Alex Martin

Reupping this story from last month on Kristi Noem's tenure at DHS: wsj.com/politics/polic…

“When the secretary’s office was briefed on the report, officials there gave it a higher level of classification and blocked it from being publicly released, people familiar with the matter said.” wsj.com/politics/natio…

I'll do a little FAQ for if you clicked over to my profile from the WSJ article, which got more popular than I expected. Q: Was this a terrible risk? A: I promise it was fine and I was never worried about it. Closer to 100% than 99%, ex ante. The article mentions I considered it more like a bond's risk profile. Q: Really? Why so certain? A: Yeah, really. I'd divide the issues into three parts: (a) the underlying truth of the federal budget, (b) the translation of that into the resolution condition, and (c) Kalshi's safety as a platform. I came away fully happy on all three counts. A lot of people are antsy about 1-2 of these while assuming the other 1-2 as a given, depending on what they're familiar with. All three were solid; we can go through them in turn. Q: Why couldn't federal spending decline? A: Federal spending is dominated by senior programs with COLAs and interest on the debt, which was rolling over into higher interest rates. Growth in these things is simply larger than the discretionary spending cuts. I also did this *during* the year 2025 and tracked Treasury outflows so I was somewhat looking at what had already happened, not what was hypothetically going to happen. Q: Why couldn't federal spending get miscounted, e.g. by an unreliable political source? A: The count that mattered for the market's resolution is a count that comes from the BEA as part of the GDP calculation, that then gets auto-imported onto a St Louis Fed website. These sources are apolitical and reliable and haven't had any turmoil. This is also an unambiguous real-number criterion so I wasn't worried about it getting resolved right. Q: What about the risk of Kalshi itself? A: They put people's stakes in a kind of money market fund as collateral and fund themselves on fees. Customers lose money on net, but in a clear and transparent way. Functionally they sell $1.00 to two people with mutually exclusive bets for $1.01 or $1.02, so they can both earn revenue and collateralize the obligations. If you're right about the underlying it's an ordinary collateralized loan. If you remember something about it being crypto-adjacent or using blockchain-like resolution methods, that's a different website. Q: Doesn't risking a larger amount of money to pick up a smaller amount of money seem like a bad idea? A: Most good assets look like this, actually; you do risk principal on every investment, often for a smallish return. If anything, assets with potential for super-high returns relative to principal, like out-of-the-money call options, are the dangerous ones. With respect to prediction markets in particular, the intuition in this Q turns out to be a bad instinct. The best literature shows "longshot bias" in prediction markets more than not; that is, underdog positions are overrated and favorites are underrated. Q: Were you really "risking it all?" A: Honestly, no. Liquid financial wealth for 30-somethings is almost always pretty low but they have big future earnings potential and maybe home equity and retirement accounts too. I have plenty of that stuff, so in a sense this was not actually a huge fraction of my net present value of future consumption. Those things are mentioned in the article and they do make the story less dramatic. Q: You don't have much money. A: If you think I don't have much, you might have missed that I have home equity and a 401k in addition to the money invested here. In general, 30-something personal finance is dominated by these illiquid assets. If you did factor those in and still think that's not much money, then you might just be quite rich; good for you! Q: You have a lot of money. A: This is closer to the truth in an objective sense. Q: Will you pay taxes? A: Yes, always do. Though the guidance on this form of income could be improved. Q: Does tax reduce the rate of return? A: Yeah. Although interest on Kalshi clearinghouse money puts my rate of return over 40%, I'd say NPV of tax considerations knock it back to 29% or so. Q: Earning a 29% return at scale is easy. A: Probably not, but if you really do find it easy then you've got much better things to do than argue here. Q: There were better trades possible, why pay attention to this one? A: I'd guess because prediction markets at their best are supposed to draw out falsifiability and conviction on issues like federal spending. Q: But many prediction markets are very frivolous. A: Certainly. Q: You're woke and hate Elon. A: He has a mixed legacy for sure but I wish him the best especially on his most productive enterprises like SpaceX and Tesla. Q: Are you doing interviews on this? A: Nah I gotta get back to real work, this was fun though!

At the peak of DOGE mania, one man bet his life savings against Elon Musk wsj.com/finance/invest… via @WSJ

@nick_underhill You are psychotic, but in a good way.

We built a play designer that allows you to make your own plays, build out the depth chart, substitute players and share a pic of whatever you did when you're done. There are also some preloaded concepts the Saints like to run if you want to see what they look like and learn more about the team. Let me know if you find any broken parts. neworleans.football/page/play-tool

Happy Mardi Gras! Please rise for the playing of our anthem. youtu.be/Ru_6po43WKs

I'm working at a coffee shop today and am currently watching an older gentleman read the print edition of the Wall Street Journal and mark each story with a checkmark after he finishes it. Long live print

Trump has complained to aides repeatedly in recent weeks about Attorney General Pam Bondi, describing her as weak and an ineffective enforcer of his agenda as he pressures the DOJ to more aggressively pursue his priorities. @jdawsey1 @sgurman @cryanbarber wsj.com/politics/polic…

Five years ago. Seems like five lifetimes.

Also in the story: James Sample, a professor at Hofstra University’s law school, called Dershowitz’s idea “absurd.”

Fed governor Chris Waller this morning: We can make the price level go down if you want, but you’re not going to like it.

A few years ago @crampell had a nice column explaining why prices were not, in fact, going to go back down. washingtonpost.com/opinions/2023/…

Two heists made in broad daylight present a scarier challenge for museums worn out by soup-throwing protesters. on.wsj.com/4q5AjgY

Documents detail plans for U.S. financial firms and other businesses to tap roughly $200 billion of frozen Russian assets for projects in Ukraine—including a massive new data center to be powered by a nuclear plant currently occupied by Russian troops. wsj.com/world/europe/u…

Clinical trials can be the difference between life and death for #cancer survivors. Here’s one way to try and find one that’s right for you. after-treatment.com/p/finding-the-…

LSU when they had 39 scholarship players in 2021 for the Texas Bowl:

Rep. Elise Stefanik, a top Trump ally, criticized House Speaker Mike Johnson, calling him an ineffective leader who is losing control over the GOP conference headed into the midterm elections on.wsj.com/48eoO0E

This is the most joyless tech revolution ever. Wall Street loves AI but ordinary folks greet it with anxiety. Contrast to 90s when they were comfortable with Internet & related tech. A factor in the disconnect between good data & bad sentiment. My column: wsj.com/tech/ai/the-mo…

How do you figure out which #Biohacking companies are good and which ones are full of crap? ➡️ after-treatment.com/p/can-biohacki…

The Comey prosecution hit a new and surprising skid Wednesday as the Justice Department acknowledged that a full grand jury never reviewed the final indictment of the former FBI director, a concession that could further jeopardize the case. W @cryanbarber: wsj.com/us-news/law/co…