Speaker 1: Hello, and welcome to another episode of the ad Thoughts Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe wisent. Joe. I am very,
Speaker 1: very excited about this episode because we are about to
Speaker 1: embark on our second series here at Odd Lots. Our
Speaker 1: first series was about financial crime and financial Shenanigan's right. Yeah,
Speaker 1: it was great. You must remember it wasn't that long ago.
Speaker 1: No no, no, no no, I no, I'm playing. Don't I
Speaker 1: do remember it? It It was very fun um and I'm
Speaker 1: excited about our new series. Yeah. So, in our grand
Speaker 1: tradition I guess of dealing in the worst of human character,
Speaker 1: we are going to be all about fear and greed
Speaker 1: in our next series. We're gonna be talking about bubbles.
Speaker 1: This is gonna be a great I'm really excited. Let's
Speaker 1: just be honest. Bubbles are when markets are at the
Speaker 1: most fun. I mean, there may be markets at their worst,
Speaker 1: but when markets are just trading on pure emotion, fear
Speaker 1: and greed, totally divorced from fundamentals. Panic, everyone wanted to
Speaker 1: get rich. It's hard to argue that that isn't when
Speaker 1: markets are there at their most interesting. No, I totally agree,
Speaker 1: and you hit the nail on the head, because if
Speaker 1: you think markets are reflection of human emotions and human nature,
Speaker 1: then the extremes are probably the most interesting facets of that.
Speaker 1: And I mean, I have to say the other thing
Speaker 1: about bubbles, and I think the real reason that everyone
Speaker 1: is always perpetually fascinated with them is that you can
Speaker 1: get rich during the bubble if you can time it
Speaker 1: perfectly right. And who doesn't want to get rich? So
Speaker 1: what bubble are we starting with? Are we starting with today?
Speaker 1: All right? We're going to start out with the quintessential bubble,
Speaker 1: in my opinion, um, and that has to be the
Speaker 1: sort of nineteen twenties stock bubble and the subsequent crash.
Speaker 1: And we're also going to be discussed saying some other
Speaker 1: stock market bubbles that happened along the way, including of
Speaker 1: course seven and we might even get to two thousand seven,
Speaker 1: two eight. I can't wait. I mean, obviously there's bubbles
Speaker 1: in many things, in many things. We've had some episodes
Speaker 1: in fact about bubbles, including beanie babies and catfish and
Speaker 1: probably some others. But I do think that when people
Speaker 1: think bubble, they probably first think stock market bubbles. So
Speaker 1: I think, you know, the sort of some of the
Speaker 1: history of the big ones in the United States is
Speaker 1: a great way to start. We're starting out very very classical, alright.
Speaker 1: So here with us to talk about various stock bubbles
Speaker 1: is Scott Nations. Uh. He is the author of a
Speaker 1: book called A History of the United States in five crashes,
Speaker 1: stock market meltdowns that defined a nation. I actually know
Speaker 1: him from his other job, which is president of Nations Shares.
Speaker 1: It's a company that's been building a lot of indexes,
Speaker 1: including some interesting volatility indexes, so we might even ask
Speaker 1: him about those later in the show as well. Scott,
Speaker 1: thanks so much for coming on. It's great to be here.
Speaker 1: So Scott, you know your book I think is probably
Speaker 1: the perfect one for us to begin this series. But
Speaker 1: just to set the scene for us, I want to
Speaker 1: start with crash. If you could pinpoint one thing that
Speaker 1: sort of sparked the euphoria that led to that initial
Speaker 1: nine twenties stock bubble, what would it be. It would
Speaker 1: have to be a friendship. And I know that sounds goofy,
Speaker 1: but it was a friendship between the head of the
Speaker 1: Federal Reserve Bank in New York and the governor of
Speaker 1: the Bank of England, and these two wonderful guys, Montague
Speaker 1: Norman and Benjamin Strong had a wonderful friendship, and they
Speaker 1: were trying to help each other, and in doing so,
Speaker 1: Benjamin Strong kept interest rates in the United States ridiculously low.
Speaker 1: It's not the first time the Fed has done that,
Speaker 1: but he kept interest rates in the United States ridiculously low,
Speaker 1: even lower than they had been during the emergency level
Speaker 1: of World War One. And that is really what fed
Speaker 1: the bubble that became the nineteen twenties and then ultimately
Speaker 1: the nineteen nine crash. And it's it's easy to think
Speaker 1: about these crashes in numbers, but their dramas. Each of
Speaker 1: them is a drama. Each one of them is a
Speaker 1: fascinating drama. And in nine it's a little bit like
Speaker 1: the story of the Titanic. We know how it ends,
Speaker 1: and it ends badly, but it's a fascinating story. I
Speaker 1: don't want to skip ahead to another bubble, so I'm
Speaker 1: not going to. But in when when I've read about
Speaker 1: the nineteen twenties, something that struck me was, you know,
Speaker 1: analogies to the late nineties bubble, because in addition to
Speaker 1: the good financial conditions you characterized, there were a lot
Speaker 1: of genuine, the genuine reasons to be excited about things.
Speaker 1: It was peace, There was the increasing wide spreadness of
Speaker 1: the automobile, the radio, the new communications technology was taking off.
Speaker 1: But there was just a all kinds of non financial
Speaker 1: reasons for people to start start to get excited. Absolutely
Speaker 1: all of Europe had been devastated by World War One.
Speaker 1: The American industrial base had been untouched. People were buying automobiles.
Speaker 1: There was another invention, relatively new invention that everybody had
Speaker 1: to have. It was the radio. Our ci a Radio
Speaker 1: Corporation of America started the decade as a two dollar
Speaker 1: stock and after splits it into the decade while almost
Speaker 1: into the decade at about five seventy dollars, So you're
Speaker 1: absolutely right. Everybody felt great about America and America's place
Speaker 1: in the world. Interest rates were low. The Treasury had
Speaker 1: also made the country a country of investors by selling
Speaker 1: them war bonds, and that bled into them buying stocks
Speaker 1: once the war was over. So you have this mix
Speaker 1: of low interest rates, relatively positive economic growth, a lot
Speaker 1: of optimism about the future of fairly steady geopolitical landscape.
Speaker 1: When did the wheels start to come off and what
Speaker 1: were the signs that trouble was potentially ahead. Unfortunately, in
Speaker 1: nine we really didn't get any clues until very late
Speaker 1: in the game. There were certainly some people that were worried,
Speaker 1: but it wasn't really until September of nineteen nine that
Speaker 1: people started to worry and and and talk about their
Speaker 1: worry out loud. The striking thing about each of the
Speaker 1: five crashes that I talked about is that each has
Speaker 1: a catalyst that has very little to do often very
Speaker 1: little or nothing to do with finance. And it had
Speaker 1: a little to do with finance. There was a fraud
Speaker 1: ster in London by the name of Clarence Hatchery who
Speaker 1: uh simply started counterfeiting stock certificates and in a day
Speaker 1: when everything was on paper, he managed to completely undermine
Speaker 1: the stock market. And he wasn't found out until September
Speaker 1: of nine, and that's when the wheels tracing your in
Speaker 1: your phrase really started coming off. One thing I like
Speaker 1: about crashes is it really is, I think impossible to
Speaker 1: pinpoint what caused the crash because you can point to
Speaker 1: a million things. I know one of the is so minor,
Speaker 1: but I think, uh, one of the things people point
Speaker 1: to was some regulator in Massachusetts preventing a utility company
Speaker 1: stock from splitting, the most minor thing in the world.
Speaker 1: But it freaked out utility investors, pointing to if this
Speaker 1: one minor regulatory body in Massachusetts can freak out investors,
Speaker 1: how fragile the whole edifice. Because you make a great point.
Speaker 1: Until then, this financial regulator had allowed any any utility
Speaker 1: that wanted to split its stock. They had allowed them
Speaker 1: to do so. Uh. They were essentially a rubber stamp.
Speaker 1: But then a utility in Massachusetts came to home and said,
Speaker 1: we'd like to split our stock for for one their
Speaker 1: reason was because it's the fashion of the day. No
Speaker 1: more reason than that, it's the fashion of the day.
Speaker 1: And finally the regulator had had enough and they said, nope,
Speaker 1: your stock is already trading much higher than any intrinsic value.
Speaker 1: If we allow you to split, it will get even worse.
Speaker 1: And this is our line in the sand. And was
Speaker 1: finally somebody who had said, somebody, an authority who had
Speaker 1: said this is not right and this needs to stop.
Speaker 1: I love the idea that maybe a regulator in Massachusetts
Speaker 1: of utility companies could possibly be responsible for the stock
Speaker 1: market crash on the subsequent create depression. Well, they they
Speaker 1: certainly helped. They certainly helped things on their way. Okay,
Speaker 1: so you get these sort of idiosyncratic things happening and
Speaker 1: people start to get a little bit nervous and stocks, uh,
Speaker 1: I guess they really start coming down on Black Tuesday, right,
Speaker 1: I always got it mixed up with Black Thursday. But
Speaker 1: Black Tuesday was the first big drop, is that right? Well,
Speaker 1: there were two, there were two nearly identical drops. They
Speaker 1: and the twenty nine that it actually started just after
Speaker 1: Labor Day, that was the day after Labor Day was
Speaker 1: the peak of the market. But you're right, the twenty
Speaker 1: ninth of October when the market both of those days,
Speaker 1: the market was down about twelve and a half or
Speaker 1: that's when it that's when it really really really got bad.
Speaker 1: So how do people how are people reacting in that
Speaker 1: time period, because whenever we see stocks drop nowadays, you know,
Speaker 1: we always get the chorus of people talking about how
Speaker 1: this is a healthy correction, to use the cliche. I
Speaker 1: wonder if the same thing happened in I don't think
Speaker 1: people understood, well, certainly people didn't recognize what the nineteen
Speaker 1: thirties were gonna look like and there's no way they
Speaker 1: could a I think what they were doing was they
Speaker 1: were looking back to what had happened in nineteen o seven.
Speaker 1: The panic of nineteen o seven is the first crash
Speaker 1: I talked about, and that was a panic, and each
Speaker 1: of the each of the crashes have heroes and villains.
Speaker 1: The hero in nineteen o seven was undeniably JP Morgan,
Speaker 1: and I mean the man, not the bank, because he
Speaker 1: nearly single handedly stopped the crash. Well. In nineteen there
Speaker 1: were a bunch of financiers who thought that they could
Speaker 1: be the modern day JP Morgan, and they tried to
Speaker 1: do that. They tried to step in, raise some capital,
Speaker 1: buy some stocks, and so I think that for most
Speaker 1: of October of nine, I think most people thought this
Speaker 1: is bad, but it will stop and then we'll go
Speaker 1: back up and it will be like every other break
Speaker 1: that we've had in the market. They didn't realize that
Speaker 1: they were going to end up making things worse than
Speaker 1: it was going to get. As bad as it did,
Speaker 1: I feel like we could actually probably just do the
Speaker 1: whole episode one because it's so rich and we should
Speaker 1: move on to and one other right nugget I really
Speaker 1: like from it I remember during the two thousand and
Speaker 1: eight crash. You know, there was that famous um Warren
Speaker 1: Buffett up ed in the New York Times. I think
Speaker 1: he's like, buy stocks. I know I am. And there
Speaker 1: was something similar. John Rockefeller had did a similar thing.
Speaker 1: He sort of came out of seclusion. He's like, I'm
Speaker 1: buying American shares. It's a good it's a good deal.
Speaker 1: Like all these attempts by the sort of business legends
Speaker 1: to just instill confidence with their words alone. Well, John D.
Speaker 1: Rockefeller in nine said my son and I are buying stocks.
Speaker 1: And he at the time he mentioned some outlandish number
Speaker 1: he had spent, a number that only Jape that that
Speaker 1: Rockefeller could spend. But for the most part, people weren't
Speaker 1: really afraid in a way that that Rockefeller could could calm.
Speaker 1: I mean they were, they were They ultimately were really afraid.
Speaker 1: They were afraid that they were gonna lose everything. Yeah,
Speaker 1: And it's funny we still see that happening. I mean
Speaker 1: all the way up to two thousand and eight, when
Speaker 1: Warren Buffett came in and invested in Goldman Sack Shares,
Speaker 1: a right in the middle of the banking crisis. I
Speaker 1: have a feeling that Joe wants to move on to
Speaker 1: a later stock market bubble and crash, and that would
Speaker 1: be the events of night seven. That sounds good, Let's
Speaker 1: talk about eight seven. Um, you know, uh, Well, it's
Speaker 1: interesting because we hear so much about quants these days,
Speaker 1: and people are sort of nervous that the quant machine
Speaker 1: are going to malfunction. We're gonna get this like wave
Speaker 1: of uncontrollable selling from computers and everything's gonna melt down.
Speaker 1: Seven was kind of a precursor to these fears. It's
Speaker 1: interesting there. The five crashes that I discussed pan more.
Speaker 1: They span more than a century, but each one is
Speaker 1: abetted by some sort of I call and financial contraption
Speaker 1: that is new, it's novel, it's poorly understood, and it's
Speaker 1: untested under stress. And in seven, probably the prototypical contract
Speaker 1: option was portfolio insurance. It seemed like a like an
Speaker 1: ingenious invention by a couple of academics at cal Berkeley,
Speaker 1: and it was a way they way they expressed it
Speaker 1: as a way for investors, institutional investors to make certain
Speaker 1: that their stock portfolio never fell below a certain value.
Speaker 1: It required regular regimented selling of stocks as they fell.
Speaker 1: The problem is that we and we know now we
Speaker 1: should have known then that when we demand liquidity is
Speaker 1: when it evaporates. And that's what happened. It was the typical, prototypical,
Speaker 1: really financial contraption. The interesting thing is that in the
Speaker 1: worst of the crash, of the guys that had created
Speaker 1: this Leland, O'Brien and Rubinstein were running a business that
Speaker 1: would sell futures to affect this insurance, and their trader,
Speaker 1: at one point on October seven, refused to sell anymore futures.
Speaker 1: His quote was, if I sell all the futures that
Speaker 1: I'm supposed to, I'm certain I will drive the market
Speaker 1: to zero. Wow. So did he save the world. Well,
Speaker 1: I'm not sorry he saved the world, but he he
Speaker 1: helped stop the bleeding. If somebody saved the world, it
Speaker 1: might it might have been Alan Greenspan the next morning
Speaker 1: with a wonderfully terse um comment that consistent with its
Speaker 1: position is the Central Bank, the FED is ready to
Speaker 1: essentially give anybody anything they want. And then the Federal
Speaker 1: Reserve got on the line with banks and said we'll
Speaker 1: give you anything you want. Now I don't I'm worried
Speaker 1: we're cheating a little bit here because we talked about
Speaker 1: the crash of but this is the bubble series. Was
Speaker 1: their exuberance? What was the pre October seven vibe in
Speaker 1: the market where people are just thinking that things would
Speaker 1: just go straight up? Exuberance doesn't even begin to cover it.
Speaker 1: The first thirteen days, the doll did something it had
Speaker 1: never done before and it has never done since. It
Speaker 1: gained thirteen straight days in a row. At the market's
Speaker 1: top in August, it was up forty three for the year.
Speaker 1: I think that would have made it the sixth or
Speaker 1: the eighth best year ever if it could have just
Speaker 1: held onto that. So exuberance doesn't even begin to describe it.
Speaker 1: Much of it was a function of corporate raiders who
Speaker 1: had started to recognize the unrecognized value previously unrecognized value
Speaker 1: and a lot of stocks, and they were buying them up.
Speaker 1: And so we gotten into a situation where everybody felt
Speaker 1: like they could buy a stock confident that some raider
Speaker 1: would come along and bid it even higher. Yeah. Really,
Speaker 1: the era of greed is good. To Joe's earlier point,
Speaker 1: I'm wondering, you know, nowadays we talk a lot about
Speaker 1: the potential for quant funds or systematic funds or risk
Speaker 1: parity funds to spark a broad sell off in the
Speaker 1: style of portfolio insurance in the eighties. Was anyone talking
Speaker 1: about the risks of portfolio insurance or you know, the
Speaker 1: downsides of black shoals before it actually happened. Even the
Speaker 1: inventors of portfolio insurance realized that it had some limitations
Speaker 1: when they go into when they went into sales meetings,
Speaker 1: they would say that this will work until something like
Speaker 1: in the analogy they used was the Soviets invade Iran.
Speaker 1: There were some other people who were talking about it,
Speaker 1: but you really had to be pretty geeky in order
Speaker 1: to have gotten that message. It was actually precisely a
Speaker 1: week before the crash that an article appeared in the
Speaker 1: Wall Street Journal by Beatrice Garcia that really introduced people
Speaker 1: to the fear of portfolio insurance. Alright, I want to
Speaker 1: uh skip ahead to actually what I think is. I
Speaker 1: don't know if it's my favorite crash, but it's the
Speaker 1: one that I feel like I know the best because
Speaker 1: I sort of came of age during it, and that
Speaker 1: is the late nineties bubble. As a student in high school.
Speaker 1: I got really tessed with the market then and I
Speaker 1: think it is a good chance that due to that
Speaker 1: timing is the reason I'm in financial media today because
Speaker 1: I just found the whole thing, uh fascinating. What in
Speaker 1: your when did that bubble start? In your view, that's
Speaker 1: a great question. Once I don't talk about what happened
Speaker 1: in two thousand, two thousand, two thousand and two in
Speaker 1: my book. I don't consider that quite a crash. It
Speaker 1: took place over actually several years. It had several down legs,
Speaker 1: first of all, starting in March up two thousand and
Speaker 1: then with nine eleven. Uh. But when did when did
Speaker 1: the bubble of of the es start? I think it
Speaker 1: would have to I look at it as something that
Speaker 1: started with the the Apple Super Bowl ad that ran
Speaker 1: one time, because that really started to put the personal
Speaker 1: computer and personal technology front and center in people's thinking.
Speaker 1: And that's I think when that market really started taking off.
Speaker 1: I've conceptual question, which is, uh, you know, after bubbles burst,
Speaker 1: we always talk about the pricing is having been irrational,
Speaker 1: But the run up to all these bubbles actually often
Speaker 1: has a rational explanation. There's usually a narrative to accompany it, right, Oh, yeah,
Speaker 1: there's always an explanation. Unfortunately, So in terms of those explanations,
Speaker 1: I mean, what is it about human nature that we
Speaker 1: always buy into those explanations and we're never more skeptical
Speaker 1: of the story that we're hearing. It's a phrase that
Speaker 1: we've used before, and the phrases it's different this time.
Speaker 1: It is so easy to convince ourselves that it is
Speaker 1: different this time in we had not really seen we've
Speaker 1: seen a single modern stock market crash in nine seven.
Speaker 1: In seven, it had been so long since we've had
Speaker 1: a crash fifty years that I think people just forgot
Speaker 1: that they could happen, and they thought we are much
Speaker 1: more sophisticated, much smarter now than we were then. I
Speaker 1: think it's just the hubrists of humankind where we just
Speaker 1: think we're smarter and it's different this time. I have
Speaker 1: another human nature question, and it concerns the post crisis period,
Speaker 1: because since two thousand and nine, we've essentially been in
Speaker 1: this NonStop bowl market. Uh, there's been a few blips
Speaker 1: along the way. That being said, throughout this rally, numerous
Speaker 1: people have been talking about bubbles or the crash is
Speaker 1: going to come back anytime soon, and so in a way,
Speaker 1: rather than this period being characterized as care freeness are
Speaker 1: buying into a new story. There's been this underlying deep
Speaker 1: pessimism that's prevented a lot of people from actually participating
Speaker 1: in this rally, and this belief that the next two
Speaker 1: thousand and eight could happen any minute from now. Well,
Speaker 1: and a lot of those people have something that they
Speaker 1: want to sell, and they want to sell you a
Speaker 1: news utter. They think that you should be buying gold
Speaker 1: or whatever. But I think you make a great point,
Speaker 1: and that is, if there's so much skepticism, it's hard
Speaker 1: to think that we're going to have a crash. Now
Speaker 1: we know the market can pull back substantially. Nobody is
Speaker 1: saying that it can't. But with interest rates as low
Speaker 1: as they are, if interest rates would go substantially higher
Speaker 1: over the next couple of years, uh, in, the market
Speaker 1: could very well be in trouble. But I I just
Speaker 1: think that you're absolutely right. There's so much skepticism that
Speaker 1: it's tough to think we're really going to get say,
Speaker 1: bubble shous. There's skepticism. But on the other hand, uh,
Speaker 1: you know, I really like the way city analysts once
Speaker 1: phrased or once characterized a bubble. They said it was
Speaker 1: something that I get fired for not owning. And in
Speaker 1: that sense, you can complain about valuations as much as
Speaker 1: you want, but if you have to invest money, well,
Speaker 1: then you have to put it somewhere other than cash.
Speaker 1: And so it's either going into stocks or credit. Um.
Speaker 1: But Scott to uh, to Joe's point, if there was
Speaker 1: one thing that you could pinpoint as a suspicious sign
Speaker 1: when it comes to identifying a true bubble, what would
Speaker 1: it be? That's a great question. I in my experience,
Speaker 1: in my in my book, I talked about several similarities
Speaker 1: that each of the crashes share. UM. There is there's
Speaker 1: always some new financial contraption. I think that if we
Speaker 1: can see something that is starting to um capture too much,
Speaker 1: too many assets, uh, then that would be a problem.
Speaker 1: Uh it interest rates too low for too long are
Speaker 1: the reason. And then two thousand and eight happened. So
Speaker 1: if you want to look now and say, boy, interest
Speaker 1: rates have been too low for too long, and the
Speaker 1: Federal Reserve seems just terrified of raising Fed funds rate
Speaker 1: past one or of starting to shrink the balance sheet,
Speaker 1: that might be the thing that would scare people right now.
Speaker 1: And as Tracey you mentioned in the beginning. One of
Speaker 1: the really well, let's be honest, one of the cool
Speaker 1: things about bubbles is that you could get rich in
Speaker 1: a really short period of time. And the only thing
Speaker 1: you have to do to get rich during a bubble
Speaker 1: is to sell before everybody else sells. As long as
Speaker 1: you could do that, that bubbles are great. So when
Speaker 1: you look at these crashes and you know, your book
Speaker 1: is a history of the United States and five crashes,
Speaker 1: are there any common themes out there that sort of
Speaker 1: foretell the imminent collapse so that people know to uh,
Speaker 1: you know, get out the door before everybody else does. Well.
Speaker 1: The problem, it's a it's a fascinating question. The problem
Speaker 1: is that and I mentioned these catalysts, and there's always
Speaker 1: a catalyst. The problem is that the time between the
Speaker 1: catalysts and the crash is collapsing. It was a year
Speaker 1: between the catalysts for the nineteen o seven panic and
Speaker 1: the actual panic. Um it was a year. Uh. In nine,
Speaker 1: it was about a month between hatchery and the crash.
Speaker 1: In seven, it seemed the friday before the crash seemed
Speaker 1: like we'd finally gone to war with a ran. So
Speaker 1: that was a weekend and we haven't talked about two
Speaker 1: thousand and tend the flash crash, but the catalyst for
Speaker 1: that happened the day before the crash. So we've gone
Speaker 1: from waiting a year and then a month, and then
Speaker 1: a weekend, and now a day. The problem is as
Speaker 1: the time between the catalysts and the crash collapses, then
Speaker 1: there's less opportunity for people to do what you're suggesting.
Speaker 1: Real quickly, Well, you mentioned the catalyst for flash crash.
Speaker 1: What do you identify that as? Oh? I think it
Speaker 1: was clearly the rioting, arson and murder in the streets
Speaker 1: of Athens on May five, two and ten. It seemed
Speaker 1: just absolutely obvious that that all of the Greeks, all
Speaker 1: of Greek society, was going to come apart, and that
Speaker 1: as a result of the Eurozone was going to come apart.
Speaker 1: It seemed absolutely certain A million people were in the
Speaker 1: streets of Athens, a bank had been firebombed, three people
Speaker 1: had been killed, um not just killed, murdered, three young
Speaker 1: people who would come back to Athens to continue their
Speaker 1: careers when they didn't need to come back to Athens.
Speaker 1: And that and the fact that on the on the
Speaker 1: seventh we were going to get a non farm payroll number,
Speaker 1: the writing in Athens, which is obviously the catalyst for
Speaker 1: what happened. Scott Nations, the author of a history of
Speaker 1: the United States in five crashes stock market meltdowns that
Speaker 1: defined a nation. Thank you so much for joining us.
Speaker 1: Fascinating conversation. I'd love to have you back one day.
Speaker 1: Did you just like talk more about because we could
Speaker 1: do like two hours on it. But that was great
Speaker 1: and a great start to our bubble series. Thanks so much.
Speaker 1: It's been tremendous fund to be here, Joe. I thought,
Speaker 1: as you said, that was a fantastic start to our series. Um,
Speaker 1: I love drawing analogies between previous bubbles, and I have
Speaker 1: to say, the idea that the window that you have
Speaker 1: to get out first from a bubble ahead of an
Speaker 1: imminent crash, the idea that that is shrinking rapidly, that
Speaker 1: really resonates, especially when we think about the way markets
Speaker 1: are more computerized nowadays, but also just the way information
Speaker 1: gets disseminated so quickly nowadays. Yeah. I hadn't even thought
Speaker 1: about that, but that is a great a great point,
Speaker 1: I thought, and it was one that hadn't clicked to
Speaker 1: me at all. But it seems easy to say on
Speaker 1: the way up, and it was like, Yeah, I know,
Speaker 1: it's kind of a rational it's a bubble, but I'll
Speaker 1: just be prudent. But if the you know, the crash
Speaker 1: can happen that fast, probably there are a lot of
Speaker 1: people who imagine they'll be prudent and not actually be
Speaker 1: able to act on it. Yeah, exactly, all right, Um,
Speaker 1: should we tease some of the other bubbles that we're
Speaker 1: going to be discussing during this series. Wait, I just
Speaker 1: want to make one more point too that I really
Speaker 1: from Scott and that is the sort of what is
Speaker 1: he characterized that the new financial contraption at any given moment,
Speaker 1: because I think it's you know, and I think we
Speaker 1: look at you could sort of tell that you need. Obviously,
Speaker 1: there's the financial conditions puzzle, often characterized by low interest rates.
Speaker 1: There's the sort of optimism part of the puzzle, the
Speaker 1: idea that some new technology like the internet or the
Speaker 1: radio is going to get people excited. But this other
Speaker 1: thing that there's some new tool for investing, whether it's
Speaker 1: the c d O or the online broker and the
Speaker 1: nineties or whatever it is, or the mutual funds in
Speaker 1: the twenties, that there has and of course now you know,
Speaker 1: people are very concerned about e t f s and
Speaker 1: other things like that we don't know exactly. Seems like
Speaker 1: a very important point I had I'd never really like
Speaker 1: put together before. Yeah, it's interesting that those new creations
Speaker 1: often come from I don't want to say like a
Speaker 1: good place. But if you think about the Investment Trust
Speaker 1: of the nineteen twenties, that was really supposed to uh
Speaker 1: democratize finance and make it easier to invest in the
Speaker 1: same thing for e t f s now right, you
Speaker 1: know you're supposed to be able to get easy and
Speaker 1: cheap access to stocks. Uh. You could even argue the
Speaker 1: housing bubble um going into two thousand eight. You know,
Speaker 1: the government was trying to increase home ownership. Um anyway, Alright,
Speaker 1: but I think there's a quote about the road to
Speaker 1: good intentions or something like that, or the road to hell,
Speaker 1: but I applies here. So let's real quickly. Uh. Yeah,
Speaker 1: as you mentioned tease ahead to some of our future episodes,
Speaker 1: what are you excited to talk about? Well, you know,
Speaker 1: I said was the quintessential bubble and crash, but there's
Speaker 1: one that is even more classic, and that has to
Speaker 1: be the Tulip Bubble. I'm very excited to talk about
Speaker 1: that one, although I've I am very much too. I
Speaker 1: know there's a lot of debate about that one, about
Speaker 1: how much of it was real and how much it
Speaker 1: was a myth, but it is the number one thing
Speaker 1: that when people think bubble, it's tulips again, and so
Speaker 1: I feel like I can't wait to really dive into that.
Speaker 1: Also because I'm super into U the twenties, I'm excited
Speaker 1: we're gonna talk about the nine twenties Florida real estate bubble,
Speaker 1: which is sort of a precursor to the overall crash,
Speaker 1: and there are just some fabulous stories that came out
Speaker 1: of that. So I am very excited about continuing this series. Yeah, alright,
Speaker 1: so everyone should keep on listening because those episodes and
Speaker 1: many more will be coming out in the coming weeks.
Speaker 1: But that is it for the first edition of our
Speaker 1: Bubbles series. I'm Tracy Alloway. You can follow me on
Speaker 1: Twitter at Tracy Alloway, and I'm Joe wi isn't All.
Speaker 1: You can follow me on Twitter at the Stalwart, and
Speaker 1: you can follow Scott on Twitter at Scott Nations. And
Speaker 1: our producer, Sarah Patterson Sarah pat with two teas. This
Speaker 1: has been another episode of the Odd Lots podcast. Thanks
Speaker 1: for listening.