How to Play the Money Game with Michael Santoli
The Compound and Friends - The Compound
In this episode of 'The Compound and Friends,' host Michael Santoli discusses his unique perspective on financial journalism, emphasizing storytelling over prediction. Drawing from
Key takeaways
- The most satisfying aspect of financial journalism for Santoli is not being right about predictions but effectively illuminating complex systems for readers.
- Gamblers are often driven by the suspense before a result rather than the actual win, mirroring the thrill of market anticipation.
Main topics
- The psychology of financial markets
- Role of the journalist vs. practitioner in finance
Notable quotes
"I don't have the gambling thing. And the more I've kind of covered markets and learned about them, you don't have that satisfaction out of a winning bet."
"The thing that gamblers are chasing is not the winning. It's the moment right before you find out whether you won or lost."
Conclusion
Michael Santoli reflects on his career as a financial journalist not as a trader or forecaster
Transcript preview
Speaker 6 (0:00) Yankees won a funeral. They did. They're squeaking them out. You go to the stadium a lot? I don't go a lot. I used to go. I used to have like a little mini plan. I'm so old. I can't warm up to the new stadium. I know it's been there like 17 years or whatever, but it's like not the place I walked into when I was five years old. Oh, Speaker 4 (0:20) you should Speaker 6 (0:20) have come Speaker 4 (0:20) with me to Jay-Z. You would have loved it that night. Oh, yeah? Oh, my God. So they didn't have Yankee security there. They had it. They had an outsourced security. And I think there's like 50,000 tickets sold. And then maybe another 50,000 people who thought either somehow they'd get in or- I'm on the list. Speaker 6 (0:39) Or Speaker 4 (0:39) if you're right outside the stadium, you can listen and just hang out. And it's in one of the most population-dense neighborhoods maybe in the world. Yeah. And it was just like it was impossible. Speaker 4 (0:52) I went Saturday night, so it wasn't quite as bad as the next night, Sunday night, where he didn't go on stage until 1230. Oh, my God. But it took us two hours to get in. We planned for that. And then it took us two hours to leave. No kidding. Which is the worst. Yes. And everybody's, like, standing shoulder to shoulder. They just— Yeah. They had two—it's six gates, Yankee Stadium. They had two gates open, which I don't understand. It's Speaker 6 (1:16) a Speaker 4 (1:16) nightmare. I know. I think what they thought is that— they'd be able to better control the flow out of the street. Fewer checkpoints, yeah. But it did. Speaker 6 (1:25) So this is the thing where they like Speaker 4 (1:27) cut it into a doc or something? The Four Knights or whatever it was? They're going to have to make a movie. I think they did. They're going to have to because it was a true like milestone event. Oasis Speaker 5 (1:39) is coming out at IMAX. Their tour. There Speaker 6 (1:41) you go. Speaker 4 (1:42) Probably Speaker 6 (1:42) the Speaker 4 (1:42) sphere. Who knows? Speaker 5 (1:44) That'd be sick. I saw them at the Rose Bowl last year before Future Proof. Amazing. You know Speaker 4 (1:49) he's Speaker 6 (1:49) at Speaker 4 (1:49) Yankee Stadium a lot? Terranova's there. I know it. Like almost every game. I know. He just loves it so much. He Speaker 6 (1:55) has a Speaker 4 (1:55) plan. I'm going with him. You're going to go to the 9-11? Speaker 6 (1:58) Oh, with you. Yeah. Speaker 4 (1:58) I was going to go. Speaker 6 (2:00) Yeah. Oh, you're not going? Speaker 4 (2:00) It's Jewish holiday. Speaker 6 (2:01) Oh, what does it fall on? I Speaker 4 (2:03) don't know. Rosh Hashanah? What's 9-11? September 11th. Probably Rosh Hashanah. Rosh. Do Speaker 5 (2:07) you consider yourself the greatest financial journalist of all time? Oh my God. No, I don't. I try not to consider myself at all. Speaker 4 (2:16) Why are you so awesome? I mean, come on. We are going to make you blush. I've Speaker 5 (2:22) aged Speaker 6 (2:22) into it. Speaker 5 (2:23) No, but you know what? I feel this way, and I think I speak for the fans. You feel as much like a practitioner as anybody in modern times that has reported on the financial markets. Speaker 6 (2:35) I Speaker 5 (2:35) guess I'll take that as a compliment. Speaker 4 (2:38) You're saying you feel that way about him or he feels that way? That's how I feel. Oh, because you said you. Speaker 5 (2:45) Whatever I said. I said how I feel. I Speaker 4 (2:46) know Speaker 5 (2:46) what you meant. Speaker 4 (2:47) I was there. Speaker 5 (2:48) That's how I feel. You'll take it? Or you'll take that compliment? I Speaker 6 (2:52) will Speaker 5 (2:52) take that, although... You feel like you're more than just an observer. I'm saying I feel that. I just said it again. Right. Go Speaker 6 (2:58) ahead. I feel like I always view it as kind of color commentator, but maybe sounding a little more like the color commentator who has a good feel for how the game is played as opposed to just covering it in a neutral way. But the funny thing about it is I have zero interest and never have had an interest in actually doing this stuff. Like I've never wanted to trade. I've multiple times been like, hey, come on over, sell side by side, you know, try Speaker 4 (3:25) it out. And I've never been tempted. You've never like been so right on something that ends up happening where you were like, you know, in an alternate universe, I'm a two and 20 and I capitalize on this thing that I saw coming before anyone else. Only in the most like abstract hypothetical Speaker 6 (3:42) way. Not in a way where I legitimately like crave that feeling. Okay. And I just think it's honestly a temperament thing. Like, I don't have the gambling thing. And the more I've kind of covered markets and learned about them. You don't have, Speaker 4 (3:55) you don't get the satisfaction out of a winning bet. Not really. Is that what you mean when you say you don't, I don't Speaker 5 (4:01) have Speaker 4 (4:01) that Speaker 5 (4:01) either. You Speaker 4 (4:01) know what? Because Speaker 6 (4:02) you're Speaker 5 (4:02) an Speaker 6 (4:02) umpire. You call balls and strikes. You don't really make predictions. It could be that. Yeah. That's true. I don't actually go out and say this stock's going to here. Or I think the market's going to have a, you know, 15 % drop or anything like that. But I just feel like, and by the way, I love the research on gamblers where they, I don't know if it's been debunked yet, but they say the thing that gamblers are chasing is not the winning. It's the moment right before you find out whether you won or lost. Speaker 4 (4:28) Really? It's like that Speaker 6 (4:30) suspense Speaker 4 (4:31) of like, it might Speaker 6 (4:32) happen. Speaker 4 (4:32) It's Speaker 6 (4:33) like Speaker 4 (4:33) Christmas morning, right before you pull the wrapping paper off the gift. No, you're right. Speaker 5 (4:37) It Speaker 4 (4:37) might be when you're happiest. I remember Speaker 5 (4:38) last year, I bet again, I moneyed on the Lions in-game. I think I got to the Giants last year. And when Gibbs broke that run and you knew that you were about to hit Speaker 6 (4:45) the bed, Speaker 5 (4:45) it's the best feeling. Speaker 6 (4:46) Yeah. Well, yeah, exactly. Right before. But I mean, in terms of being a practitioner, like I never would pretend that I could actually, you know, I could like fake it. I could have people come along, have Speaker 4 (4:56) people come along and said, why don't you join? Why don't you join my firm? We need a smart guy that understands markets who could communicate to clients. Yeah. I'm sure you've been tempted over the years. That's happened. Yeah. Speaker 6 (5:05) And, you know, I'm not going to say that I haven't. in a contract negotiation, floated that prospect out there as a stalking horse. Smart. They didn't bite. But, you know, I do think that it's an analogous role to be kind of a strategist as you guys, you know, anything like you guys are. But for me, it's been much more about, like, I didn't come into this with some innate love or interest in financial stuff. Like my first job out of college was at this financial trade rag. It was publisher of like a lot of newsletters in a trade magazine called Investment Dealers Digest. And when I was going for the interviews, I was pretty sure, but not a hundred percent certain that the stock tables in the newspaper were in dollars. Speaker 6 (5:53) Like I pretty I was pretty sure but like they don't put the dollar sign Maybe it's points of some sort and plus the fractions and everything at the time So, you know I kind of came into it and then I realized that it's a great forum for all the things you would ever want to write about and talk about which is like winners and losers and these complex systems and trying to explain how the world works and you know, I think I also have looked up to people who've done this type of thing whether it's a strategist or a writer who Speaker 6 (6:21) They utilize everything they Speaker 4 (6:22) know, right? I mean, what kind of job? So wait, I totally identify with that. Like yesterday, I don't know anything about science. Yeah. Yesterday, I just happened to have personally found the news about Moderna effectively being able to, in six weeks, create a personalized cancer vaccine specifically tuned in to like your type of tumor and thereby. injecting that mRNA into a person and having it go to work on any potential risks because it's, and then, and then the stock went up 170 % or something on the day. I just went down this whole rabbit hole of like, why is this such huge news? Because I'm not like a biotech trader. But I agree with you. Like every day you get an opportunity to learn something new and talk about something completely new. And maybe people in other disciplines can say that. But finance touches, money touches everything in the whole world. So sports, like anything that you could possibly be interested in. There's a monetary angle. I was Speaker 6 (7:32) a history major. I was like a liberal arts guy. And I always joked that I majored in history because it included everything. Right. Like, you know, and so it's like the decision of not making a decision. So like, if we're talking about oil, you want to know about the history of Russia wanting to have some kind of a domain over that part of the world throughout Ukraine. That's relevant. So where do you Speaker 4 (7:51) get your most satisfaction from then? So it's obviously not about being right. And most of the time you're not like make writing predictions anyway. Right. Is it, I wrote this beautifully. Like I did, I did a 600 word column. I perfectly explained everything the reader could need. It was a little bit literary and it's just, it was like a flawless piece. Is that for you? Something close to that. More so than being right about something or being. Speaker 6 (8:17) Yeah, I mean, obviously both are great, but it's much more the former. It's much more I captured what's happening or what seems to be happening in a way that is efficient, eloquent, and it actually illuminates it for somebody reading it. It was looking at it from a way where it feels like, yeah, that feels right. Speaker 4 (8:38) So I think that's why you're my favorite investment writer, markets columnist, because you're the best at that. You're the best at that, I think ever. And I could cite specific columns that you've done with the history thing that you'd like. You must have written this 25 years ago. You're talking about the Hartford Insurance Group. Oh, yeah. And you do a column and you explain why are the insurance companies in Hartford. It turns out it's the highest elevation in New England. That's where you got that from. I found out. I found out. Speaker 5 (9:10) Because he's taught us. He never gave you credit. I've heard that story a million times. I never gave credit to the Speaker 6 (9:15) person I heard it from. And what it really actually was, I believe it's like a very wide part of the river. So I almost misstated it. But you've done that every week. Speaker 4 (9:25) For 30 years. It's unbelievable. You give people more than the stock went up 5%. The CEO said this. Here's what you need to look out for in the earnings next week. You're doing pros. It stands out. And I just, I think Speaker 6 (9:40) it's brilliant. Well, thanks. I mean, and you know, look, a lot of it goes back to, I came out of, I always say people do what I do roughly, financial journalism, any kind of journalism. Some people come at it because. they're writers and they're good at articulating a thing or they feel like that's their edge. Other people are just like news hounds. They just want scoops. They just want to crack heads and find the information first. And I like to speak authoritatively about things and all that, but I kind of got off the scoop treadmill at a very young age and was like, let me just try and describe. But also that goes back to Barron's where I spent 15 years and you had a whole week of kind of like. absorbing, digesting what's going on, seeing all the other short-term storylines play out in a given week. You're filing on Friday night. Filing on Friday night. And then on Saturday morning at the time, you know, physical newspaper arriving on Saturday morning, you had a way of trying to just distill it into what mattered most or was most entertaining to read about the Speaker 4 (10:37) market. Speaker 6 (10:37) So Speaker 4 (10:38) now you're on TV. Michael, why did the Dow just go up? 25 points in the last 10 minutes. Not a joke. That's exactly what it is. Well, I think you do both equally well. All right. Did we do the show yet? The show's over. See ya. All right. Guys, this is... Do your thing. This podcast is brought to you by DBMF, the world's largest managed futures ETF. Feel like the world's changing fast? Sure do. 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What's with the glasses? Is that paparazzi? Speaker 1 (13:06) Are Speaker 4 (13:07) we laying low, Nicole? All right. Ladies and gentlemen, welcome to the World's Greatest Investing Podcast. My name is downtown Josh Brown. First time listeners, welcome. You're in for a treat. Last time listeners, I'm sorry. We tried. We did our best. With me today, as always, my co-host, Mr. Michael Batnick. Michael, say hello. Hello, hello. We have... Financial media royalty in the house. Michael Santoli is co-anchor of CNBC's Closing Bell Overtime and serves as the network's senior markets commentator. He also writes regular columns and produces original video for CNBC.com and CNBC Pro. Santoli joined CNBC in October 2015 from Yahoo Finance, where he was a senior columnist and before that, of course, a legendary run at Barron's. 15 years as a columnist and feature writer, having begun his career in the early 90s, covering the securities industry for Dow Jones Newswires. Mr. Santoli, thank you so much for being here. So Speaker 6 (14:13) great to be here. The Speaker 4 (14:15) crowd is going absolutely bananas. Thanks for accepting my invitation to be invited. All right. I'm telling you that I have always wanted to have you on, but... You're on closing bell overtime. We tape the show at three o'clock. Josh is Speaker 5 (14:29) too nice. I've asked you a million times and he always says he can't do it. I Speaker 6 (14:32) always say, f*** that guy. I Speaker 5 (14:34) appreciate being Speaker 6 (14:36) considered and just left in the waiting room. I was a little Speaker 4 (14:39) nervous to ask you because I know you're on TV. But I did want to tell you, you taught me the stock market. This is a true story. And I've told you this before, but I want the audience to understand Speaker 6 (14:48) this. Speaker 4 (14:48) You Speaker 6 (14:48) have and Speaker 4 (14:48) you make it sound like I'm 30 years older than Speaker 6 (14:50) you, Speaker 4 (14:50) which is fine. It's okay. But you really did because... So I started my career at Lou Lieberbaum, blue chip firm. It was a bucket shop on Long Island, but my parents didn't know better. They knew somebody that worked there and they're like, go work for him. I was a aimless idiot, but I was smart enough to realize that the people I worked for didn't know anything, like literally nothing except one guy. And I'll never forget this. I went up to him after four o'clock, all the brokers were doing cocaine or whatever they were doing. The room was empty and I walked up to him and I said, you are the only person I see reading the Wall Street Journal. You seem to sort of know what's going on. How do I learn about stocks? And I'm a cold caller. I'm not even licensed. And he said, exactly. He said. Very important. The C-section of the Wall Street Journal every single day. Was that the money and investing? Money Speaker 6 (15:46) and investing, Speaker 4 (15:46) yeah. Money and investing. Read the C-section. Don't worry about B, it's politics. Don't worry about A, it's like New York Times. Read the C-section. Okay, I'll do that. What else? If you want to learn how to, if you want to learn why the market's doing what it's doing, every Saturday, read Barron's, except for Abelson. Speaker 2 (16:04) Yeah, Speaker 4 (16:04) exactly. He said, Abelson, you will leave the business. Everybody else. He didn't say you, but you were the best columnist at Bounds at that time. And then the third thing he said, which is maybe where I learned the second most from, he said, business week, Gene Marshall. Yeah. If you want to learn how to pitch stocks, Gene Marshall is the best stock, individual stock storyteller in the world. Yeah. And his column was called Inside Wall Street. And so I did it. I listened to this guy. Yep. And that's how I learned the stock market. Yours was the first column I'd read because of everything that we just talked about. I just felt like this guy's not just saying what's happening. He's a writer. And I read novels. I read literature. So it just, it resonated with me. Anyway, that's how I learned the stock market. So thank you for that. I'll take a tiny slice of the credit Speaker 6 (16:54) for that. Thank you. I mean, obviously Barron's was a great place to just like find a voice. And also, you know, you're being read by people. who know a whole lot more than you. Oh, Speaker 4 (17:04) I Speaker 6 (17:04) agree. And you have to therefore rise to, in fact, one of the reasons I stepped off, you know, a lot of reasons I felt like I wanted to move on from there. But one was I got myself in this trap on this treadmill of like, you know, this is like early 2010s. And it's like, I'm trying to stay one step ahead of these guys who stay two steps ahead of the overall market for a living. And they have all the resources. And it was just exhausting. And you kind of think yourself into circles. And to be honest, a lot of times what it did, being at Barron's was part of this, is it backed you into a kind of reflexive contrarianism or let me just say the provocative thing that goes against the prevailing trend or whatever it is. And I kind of bristled at doing that all the time because, you know, you have to have a certain tolerance like Alan did, Abelson, of just like screaming into the darkness Speaker 4 (17:57) and saying, why does the market go down? So he was like this feared there back then. Don't you feel like his columns now versus like what else is out there is pretty quaint. I don't even think it would get noticed on Twitter these days. But back then it was like, uh-oh, Abelson's about to go to town on Microsoft. Speaker 6 (18:16) Now it's like it would just be this florid way of saying like oh there the crowd goes again doing it silly heard like things and once in a while there would be a targeted you know takedown of a company or whatever and you know I don't know if this is if this is true but I've had people come to me and point to the crash of 87 that period of time where the there was of course a Monday. And the weekend before that, Alan, who was bearish leading up to that. But if you remember, the market peaked in that August and it was down huge into the crash. Yeah. Like it was already kind of a mess. And I think he was kind of saying like, aha, look at this. Finally, the world's coming around in my way of thinking. There's some good stocks that are cheap now, whatever. Next day, market goes down 22%. And it was like never again. Speaker 4 (19:03) He had his moment. I Speaker 6 (19:04) have Speaker 4 (19:04) no idea if that's true. So then he couldn't ever be bullish again, just in case. I mean, I think temperamentally he wasn't geared to anyway. Nobody ever expects the crash of 87, right? It's like a Monty Python sketch. Exactly. All right. And then I taught Michael the stock market after you taught me. That's right. Speaker 5 (19:20) Yeah, sure. Who taught you the stock market? Nobody really Speaker 6 (19:23) taught me anything. I think it's really just like pulling from every direction and just like. Reading smart people. Is that Barton Biggs' book up there? Yeah. Barton's a great example of what I'm Speaker 4 (19:34) talking Speaker 6 (19:35) about. It's like an English major. Speaker 4 (19:36) But you talked to a lot. The thing about what's different about you versus what Michael and I do. Michael and I, when we write, we're bloggers. We've written books. But we're not sourced. We're just reading other people, synthesizing, looking at charts, looking at some data, coming up with our own opinions. You were talking to real people behind the scenes that were managing real money. And I think that's where part of your edge probably came from. That Speaker 6 (20:03) is true. And especially the people who are a little bit more tactical, willing to kind of stray away from, you know, the kind of standard playbook a little bit or not the closet indexer types. But you know what? These days, it's more what you do than not. Like, I do still. keep in touch with people and try to have a read on what they're thinking and saying, but they don't know anything. Anyway, nobody knows. That's almost comforting though. But do you think it's the opposite now? Everyone knows everything because there's so much information out there. I Speaker 5 (20:31) think, Speaker 6 (20:31) yeah, almost everyone knows a certain level of what's going on. I've always said that that was what I found valuable about, you know, when I first took to Twitter and, you know, you know, I was in, I was in news, I've been a newswire reader in real time my whole career, but it was just like, let me just. keep it up with this to make sure I'm not missing anything. Right. And it is all there. Like you saw the, see the crescendo of attention and certain things. And yeah. So I don't know if anybody is any more saying, you know, in a broad sense on the overall market, I have an edge and I'm going to, but I Speaker 4 (21:05) think to your question, I think everyone is now so up to speed and is everyone is like drinking from the fire hose. Yeah. The skill is like figuring out what to really pay attention to, what not to, which of course you can do it sometimes. You can't always do it all the time. But Speaker 5 (21:22) that's what makes you so valuable still is because there's almost too much now that people need somebody to synthesize. Focus it down. Speaker 6 (21:29) Yeah. Speaker 5 (21:29) Give me Speaker 6 (21:29) 800 words. What matters? Right. Focus it down. What theme is either misunderstood? Look, a lot of this comes down. You guys know it's like what version of history applies today? Because you can find. an analogous period or something that looks like this type of market behavior. And you could infer what you want from it, but nothing is 100%. Speaker 4 (21:51) It's always different, guys. Yeah. Like unapologetically. Right. No, this time it is different. And last time it was different too. And that's our step. Michael, I'm so