the market that you make, you’ll get no market share, nobody will ever trade with you. If you’re too aggressive, you will get all the market share and you’re going to be wearing them. So, finding that balance,
Jeff Malec 1:03:24
which is similar to poker there of like, if you play a lot of hands you got to write you’re gonna have a lot more volatility.
Kris Abdelmessih 1:03:30
That’s right. And if you don’t play enough hands, the ante is going to gonna kill you.
Jeff Malec 1:03:35
I just popped in my head as I was looking at yellow here turning into like, peloton or something? Did you ever think it’d be an interesting case study right with your students or something or in this New York weekend to run it with the colors and then run it with random stock names? Right? And if you get a bias in there of like, oh, I don’t want to,
Michael Steiner 1:03:57
I do have I do have an option. If you explored an upper right corner there with a little paw print. We can you can make markets instead of the colors. You see the little paw print up there. Yeah, nope. Next one. So you can we could we can make markets on ladybug.is octopus? Yeah, it’s Wait, sometimes it’s more fun to yell out. How’s the frog?
Jeff Malec 1:04:19
Right? tended on the frog? Yeah, I’m gonna fail the steak math test. But why wouldn’t I always just so this wager piece is like the volatility of it basically. Right? How much it can move in the next round.
Michael Steiner 1:04:32
Right? And I think I told you may have told Chris Tina at least the only bias that’s built into this is that the wager amount as the person gets into like, the higher your your place the lower the average wager is? So if you hit if you hit advanced right now you’ll see the red who’s in first place. He only wagered 23 Right and then the people in the farther the farther back places they wagered, on average, they waited a little bit more. So I’ve built in some,
Jeff Malec 1:05:05
so they can come back essentially.
Michael Steiner 1:05:07
Yeah, and and you can go on it, I’ve actually also built in like a little bit of a dead cat bounce not completely dead. Obviously, the yellow rubber ducky there went bust, but I built it in so that you could bet more than you have. So that actually provides for a slight upward bias when the slight upward bias when the person is really, really low. So there’s, there’s a little bit of personality built into it a little bit of bias, but not to the point where anybody would have a substantial amount of edge. And then after watching a few simulations, it’s it’s it’s almost negligible. So
Jeff Malec 1:05:47
and then confuse me the first time this is just the random number generator, essentially, what we’re looking at here, the game itself is the cards and the concept of trading back and forth on what the result of this random generator is.
Michael Steiner 1:06:01
Exactly, exactly right. This is the race that you’re betting on in the live setting by by swapping the cards, which are the bad at the bats and swapping cash, so and so
Jeff Malec 1:06:11
who’s the target audience? Anyone? Everyone? Or is it kind of for a bit of financial literacy? And
Michael Steiner 1:06:18
it’s, I’m not sure yet. I mean, as a teacher, right, like, I want to, I do like the game, just to play it and to teach from it. But I kind of think it might be more for what I’m really thinking is building a course around around the game, because it goes really deep. And the concepts, the concepts and mechanics and understanding. You know, just understanding risk and measuring stuff like expected value and understanding market making, shorting I’m going to add options to this to the game also where you can trade options. Like adding all of that it’s almost, you know, since it’s getting in my mind so big, it’s not going to be just a game, it’s going to be kind of like building entire entire course around it.
Jeff Malec 1:07:10
And on that vein, do you think financial literacy, like how you see these high school kids? Is that a problem out there? Do you think?
Michael Steiner 1:07:19
Oh, yeah, it’s hard for me, I again, I kind of have a solution, because so it’s hard for me to be critical. Although, you know, there’s, there’s no, there’s no, there’s no stakes in it for for a kid when they’re doing a financial literacy course. Right? Like there. Yeah. Like, there’s some kids who are going to come in and get a lot of deep insight and understanding why credit card interest rates are so high. But most kids are just, they just want to know if it’s gonna be on the test. And they just want to get through it. And it’s not it’s not applicable to their lives. I mean, sex education is more applicable to a teenager’s life and financial literacy.
Jeff Malec 1:07:57
Yeah, but only by a few years, probably, right.
Michael Steiner 1:08:00
Yeah, no. So so the testing of it, I don’t have a good solution to it, you know, a lot a lot of schools offer, you can Oh, you can get through this course, by taking it in the summer of financial literacy course in the summer, you can take it online, and that’s going to that’s going to satisfy the requirement. Or for us teaching you financial literacy, and the students look at it exactly. Like you’d expect them to look at something that’s mandatory. It’s like, alright,
Jeff Malec 1:08:25
you know, What score do I need to get?
Michael Steiner 1:08:27
Yeah, yeah, they have to go to Driver’s Ed. Class, in order to be able to go and take the test, they have to attend the class. But when they are attending that class, they’re not particularly interested in, they just want to know what the test is going to be and know, and what the answers are. So, so I like the idea of teaching financial literacy. I think with my with my game, I can teach, like deep insights into understanding trading and Bayesian inference and financial decisions under uncertainty, things like that. But teaching a budget household budget, oh, my gosh, that’s a snore fest for any teenager.
Jeff Malec 1:09:05
Right? Like, that’s the Why do I need to learn this? What is this gonna do for me?
Michael Steiner 1:09:09
Yeah, are teaching the value of compound interest? I mean, their thoughts aren’t past the next like two months, maybe two years. And it’s understandable, right? They’re changing so much, they’re stuck. They’re gonna be a different person in two years. Yeah. So so it’s hard to it’s hard to capture that kind of that the importance of those things, and I don’t have the right answer to do it.
Jeff Malec 1:09:30
So when you can argue like, Well, that was the game of life or even monopoly or something like teach you not to spend all that but then again, yeah. And what are your thoughts on like the gamification which has become a bad word in terms of like Robin Hood and some of these platforms where right if you do an option trade and confetti goes on the screen and you did it? Like if you think market goes up by cause if you think market down by puts? So, yeah, what are your thoughts in general like that’s the bad sort of gamification?
Michael Steiner 1:10:00
Oh, yeah. Yeah, for sure. If I were to make a value judgment, I would say that that’s that’s probably not the best of the best use of gamification, right?
Jeff Malec 1:10:09
But it seems like this something like this could be like, Hey, here’s how you can write a little tutorial game to teach yourself how to trade options, or even how to trade Bitcoin or stocks or whatever the case might be. Yeah. Although there’s not binary in that case, right? You might get out with some in the other one is first, second. And third.
Michael Steiner 1:10:30
Oh, yeah, there was the it’s another outcome for for tickets for how the how the pay off is? Yeah. I don’t know about I don’t know. gamifying. Hooking people into the, they’re not learning anything. They’re just getting the feedback. And then and then getting hooked on the confetti, and, and the roulette, roulette wheel kind of thing. Getting watching it spin.
Jeff Malec 1:10:56
And so we touched on a little bit you’re currently teach high school physics? And some calculus and stats. Tutor on the side?
Michael Steiner 1:11:06
Yeah, yeah, it’ll help anyone with any math or physics?
Jeff Malec 1:11:10
So how are we looking for America’s youth? Are we in good hands? Or are we Are we dead are the Chinese and everyone else going to kick our butts? Because you see all these test results and everything that we just keep lagging further and further behind? But you know, they’re on the front lines. Do you see that? Or? No,
Michael Steiner 1:11:29
I don’t, I don’t, I don’t, I don’t see it, honestly. And my world is so small, compared to everything else. I’m in a suburban school with, with mixed, very mixed, very diverse group of people. And I can honestly say, like, the most the thing that I that I, that I feel more than anything coming from the students is just profound kindness. And they’re kind to each other. And they’re kind to the kind to themselves. And, and that gives that gives me enough, that gives me enough hope for anything else. The
Jeff Malec 1:12:04
like, where do they lose their way? They’re like, how do we become well, the academic divisive in the country? Yeah, good. They’re good at that level, right.
Michael Steiner 1:12:13
The, well, the academics or the academics, it took a hit from the COVID, and the remote instruction and all that, that’s making a comeback. Like the standard, you know, coming back, it’s going to take a few more years. But that but that, like I say, that’s the one thing that gives me the, I think we’re going to be fine, because these kids all they they’re taking care of each other and they’re taking care of themselves so and like just like helping each other with just you watch them help each other with like math problems. And you’re like, Man, this is, this is awesome. Yeah, they’re, they’re, you know, they might not be, I think AP scores, I don’t know, if AP scores have really decreased as much for the pandemic, which is a good I think that’s a might be a really good gauge to see how our education system is still holding up.
Jeff Malec 1:12:59
I like it a hopeful message. Usually we have everyone on here talking global macro, and the US is going to fail and the dollar is junk, and oh, no, go, yes.
Michael Steiner 1:13:09
We have some awesome, like entrepreneurs and people who think like, just like nobody else. And just people who are not going to give up. I mean, that’s what an American is. I mean, typical American isn’t lazy and, and dumb. Like the typical American is someone who looks at a problem and says, like, yeah, I can patch that. And I can fix it, maybe I can come up with something better and, and make some money from it.
Jeff Malec 1:13:33
So you launched the game. Now you guys are doing a little meetup in New York City at the beginning of October. So tell us what’s going on there. Who’s running that Steiner?
Kris Abdelmessih 1:13:45
Yeah, so it’s going to be October 4, fifth and seventh. In New York City, it’s going to be in Midtown, we’ll reveal the location A bit later to the people that are getting in. As far as and when I say getting in it’s there’s nothing meant to be exclusive about it. It’s just there’s limited amount of space. So it’s not, it’s completely free. There’s a limited amount of space however, we meet Tina and Steiner, we will all be there, there will be a mix of veterans that we know from the business 20 years ago down to learners that are you know, 18 years old, that are on the internet and are just super interested in learning about this kind of stuff. And I want to just emphasize that it’s a totally no ego, super welcoming environment. And we just we want to we want people to have a good time. And we from our point of view, we are trying to learn how other people can learn better. So you know, this is the first time we’re doing this and we’re really interested in you know, if we try to approach a topic in such in such a way, is that landing is it not landing we’re going Gonna get feedback from everybody, we would love to go out with attendees afterwards, you know, go to happy hour or whatever, and just speak informally about it experience and, you know, to kind of be part networking part meeting people part playing the game or learning. And it’s just an experiment that we’re going to see how it goes.
Jeff Malec 1:15:21
Sounds like fun, I might have to go. Definitely. It’s going to be in Tina’s backyard I think. Sort of, not literally. And so and help me understand because I saw the video you had Steinar of the the kids playing it, and there were like, 30, or some in there. So if I have more than eight people, it’s just you can, everyone gets more and several people can own each horse, so to speak.
Michael Steiner 1:15:51
So everyone starts with the same portfolio and and so as many portfolios as you can print, that’s how many people can play any round of this game. So I I’m really looking forward to some point, playing this game in, in maybe a conference setting with 100 or more people in like, just one open outcry. I mean, you advance the game there pretty fast. But if 15 teenagers in the bottom floor of a library are going to be loud and jump around and get the game right away. It’s with 100 plus people, it’s going to be the funnest, funnest way to
Jeff Malec 1:16:33
I want to start using it on due diligence meetings. I’m like, Okay, we’re gonna get these five people, you got to play the game against them. And if you don’t win, I’m not sure about an allegation. I’m not sure about your skill level All right, Steiner, last thoughts from you. Give us your pitch come out to New York.
Michael Steiner 1:16:55
Oh, yeah, it’s gonna be it’s gonna be a party. I’m so looking forward to. reconnecting to these people in my life that are that were in my life. At that time, and they were just so fun to be with them. So it’s good. That’s going to be the number one thing and then just to have just to be able to play this game and yeah, it’s a rockin good time.
Jeff Malec 1:17:21
Tell us about the hat. Mama boys.
Michael Steiner 1:17:24
Oh, it’s just my, my son had a party and somebody it wasn’t a big party. It somebody left the hat on the counter. And I saw it and and, and I liked it. So I insisted, I told my son before I take this, you have two days to find the owner. Otherwise, I’m going to take it and I knew I knew he wasn’t going to try to find the owner. So I took it, and I wore it. And Mike, my girlfriend saw it. And she laughed. And I was like, this is perfect. This is exactly this is exactly for me. Mom of boys.
Jeff Malec 1:18:02
And then it begs the question, though, did your son have a party with moms there? I do have like 30 moms at his party.
Michael Steiner 1:18:09
That no idea. That’s it? It’s my hat now and but yeah, he had some moms over at
Jeff Malec 1:18:17
Chris last night.
Kris Abdelmessih 1:18:19
Oh, yeah. So for me this is this is super fun to be doing this super fun to be reconnecting with this team. And, you know, my favorite thing in the world is watching people like get switched on, feel unlocked. Steiner is a master of giving people that feeling. And it’s a total privilege for me to be able to be a witness to that and to help facilitate it and help in any way that I possibly can and to meet all these people that are interested in bettering themselves and learning more. So I’m just super psyched to watch people. Get excited
Jeff Malec 1:19:01
about it. We’ll leave it there. Thank you guys. And we’ll see you in New York Oakley.
Kris Abdelmessih 1:19:08
Thanks, Jeff. Appreciate it. Yeah.
