YouSaid · the spoken record

Scott Nations

lines on the record: 47
first: 2020-02-02
most recent: 2020-02-02
sittings or episodes: 1
sources: podcast

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“Well, Steg, as you know, I'm a contributor to CNBC, so they can see me on CNBC. They can also go to the author website, author website is scottnations.com. And I also have a presence on Amazon Author page.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That's a great question because as a young person, as an investor, I came up in a time when there were people who were required to provide liquidity. For example, in the New York Stock Exchange that were specialists who had a really lucrative franchise to trade stocks, here in the United States now there is no person, no body, no trader, no investor who is required to provide liquidity. And I think that that is probably the biggest weakness that our stock market, our financial markets in general have right now. And we've seen that. We saw that during the flash crash. We saw that some high frequency traders not understanding what was going on simply refused to participate. And they're not required to provide liquidity, despite the fact that they have access to some of these markets that other investors don't.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And it's necessary for a high frequency trader, but it doesn't really take anything away from the long-term investor. So when you read about these things or you hear about these things, as a long-term investor, you should be interested. But it doesn't put you at a disadvantage. The best advantage you have is, again, the right sort of diversification, a strategy that makes sense for you, discipline, and using products that are lower cost for the investor. That's what people should be doing, and that's how they can make the stock market work for them.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So it's done via microwave. And those firms can tell you what the weather is like between Chicago and New York because their trades will be slowed down by a few nanoseconds if the weather is bad, if it's raining between Chicago and New York. That will give you an indication of how speed is now critical. But speed cuts both ways”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“A wonderful question because you're right, there was a time when you could call from Chicago or New York to London. And that was considered essentially instantaneous. Now, as an example, we are traders, high frequency traders, are bumping up literally against the speed of light. That is now the problem that they have. That's the hurdle that they have when it comes to executing trades. For example, Most orders that are sent between New York and Chicago or Chicago and New York are done via microwave. They're not done by... Fiber optic cable because fiber optic is too slow”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“There are great vehicles that didn't exist 20 years ago, like exchange-traded funds, which are much cheaper for the average investor to use than an old-fashioned mutual fund. Take advantage of those, but also realize that liquidity dries up during a panic. So if you think that when panic hits, I'm simply going to sell. Well, you're going to be really unhappy with your results. It's important to realize that stocks have been a great way to build wealth for millions of people. But one of the reasons that stocks do so well is that sometimes you are just along for the ride. That is, you're not going to be able to get out during a panic. So how would people position themselves? Kind of old-fashioned, logical. Versus greed diversification is really the best way to do it.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“In early 2009, the market looked horrible when it looks horrible is probably a time to be more greedy than fearful. In addition, there are certain good old-fashioned ways of approaching the stock market. Have your money spread around. That's called diversification. Have a little bit of money in the stock market. Have a little bit of money in fixed income. We know that diversification is the only free lunch in investing in that it can increase your risk-adjusted returns. Unfortunately, there's no silver bullet.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That's a question I get a lot. What should I do? What should I do to protect myself? Well, many of vehicles that exist are pretty expensive. I spent my time on the trading floors of Chicago as professional option trader. And you think that options are insurance. I can buy insurance and protect myself. The problem is that insurance ends up being very expensive. So what can you do? What you can do is not get carried away. So right now the stock market is doing very well. This may be a time to be more fearful than greedy.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And the problem with that is that their own selling ballooned the volume. They had overconfidence in the liquidity that's provided via electronic trading. And they essentially tricked themselves into believing that the market could sustain a bunch more selling than it actually could. And so within the span of just a few minutes, their lack of understanding of real liquidity in the market led them to sell so many futures contracts, overwhelmed the liquidity in the market, and drive the Dow Jones industrial average down by 10%, again in just a matter of minutes.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And so, this investor wanted to sell electronically. They wanted to sell a bunch of futures contracts, which is perfectly reasonable way to hedge. But they wanted to do so in size, that is, they wanted to sell a lot of contracts. But that means that they also wanted to sell in a way which would not drive the price down via their own selling. So they turned to an algorithm. Actually, they turned to three different algorithms. Eventually, they said that we're going to sell a certain number of contracts every minute equal to the volume of the market in the previous minute.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's a great question because, again, the next crash is going to look like the flash crash. There were certainly reasons to be worried about our stock market in early May of 2010. And there was one investor, one institutional investor in particular who was worried. And so they wanted to reduce their exposure for their investors. They wanted to do so by selling stock index futures, which now trade almost exclusively electronically. In 1987, it was a bunch of guys in bright red jackets jumping around in a pit. And in 2010, it was almost exclusively electronic.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“When the problem, the size of the problem in Greece became obvious. That's when everybody sat up and took notice because there's no provision for divorce in the Eurozone. There's no provision for somebody for an economy to leave the Eurozone. And so now the question becomes, is the entire experiment going to collapse? And if it does, what does that do to France? What does it do to Germany? What does it do to other Eurozone economies? And what does it do in the United States? And so that is the uncertainty that caused the flash crash on May 6th of 2010.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Couldn't shut down the railroad for political considerations. But when it came time for them to try and get into the Eurozone, that is, the community of countries that uses the common currency, the common euro currency, The Greek government was desperate to do so because of the benefits that they thought which would ensue, but they weren't even close to being able to meet the objective standards for inclusion, standard like the size of the government deficit, the amount of government debt. So they simply started lying about these things to their European brothers. And so eventually Europe let them into the Eurozone.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Tax avoidance was not just something that was a problem. It was essentially an avocation for every Greek citizen. They felt like they almost, it seemed that they almost felt like it was their job to avoid taxes. And it was tough to fund an economy or a government that way. And even though they didn't have revenue coming in, the Greek national government spent money like it was going out of style. One example in the book, the Greek National Railroad One year had revenues of $100 million. The total money that they pulled in was 100 million euros, but their expenses were seven times that. Their expenses were 700 million euros. And the Greek finance minister calculated at one point that it would be cheaper for the government to simply shut down the Greek National Railroad and pay for every passenger to take a taxi cab. So that was the Greek government. But they obviously.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Next crash we have, and I don't know if it's going to be a week from now or two decades from now, but the next crash we have is going to look much more like the flash crash than it's going to look like anything else. It's certainly going to look more like the flash crash and it's going to look like 1929. So that's why I write about the flash crash. Now specifically Greece and the Eurozone economy. The best way to describe the Greek economy in period from, say, 2000 to 2010 was a lie which was built on a disaster. And what do I mean by that? Well, the Greek economy was a disaster. It was absolutely a disaster. It was underperforming. There were a few jobs.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That's a great question. And let me preface this by saying that people often ask, why did I write about the flash crash in 2010? Because it happened very, very quickly. And it was over almost as soon as it started. It's certainly not as familiar to everybody as 2008, 1987, 1929. And probably more people have heard of the panic of 1907 than remember the flash crash of 2010. I write about the flash crash of 2010. I write about that because”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“No, you simply can't. I talk about every crash being abetted by some new sort of contraption. The contraptions just change. The contraptions change. They get much more sophisticated as time goes on. The contraption for the very first crash, 1907, was a savings trust. It was called a savings trust. And what could sound better than that? Two wonderful words put together to mean something entirely different. It was really intended to be a savings and loan or a bank. Ultimately, it became essentially a savings and loan that was grafted onto a hedge fund. So the worst sort of thing. But the point is that these contraptions, they all evolve. They become much more sophisticated. They feed people's greed. Are getting paid or believe that it reduces risk. And there's simply no way to legislate against that.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“They all got paid. That means that they were all greedy to the degree that we're greedy for more money or more love or more free time. It seems that everybody wants more of something. Those people wanted more money. So to look back and say that we're going to try and regulate greed or legislate against greed, I think is a mistake. There were lots of problems that were made. There were lots of mistakes that were made. Problems were generated. But to a certain degree, they're human. I mean, Warren Buffett is the first one to talk about fear versus greed. And those are purely human emotions.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Policymakers got paid to the degree that they were able to satisfy their personal opinions about how involved government should be in these sorts of things. The best way to express that everybody was getting paid and that the link of trust had been broken is one of the phrases that some of the mortgage brokers used and that some of the investment bankers used. And it was very simply put, I'll be gone. You'll be gone. And what they meant was that we're going to get paid for these deals now. We're going to get paid for writing mortgages or buying mortgages or packaging mortgages and selling them. We're going to get paid now. And when the problems rise because people aren't able to pay their mortgage, you and I will be gone. We will have cash the check. We'll be wealthy. Maybe we'll be retired. But we'll get paid.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It seemed that everybody had the incentive to get paid. And it seemed that like everybody was going to get paid. The homeowner was going to get a big mortgage. The rating agencies were going to get paid by the banks who paid them to rate these deals. The investment bankers got paid when they bought these mortgages, put them into mortgage-backed securities, and then sold them to investors”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“This appetite for mortgages means that everybody lets their guard down a little bit. The homeowner is able to get a bigger mortgage than they might otherwise. The mortgage broker gets paid for writing the mortgage. The bank that originally makes the mortgage gets paid when they sell it. Everybody gets paid except the end investor. And so again, some financial engineering got a little ahead of itself. And we ended up with these products that destroyed the link between the end investor and the person who was actually borrowing the money for a market. And I think it's that destruction of that link that really caused the problems in 2008, 2009.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And once it's sold off, it can be combined with a bunch of other mortgages. And that makes sense. There's no reason that an investor, let's say an institutional investor, might not want to own a big portfolio of, say, 10,000 mortgages. They're going to take the risk, but they're also going to reap the interest rate rewards. So that is an interesting concept. Unfortunately, we got to the point where we wanted to divide up that portfolio of mortgages in different ways to satisfy different needs. And we lost sight of the risk. But really what happened was that there was this enormous appetite for mortgages from financial, essentially from investment banks to put into these mortgage-backed securities, which could then be diced up and sold to investors. And the problem with that is that”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“A few decades ago, a mortgage on a home was a very different sort of thing. For example, the mortgage that my parents had on the home I grew up in, they got from a local savings and loan. It was down the street. That's where they dropped off their check every month. The savings in loan kept that mortgage. They kept that loan. It was an asset for that savings and loan. My parents knew some of the people who worked there. They probably knew the banker who made them the mortgage. That relationship changed fundamentally over the last, say, 20 or 30 years. Instead of a mortgage being an asset that a savings and loan would keep on their books, Bankers realize it's really an asset that can be sold off.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“The interesting thing to take away is now that our equity market has what we would call Our stock market to drop by 22, almost 23% in a single day. The market would close down before that would happen. And because these are engineered in such a way that everybody knows what they are, these circuit breakers, what they do is they tell everybody, let's just stop and think about what we're doing. And let's just not sell because we're in the middle of a panic. So that's sort of a loss for a single day is simply not possible anymore. And that's important for an investor to realize. Doesn't mean it couldn't happen over the course of a month or two, which would be pretty ugly. But things are a little bit different. I think we also have an understanding now that about the interaction of some of our markets, and we didn't understand how some of our markets interacted back in 1987. So we're certainly a lot smarter about some of those issues than we use.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That's a great question. It really drives home the idea that markets can fall farther than we believe and that some of these, again, financial contraptions have problems. And I didn't really understand the idea of financial contraption across stock market crashes at the time. But I came to realize that some of these great ideas that people have are flawed at their very core. And so you have to be a little bit, we'll call it dubious. You have to be a little bit dubious about some of these great ideas.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It was something interesting to live through because it explained, it shows in sharp focus that markets often behave irrationally, that the market can fall farther than you believe it can, and that the worst time to try and right-size your portfolio is during a panic.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I had just started as a clerk on the floor of the Chicago Board of Trade in the Financial Futures markets. I was a young guy, so I had the benefit of not having a lot of responsibilities. I didn't know if I would have a job the next day. I worked for a wonderful man who was a legendary trader, and he was able to navigate it very easily. But you never know what else is going to happen. Is the market simply going to close down? Am I going to have a job? Unfortunately, it worked out well. It certainly didn't work out well for investors. Again, there was a lot of psychic and financial damage”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And eventually, if it falls enough, you have to sell more slivers and larger slivers. So that's what happened in October of 1987. Investors were entranced by this concept of portfolio insurance, and so they used it to a huge degree. They also invested more money in the stock market because of portfolio insurance that they would have otherwise. They felt confident that this insurance would save the day, essentially. What happened is that there was just this cascade of selling from portfolio insurance as more and more and more had to be sold, liquidity dries up in an environment like this. And that's what happened. The market was essentially trying to sell billions of dollars worth of stock, and there were simply no buyers.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“they could limit the risk on a portfolio. And again, that sounds like a wonderful thing. They used stock index futures to do this eventually. The problem is that portfolio insurance and the math at the heart of it rely on some assumptions about our market, which just are not valid. It assumes that there's essentially an unlimited amount of liquidity. And we know that in times of stress, liquidity dries up. So portfolio insurance called for selling tiny slivers of a portfolio in the form of stock index futures as the market fell and continuing to sell small slivers as the market continues to fall.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I had actually just started my career when the crash of 1987 happened. And it was certainly something to live through. I talked about every crash having some sort of financial contraption and portfolio insurance was certainly the financial contraption for 1987. So portfolio insurance was certainly the contraption for 1987. What is portfolio insurance? Because it sounds like a wonderful idea. Sounds like a wonderful concept. The math of options on stocks can get pretty rigorous, but some academics realize that if you were to trade a portfolio of stocks in small slices and in a very particular way that you could replicate the performance of an insured portfolio, hence portfolio insurance. And these academics realized that if they used this really rigorous math, that theory”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And that crude oil was actually trading on the commodity markets for $30. So crude oil as reserves for city services, we're trading at a huge discount to what the crude oil was really worth. And so T-Boom Pickens realized the best place to find crude oil was on Wall Street. And he drilled for it by trying to buy city services because he realized that as an activist, that the value of the company was grossly understated by the stock market.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Crude oil or natural gas. And obviously he paid attention to the bigger firms in the business. And one of the firms that he saw was a company called Cities Services, which had been around for a long time. And Kiboom Pickens did a little math and realized that the price at which city service's stock was trading. Meant that all of the crude oil reserves that they had were selling for about $5 a barrel. So if he could have bought the whole company at the current stock price, he would have bought a whole bunch of proven oil reserves of crude oil for about $5 a barrel. Well, T. Boom Pickens also knew that the industry finding costs, that is the cost to go out and do the geology, drill a test well and the like was $15.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Certainly, before the 1980s, businessmen were seen as gentlemen JP Morgan would have thought first and foremost that he was a gentleman. And they did not believe in essentially rocking the boat when they did business. They wanted to do business together. They wanted everybody to agree. The 1980s, things changed. And we ended up with what we ended up calling corporate raiders. People who were happy to rock the boat, who realized that corporations were holding this hidden value and that only somebody was willing to rock the boat could unleash that value. And the example, one of the first examples from the 1980s is an example from T-Boom Pickens. T-Boom Pickens ran a small, small-ish petroleum firm, Mesa Petroleum, essentially drilling for”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“The stock market is a great place to provide for education or retirements. So I guess the lesson is don't get caught up in the hype. And if you think that there's hype going on right now, well, don't get caught up in it.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I think that the thing to take away from all the crashes actually is that they are all hauntingly similar. Crashes are all hauntingly similar. And that's really the reason I wrote the book. But they're also extremely rare. Crashes are extremely rare. It was more than 20 years from the first to the second that I write about and then more than 50 from years from the second to the third and then again 20 years from the third to the fourth. I think that those are the two things that I would leave investors with unfortunately they're also inevitable. Crashes are inevitable. Why is that? It's because our greed runs away with us and we lose sight of fear and every investor should have a reliable balance of those two things. So it's unfortunate that we do have crashes because they do inflict a monetary and a psychic cost. But over time”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I think that's a great question. I think that given our stock market, the American stock market is at all time highs and that our economy is doing pretty well, not great, but pretty well. I think it's easy to say that interest rates here in the United States as guided by the Federal Reserve are too low. The Federal Reserve, I believe, is responsible for the crash in 1929 by keeping rates too low in the late 1920s. And I think they did the same thing in the decade of the 2000s, just before the crash in 2008 and 2009. The kept rates too low for too long. So I think there's real concern.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“American brokerage firms paid $100,000 to put a brokerage office on a single transatlantic liner, the Berengaria, $100,000 just opened the opportunity to open a brokerage office. Another brokerage firm opened a tent at the U.S. Amateur Golf Open in Pebble Beach. The stock market was such a phenomenon and the rally was such a phenomenon that people didn't want to get away from it.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“The Federal Reserve really started making errors in policy in 1924 when they were essentially begged by the British government to help them get back on the gold standard by lowering interest rates here in the United States. And they did that. And they continued that sort of policy and eventually the Federal Reserve simply lost control of the monetary situation in the United States. There was so much money being made by industry and individuals that they were happy to loan that money to stock market speculators. And that's sometimes called the call money market. Call money is money that's available to investors to speculate with. And for a long time, that money had been provided by banks. And now outside investors were providing it and they did it in droves because interest rates were so low otherwise. And the bubble was undeniable in the late 19th century.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“With an economy roaring like that, a stock market booming like that, you would expect the Federal Reserve, which it was new at the time. You would expect them to raise rates one Federal Reserve officer at one time described it as taking away the punch bowl when the party really got going. And the Federal Reserve did not do that. In fact, they kept rates low. They kept rates too low, largely because they wanted to help England return to the gold standard after World War I. That was a tragic mistake, keeping rates that low. There was also a roster of new technologies that were unleashed following World War I, radio would probably be the biggest, but also the automobile industry really got going, really came into its own. And then America just felt good about itself. And so all of those things spawned this euphoria that eventually made its way into the stock market.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“In the late 1920s, actually much of the entire decade, but particularly in the last half of the 1920s, there were simply a euphoria at work in the United States that was not just financial. It had to do with the United States place in the world and from a military point of view, also from an industrial point of view. So as you pointed out, in 1927 and 1928, the stock market gained more than 90%. We had come out of World War I. We felt great about our place in the world, but there were also some other things that worked. For example, in a situation like that,”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Became obvious to everybody after things had settled down after the Panic of 1907. The United States government needed a way to inject liquidity into the system and didn't have it and that there needed to be a lender of last resort, if you will, for the financial market. And that didn't exist before 1907. And so the Federal Reserve was created in 1913 because everybody realized if nothing else, JP Morgan's not going to live forever. And we can't rely on one man, one person to essentially bail out the stock market in times of stress.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And that just one specific story of his involvement. That's not the first time he did something like that. Probably the most immediate. But within 15 minutes, they had raised actually more than $25 million. Officials were able to go on the floor and say, we have $25 million to lend to investors who are in trouble. People were so desperate to get this money that the clerk who was responsible for recording borrowers and amounts had his suitcoat ripped off of him in the turmoil. So JP Morgan was really the man, the single man, who managed to save the stock market in 1907.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And his confidence was it was not naked. He rounded up bankers in the Wall Street area, got them all into his office at a time when JP Morgan called, you came running. And he told the assembled bankers, you have 15 minutes to raise $25 million to save the stock market. $25 million back then was a colossal amount of money. But JP Morgan essentially said, you have 15 minutes to raise this money for the stock market is going to close and who knows when it will ever reopen.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“The president of the New York Stock Exchange went to JP Morgan at the time his office was directly across the street from the New York Stock Exchange. Very simply, Mr. Morgan, we will have to close the exchange early. There's simply too much selling. And JP Morgan understood what that meant. His question was, how in the world do you ever reopen a stock market that you've been forced to close because there's too much selling? And so JP Morgan asked, When do you normally close? Well, sir, we normally close at 3 o'clock, but we can't get there. There's too much sun. He said, You will not close one minute early.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Before 1907, the United States was really beginning to understand that it was going to be the American century It was powerful. It was probably at that point the most powerful country on the globe. And so, frankly, the United States got carried away with itself. And we'll talk about some of the specifics of some of these crashes and how these. These share some similarities in a bit, but you asked specifically about Morgan's intervention in the market. This was before the US Federal Reserve existed. In fact, the panic of nineteen oh seven was to cause the Federal Reserve was created. But if you were worried about the market, you were worried about the panic of 1907, the person you went to see was J.P. Morgan. Because, again, he was so powerful. And one example occurred in the midst of the panic on Thursday, the 24th of October of 1907.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Most powerful man on Wall Street. He was called the Zeus of Wall Street. And he really was involved in every aspect of finance in the United States in the first part of the 20th century.”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“JP Morgan was a fascinating man. He was a fascinating man. He was a man of privilege. He was born into privilege. His father was Judas Morgan, who was, well, essentially, made the family even more wealthy by selling Civil War bonds in London during the American Civil War. JP Morgan was educated, as you would expect somebody if his wealth, he had a parapetic education. He was obviously educated in the United States, but also in Switzerland and in Germany. As a young man, in Germany, he developed an appreciation for art, actually a love for art, which informed his private life. But JP Morgan was really raised being a banker in the early part of the 20th century. He was by far the wealthiest man on Wall Street. Well, maybe not the wealthiest, but certainly in the most powerful. He was absolutely”
2020-02-02 · We Study Billionaires · TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT