1 00:00:15,316 --> 00:00:19,996 Speaker 1: Push Kim. 2 00:00:20,236 --> 00:00:23,756 Speaker 2: I'm Lydia Dean Cott and I'm Michael Lewis, and we're 3 00:00:23,796 --> 00:00:27,476 Speaker 2: continuing our special series about The Big Short. In this episode, 4 00:00:27,596 --> 00:00:30,636 Speaker 2: we're gonna hear from three guys who worked for Steve Eisman, 5 00:00:30,836 --> 00:00:33,836 Speaker 2: a fund manager at front Point Partners who bet on 6 00:00:33,916 --> 00:00:36,876 Speaker 2: the housing market crashing in the late two thousands and 7 00:00:37,116 --> 00:00:39,956 Speaker 2: was right. In the movie version of The Big Short, 8 00:00:40,236 --> 00:00:42,996 Speaker 2: Eisman is called Mark Baum, and I want to play 9 00:00:42,996 --> 00:00:45,476 Speaker 2: you a clip that's narrated by Ryan Gosling in which 10 00:00:45,516 --> 00:00:47,756 Speaker 2: we're introduced to the three guys who worked for him. 11 00:00:48,036 --> 00:00:49,196 Speaker 3: What if you just say, I just want to play 12 00:00:49,196 --> 00:00:50,676 Speaker 3: you a clip and then I we'll explain after. 13 00:00:53,476 --> 00:00:56,796 Speaker 2: Okay, It starts with Steve Carrell playing Mark Baum. 14 00:00:57,356 --> 00:00:57,716 Speaker 1: Guys. 15 00:00:57,916 --> 00:00:59,996 Speaker 3: Cynthia wants me to quit and I'll put a B 16 00:01:00,076 --> 00:01:00,756 Speaker 3: and B in for Mott. 17 00:01:01,636 --> 00:01:03,476 Speaker 4: So that's great. I'd love to see Mark Baum run 18 00:01:03,516 --> 00:01:04,316 Speaker 4: a bed and breakfast. 19 00:01:04,836 --> 00:01:08,116 Speaker 3: Benny Daniel, you know how to make a muffin Mark's numbers. 20 00:01:07,796 --> 00:01:09,556 Speaker 1: Guy, no joke. 21 00:01:09,636 --> 00:01:11,116 Speaker 5: She could actually make a move to her mind. 22 00:01:11,236 --> 00:01:14,116 Speaker 1: I mean she made me start wearing a seat. Porter Collins, 23 00:01:14,876 --> 00:01:16,676 Speaker 1: former Olympic rower who went to Brown. 24 00:01:17,676 --> 00:01:19,996 Speaker 3: Sorry, I think we're the front Point because there is 25 00:01:19,996 --> 00:01:22,276 Speaker 3: another front Point in the same building, that is Bonds, 26 00:01:22,516 --> 00:01:26,436 Speaker 3: and Danny moses the optimist of the bunch and a 27 00:01:26,476 --> 00:01:28,396 Speaker 3: hell of a trader, which is the only reason they 28 00:01:28,396 --> 00:01:31,436 Speaker 3: put up with his bullshit optimism. It was this guy 29 00:01:31,676 --> 00:01:35,636 Speaker 3: from Deutsche who was talking about shorting housing bonds. 30 00:01:36,756 --> 00:01:39,636 Speaker 2: So that's the movie version of what the front Point 31 00:01:40,036 --> 00:01:43,036 Speaker 2: partners were like. Based on minoractions with them. That sounds 32 00:01:43,036 --> 00:01:44,876 Speaker 2: about right. What was it like for you when you 33 00:01:44,916 --> 00:01:45,516 Speaker 2: first met them? 34 00:01:46,356 --> 00:01:49,716 Speaker 3: Oh, the movie completely nails their interactions. I think of 35 00:01:49,876 --> 00:01:52,876 Speaker 3: Eisman as sort of the main character, and he was 36 00:01:52,956 --> 00:01:55,516 Speaker 3: kind of the big picture person, and then these other 37 00:01:55,556 --> 00:01:59,756 Speaker 3: three guys were doing various little picture things. The big 38 00:01:59,796 --> 00:02:02,396 Speaker 3: picture thing they were doing for me was watching Eisman. 39 00:02:02,836 --> 00:02:05,956 Speaker 3: But each played kind of a slightly different role and 40 00:02:06,356 --> 00:02:09,036 Speaker 3: each could contribute to the story. But there were so 41 00:02:09,276 --> 00:02:12,356 Speaker 3: downstage voices but characters in and of themselves, and I 42 00:02:12,556 --> 00:02:15,996 Speaker 3: kind of felt, especially the jerrymy Strong character playing Vinnie, 43 00:02:16,716 --> 00:02:21,156 Speaker 3: the movie just kind of nailed him. 44 00:02:21,196 --> 00:02:24,436 Speaker 2: This is the Big Short Companion podcast, and on today's episode, 45 00:02:24,636 --> 00:02:28,076 Speaker 2: Michael Lewis talks with the three front Point employees, Porter, Danny, 46 00:02:28,116 --> 00:02:32,476 Speaker 2: and Vinnie. 47 00:02:33,356 --> 00:02:35,356 Speaker 3: The first of the three front Point traders I spoke 48 00:02:35,396 --> 00:02:38,116 Speaker 3: to was Porter Collins. I asked him about meeting the 49 00:02:38,156 --> 00:02:40,516 Speaker 3: trader from Deutsche Bank who is going to let them 50 00:02:40,516 --> 00:02:43,676 Speaker 3: in on the big short itself, the bet against subprime 51 00:02:43,716 --> 00:02:49,876 Speaker 3: mortgage bonds. Greg Littman walks into your life. Describe Greg 52 00:02:49,956 --> 00:02:50,556 Speaker 3: Littman to me. 53 00:02:50,916 --> 00:02:54,276 Speaker 5: He looked like a Wall Street salesman. Whoever walked in 54 00:02:54,316 --> 00:02:56,516 Speaker 5: that door that was gonna sell us credit to false 55 00:02:56,516 --> 00:03:01,116 Speaker 5: swaps on housing was gonna get beaten up. But he 56 00:03:01,196 --> 00:03:04,796 Speaker 5: walked in the room and he was one hundred and 57 00:03:04,876 --> 00:03:09,116 Speaker 5: twenty percent confident about everything, and so therefore it made 58 00:03:09,276 --> 00:03:12,556 Speaker 5: it's so much easier for us to not like him 59 00:03:13,636 --> 00:03:16,996 Speaker 5: and to be skeptical of him and to go after him. 60 00:03:17,516 --> 00:03:19,476 Speaker 5: You know what, They have a scene in the movie 61 00:03:19,476 --> 00:03:22,876 Speaker 5: he said, I hung out with fashion friends, right. He 62 00:03:22,996 --> 00:03:25,436 Speaker 5: wanted to play that coolness factor as well, So he 63 00:03:25,596 --> 00:03:29,236 Speaker 5: wasn't like a funny duddy Wall Street salesman. He was 64 00:03:29,276 --> 00:03:33,716 Speaker 5: a young, flashy Wall Street salesman, and he put on 65 00:03:33,796 --> 00:03:37,316 Speaker 5: a sales pitch and all of us in the room 66 00:03:37,676 --> 00:03:38,876 Speaker 5: thought it was too good to be true. 67 00:03:39,356 --> 00:03:42,156 Speaker 6: The first thing that pops up in our head was 68 00:03:42,236 --> 00:03:50,156 Speaker 6: how intense yet entertained we were during the whole process. 69 00:03:50,556 --> 00:03:55,556 Speaker 3: That's Vincent Daniel, whose character would launch Jeremy Strong's acting career. 70 00:03:56,756 --> 00:03:59,916 Speaker 6: It was very intensive every day to be thinking about 71 00:04:00,596 --> 00:04:03,396 Speaker 6: this investment that we were doing, this trade we were doing, 72 00:04:04,276 --> 00:04:08,916 Speaker 6: and then, like everything associated with our office, we made 73 00:04:08,916 --> 00:04:12,876 Speaker 6: it quite entertaining to make sure that we kept saying minds. 74 00:04:13,476 --> 00:04:15,756 Speaker 3: So let's start this way. If you're just explaining to 75 00:04:15,796 --> 00:04:19,556 Speaker 3: your kids what the hell of financial crisis was without 76 00:04:19,676 --> 00:04:22,836 Speaker 3: using financial jargons, so in a way they'd understand that 77 00:04:22,916 --> 00:04:25,196 Speaker 3: what happened in two thousand and eight, it was such 78 00:04:25,196 --> 00:04:29,196 Speaker 3: a big deal, and what role did you play in it? 79 00:04:29,276 --> 00:04:32,916 Speaker 6: Well, the housing market crashed, right, and no one really 80 00:04:32,916 --> 00:04:35,676 Speaker 6: talks about the why it crashed or what happened. There 81 00:04:35,716 --> 00:04:38,556 Speaker 6: was a lot of bad loans that were made to 82 00:04:38,716 --> 00:04:44,076 Speaker 6: people who shouldn't have gotten those loans at housing prices 83 00:04:44,196 --> 00:04:47,876 Speaker 6: that were way too high and unaffordable for them, and 84 00:04:49,316 --> 00:04:51,996 Speaker 6: they had an inability to pay those loans. Without getting 85 00:04:52,076 --> 00:04:55,516 Speaker 6: into the intricacies of how we got there in the 86 00:04:55,516 --> 00:04:56,396 Speaker 6: first place. 87 00:04:56,556 --> 00:04:58,756 Speaker 3: I'm gonna play the role of your child, okay, dad, 88 00:04:58,876 --> 00:05:01,316 Speaker 3: So if that happened, so everybody lost a lot of 89 00:05:01,316 --> 00:05:04,756 Speaker 3: money because the housing prices collapsed. How did you make money? 90 00:05:05,076 --> 00:05:09,396 Speaker 1: Well, we were betting that. 91 00:05:10,796 --> 00:05:13,396 Speaker 6: The housing prices would collapse, and that was based upon 92 00:05:13,476 --> 00:05:16,076 Speaker 6: information and research. To kids, this is why you spend 93 00:05:16,116 --> 00:05:18,236 Speaker 6: a lot of time going to school and doing your 94 00:05:18,276 --> 00:05:22,716 Speaker 6: homemann Is because what we were doing was our homework 95 00:05:22,756 --> 00:05:26,836 Speaker 6: and realized that housing prices were too high and these 96 00:05:26,876 --> 00:05:29,916 Speaker 6: loans were going bad. And then so we figured it 97 00:05:29,916 --> 00:05:33,316 Speaker 6: out a way to make an investment. I'll use the 98 00:05:33,356 --> 00:05:35,516 Speaker 6: word investment rather than a bet. I guess to the 99 00:05:35,596 --> 00:05:39,436 Speaker 6: kids that it would all go bad and we would 100 00:05:39,436 --> 00:05:39,916 Speaker 6: make money. 101 00:05:40,196 --> 00:05:42,436 Speaker 3: Who let you make this investment? I mean if you 102 00:05:42,516 --> 00:05:44,636 Speaker 3: made money, somebody lost money. 103 00:05:44,836 --> 00:05:49,756 Speaker 6: Yes, there was a middleman, right like any gambling ring 104 00:05:49,876 --> 00:05:52,276 Speaker 6: usually has. As there's a middleman who was a bookie, 105 00:05:52,916 --> 00:05:55,596 Speaker 6: and he was taking both sides of the bets. So 106 00:05:55,956 --> 00:05:58,196 Speaker 6: we didn't really know who was on the other side. 107 00:05:58,396 --> 00:06:01,516 Speaker 6: For the most part up until the end, we just 108 00:06:01,596 --> 00:06:03,756 Speaker 6: knew that we had the ability to do what we 109 00:06:03,836 --> 00:06:07,636 Speaker 6: wanted to do, and these brokers, these middlemen, allowed us 110 00:06:07,676 --> 00:06:08,036 Speaker 6: to do it. 111 00:06:08,396 --> 00:06:11,716 Speaker 3: Let me continue in this vein of childlike questions. Sure, 112 00:06:12,316 --> 00:06:15,476 Speaker 3: why didn't everybody do their homework like what happened? 113 00:06:16,316 --> 00:06:19,636 Speaker 6: Imagine if you're in school, and you're getting away with 114 00:06:19,676 --> 00:06:22,796 Speaker 6: getting good grades without doing your homework. So more and 115 00:06:22,836 --> 00:06:26,476 Speaker 6: more people will just not do their homework and everything 116 00:06:26,516 --> 00:06:29,396 Speaker 6: will work out well. But if you actually did your homework, 117 00:06:30,116 --> 00:06:35,236 Speaker 6: you would realize that at some point not doing your 118 00:06:35,236 --> 00:06:36,876 Speaker 6: homework was not going to work. In fact, it was 119 00:06:36,916 --> 00:06:38,756 Speaker 6: going to be really bad. And if you did do 120 00:06:38,836 --> 00:06:42,116 Speaker 6: your homework, you were going to be rewarded in some way, 121 00:06:42,156 --> 00:06:43,236 Speaker 6: shape or form or fashion. 122 00:06:43,316 --> 00:06:46,356 Speaker 3: Yeah, how hard was it for you to get your 123 00:06:46,396 --> 00:06:49,996 Speaker 3: mind around the idea that you all could be right 124 00:06:50,076 --> 00:06:53,556 Speaker 3: and the whole world was wrong. You were making a 125 00:06:53,596 --> 00:06:57,436 Speaker 3: bet against the supposedly smartest people on Wall Street, who 126 00:06:57,516 --> 00:07:01,036 Speaker 3: were inside the biggest firms on Wall Street, and they 127 00:07:01,036 --> 00:07:01,876 Speaker 3: were all wrong. 128 00:07:02,316 --> 00:07:03,756 Speaker 1: I'll tell you why, Mike. 129 00:07:04,156 --> 00:07:06,556 Speaker 6: It was the only place that I had a PhD 130 00:07:07,156 --> 00:07:08,156 Speaker 6: in what was happening? 131 00:07:08,836 --> 00:07:10,676 Speaker 1: Right. I lived this. 132 00:07:12,196 --> 00:07:15,436 Speaker 6: In the late nineties because I was covering the subprime 133 00:07:15,676 --> 00:07:21,316 Speaker 6: mortgage companies way back when, So this was this was 134 00:07:21,356 --> 00:07:24,276 Speaker 6: secondhand knowledge to me. If the massive crisis of this 135 00:07:24,396 --> 00:07:27,796 Speaker 6: country was happening in the healthcare industry, I would have 136 00:07:27,836 --> 00:07:30,796 Speaker 6: been useless. I would have been just like every other 137 00:07:30,836 --> 00:07:35,196 Speaker 6: schmuck Wall Street person opining. But this was the one 138 00:07:35,196 --> 00:07:37,396 Speaker 6: place where we were not opining. We had the data 139 00:07:37,396 --> 00:07:41,316 Speaker 6: better than everyone, and at that time, you know, the 140 00:07:41,436 --> 00:07:45,956 Speaker 6: data was not perfectly presentable to everyone because you could 141 00:07:45,996 --> 00:07:48,596 Speaker 6: get it, it wasn't proprietary, but no one even knew 142 00:07:48,596 --> 00:07:51,316 Speaker 6: what we were talking about. I remember seeing this data 143 00:07:51,356 --> 00:07:55,476 Speaker 6: back in the nineties. So every month data would come 144 00:07:55,476 --> 00:07:58,876 Speaker 6: out that would show the delinquencies and losses of these 145 00:07:58,916 --> 00:08:01,276 Speaker 6: respective pools of mortgages. 146 00:08:00,836 --> 00:08:02,916 Speaker 3: Right, people not paying back their loans. 147 00:08:02,716 --> 00:08:07,596 Speaker 6: Right, correct, and you could comp them to the prior 148 00:08:07,676 --> 00:08:11,076 Speaker 6: your vintages and the ones that we were short, the 149 00:08:11,076 --> 00:08:14,956 Speaker 6: ones that we were betting against. The curves were horrifically bad. 150 00:08:15,156 --> 00:08:18,116 Speaker 6: Like the delinquencies were well north of where they should be. 151 00:08:18,156 --> 00:08:20,276 Speaker 6: The losses were starting to pile up and be well 152 00:08:20,316 --> 00:08:23,236 Speaker 6: north of where they should be. So to us, to me, 153 00:08:23,356 --> 00:08:26,236 Speaker 6: I'll speak for myself, it was simple math that we 154 00:08:26,236 --> 00:08:29,196 Speaker 6: were going to be right. What I didn't realize was 155 00:08:29,196 --> 00:08:31,316 Speaker 6: how far the FED would go to make sure that 156 00:08:31,396 --> 00:08:35,076 Speaker 6: I was wrong. And quite frankly, I think we were 157 00:08:35,116 --> 00:08:40,076 Speaker 6: a little fortunate that they didn't understand what we understood. 158 00:08:40,276 --> 00:08:43,476 Speaker 6: And at that point in time, this is probably one 159 00:08:43,476 --> 00:08:45,476 Speaker 6: of the first and probably last times in our lives 160 00:08:45,556 --> 00:08:49,316 Speaker 6: that we knew more than the most important people in 161 00:08:49,356 --> 00:08:51,916 Speaker 6: the world thought they knew about this subject matter. 162 00:08:52,076 --> 00:08:54,356 Speaker 3: How do you explain the ignorance of the most important 163 00:08:54,356 --> 00:08:55,836 Speaker 3: people in the world. I mean, you would have thought 164 00:08:55,836 --> 00:08:58,516 Speaker 3: that City Group and Merrill Lynch in the Federal Reserve 165 00:08:58,916 --> 00:09:02,676 Speaker 3: would have people equally expert on this subject. Two were 166 00:09:02,676 --> 00:09:04,716 Speaker 3: looking at all the data and all the curves, just 167 00:09:04,796 --> 00:09:06,996 Speaker 3: like you in retrospect you look back on that. How 168 00:09:06,996 --> 00:09:08,796 Speaker 3: do you explain it? 169 00:09:09,316 --> 00:09:09,716 Speaker 1: Of money? 170 00:09:09,796 --> 00:09:12,796 Speaker 6: That's the only way that in my head that rationalizes. 171 00:09:13,676 --> 00:09:17,796 Speaker 6: I always assume that people saw what I saw, Particularly 172 00:09:17,836 --> 00:09:20,156 Speaker 6: the people that were this close to the situation, that 173 00:09:20,236 --> 00:09:24,516 Speaker 6: were analyzing these bonds and these these they knew, they 174 00:09:24,556 --> 00:09:27,796 Speaker 6: had to know, but there was just too much money 175 00:09:28,396 --> 00:09:32,676 Speaker 6: to be made on the incremental subprime loan. There was 176 00:09:32,716 --> 00:09:35,116 Speaker 6: just too much money to be made, So they all 177 00:09:35,156 --> 00:09:38,396 Speaker 6: turned the most intelligent ones turned the blind eye. 178 00:09:38,556 --> 00:09:40,636 Speaker 1: Yeah my opinion, Yeah. 179 00:09:40,116 --> 00:09:43,956 Speaker 3: That makes total sense that the only other people around 180 00:09:43,996 --> 00:09:47,156 Speaker 3: who had access to the information were all being paid 181 00:09:47,716 --> 00:09:49,116 Speaker 3: to misinterpret the information. 182 00:09:50,276 --> 00:09:50,636 Speaker 1: Correct. 183 00:09:52,276 --> 00:09:54,876 Speaker 3: We're going to take a quick break when we come back. 184 00:09:55,236 --> 00:09:58,276 Speaker 3: I asked Vinnie and the other front Boy guys how 185 00:09:58,276 --> 00:10:01,676 Speaker 3: being depicted in my book and in the movie affected 186 00:10:01,676 --> 00:10:03,236 Speaker 3: their lives afterwards. 187 00:10:06,476 --> 00:10:09,636 Speaker 7: How did the Volkswagen Beetle go from being hitler dream 188 00:10:09,676 --> 00:10:13,036 Speaker 7: car to a hippie icon? How did a disgruntled center 189 00:10:13,076 --> 00:10:16,756 Speaker 7: fielder change the business of sports? I'm Jacob Goldstein and 190 00:10:16,916 --> 00:10:19,676 Speaker 7: on Business History my co host Robert Smith, and I 191 00:10:19,756 --> 00:10:22,756 Speaker 7: dig into the people and companies who created the modern world. 192 00:10:23,156 --> 00:10:26,716 Speaker 7: Business History is full of innovations and failures and insights 193 00:10:26,756 --> 00:10:29,996 Speaker 7: into how business works today. At the end of today's 194 00:10:30,036 --> 00:10:31,996 Speaker 7: episode of Against the Rules, we're going to play a 195 00:10:31,996 --> 00:10:36,396 Speaker 7: clip from our episode about Jim Simon's decades ago. Simon's 196 00:10:36,436 --> 00:10:41,196 Speaker 7: basically invented modern algorithmic trading, and after a few early hiccups, 197 00:10:41,236 --> 00:10:44,836 Speaker 7: including buying up all the potatoes in Maine, Simon's built 198 00:10:44,876 --> 00:10:49,436 Speaker 7: a machine that generated incredible returns for decades. The show 199 00:10:49,516 --> 00:10:52,316 Speaker 7: is called Business History, and the previews coming up at 200 00:10:52,316 --> 00:10:54,476 Speaker 7: the end of today's episode of Against the Rules. 201 00:10:56,636 --> 00:10:59,236 Speaker 3: Have the book in the movie sort of screwed up 202 00:10:59,276 --> 00:11:01,796 Speaker 3: your memory of the experience in the way your you know, 203 00:11:02,356 --> 00:11:05,196 Speaker 3: pictures from a family vacation screw up your family memory 204 00:11:05,196 --> 00:11:07,516 Speaker 3: of the family vacation because all you end up remembering 205 00:11:07,596 --> 00:11:10,916 Speaker 3: is the pictures. Or do you have scenes in your 206 00:11:10,996 --> 00:11:13,876 Speaker 3: head that are just separate from that, that are vivid 207 00:11:13,916 --> 00:11:16,356 Speaker 3: to you about the experience. 208 00:11:17,436 --> 00:11:20,596 Speaker 6: I'll give you a great personal business scene that really 209 00:11:20,636 --> 00:11:24,996 Speaker 6: gets to I think what you're getting at. So I 210 00:11:25,076 --> 00:11:30,756 Speaker 6: might get the dates slightly wrong. October two thousand and eight. Okay, 211 00:11:32,036 --> 00:11:36,956 Speaker 6: my now deceased father in law takes the entire family 212 00:11:37,676 --> 00:11:42,196 Speaker 6: on a Disney vacation and we were there during the 213 00:11:42,236 --> 00:11:46,716 Speaker 6: time that the markets were blowing up. So while I'm 214 00:11:46,956 --> 00:11:49,716 Speaker 6: on it's a small world. I know that the S 215 00:11:49,796 --> 00:11:54,276 Speaker 6: ANDP is down three four percent, but I'm there with 216 00:11:54,436 --> 00:11:59,676 Speaker 6: my nieces, my nephews, my kids, and thankfully we're on 217 00:11:59,716 --> 00:12:02,116 Speaker 6: the right side of it, right, thankfully Like that, that 218 00:12:02,636 --> 00:12:05,676 Speaker 6: was the only solace was that my father in law 219 00:12:05,876 --> 00:12:08,556 Speaker 6: had money in the markets like he was. He was 220 00:12:09,356 --> 00:12:12,876 Speaker 6: somewhat financially sadly, you know, he did, you know, pretty 221 00:12:12,876 --> 00:12:13,716 Speaker 6: well in markets. 222 00:12:14,156 --> 00:12:16,676 Speaker 1: And I remember him going we're in the pool. 223 00:12:18,236 --> 00:12:19,796 Speaker 6: We're in the pool with all the kids, and I 224 00:12:19,836 --> 00:12:22,596 Speaker 6: remember him going to, I guess, go to the bathroom, right, 225 00:12:23,276 --> 00:12:25,996 Speaker 6: And I just sat there saying, he's going to come 226 00:12:26,036 --> 00:12:30,436 Speaker 6: out check markets and he's going to have the face 227 00:12:30,436 --> 00:12:35,396 Speaker 6: of the grim Reaper and look for me immediately and 228 00:12:35,516 --> 00:12:38,516 Speaker 6: sure as shit. Every day that I was there, about 229 00:12:38,556 --> 00:12:41,036 Speaker 6: four point thirty he comes out and I'm sitting there. 230 00:12:41,236 --> 00:12:42,596 Speaker 1: I probably have a cocktail in my hand. 231 00:12:42,596 --> 00:12:45,516 Speaker 6: I go here, it comes right, and he would just go, Vinny, 232 00:12:45,756 --> 00:12:49,156 Speaker 6: what in the world is going on? And so that 233 00:12:49,316 --> 00:12:52,516 Speaker 6: is kind of one of my memories of it gets 234 00:12:52,556 --> 00:12:55,316 Speaker 6: back to, wow, we knew a lot back then, and 235 00:12:55,356 --> 00:12:57,836 Speaker 6: I'm sitting in Disney World where everyone's playing around, no 236 00:12:57,876 --> 00:13:01,436 Speaker 6: one's paying attention to anything. But come after four o'clock, 237 00:13:01,556 --> 00:13:04,716 Speaker 6: my father in law started paying attention every day and 238 00:13:05,196 --> 00:13:07,836 Speaker 6: I think the market was dound like ten percent that week. 239 00:13:08,076 --> 00:13:09,916 Speaker 3: And what do you say to him when he says, Vinnie, 240 00:13:09,916 --> 00:13:10,716 Speaker 3: what the hell's going on? 241 00:13:11,156 --> 00:13:14,636 Speaker 6: It's like, well, I go, there's a problem with the 242 00:13:14,676 --> 00:13:17,756 Speaker 6: housing market. And what you don't want to say is 243 00:13:18,596 --> 00:13:20,756 Speaker 6: I've been trying to tell you this, but no one 244 00:13:20,836 --> 00:13:25,436 Speaker 6: really listens to you until the markets actually go down. 245 00:13:25,596 --> 00:13:29,716 Speaker 3: Has anybody been angry at you for being right? 246 00:13:29,836 --> 00:13:30,276 Speaker 1: No? 247 00:13:30,276 --> 00:13:31,276 Speaker 3: No, You've got no anger. 248 00:13:31,356 --> 00:13:35,036 Speaker 6: No, no anger. Every once in a while you get well, 249 00:13:35,036 --> 00:13:35,996 Speaker 6: why didn't you stop this? 250 00:13:36,716 --> 00:13:36,876 Speaker 1: Right? 251 00:13:37,356 --> 00:13:40,796 Speaker 6: Or I remember a few years ago I would get 252 00:13:40,876 --> 00:13:44,396 Speaker 6: the like, how do you feel comfortable profiting from this? 253 00:13:44,876 --> 00:13:47,316 Speaker 1: And the way. 254 00:13:47,156 --> 00:13:52,956 Speaker 6: I explained our way around. It was like, look, we 255 00:13:52,996 --> 00:13:57,196 Speaker 6: went down to Washington, DC many a time's pre crisis. 256 00:13:58,236 --> 00:13:59,956 Speaker 1: We are not silent wallflowers. 257 00:14:00,516 --> 00:14:03,076 Speaker 6: We went there and said, you guys are screwing up 258 00:14:03,196 --> 00:14:06,436 Speaker 6: royally and I've come to learn and I have this line. 259 00:14:06,436 --> 00:14:09,396 Speaker 6: I was like, unless you go to DC with a 260 00:14:09,436 --> 00:14:12,276 Speaker 6: suitcase full of money on the accel express, no one's 261 00:14:12,276 --> 00:14:14,676 Speaker 6: going to listen to And they didn't. 262 00:14:14,956 --> 00:14:17,636 Speaker 1: So it's not like we didn't try. We did. 263 00:14:18,276 --> 00:14:21,116 Speaker 6: And I know we didn't cause the crisis that I know, 264 00:14:23,156 --> 00:14:26,076 Speaker 6: do we accelerate the crisis by increasing the amount of 265 00:14:26,636 --> 00:14:30,196 Speaker 6: like synthetic stuff that was put on it? Maybe someone 266 00:14:30,196 --> 00:14:33,316 Speaker 6: could maybe make that argument, But by the time we 267 00:14:33,396 --> 00:14:35,196 Speaker 6: got involved, it was already gone. 268 00:14:35,796 --> 00:14:38,196 Speaker 3: So when you look back, looking back at the way 269 00:14:38,196 --> 00:14:41,316 Speaker 3: you may have played a poker hand, is there any 270 00:14:41,836 --> 00:14:44,516 Speaker 3: if you could replay it? Would you replay it any differently? 271 00:14:45,676 --> 00:14:48,476 Speaker 1: I would replay the after effects. 272 00:14:48,956 --> 00:14:52,596 Speaker 6: What I didn't realize was how they were going to 273 00:14:52,676 --> 00:14:57,836 Speaker 6: quote remedy the issue, right, I wasn't of the belief 274 00:14:57,876 --> 00:14:59,116 Speaker 6: that a lot of people were going to go to 275 00:14:59,196 --> 00:15:03,796 Speaker 6: jail and like, but what I didn't realize to this day, 276 00:15:05,036 --> 00:15:11,076 Speaker 6: I think that episode that incident. Recession was the last 277 00:15:11,116 --> 00:15:15,436 Speaker 6: time material adverse price discovery can happen in markets. 278 00:15:15,836 --> 00:15:19,116 Speaker 3: Explain that, Explain that to a child what material adverse 279 00:15:19,156 --> 00:15:20,076 Speaker 3: price selection is? 280 00:15:21,116 --> 00:15:26,596 Speaker 1: Okay? In markets, things go up, things go down. Right? 281 00:15:29,076 --> 00:15:32,276 Speaker 6: Would we have been taught by textbooks to believe that 282 00:15:32,276 --> 00:15:36,996 Speaker 6: that's just how markets work, that's how capitalism works. Specifically, 283 00:15:37,556 --> 00:15:39,356 Speaker 6: is that yes, you will have booms, but you will 284 00:15:39,356 --> 00:15:45,116 Speaker 6: also have busts. The government said, we don't want busts anymore. 285 00:15:45,556 --> 00:15:51,076 Speaker 6: We don't want prices to go back. Particularly, we don't 286 00:15:51,076 --> 00:15:53,876 Speaker 6: want prices to go bad. And this probably where I 287 00:15:53,876 --> 00:15:55,356 Speaker 6: don't think it's controversial at all. 288 00:15:55,916 --> 00:15:56,636 Speaker 1: We don't want. 289 00:15:56,436 --> 00:15:58,596 Speaker 6: Prices to go bad for the people who could actually 290 00:15:58,636 --> 00:16:02,316 Speaker 6: afford for prices to go bad, meaning the wealthy people. 291 00:16:04,076 --> 00:16:09,356 Speaker 6: You have your you're too influential, you're too powerful, you're 292 00:16:09,396 --> 00:16:13,756 Speaker 6: too required to continue to spend the money that you 293 00:16:13,836 --> 00:16:16,956 Speaker 6: do your wealth such that at the end of the day, 294 00:16:17,796 --> 00:16:19,596 Speaker 6: we're going to bail you out, because if we don't 295 00:16:19,596 --> 00:16:23,476 Speaker 6: bail you out, there are some major negative implications to 296 00:16:23,596 --> 00:16:28,396 Speaker 6: the overall economy. Right, Whereas, sadly, for the people who 297 00:16:28,476 --> 00:16:36,556 Speaker 6: can't afford price discovery, poor lower middle class, you're allowed 298 00:16:36,596 --> 00:16:41,596 Speaker 6: to go bust because you're not that important. So if 299 00:16:41,636 --> 00:16:45,476 Speaker 6: I had to do something different, I would recognize that 300 00:16:45,676 --> 00:16:49,996 Speaker 6: sad fact a lot earlier than I have. That the 301 00:16:50,036 --> 00:16:55,356 Speaker 6: way they're going to remedy every calamity going forward, the 302 00:16:55,396 --> 00:17:00,356 Speaker 6: minute something goes bad, the swap team and the fire 303 00:17:00,356 --> 00:17:03,196 Speaker 6: hoses are out immediately to make sure it doesn't go poorly. 304 00:17:03,316 --> 00:17:05,676 Speaker 3: Give me an example of the fire hoses coming out. 305 00:17:06,476 --> 00:17:09,116 Speaker 6: The Silicon Valley Bank, and they're making it as if 306 00:17:09,156 --> 00:17:12,036 Speaker 6: Silicon Valley Bank was small. It wasn't that small, right, 307 00:17:12,876 --> 00:17:16,956 Speaker 6: If a major bank of that kind went under in 308 00:17:16,996 --> 00:17:19,636 Speaker 6: a market where a price discovery was allowed, you would 309 00:17:19,676 --> 00:17:24,236 Speaker 6: probably see the markets go down a material amount. They 310 00:17:24,316 --> 00:17:28,116 Speaker 6: remedied that situation in two days over the weekend. They 311 00:17:28,196 --> 00:17:33,196 Speaker 6: just basically flooded the lines with fake credit, right a 312 00:17:33,236 --> 00:17:36,796 Speaker 6: line of credit to make sure that any bank that 313 00:17:36,876 --> 00:17:39,756 Speaker 6: was about to go under, regional bank that was about 314 00:17:39,756 --> 00:17:42,116 Speaker 6: to go under would be saved by this line of credit. 315 00:17:42,556 --> 00:17:47,756 Speaker 6: And so the market rightfully so ignored the adverse price 316 00:17:47,836 --> 00:17:50,316 Speaker 6: discovery because they realized that the FED had its back, 317 00:17:50,436 --> 00:17:53,036 Speaker 6: and they did not allow this to fester for more 318 00:17:53,116 --> 00:17:54,316 Speaker 6: than a week. 319 00:17:55,276 --> 00:17:55,676 Speaker 1: That's it. 320 00:17:57,196 --> 00:17:59,716 Speaker 6: There used to be a time when price discovery was allowed. 321 00:18:00,036 --> 00:18:01,116 Speaker 6: It's not allowed anymore. 322 00:18:02,716 --> 00:18:05,196 Speaker 3: I get asked a bunch why I opened and closed 323 00:18:05,196 --> 00:18:07,756 Speaker 3: the Big Short with these characters, these front point guys 324 00:18:08,276 --> 00:18:11,196 Speaker 3: and particular Steve Eisman. Part of it was they had 325 00:18:11,196 --> 00:18:13,996 Speaker 3: this really deep experience with the subprime lending market that 326 00:18:14,076 --> 00:18:16,916 Speaker 3: went back to the early nineteen nineties. They had seen 327 00:18:16,996 --> 00:18:20,676 Speaker 3: firsthand this ugly border between high finance and the American 328 00:18:20,716 --> 00:18:23,836 Speaker 3: lower middle class. And so they were in a way 329 00:18:23,916 --> 00:18:27,076 Speaker 3: there at the very beginning of the story. But I 330 00:18:27,156 --> 00:18:29,196 Speaker 3: ended the book with him because they had just handed 331 00:18:29,276 --> 00:18:33,716 Speaker 3: me an ending on a platter. The day Lehman Brothers 332 00:18:33,716 --> 00:18:37,676 Speaker 3: failed and they became rich, they were actually totally shell shocked. 333 00:18:38,596 --> 00:18:41,116 Speaker 3: They wandered around midtown Manhattan and wound up on the 334 00:18:41,116 --> 00:18:44,436 Speaker 3: steps of Saint Patrick's Cathedral. Here's Danny Moses. 335 00:18:45,076 --> 00:18:48,516 Speaker 4: Literally until the day that Lehman went down, and we'd 336 00:18:48,556 --> 00:18:51,316 Speaker 4: never realized how big this thing was, and so that 337 00:18:51,356 --> 00:18:54,196 Speaker 4: moment on Saint Patrick's Cathedral on those steps was real. 338 00:18:54,716 --> 00:18:57,156 Speaker 3: So I don't want you to describe the moment on 339 00:18:57,316 --> 00:18:58,596 Speaker 3: Saint Patrick's Cathedral, and. 340 00:18:58,676 --> 00:19:01,556 Speaker 4: We realized that like this is this is bad, like 341 00:19:01,596 --> 00:19:03,596 Speaker 4: this is going to be over, Like what how is 342 00:19:03,596 --> 00:19:06,596 Speaker 4: this going to play out? And so literally left the 343 00:19:06,636 --> 00:19:09,796 Speaker 4: trading desk, gave it to junior trader reporter Vinnie walked 344 00:19:09,836 --> 00:19:12,276 Speaker 4: me out. You know, Saint Patri's Cathedral was about one 345 00:19:12,316 --> 00:19:15,436 Speaker 4: avenue over, and Steve was at a conference down at 346 00:19:15,436 --> 00:19:17,996 Speaker 4: Goldman Sachs that day, probably raising as much money as 347 00:19:17,996 --> 00:19:20,356 Speaker 4: he wanted to at that point, and we were sitting 348 00:19:20,396 --> 00:19:22,436 Speaker 4: up there on the steps and we just had a 349 00:19:22,516 --> 00:19:25,676 Speaker 4: very cathartic kind of moment watching people go by. Some 350 00:19:25,716 --> 00:19:29,476 Speaker 4: were construction workers, some bus drive some oblivious, but then 351 00:19:29,796 --> 00:19:31,836 Speaker 4: the lawyers and the Wall Street people walking by, they 352 00:19:31,916 --> 00:19:34,516 Speaker 4: probably knew. And I guess at that moment in time, 353 00:19:34,556 --> 00:19:36,036 Speaker 4: you felt like I wish I was one of the 354 00:19:36,036 --> 00:19:38,476 Speaker 4: people who didn't know anything that was going on. I 355 00:19:38,516 --> 00:19:40,476 Speaker 4: thought to myself, they have no idea what's about to 356 00:19:40,476 --> 00:19:44,156 Speaker 4: happen to them, Meaning if the economic system collapses, they're 357 00:19:44,196 --> 00:19:46,116 Speaker 4: going to feel it because the government's going to be 358 00:19:46,396 --> 00:19:49,916 Speaker 4: effectively in dire straits. And you know, it's amazing when 359 00:19:49,956 --> 00:19:54,356 Speaker 4: you fast forward to today, all the consequences of all 360 00:19:54,396 --> 00:19:58,116 Speaker 4: those things that happened seventeen years ago are not only 361 00:19:58,156 --> 00:20:01,396 Speaker 4: still with us, potentially end up getting a lot worse 362 00:20:01,516 --> 00:20:03,516 Speaker 4: because of the moral hazard and the hubris that's you know, 363 00:20:03,596 --> 00:20:04,276 Speaker 4: still out there. 364 00:20:04,636 --> 00:20:07,396 Speaker 3: When I talk to them about publishing their stories, all 365 00:20:07,436 --> 00:20:11,316 Speaker 3: the characters in the book shared this one concern. They 366 00:20:11,316 --> 00:20:13,596 Speaker 3: were all really worried how it would look to have 367 00:20:13,676 --> 00:20:16,276 Speaker 3: made a fortune from the collapse of a system and 368 00:20:16,316 --> 00:20:20,076 Speaker 3: the ruin of so many careers and lives. Porter Collins 369 00:20:20,156 --> 00:20:21,356 Speaker 3: especially brought this up. 370 00:20:22,276 --> 00:20:25,796 Speaker 5: I was scared, you know. When the book came out. 371 00:20:25,836 --> 00:20:30,796 Speaker 5: My grandfather read it and he didn't really approve. He 372 00:20:31,316 --> 00:20:33,876 Speaker 5: was like, well, you made all this money and everyone 373 00:20:33,916 --> 00:20:37,596 Speaker 5: lost their homes, Like how does that make you feel? 374 00:20:39,116 --> 00:20:42,076 Speaker 5: And so like that was that other side of the coin, right. 375 00:20:42,236 --> 00:20:43,596 Speaker 3: And what did you say to What did you say 376 00:20:43,636 --> 00:20:43,956 Speaker 3: to him? 377 00:20:45,636 --> 00:20:48,396 Speaker 5: I said, he was right, you know, and he had 378 00:20:48,476 --> 00:20:52,196 Speaker 5: the memory going back to you know, the depression, right, 379 00:20:52,236 --> 00:20:55,196 Speaker 5: he came from a different era people forget all this stuff, 380 00:20:55,236 --> 00:20:57,756 Speaker 5: and so you know, I had a bit of that. 381 00:20:58,196 --> 00:21:01,036 Speaker 5: Maybe it's the waspiness in me or whatever it is. 382 00:21:01,116 --> 00:21:01,836 Speaker 5: I was scared. 383 00:21:06,276 --> 00:21:09,316 Speaker 3: If i'd asked you to predict, as you're saying, I think, 384 00:21:09,356 --> 00:21:12,436 Speaker 3: on the steps of the Saint Patrick's Cathedral, what the 385 00:21:12,476 --> 00:21:16,716 Speaker 3: world's going to look like in fifteen years, And I 386 00:21:16,756 --> 00:21:19,916 Speaker 3: mean not just the financial markets, but also the political markets. 387 00:21:21,636 --> 00:21:23,236 Speaker 3: How far off would you have been? What did you 388 00:21:23,316 --> 00:21:25,996 Speaker 3: imagine what was going to happen and what did happen. 389 00:21:28,596 --> 00:21:31,716 Speaker 6: I would have imagined that we would have had I 390 00:21:31,756 --> 00:21:35,596 Speaker 6: would have been wrong. Put it that way. I would 391 00:21:35,596 --> 00:21:38,476 Speaker 6: have imagined that there would have been more justice, or 392 00:21:38,956 --> 00:21:42,436 Speaker 6: if you looked at prior times in history, there would 393 00:21:42,436 --> 00:21:48,356 Speaker 6: have been more time to remedy the situation through price discovery. 394 00:21:48,436 --> 00:21:51,716 Speaker 6: We wouldn't have allowed the proliferation of some of the 395 00:21:51,756 --> 00:21:53,236 Speaker 6: excess leverage that has happened. 396 00:21:53,996 --> 00:21:55,836 Speaker 1: But I was naive. 397 00:22:00,156 --> 00:22:02,556 Speaker 4: So the system is set up in a way to 398 00:22:02,676 --> 00:22:06,196 Speaker 4: reward the risk and not really punish the people that 399 00:22:07,076 --> 00:22:09,636 Speaker 4: make the wrong bets. And so, yeah, you can lose 400 00:22:09,636 --> 00:22:11,956 Speaker 4: your job, but as we saw during the financial no 401 00:22:11,956 --> 00:22:14,236 Speaker 4: one went to jail afterwards, and who bailed them out? 402 00:22:14,396 --> 00:22:16,876 Speaker 4: The taxpayer and the shareholders. Over time, that was it. 403 00:22:17,436 --> 00:22:19,396 Speaker 4: No one else did. Some people paid fines here and there, 404 00:22:19,396 --> 00:22:21,596 Speaker 4: but that's pretty much all it was. So the moral 405 00:22:21,676 --> 00:22:25,076 Speaker 4: hazard that was created as a result of this and 406 00:22:25,116 --> 00:22:30,036 Speaker 4: the crisis stays with us today. 407 00:22:30,916 --> 00:22:33,556 Speaker 3: I want to thank Danny Moses, Vincent Daniel, and Porter 408 00:22:33,636 --> 00:22:37,356 Speaker 3: Collins for talking with me once again starting next week, 409 00:22:37,436 --> 00:22:40,316 Speaker 3: We're going to widen out our lens and look at 410 00:22:40,356 --> 00:22:44,516 Speaker 3: all the ways the financial crisis changed our world, but 411 00:22:44,636 --> 00:22:48,916 Speaker 3: also how maybe the system averted something even worse than 412 00:22:48,916 --> 00:22:49,476 Speaker 3: what we got. 413 00:22:59,916 --> 00:23:02,796 Speaker 2: Against the Rules, The Big Short Companion is hosted by 414 00:23:02,796 --> 00:23:06,436 Speaker 2: Michael Lewis. It's produced by Me Ludy, Jane Cott and 415 00:23:06,516 --> 00:23:11,476 Speaker 2: Catherine Girodell. Our editor is Julia Barton. Our theme was 416 00:23:11,476 --> 00:23:15,236 Speaker 2: composed by Nick Brittel, and our engineer is Hans Dale 417 00:23:15,316 --> 00:23:22,636 Speaker 2: Sheeting special thanks to Nicole opten Bosch, Jasmine Faustino, Pamela 418 00:23:22,716 --> 00:23:26,916 Speaker 2: Lawrence and the rest of the Pushkin Audiobooks team. Against 419 00:23:26,956 --> 00:23:30,676 Speaker 2: the Rules is a production of Pushkin Industries. To find 420 00:23:30,676 --> 00:23:35,156 Speaker 2: more Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts 421 00:23:35,516 --> 00:23:38,316 Speaker 2: or wherever you listen to podcasts, And if you'd like 422 00:23:38,356 --> 00:23:41,836 Speaker 2: to listen ad free and learn about other exclusive offerings, 423 00:23:42,076 --> 00:23:44,516 Speaker 2: don't forget to sign up for a Pushkin Plus subscription 424 00:23:45,076 --> 00:23:49,476 Speaker 2: at pushkin dot fm, Slash Plus or honor Apple show page. 425 00:23:50,756 --> 00:23:53,236 Speaker 2: And you can get The Big Short now at Pushkin 426 00:23:53,396 --> 00:23:58,076 Speaker 2: dot fm, Slash Audiobooks or wherever audiobooks are sold. 427 00:24:00,876 --> 00:24:02,996 Speaker 7: It's Jacob Goldstein. I'm the co host of a new 428 00:24:03,036 --> 00:24:05,956 Speaker 7: show called Business History, and we're bringing you a clip 429 00:24:06,036 --> 00:24:08,836 Speaker 7: right now from an episode we did about a mathematician 430 00:24:08,916 --> 00:24:13,076 Speaker 7: name Jim Simon's. Simons wanted to take human emotions out 431 00:24:13,116 --> 00:24:17,036 Speaker 7: of investing, and after a few early hiccups, including buying 432 00:24:17,156 --> 00:24:19,996 Speaker 7: up all the potatoes in Maine, he created one of 433 00:24:19,996 --> 00:24:23,236 Speaker 7: the greatest money machines in history. I really hope you 434 00:24:23,276 --> 00:24:25,156 Speaker 7: like the clip, and if you want to hear more, 435 00:24:25,276 --> 00:24:28,396 Speaker 7: please check out the show. It's called Business History and 436 00:24:28,436 --> 00:24:32,916 Speaker 7: it's available wherever you're listening right now. They were doing 437 00:24:32,956 --> 00:24:35,516 Speaker 7: what we would call today machine learning. 438 00:24:35,556 --> 00:24:39,916 Speaker 8: A machine learning is like essentially, you build a system 439 00:24:39,916 --> 00:24:41,836 Speaker 8: in a computer, you feeded a bunch of data and 440 00:24:41,876 --> 00:24:44,876 Speaker 8: the system sort of builds a map of the relationships 441 00:24:44,876 --> 00:24:47,076 Speaker 8: in that data, and then with new data it can 442 00:24:47,156 --> 00:24:50,756 Speaker 8: kind of interpolate or extrapolate and make guesses about. 443 00:24:50,516 --> 00:24:51,436 Speaker 1: What should come next. 444 00:24:51,756 --> 00:24:55,196 Speaker 8: And of course today we have an exciting, maybe misleading, 445 00:24:55,316 --> 00:24:57,356 Speaker 8: confounding term for machine learning. 446 00:24:57,876 --> 00:24:58,716 Speaker 1: We call it AI. 447 00:24:58,996 --> 00:25:02,356 Speaker 9: Exactly right, right, this is still very basic machine learning, 448 00:25:02,556 --> 00:25:06,316 Speaker 9: and the computer at the time keeps making mistakes that 449 00:25:06,356 --> 00:25:10,476 Speaker 9: they didn't really understand. So, for instance, once the computer 450 00:25:11,156 --> 00:25:17,436 Speaker 9: developed a taste for potatoes, main potatoes. The system kept 451 00:25:17,476 --> 00:25:23,356 Speaker 9: buying main potato futures in the state of Maine, potato. 452 00:25:22,956 --> 00:25:26,796 Speaker 8: Potatoes, big harvest next year or whatever, Yes, okay. 453 00:25:26,876 --> 00:25:30,636 Speaker 9: Until two thirds of the company's money was in potatoes. 454 00:25:30,676 --> 00:25:32,996 Speaker 9: They were all in potatoes. And they got a call 455 00:25:33,036 --> 00:25:34,036 Speaker 9: from the regulators, the. 456 00:25:33,996 --> 00:25:38,476 Speaker 7: CFT CFPP Commodi Futures Trading Commission. 457 00:25:38,116 --> 00:25:41,956 Speaker 9: Right saying, whoa who are you guys, Like, what are 458 00:25:41,996 --> 00:25:44,636 Speaker 9: you doing over there? You have almost cornered the market 459 00:25:44,716 --> 00:25:48,396 Speaker 9: on potatoes. You have to sell. And they ended up 460 00:25:48,476 --> 00:25:53,276 Speaker 9: losing money on the trade because blown out on potatoes, 461 00:25:53,396 --> 00:25:57,036 Speaker 9: they had stopped the computer whatever the computer's plan was. 462 00:25:57,676 --> 00:26:00,436 Speaker 9: But you know, this was just one small weird thing. 463 00:26:00,876 --> 00:26:04,636 Speaker 9: Simon and Baum were really kind of nervous about this 464 00:26:04,676 --> 00:26:07,476 Speaker 9: whole thing. They had taken investors money, they didn't really 465 00:26:07,556 --> 00:26:11,796 Speaker 9: know if their system worked. And as the story gets told, 466 00:26:11,836 --> 00:26:15,036 Speaker 9: they start to like second guess the computer and themselves, 467 00:26:15,036 --> 00:26:17,316 Speaker 9: and they start to think, well, I have this intuition 468 00:26:17,396 --> 00:26:21,116 Speaker 9: that gold's going to go up because of the geopolitical situation, 469 00:26:21,356 --> 00:26:23,116 Speaker 9: and they'd make some money on that, and then they'd 470 00:26:23,116 --> 00:26:26,356 Speaker 9: lose some money on that, and so by doubting their 471 00:26:26,396 --> 00:26:29,836 Speaker 9: own system, it just wasn't really working, and at that 472 00:26:29,916 --> 00:26:32,676 Speaker 9: point they're just Wall Street investors, right with the big computer, 473 00:26:32,916 --> 00:26:35,836 Speaker 9: trying to buy more potatoes, and the man won't let 474 00:26:35,876 --> 00:26:36,796 Speaker 9: them buy potatoes.