YouSaid · the spoken record

Greg Steinmetz

lines on the record: 59
first: 2022-10-06
most recent: 2022-10-06
sittings or episodes: 1
sources: podcast

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“It was frustrating for people because he didn't say a whole lot. So they were forced to try to read the tea leaves. But yeah, being a good listener was one of Gould's many skills. And again, another reason why we can't hate him properly. Also, he was a wonderful family man. There's this show on HBO now called The Gilded Age. That character is modeled after Gold because as much as he was a shark on Wall Street, he was a loving and devoted family man. Vanderbilt, when his wife became inconvenient, had her incarcerated Vanderbilt called his oldest son a blockhead every chance he got. Gould was a great father and a great husband. So, you know, it's hard to hate a guy like that completely.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“There's all sorts of lessons. I mentioned the lesson of patience, the lesson of getting as much information as you can, the lesson in trying to figure out what the other side is thinking. One thing that stood out that I could be better at doing, I think we could also be better at doing is just being a better listener. Gold didn't try to score points just by opening his mouth at every opportunity he could to show that he was smarter than people. If he was in a meeting with his railroad executives, he would let everyone else talk before he did. If he was at a meeting listening to some others talk about their investment ideas, he would clam up and not say anything until the very end. He was a very good listener to the point where”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, he thought about valuation, but he liked to buy things that he knew were trading below. He talked about intrinsic value. He talked about the growth prospects. He went before Congress once, and at the time they were grilling him about manipulating stock prices and doing all these bad things, you would just unsolicited, give out investment advice, and talk about the value of growth and how he made more money investing in companies that grew than in companies that didn't grow but paid out fat dividends. And he did that as a way to underline how as much as he might have looked like he was in just some common criminal, he was also doing his part to build America and expand. Opportunities for all Americans by building rail lines.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“There's something like a growth company that doesn't pay any dividend and you make your money by selling the stock down the line and paying a capital gains rate or maybe not paying taxes on something until you're retired and your personal tax rate goes down. That comes into play in your financial decision making in Golds Day it was very different.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Cared very much about valuation. And he thought about it, yeah, in terms of how much cash he could pay himself, how much he could extract from the company either by generating more profits to pay out higher dividends or by elevating the stock price. But the dividends, there weren't any taxes in those days, right? So it could all go out to shareholders without any tax leakage. You could get the cash and then reinvest it in something else that you thought offered even more opportunity for growth. Now you know you're going to get hit and in some cases give up half your money by paying out a dividend. So the incentive there was to get money out as quickly as you could, whereas nowadays you want to keep that money in a tax advantage situation.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“You didn't have the transparency that would have given investors the confidence to go for a story like that. Dividends were very important. You needed to pay out money in the here and now to maintain your stock price. Every stock in those days went public at $100 a share. If you paid the dividend that investors expected, it would stay at $100 a share. If you didn't, the stock would fall. And the role of dividends was much more important. So something like Uber, where you could say, okay, just bear with us. We're going to get to escape velocity here. You can get away with that.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Think were there essentially story stocks where the story was so compelling that they could keep raising money again and again? In the belief that 10 years down the road there to achieve sufficient scale to finally start dropping money to the bottom line, no, that wasn't going on, and that's because”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“That was one lesson for me. The other lesson for me was just how well markets could function in the absence of regulation, that the invisible hand, yeah, there were winners and losers, there were people who got hurt, but laissez faire does its work, the pricing mechanism does its work, caveat emtor was powerful. Now we want to protect everyone from harm to the point where there is even discussion about having something akin to deposit insurance for crypto investors. Those aren't things that are going to breed frugality, thrift, all these other virtues. In Gold's Day, frugality, having a good antenna for crooks, those things are really rewarded. And we're missing some of that in today's markets.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“I think I'm reading these stories now about how a lot of investors, they've never experienced a bear market before. One of the nice things about studying history is you get exposure to the mistakes people have made in the past. You don't want to study history. You want to learn from history. Anyone who reads this book, I think, will get a better sense of how markets are ebbs and flows. And how to, you can learn lessons about how to survive a tough market by seeing how it's affected others in the past.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“One of the more interesting things to me, and it provides a lot of comfort at times like this, when you're in a better market, is these things sort themselves out one way or another, and Gold used to say that there's a lot of stocks on Wall Street, but the one that's missing is the stock of patients. So markets rise, they fall, we survive, which you don't want to do is sell into the panic and just have faith that these little pieces of paper that you own are backed by companies that perform important services. With the risk that he was taking during some of his short There were plenty of times where had he bet wrong he could have been destroyed. But he believed in himself, stayed the course, and emerged victorious. So for me, that was a lesson.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“The volume was just a trickle compared to it as today. The New York Times would show you every trade for a particular stock. There was just so little volume going on in significant lots. There's more action going on at the retail level. But the shares that traded on the exchange were so few in number that you could actually report every trade in the newspaper. There was a market before noon and then it opened for a few hours after that. It was opened on Saturday. So most people weren't involved in stocks, didn't really follow the stock market. That came more in the 1920s before the crash. But there was volatility and those people who wanted to play the market because of the opportunity to get rich quick, they found their way to Wall Street.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“The attraction there was for very little money down you could make a lot of money. It was like going to the track, but that's what his customers wanted. They wanted the speculative opportunities that they couldn't get just buying a share of Union Pacific. So investor psychology, that gambling instinct that You hear about Wall Street now that Wall Street is just a casino. It is the same in those days.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Ordinary laborers, workers, school teachers, ministers, a lot of people were playing the market for the first time. So there was a speculative frenzy that would ebb and flow, just like it does now when stocks are going up, a lot of people rushed in. When they were falling, people panicked and you couldn't get them to part with their money. Investor psychology, I think, is very similar to what it is today. And today you have all sorts of protections for investors, and yet those who want to speculate and gravitate towards the most speculative instruments, whether it be crypto or meme stocks or something else, they're out there, and in those days it was the same thing. One of Gould's associates was a guy named Russell Sage, nicknamed the Money King, who was the first to introduce a retail market for calls.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“There wasn't really a retail market until after the Civil War. Again, the railroads created that opportunity because there was a lot of stock that was being bought and sold every day. The man on the street saw that”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Like the dot com bubble, a lot of things blew up. A lot of e-commerce companies have come and gone. Same with railroads. Everyone was going after it, but there was more money made than lost, I'm not sure.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“So you could look out into the future and say, hey, we've now got a railroad that crosses the Rockies. The West is going to fill up with people. There's going to be a lot more freight moving on the rails. There's going to be a lot more people moving on the rails. So if I can find the right railroad that has some monopoly characteristics within its region, I can make a lot of money. The Union Pacific, which was the first transcontinental railroad for a time, was the only railroad to cross the Rockies. That was a huge opportunity, and it could get away with charging a lot. On the other hand, it had a lot of debt, and the West didn't develop as fast as the promoters of the Union Pacific were hoping for. But that was the growth industry of its age with the Internet opportunity of its age with the railroad.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“With that, you had the rise of Wall Street and that created a speckle of opportunities for guys like Gould who could buy and sell pieces of paper on short notice. Another thing you couldn't do in the old days when markets weren't as liquid. So that was one good thing. But yeah, it was capital intensive and very competitive. Everyone and his brother was trying to build a railroad. On the other hand, and this is what got people excited about the stocks, is there's a lot of growth.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“The railroad business had some good characteristics and some bad ones. One of the bad ones is it needed a lot of capital to grow. On the other hand, that created the modern Wall Street because you needed to reach out. And look under every rock to find the capital that you needed to lay all that track, to find the people and pay them to lay that track. Before railroads, you didn't have to go to Wall Street. You could raise money from a handful of rich friends and build a factory to do something like tan leather or make shoes or what have you. Railroads can do that. You need a lot of money. There wasn't enough money in the US to get all the money you needed to build railroads. You had to reach out to London and Berlin and Paris.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Well, companies with solid cash flow. We think about stocks as owning a piece of a business like Warren Buffett. It's easier to sleep at night if you own a company that doesn't have a lot of leverage, that generates cash that you can be comfortable that whatever happens, it's still going to be around in the future. Now, we're not alone in looking for those kind of companies right now, but it is easier to sleep at night if you own something that you know has a competitive moat that has a value that provides an indispensable product that you know is going to be around no matter what happens.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“What happens to demand for other things? So some of this has been priced into stacks, but there's still enough optimism out there that if things don't work out, you can see prices fall even more.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Prices look today. What happens if we do have a room over recession? What happens if we have a prolonged recession? What happens if we still have supply chain issues a year from now? We don't have enough semiconductors a year from now. It seems clear that the Fed more than anything wants to bring labor prices back into line. Right now we still have a labor shortage. You go out to a restaurant, you've noticed it yourself where the wait time sometimes can be pretty darn long just because there isn't enough help. So how does the Fed turn what is very strong market for labor into a very weak one, bringing wages down? You can only do that by increasing the unemployment rate. And if you increase the unemployment rate”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Oh yeah, yeah. Tons of opportunity, although I would have said that a few weeks ago. Stocks have kept going down. So famous adage on Wall Street is how to catch a falling knife. It's not easy. And as attractive as some...”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“I'm thinking not about Gold Zero, but what we saw in the 20s kept going up and up until they couldn't go up anymore as soon as the Fed turns, boom. So I don't know. Of course I wish I had foreseen this. But at my firm we're not in the business of trying to pick the macro and just try to pick great companies. But yeah, now in hindsight it looks like don't flank the femin.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“I think the lesson in here is don't fight the Fed. And so when rates are coming down, Asset values went up, PEs went through the roof. Some people thought that was crazy, but The best yields you could make were in stocks and the rates reflected that. Then as soon as the tide turned on rates, it fell into asset prices. How do I make sense of this year? How do I make sense of last year? We came off of a great year of stocks and then lo and behold we had another one. And this was happening. At a time when people were saying that asset prices were already inflated and there's a bubble and they just kept.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Gold didn't do anything on the public relations front. He thought it was better to be feared than loved. So while Vanderbilt would talk to the press and Carnegie more than anyone courted the press and buttress his reputation by giving away a lot of money in his lifetime, Gold didn't do anything like that. He thought Like I said, it's better for people to have any insights into how I thought, not to think kindly of him, to think that he was the incarnation of evil. After the gold scandal, he became a target. But unlike Fisk, his partner in that, who did a lot on the public relations front, Gold didn't do anything. So he ends up being the scapegoat for what the reform crowd thought was all that was wrong with the U.S. financial system.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Why was Gould so loathed by the public? I imagine at the time that the median income person, to the extent that they had wealth, it was maybe perhaps correct me if I'm wrong, in real estate or land, maybe not a large percentage of it in stocks, very wealthy, of course, a large percentage of it in stock. So it seems like to the extent that Gould was, quote, screwing people over, my words not yours, it was fellow wealthy folks. But it seems like the hatred for him, if I can use that word, extended far beyond other wealthy people. It seems like everyone sort of heavily disliked him and feared him. Why was that the case? Did it have to do with the media who had some sort of obsession with him? What's your reason for that?”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Use their soapboxes to try to influence elections. We got Fox News on one side. We've got the New York Times on another. Yeah, gold was doing all that stuff.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“keep his name out of the press. There was a period where he was involved in a mining strike. He was on the front page every day for a year. Another instance where he used the press was to try to manipulate the election of 1886 that Grober Cleveland won. Gold on the Western Union, the Western Union was the one that transmitted the Associated Press Wire stories from the different states on election night by withholding the results in certain states Gold gave the supporters of Cleveland's opponent, James Blaine, time to stuff the ballot boxes. It didn't work. Cleveland won anyway. But it made me think, what would Elon have done if he had gotten Twitter? We might never know, but it's not uncommon for media barons.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, no, he ran from publicity, but when he could use the press to his favor, he did. The best example is he bought the New York Elevated Railroad, which is the precursor to the subway. He did that by scaring the investors who own the publicly traded stock into selling, by using the New York world to produce all these stories about how the company was going to go under. That drove the stock price down by two thirds, Gould swept in and bought it all, got control of this thing. And the moment that the stock was in his hands, the New York world started reporting about how great his prospects were. The stock price popped up right to where it had been. Gold made a fortune on that, and he did it all by using the press. Now gold could”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“And one thing I'm talking about how Gould was a crook and he did all these shady things. But Gould was able to do this because he was a very, very smart guy. Rockefeller caught him the smartest businessman in this country. Vanderbilt said the same thing. It was very hard to outfox gold. And he worked his tail off. So you had a combination where someone was extremely greedy, extremely talented, and extremely hardworking and utterly ruthless. And that's how I ended up with one of America's great fortunes. But it wasn't just by being a crook.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think some of that gold might have done is the opportunity existed there in the market for last few years just to put out a really compelling story and back that up with With strong top line growth without dropping anything to the bottom line We have this example of our carvana, right, where they put out a great story. The founders took out a couple billion dollars, and then the stock crater. Did they do anything illegal? No. And did they know that this was going to happen? I don't know. But the fact is they created a great story. Stock went up a lot. The owners took out a lot of money. That's a classic jigle move. So, the more things change, the more they stay the same.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Do you think he would take advantage of reporting regulations where you can't just short a bunch of stock and then announce you're cutting the dividend and generate sort of fake news that way? But you can announce things, you can sort of create your own metrics and say, okay, GAP generally accepted accounting principles. This is GAP, but don't pay attention to gap because GAP doesn't capture, Greg, Gap doesn't capture the true nature of our business. The true nature of our business is measured on EBITDA, which you take out debt, you take out interest payments, you take out appreciation. Oh, and by the way, share-based compensation, Greg, that's not real, okay? Actually, we're a profitable company if you take out all those things. And investors buy it. Retail investors buy it.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Who bought stocks just because they were sharing information with one another perfectly legally, this might have been another opportunity that Gould spotted before others. I would have plowed into that. So it's really fascinating to me and ultimately sad for me that we can just come up with regulation, more regulation, more regulation, and still it goes on because human nature doesn't change. And as long as there is money to be made, people will find out how to make it by hook or by crook. So I have no doubt that if Gould were around today, he would find ways to become just as rich as he was back then.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“I think he would be an admirer of Elon Musk and the way Elon was tweeting about crypto, which I guess was legal. I think gold would have spotted that opportunity and done the same. I don't know exactly what happened. No one does what Eli's crypto book looked like. But if there is an opportunity to manipulate a market, gold would find it. Short selling. For a long time, short squeezes just didn't exist because there are these rules about if you acquire so much stock, you have to disclose it. If you disclose that once you get to 5% of a company, you have to disclose it. How are you ever going to acquire enough stock to short something? And yet here we had it with meme stocks, right? There are a whole bunch of people.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“So, a lot of the ploys and techniques that Gould used during his lifetime now would be illegal. So I guess my question for you, Greg, is in today's market, those techniques are legal, but there's lots of ways to game the market or perhaps perhaps you disagree, generate an unfair advantage. How do you think Jay Gould would play today's markets if he were born, let's say, in 1980 instead of the 1830s if you're trading today?”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“And again, you couldn't do that nowadays. You'd have to disclose everything that you're doing, and it would have to all be above board, and you go to jail if you try these things. But in those days, heck, you could, and because you could, people did. And Gould did them more than anyone.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Well, one of the joys of being a director at a public company in those days is you could manipulate the stock price very easily. You could announce that you're going to increase the dividend, make it go up, you could announce that you were slashing the dividend, make it go down. And Gould learned from his predecessor, a guy named Daniel Drew, one of the great short sellers of all time, that all you have to do is buy the stock or short the stock before the news and you can make a lot of money and you can just do this all day long without amazingly sacrificing your credibility. People would still listen to you. And in fact, if you cut the dividend, that's not just a bluff. That's something actual and the stock should fall for that reason. Goldwood would just manipulate it as if the share price was a yo-yo.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“That is so wild. And one of the crazy aspects of the story is that he was a director of the company. You think directors of the company are long the stock. How is it even possible that he was able to amass a short position in a company that he worked for?”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“The margin rate for people who wanted to buy stocks on margin. Well, when the margin rate went up, there is less buying of stocks in the market. That drove the whole market down. And as he anticipated, Erie fell more than most, and he sold out, he closed his short position on Erie at a fat profit while ruining a lot of people along the way.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“One of the more audacious things, to me it's really mind-blowing what he did in this case. In order, he had a short position on the Erie Railroad. In order to make it go down, he thought, well, what I can do is I can blow up the whole market. And Erie, because it has more leverage, will fall more than most. Well, how can I blow up the whole market? He was in charge of the Eerie Railroad at that time. He deposited money at a bank or several banks, and then he wrote checks on that money, and when he wrote checks, that meant that the banks couldn't loan out that money. They had to keep that money in their tills in case someone called on the checks, and that created a shortage in the money supply, again very localized in New York, but enough to drive up.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, in our modern financial system, there's sort of a law of par that my banking deposit at JPMorgan is the same as your banking deposit at Bank of America. No such regulation in Gould's Day. None at all. One way, Greg, that Gould took advantage of this liquidity phenomena was something called a deposit trick where he basically put a bunch of money from one of the companies he owned into the system and that affected margin rates and in order to get the price of the stock to move up or down. Can you explain that a little bit for our audience?”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, while Banks in those days they could issue their own currency. And your willingness to accept that currency was a decision that you made about the faith and credit of that institution. Bank failures happen all the time. So it was caveat em tor when you would put your money in a bank. And whenever one bank failed, there'd be runs on all the banks because people thought, oh, well, we don't really know what's going on in here. Every bank is a blanket. It was just truly, there's no regulation for anything. You had auditors going around looking at national banks, but for the most part it was just like we had the Wild West out west. You had the Wild West out east and vigilante justice was sometimes your only recourse, your only remedy.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“And how fragile was the banking system sort of the plumbing of the financial system at America's beginning there was the first central bank of the U.S. and there was a second bank of the US. Then there was the era of free banking where there was no central bank and that is pretty much the period in which Gould lived pretty much his entire life, leading up until, of course, that the Federal Reserve in 1913 were banking failures common? Did that environment mean that Gould and other financiers played by a slightly different playbook than people do now?”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“He was able to boost up the price, and by the time the market would have returned to equilibrium, gold could have bought and sold and made his money.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that was an opportunity that existed at the time and he exploited that. And the reason he was able to get away with that was able to buy enough gold to manipulate the price was, like you said, gold was a global market, but it wasn't really because in the short term, gold was a local market. There was only as much gold in New York to satisfy the obligations that came into New York. And it took time to physically transport gold into the gold market. So if you wanted to bring the price down in New York, you were to bring gold from Boston, Philadelphia were close, but they didn't have that much relative to New York. There's gold out west, but no one wanted to ship it to New York because it could be stolen in a train robbery, and it took two weeks to get gold from Europe. So because the gold market was small in New York,”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“That's what made it possible, it was like 100 to 1. And you could do that because at the end of the day you had to true up your position. So if the price fluctuated during the course of the day, you had to either put more margin down or close your position. And that's what Gold was able to do. And you never had to put up a lot more money because he kept buying enough gold to keep the price aloft and never got a margin call After the gold market blew up, there were laws passed against doing that. And that opportunity disappeared. I think if there hadn't been that opportunity, Gould would have found something else.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“And by what means did Gould acquire all this gold? Did he go long gold? He bought some physical gold as well, but he also bought futures and the key feature of many futures is that you can put leverage so you can get two to one, three to one, five to one, 10 to 1 leverage. Can you speak to the importance of leverage at that time?”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Buying up all these contracts, it looked as if, well, maybe this corner that has been rumored is going to succeed, the gold price went nuts and when it crashed disastrous consequences ensued. There were people who got destroyed, who ended up killing themselves. Financial markets were in turmoil for a while. The gold exchange itself went out of business and gold, like I said before, was never brought to justice.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“And then he had trouble getting Grant to come around, but he eventually did, and he did that with the help of this fellow, Jim Fisk, by appealing to the question of national security. Ultimately, what it came down to was Gold saying, hey, if our farmers don't sell the grain Russian and Ukrainian farmers would sell the grain, and that's not good for farmers. Yeah, you can always take steps to drive down the gold price and get the greenbacks out of circulation. Grant bought into this, and he did this in defiance of his Treasury Secretary. He did this against those who regularly trafficked in gold on the gold exchange, and the gold price started going up. And once fisc got involved,”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT
“Would go up and he could sell and make a lot of money. To make that happen and to change the administration's mind about what they thought should happen to gold, he had to get Grant on his side. So with the help of Grant's brother in law, he got an audience with Grant, argued how Grant would really be doing a favor for the farmers by letting the gold price go up, they could sell more of their grain overseas, make more money, and it would be good for him politically and would help a lot of people back in west where Grant was from.”
2022-10-06 · Forward Guidance · Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz · IDENTIFIED FROM THE TRANSCRIPT