WEBVTT - Tech Stock Bubbles In the 17th Century 0:00:10.560 --> 0:00:14.000 Hello, and welcome to another episode of the Odd Blots podcast. 0:00:14.120 --> 0:00:18.079 I'm Tracy Allowin and I'm Chill so Joe. You know, 0:00:18.160 --> 0:00:22.000 we just recorded that podcast with Lee Drogan where we 0:00:22.000 --> 0:00:25.319 were talking about tech stocks and earnings. Right. Yeah. I 0:00:25.360 --> 0:00:28.520 really like that one and is another one of one 0:00:28.560 --> 0:00:30.960 of our podcasts, and they're kind of rare for what 0:00:31.000 --> 0:00:33.920 we do, where we actually talk about markets right now, 0:00:34.360 --> 0:00:36.800 as we're going, as are happening, because we often sort 0:00:36.800 --> 0:00:40.000 of talk about esoteric stuff that doesn't directly involve the 0:00:40.080 --> 0:00:41.920 day to day. So I like that we got a 0:00:42.000 --> 0:00:45.559 chance to actually talk about what's happening right now, give 0:00:45.600 --> 0:00:49.600 the listeners something useful. I really dispute the notion that 0:00:49.680 --> 0:00:53.279 we talked about esoteric stuff, But as I say that, 0:00:53.400 --> 0:00:57.240 I realized that I'm about to start talking about esoteric stuff. 0:00:57.560 --> 0:01:01.040 Well that podcast about Cracy Crazy, do you know that? 0:01:01.400 --> 0:01:04.640 Do you know what our podcast is called Odd Thoughts, 0:01:05.280 --> 0:01:12.280 But that's about bond trading? Okay, yeah, but we all know. Okay, 0:01:12.319 --> 0:01:17.240 that episode about tech stocks got me thinking about I 0:01:17.280 --> 0:01:21.640 guess companies and company earnings throughout history, and I was 0:01:21.680 --> 0:01:25.920 sort of thinking on a very meta level, almost every 0:01:25.959 --> 0:01:29.800 company is a tech stock, right because winners throughout history 0:01:29.959 --> 0:01:34.640 are companies that have either invented new technology or used 0:01:34.680 --> 0:01:38.520 it to the best effect. Right, Yeah, absolutely, And I 0:01:38.560 --> 0:01:41.040 think Lee made that point as well, that really we're 0:01:41.040 --> 0:01:44.240 not seeing an emergence of tech stocks per se. What 0:01:44.280 --> 0:01:47.600 we're seeing is an incredible use of technology across a 0:01:47.720 --> 0:01:51.800 range of industries that allows essentially capital to have incredible 0:01:51.920 --> 0:01:55.360 leverage over labor. And what we call tech stocks like 0:01:55.440 --> 0:01:58.760 your Netflix is and your facebooks are really the companies 0:01:58.920 --> 0:02:01.840 that are at the most extreme dream and of being 0:02:01.840 --> 0:02:05.960 able to get incredible amounts of output without that much 0:02:06.280 --> 0:02:09.600 that many people working for them exactly. So after I 0:02:09.639 --> 0:02:12.919 started thinking about that, I started thinking about what a 0:02:13.280 --> 0:02:16.240 you know, tech stock per se would look like, say 0:02:16.360 --> 0:02:19.280 a hundred or two hundred or three hundred years ago, 0:02:19.440 --> 0:02:22.080 Like would it be a company that I don't know 0:02:22.200 --> 0:02:27.080 was inventing like new methods of producing railroad spikes or 0:02:27.560 --> 0:02:29.880 you know, something like that. Would that be considered a 0:02:29.919 --> 0:02:33.840 technology company and would investors react to it in a 0:02:33.919 --> 0:02:38.760 similar way that they would to a Facebook or an Amazon. Now, 0:02:39.320 --> 0:02:42.960 luckily for us, there's someone out there who thinks a 0:02:43.000 --> 0:02:46.120 lot about this, so that we don't have to Um 0:02:46.160 --> 0:02:49.040 and his name is Jamie Catherwood. A lot of people 0:02:49.120 --> 0:02:54.560 might know him as finance history guy. Uh. Yeah, there's 0:02:54.560 --> 0:02:57.960 he's on Twitter, he's on Medium, and he's always producing 0:02:58.000 --> 0:03:03.640 these amazing articles about incredible episodes from financial history. I 0:03:03.680 --> 0:03:06.520 saw he tweeted something I think it was just yesterday 0:03:06.560 --> 0:03:09.680 about the I p O of the Guinness Beer Company 0:03:09.720 --> 0:03:12.440 and how people talked about that and how oversubscribed it 0:03:12.560 --> 0:03:16.520 was and that was in there. And so looking back 0:03:16.560 --> 0:03:20.320 at financial history, you really do. It's it's sort of 0:03:20.360 --> 0:03:22.840 confirms I think what is one of our general themes 0:03:22.880 --> 0:03:26.880 that to some extent nothing ever changes. And so Mania 0:03:26.960 --> 0:03:30.400 is about what we call tech stocks today presumably have 0:03:30.520 --> 0:03:33.080 many echoes in the past as well, exactly, and so 0:03:33.200 --> 0:03:35.960 we're going to talk about exactly those echoes. And I 0:03:36.000 --> 0:03:38.480 should just say that Jamie has also been a multiple 0:03:38.680 --> 0:03:41.720 listener request for an All Thoughts interview, So I'm glad 0:03:41.760 --> 0:03:45.480 we're finally making it happen. Uh. Jamie Catherwood, a k a. 0:03:45.680 --> 0:03:48.840 Finance history Guy. His real life job as an analyst 0:03:48.920 --> 0:03:52.960 over at Arthur J. Gallagher and Company. Jamie, it's so 0:03:52.960 --> 0:03:55.000 good to have you on. Thank you so much for 0:03:55.040 --> 0:03:57.880 having me. So I guess just to begin with, I'd 0:03:57.920 --> 0:04:02.040 be really curious to get some insight into how you 0:04:02.080 --> 0:04:06.640 became finance history guy and what exactly piqued your interest in, 0:04:06.800 --> 0:04:10.520 you know, going back to stories from the sixteen hundreds 0:04:10.560 --> 0:04:14.920 and even earlier to talk about finance and investing. Yeah, 0:04:14.960 --> 0:04:18.160 so I've always been a history that um I did 0:04:18.720 --> 0:04:23.120 history as my major at King's College, London, and I 0:04:23.160 --> 0:04:27.679 became interested in finance. And after joining Twitter, I saw 0:04:27.720 --> 0:04:31.400 that a ton of people were putting out content related 0:04:31.440 --> 0:04:34.600 to you know, just to investing finance in general, but 0:04:34.920 --> 0:04:39.960 no one had kind of focused on history itself and 0:04:40.040 --> 0:04:43.719 just financial history. So I figured I can't compete with 0:04:43.960 --> 0:04:46.120 the people who have been doing finance for decades or 0:04:46.160 --> 0:04:48.760 investing and you know, much smarter than I am. But 0:04:49.120 --> 0:04:53.640 I can bring the history aspect because that's what I 0:04:53.720 --> 0:04:56.039 kind of know. So it was just kind of finding 0:04:56.040 --> 0:04:58.360 my own niche. And I'm lucky that no one else 0:04:58.400 --> 0:05:01.040 was doing it because if they were, I'm sure it 0:05:01.040 --> 0:05:03.040 wouldn't have worked out as well for me. Because there's 0:05:03.040 --> 0:05:05.120 some really good writers out there on Twitter. I like 0:05:05.240 --> 0:05:07.919 that this This goes to my theory of life alpha 0:05:08.279 --> 0:05:12.200 of the idea of finding some profitable niche to exploit 0:05:12.240 --> 0:05:15.719 that other people aren't doing and sort of putting yourself 0:05:15.839 --> 0:05:18.360 out there and uh yeah, making hay in a way 0:05:18.400 --> 0:05:22.560 that others aren't very comparable to investing alpha. Um, do 0:05:22.640 --> 0:05:27.640 you find that it benefits you to study history in 0:05:27.760 --> 0:05:30.840 your day to day career as an analyst, as an 0:05:30.839 --> 0:05:35.360 observer of the market today, certainly, I mean it's I 0:05:35.440 --> 0:05:37.279 even I get tired of hearing it. But you know, 0:05:37.320 --> 0:05:40.160 people say the more things change is the more they 0:05:40.160 --> 0:05:42.760 stay the same, But it is true. It's I mean, 0:05:42.800 --> 0:05:45.240 as we'll talk about today, the kind of tech hype 0:05:45.320 --> 0:05:49.000 in the sixteen nineties, it's a kind of good reminder 0:05:49.160 --> 0:05:51.720 to not get caught up with the latest fat and 0:05:52.880 --> 0:05:56.200 I think that whatever everyone's talking about is going to 0:05:56.279 --> 0:05:59.880 be the next big thing, because when you study history, 0:06:00.000 --> 0:06:02.320 you're looking at I mean, I did one article on 0:06:02.360 --> 0:06:04.880 active investing in the Roman Empire. You can kind of 0:06:04.920 --> 0:06:09.000 see that these fads quickly go away, and so don't 0:06:09.160 --> 0:06:13.240 change what your overall strategy is just because there's some 0:06:13.320 --> 0:06:19.000 hot new stock or sector or technology, because odds are 0:06:19.080 --> 0:06:20.880 that's just going to be something that someone's going to 0:06:20.960 --> 0:06:23.679 write about in two hundred years. The next finance history 0:06:23.760 --> 0:06:26.960 guy on Medium, right or on Twitter. Um, so Jamie, 0:06:27.080 --> 0:06:29.880 let's talk about whatever they're posting on but they're just 0:06:29.880 --> 0:06:32.760 gonna wire directly into our brains. That's probably more likely 0:06:32.880 --> 0:06:36.440 download it. Yeah. So Jamie, let's talk about what a 0:06:36.680 --> 0:06:41.480 tech stock might have looked like in say, the sixteen hundreds. 0:06:41.520 --> 0:06:43.440 I sort of alluded to it in the intro, but 0:06:43.520 --> 0:06:46.120 I guess to some extent, every company is sort of 0:06:46.160 --> 0:06:50.760 about technological innovation, but in the sixteen hundreds, technological innovation 0:06:50.839 --> 0:06:54.240 would look very different to what we think about today. Yeah. 0:06:54.320 --> 0:06:58.000 So the sixteen nineties was kind of known as a I. 0:06:58.160 --> 0:07:01.680 P O bubble in London on the London Stock Exchange. 0:07:02.200 --> 0:07:04.919 Some people call it a tech bubble and some people 0:07:05.200 --> 0:07:10.040 I mean nerdy financial historians. And basically what spurred this 0:07:10.200 --> 0:07:14.640 kind of hype around tech stocks in that day was 0:07:14.840 --> 0:07:17.880 there's two factors. One was the Nine Years War was 0:07:17.920 --> 0:07:22.400 going on, which restricted trade with other nations, and so 0:07:22.720 --> 0:07:25.960 any capital that investors wanted to deploy they kind of 0:07:25.960 --> 0:07:30.600 had to turn inward and invest within Britain. So when 0:07:30.600 --> 0:07:35.400 they're looking for new opportunities, they stumbled upon new joint 0:07:35.440 --> 0:07:38.800 stock companies that were starting to form more quickly. Than before. 0:07:39.600 --> 0:07:43.000 And there was one quote from a guy who started 0:07:43.000 --> 0:07:48.760 writing a sort of bi weekly financial markets review who said, 0:07:49.160 --> 0:07:51.680 a great many stocks have arisen since this war with 0:07:51.760 --> 0:07:54.560 France for trade being obstructed at sea. A few that 0:07:54.600 --> 0:07:56.880 have money, we're willing it to lie idle, and a 0:07:56.920 --> 0:07:59.200 great many found that they could employ their money more 0:07:59.200 --> 0:08:01.560 easily and joint dock companies than in laying out the 0:08:01.600 --> 0:08:04.720 same in lands, houses or commodities. So I thought that 0:08:04.760 --> 0:08:07.160 was kind of interesting that he was pointing out that 0:08:07.160 --> 0:08:09.280 it's easier to invest in these new text docs than 0:08:09.400 --> 0:08:13.400 other asset classes. But what really set off the hype 0:08:13.600 --> 0:08:17.680 was the success of a treasure hunt by Sir William Phipps. 0:08:18.040 --> 0:08:22.200 He was actually eventually the first governor of the Massachusetts 0:08:22.240 --> 0:08:24.760 Bay Colony, which is kind of interesting, and he oversaw 0:08:24.800 --> 0:08:29.160 the Salem which trials, but he went out and convinced 0:08:29.360 --> 0:08:31.960 a duke in England he could kind of think of 0:08:32.120 --> 0:08:34.960 as like a VC firm in the modern day, to 0:08:35.280 --> 0:08:40.320 invest in his voyage to go find some treasure. And 0:08:41.320 --> 0:08:44.120 the first time he failed, but then he came back, 0:08:44.880 --> 0:08:48.120 got more financing, went back out, and he had just 0:08:48.160 --> 0:08:54.280 heard rumors of some sunken treasure ship in the Caribbean 0:08:54.880 --> 0:08:59.960 and he goes out finds it and he hauls up 0:09:00.120 --> 0:09:04.120 thirty two tons of treasure, which I can't even begin 0:09:04.160 --> 0:09:07.440 to kind of wrap my head around, and brings it 0:09:07.480 --> 0:09:12.000 back and the investors received a ten thousand percent return, 0:09:12.640 --> 0:09:16.480 which is just unbelievable. And as soon as that happened, 0:09:16.480 --> 0:09:19.760 that kind of just sparked a menia because dozens of 0:09:19.800 --> 0:09:25.600 new companies started forming to either provide the technology to 0:09:26.120 --> 0:09:29.080 retrieve treasures. So that was the kind of hype tech 0:09:29.120 --> 0:09:32.000 stock of the day. It was these diving companies that 0:09:32.840 --> 0:09:37.920 had either suits or other diving apparatus is and you 0:09:38.000 --> 0:09:40.080 just have to look up the drawings of these because 0:09:40.120 --> 0:09:44.360 they're insane. There's one was like the Edmund Halle bell, 0:09:44.840 --> 0:09:47.240 and it was this weird contraption where they would lower 0:09:47.280 --> 0:09:49.800 you down into the water and like this bell, but 0:09:49.920 --> 0:09:52.800 trap air so that divers could stay down longer and 0:09:52.840 --> 0:09:57.240 search for treasure. And so all these companies form basically 0:09:57.240 --> 0:10:00.800 promising investors and one of the prospective is for this company. 0:10:00.880 --> 0:10:03.800 One of these companies actually put in the prospectives. We 0:10:03.880 --> 0:10:07.640 promised a hundred percent return to investors, and their whole 0:10:07.679 --> 0:10:10.760 pitch was, you know, oh, look at that guy you 0:10:10.800 --> 0:10:13.960 know who made ten percent on the Phipps treasure hunt. 0:10:14.320 --> 0:10:17.320 This technology will do even better or just the same, 0:10:17.600 --> 0:10:21.800 And so investors just poured money into these stocks and 0:10:22.080 --> 0:10:24.200 it didn't it didn't end up so well. Um, but 0:10:25.080 --> 0:10:28.800 there was Yeah, it was just crazy there. From sixteen 0:10:28.920 --> 0:10:33.240 seventy two to nine there were five patents related to 0:10:33.320 --> 0:10:37.800 diving technology, and then in just two years from six 0:10:38.640 --> 0:10:41.679 there were seventeen patents filed. And it was of all 0:10:41.720 --> 0:10:44.599 patents filed in those two years, So the kind of 0:10:44.679 --> 0:10:48.080 hype was clear. I already loved this story so much. 0:10:48.280 --> 0:10:51.320 First of all, it would just have never occurred to 0:10:51.400 --> 0:10:55.040 me that in the sixteen hundred they had any technology, 0:10:55.360 --> 0:10:59.120 no matter how rudimentary, that could get lower someone to 0:10:59.160 --> 0:11:01.200 the bottom of the sea for long enough to dig 0:11:01.240 --> 0:11:03.679 up treasure. I would have just assumed then the six 0:11:04.160 --> 0:11:06.480 dreds there was no way to do this. So the 0:11:06.520 --> 0:11:10.120 fact that they invented various ways to do that, that 0:11:10.240 --> 0:11:13.720 already blows my mind. What were the returns like? So 0:11:13.800 --> 0:11:16.560 obviously I don't you know, I don't think I'm going 0:11:16.600 --> 0:11:19.320 out on a limb much to imagine that most of 0:11:19.360 --> 0:11:22.440 these endeavors did not produce ten thousand percent returns and 0:11:22.440 --> 0:11:25.839 probably many of them didn't return anything like that. Is 0:11:25.880 --> 0:11:30.320 there a distribution of returns though that like that one 0:11:30.360 --> 0:11:33.160 can collate that sort of resemble, you know, like if 0:11:33.200 --> 0:11:36.000 you talk about you compared the initial funding to kind 0:11:36.000 --> 0:11:39.480 of like a VC funding, and vcs sort of they 0:11:39.559 --> 0:11:43.320 famously are willing to take losses on a lot of 0:11:43.360 --> 0:11:46.400 their investments to hit the occasional home run or a 0:11:46.440 --> 0:11:49.040 mega home run. Like if you have a portfolio that 0:11:49.120 --> 0:11:52.439 has Facebook and then fifty losers, you're totally fine. So 0:11:52.679 --> 0:11:54.760 is there was there a sort of power law distribution 0:11:54.920 --> 0:11:58.679 like that to the companies that were able to successfully 0:11:58.800 --> 0:12:03.800 uh dig up or find sunken treasure. So obviously we're 0:12:03.880 --> 0:12:07.959 kind of restricted by what has survived since in terms 0:12:07.960 --> 0:12:11.560 of sources, there's a there's not a good data set exactly. 0:12:12.679 --> 0:12:16.120 And uh so from what I've read, there was a 0:12:16.320 --> 0:12:22.920 nineteenth century historian who wrote a like really intricate um 0:12:23.200 --> 0:12:26.800 detailing of all the joint stock companies of that day, 0:12:27.160 --> 0:12:30.160 and he wrote, I have a quote that none of 0:12:30.200 --> 0:12:33.520 the companies or expeditions because in addition to just the 0:12:33.559 --> 0:12:37.760 diving technology companies, there were a lot of groups of 0:12:37.800 --> 0:12:41.680 actual treasure hunters who would set up like the Jamie 0:12:41.720 --> 0:12:47.120 Catherwood Exploration Company and they were just dedicated to treasure hunting. 0:12:47.559 --> 0:12:50.920 But this nineteenth century historians said that none of these 0:12:50.920 --> 0:12:55.400 companies or expeditions were successful. Indeed, the only finds consisted 0:12:55.440 --> 0:12:57.440 of a few cannons at the bottom of the sea. 0:12:57.800 --> 0:13:02.960 So it doesn't sound like any of them really worked out. Um, 0:13:03.040 --> 0:13:06.320 and so I wish it was more optimistic, but it 0:13:06.360 --> 0:13:08.680 sounds like Phips kind of got the job done and 0:13:08.679 --> 0:13:13.200 then no one could replicate his success. Another fault question 0:13:13.280 --> 0:13:15.760 that I have related to this. So you talked about 0:13:15.920 --> 0:13:20.880 the mania, You talked about them, the surge and patents 0:13:20.920 --> 0:13:25.800 that were associated with the treasure hunting diving technology. One 0:13:25.840 --> 0:13:29.120 of the things that we see in modern bubbles and 0:13:29.160 --> 0:13:32.600 even tech is you start with something like Okay, a 0:13:32.640 --> 0:13:35.959 few vcs invest in tech companies, and then a few 0:13:36.040 --> 0:13:40.920 years later, I'm getting ads on my iPhone on Instagram 0:13:40.920 --> 0:13:43.440 to say invest in tech startups for as little as 0:13:43.480 --> 0:13:45.480 ten dollars a month, and people find a way to 0:13:46.160 --> 0:13:51.240 democratize what had been this sort of very exclusive and 0:13:51.840 --> 0:13:55.400 difficult way to invest. Talk to me about the mass 0:13:55.480 --> 0:13:59.440 participation and the degree to which this extended beyond the 0:13:59.520 --> 0:14:02.720 vcas and the dukes to normal people who just wanted 0:14:02.760 --> 0:14:06.760 to put some money down in search of massive returns. Yeah, 0:14:06.840 --> 0:14:11.720 so it definitely was a wider spread investment than just 0:14:11.800 --> 0:14:17.600 these vcs as we're calling them, because these companies are 0:14:17.640 --> 0:14:21.480 formed as joint stock companies and so the average investor 0:14:21.840 --> 0:14:26.280 was able to put their money into these companies. Obviously 0:14:26.320 --> 0:14:30.560 that probably wasn't necessarily a benefit in hindsight once the 0:14:30.880 --> 0:14:35.120 kind of crash came, but yeah, it was definitely a widespread, 0:14:35.560 --> 0:14:41.360 uh sort of speculative mania. And there were and there 0:14:41.400 --> 0:14:47.080 was an account later of the Treasury, the British Treasury 0:14:47.120 --> 0:14:49.880 starting a lottery system because that's how they did a 0:14:49.920 --> 0:14:53.480 lot of their financing in the day, because they wanted 0:14:53.520 --> 0:14:57.320 to kind of pull the money away from these speculative 0:14:57.400 --> 0:15:02.240 joint stocks into funds that benefit the government. And there 0:15:02.320 --> 0:15:05.520 was an analysis done that showed that something like eighties 0:15:05.520 --> 0:15:09.400 seven percent of the money that in your average investor 0:15:09.520 --> 0:15:13.280 had been putting into these joint stock tech companies then 0:15:13.400 --> 0:15:16.920 went to these lotteries. And I thought that was interesting 0:15:16.960 --> 0:15:20.240 because it was kind of just proving that investors didn't 0:15:20.240 --> 0:15:23.200 have a specific you know, dedication to these tech stocks. 0:15:23.240 --> 0:15:26.160 They were just going wherever offered the higher return. So 0:15:26.200 --> 0:15:29.680 as soon as these lotteries offered a better chance at that, 0:15:29.720 --> 0:15:32.400 they ditched the joint stock companies and kind of forgot 0:15:32.440 --> 0:15:50.200 about them. So, Jamie, the natural route for a lot 0:15:50.200 --> 0:15:53.080 of companies, and tech companies in particular, is that you're 0:15:53.080 --> 0:15:55.680 a startup and you get started out of someone's garage, 0:15:55.680 --> 0:15:58.800 and then you get venture capital funds, and then you 0:15:59.080 --> 0:16:01.040 eventually do a listing and a big I p O 0:16:01.160 --> 0:16:04.440 and then you have public investors. You wrote a really 0:16:04.480 --> 0:16:08.119 interesting post, I think it was back in October about 0:16:08.280 --> 0:16:11.240 how a lot of the companies um that happened I 0:16:11.320 --> 0:16:13.720 p O ing in the US over the past year 0:16:13.920 --> 0:16:18.680 have basically never produced a profit, and a lot of 0:16:18.680 --> 0:16:21.560 those companies would be tech companies that investors are just 0:16:21.680 --> 0:16:25.720 sort of betting on on the off chance that they 0:16:25.760 --> 0:16:30.320 will get a big payoff eventually. What's the historic parallel 0:16:30.680 --> 0:16:32.640 to those sorts of I p o s that you 0:16:32.680 --> 0:16:37.240 were looking at. Yeah, So in the early nineteen hundreds, 0:16:37.280 --> 0:16:40.280 there was a rubber boom, if you can believe it, 0:16:40.840 --> 0:16:48.040 and essentially these rubber plantations in Malaysia were they're like 0:16:48.120 --> 0:16:50.840 the largest plantation I believe is in Malaysia. There's one 0:16:50.880 --> 0:16:54.040 in Brazil, so I might botch which one it was, 0:16:54.080 --> 0:16:58.400 but closed down, which meant that the supply of rubber 0:16:58.480 --> 0:17:01.040 was going down and prices were shooting up. And so 0:17:01.080 --> 0:17:04.520 as investors saw that, they did what they always do 0:17:04.720 --> 0:17:08.040 and kind of flocked to rubber as their new hot, 0:17:08.680 --> 0:17:13.480 hot fad, and a lot of companies in England, interestingly 0:17:13.600 --> 0:17:18.440 not Malaysia, were setting up rubber plantations, or at least 0:17:18.440 --> 0:17:20.960 claiming that they were in Malaysia to take advantage of 0:17:21.000 --> 0:17:25.240 this rubber boom, and investors just poured money into it, 0:17:25.640 --> 0:17:31.200 and companies were listing their shares on the market without 0:17:31.240 --> 0:17:35.760 even actually having a plantation. Yet. There was one company 0:17:35.800 --> 0:17:41.520 that put in their prospectives that they would basically offer 0:17:41.600 --> 0:17:44.200 the secrets of the company in exchange for a direct 0:17:44.240 --> 0:17:48.520 buyout of the whole company. So I don't know, I 0:17:48.520 --> 0:17:50.920 wouldn't say that was reassuring if you were just investing 0:17:51.119 --> 0:17:55.880 that the founders were looking to get out so quickly. Um, 0:17:56.119 --> 0:17:59.359 But yeah, there's some guy who went to Malaysia and 0:17:59.400 --> 0:18:04.119 basically they're just like these stubs of rubber tree, whatever 0:18:04.160 --> 0:18:07.280 the tree is that they're planting on these plantations and 0:18:07.320 --> 0:18:12.000 there was nothing even growing. And the perspectuses back at 0:18:12.040 --> 0:18:14.239 home in England were saying that they had, you know, 0:18:14.320 --> 0:18:19.040 these really high yielding plantations and everything was going great, 0:18:19.080 --> 0:18:21.720 but in reality there was nothing even set up in Malaysia. 0:18:22.160 --> 0:18:24.000 So yeah, it was a case of kind of just 0:18:24.119 --> 0:18:29.359 listing a prospectus to raise money or just you know, 0:18:29.800 --> 0:18:33.399 ly in your pockets before doing any actual work. And 0:18:33.440 --> 0:18:36.639 no one was doing real due diligence. So look for 0:18:36.640 --> 0:18:39.440 a while, I'm curious about that because you're talking about 0:18:39.920 --> 0:18:43.920 the perspectuses of this rubber company. You mentioned the perspectuses 0:18:44.520 --> 0:18:48.960 of this uh, the companies that the Sunken Treasure I 0:18:49.040 --> 0:18:52.399 mentioned in the intro. You tweeted about the prospectus and 0:18:52.480 --> 0:18:56.439 the initial subscribe subscribe over subscription of the Guinness I 0:18:56.480 --> 0:18:59.560 p O. Was there any when we think about perspectus 0:18:59.560 --> 0:19:02.240 is today and companies file s one FI length and 0:19:02.240 --> 0:19:05.640 they're all very regulated and there's very sort of strict 0:19:05.680 --> 0:19:08.040 patterns about you talk about this and then you lay 0:19:08.040 --> 0:19:09.560 out the balance sheet and then you lay out the 0:19:09.600 --> 0:19:13.560 income statements. Was there any sort of common approach to 0:19:13.880 --> 0:19:16.200 laying out a prospectus or was it in those days, 0:19:16.240 --> 0:19:20.000 basically you just write whatever you want. I'm not an 0:19:20.000 --> 0:19:22.280 expert on this, but from what I've seen, that kind 0:19:22.280 --> 0:19:25.960 of I mean, I can't imagine a government that was 0:19:26.000 --> 0:19:29.240 regulating perspectuses would let someone say I'll give you the 0:19:29.280 --> 0:19:31.920 secrets to the company if you buy me out, um, 0:19:32.640 --> 0:19:37.000 and I wouldn't say that. Looking at various perspectuses, there 0:19:37.000 --> 0:19:41.000 seemed to be a kind of common format or approach. 0:19:41.400 --> 0:19:43.720 So it certainly didn't seem to me that there is 0:19:43.760 --> 0:19:48.000 any regulation of it. But I could read something that 0:19:48.080 --> 0:19:51.080 proves proves me wrong. So what are some of your 0:19:51.080 --> 0:19:55.240 other favorite finance stories, especially anything related to sort of 0:19:55.320 --> 0:19:58.119 tech or mania, which seems to be what we're what 0:19:58.240 --> 0:20:03.040 we're discussing here. I gotta say reference the Guinness example. 0:20:03.880 --> 0:20:08.240 That's probably one of my favorite examples a kind of 0:20:08.240 --> 0:20:13.840 a mania in history, because it was just insane that 0:20:14.920 --> 0:20:19.359 sources describing what went down on the actual day of 0:20:19.400 --> 0:20:24.800 the quote I p O. I mean, the economist said 0:20:24.920 --> 0:20:28.880 something like it's a day that witnesses will never forget. 0:20:29.240 --> 0:20:33.159 And then another newspaper the time called the Spectator said 0:20:33.200 --> 0:20:36.080 that the scene that took place on Saturday outside of 0:20:36.119 --> 0:20:38.879 Barings Bank is enough to show that a speculative mania 0:20:38.960 --> 0:20:43.919 exists or something along those lines. And as you mentioned, 0:20:43.960 --> 0:20:47.680 I tweeted all these takes at the time by analysts 0:20:48.240 --> 0:20:51.400 or you know, writers at The Economist and this other 0:20:51.440 --> 0:20:55.120 newspaper kind of taking their different views of the valuation 0:20:55.160 --> 0:20:58.800 of the company because a lot of investors were getting 0:20:58.840 --> 0:21:05.080 hyped up around Guinnesses ramped up production and there I 0:21:05.119 --> 0:21:08.240 guess new technology to bring it back to tech that 0:21:08.359 --> 0:21:11.119 was allowing them to produce more at a lower cost. 0:21:11.280 --> 0:21:13.879 But then some analysts were saying that was really just 0:21:13.960 --> 0:21:18.200 because the materials had gotten cheaper, and so that was interesting. 0:21:18.240 --> 0:21:22.240 But in terms of mania, when the Guinness I p 0:21:22.440 --> 0:21:27.440 O actually took place, the Bearings Bank basically came out 0:21:27.520 --> 0:21:30.360 and said that it would be open for thirty six hours, 0:21:30.920 --> 0:21:33.800 and investors who wanted to get in on the action 0:21:33.840 --> 0:21:37.560 had to come with their subscription form and deliver it 0:21:37.600 --> 0:21:42.200 to the bank, all signed and everything, and the bank 0:21:42.280 --> 0:21:44.760 only ended up being open for three hours because there 0:21:44.760 --> 0:21:47.840 was such a mad rush and they had to call 0:21:47.920 --> 0:21:52.639 in a special police brigade to police the area because 0:21:52.680 --> 0:21:55.840 investors were going crazy. They had to barricade the doors 0:21:55.960 --> 0:21:59.200 so they couldn't let anyone in but people still wanted 0:21:59.240 --> 0:22:02.320 to get their shares in. But obviously this was way 0:22:02.320 --> 0:22:05.560 before anything electronics, so they still had to deliver their 0:22:05.560 --> 0:22:09.840 subscription form. So seen as there was police lining the 0:22:09.880 --> 0:22:15.040 perimeter and the doors were barricaded, investors started tying their 0:22:15.080 --> 0:22:18.960 subscription forms two rocks and literally throwing themselves at the 0:22:18.960 --> 0:22:22.520 opportunity by launching these rocks with their subscription forms like 0:22:22.600 --> 0:22:25.440 through the windows of Barings Bank in order to get 0:22:25.480 --> 0:22:29.520 their shares in. Uh So that is I don't know. 0:22:29.560 --> 0:22:32.200 To me, that's one of the craziest stories, because you 0:22:32.320 --> 0:22:37.919 just imagine some i PO today and investors sitting in 0:22:38.000 --> 0:22:42.359 Manhattan somewhere just launching rocks through banks windows and buy shares. 0:22:42.680 --> 0:22:45.359 That kind of reminds me, Tracy. Remember when we did 0:22:45.600 --> 0:22:49.159 the episode about the housing bubble in Florida like a 0:22:49.200 --> 0:22:53.159 hundred years ago, and we talked about the binder boys, 0:22:53.640 --> 0:22:57.000 just like we're out on the street in Florida who 0:22:57.119 --> 0:23:00.239 just had these binders full of properties for sale and 0:23:00.280 --> 0:23:04.760 these manias in essentially in the days before electronic trading, 0:23:04.880 --> 0:23:07.240 when things had to be done physically, when you had 0:23:07.280 --> 0:23:10.040 these manias that people actually had together in one place. 0:23:10.480 --> 0:23:12.399 In the case of Miami was just sort of gathering 0:23:12.400 --> 0:23:15.280 out on the street. They're actually like all kinds of traffic, 0:23:14.960 --> 0:23:19.960 traffic jams and other stuff like that, because essentially everyone 0:23:20.119 --> 0:23:22.320 was out in the street trying to buy property. And 0:23:22.359 --> 0:23:25.080 so it very much reminds me of that that sometimes 0:23:25.119 --> 0:23:27.719 these things get so intense that they start to like 0:23:27.800 --> 0:23:32.480 break down the physical infrastructure of the place where transactions 0:23:32.520 --> 0:23:36.000 are done. Yeah. Um, it makes you think a lot 0:23:36.040 --> 0:23:39.760 about like whether current manias are more difficult to spot 0:23:39.800 --> 0:23:43.000 because they don't happen in some physical capacity, Like you 0:23:43.000 --> 0:23:45.600 don't have a bunch of people standing outside the New 0:23:45.640 --> 0:23:48.560 York Stock Exchange hurling rocks in order to get their 0:23:48.600 --> 0:23:52.800 share subscriptions. But I but I did think of that 0:23:52.800 --> 0:23:56.680 that the the analogy would be remember in late seventeen 0:23:56.880 --> 0:24:00.320 when all the cryptocurrency exchanges couldn't handle the traffic load 0:24:00.400 --> 0:24:02.680 and start going down right, and they would have these 0:24:02.720 --> 0:24:06.560 crashes and people complained that their trades weren't going through. 0:24:06.600 --> 0:24:09.440 So even though it's digital, I do think that there's 0:24:09.480 --> 0:24:11.840 some interesting analogies where you just get such a rush. 0:24:12.040 --> 0:24:15.520 In that case, it was digital infrastructure that they were 0:24:15.520 --> 0:24:18.560 just buckling onto the load. Yeah, so maybe when demand 0:24:18.640 --> 0:24:22.920 starts to overload the market infrastructure. That's a bad sign. Um. 0:24:22.960 --> 0:24:28.000 But we're speaking over Jamie, so I feel bad, Jamie. Um. 0:24:28.040 --> 0:24:30.240 There's one thing that you pointed out in your your 0:24:30.280 --> 0:24:33.119 post about Guinness, which was that, you know, when this 0:24:33.240 --> 0:24:37.200 all was happening in the late eighteen hundreds, there were 0:24:37.280 --> 0:24:40.320 a bunch of commentators who were watching this from afar 0:24:40.560 --> 0:24:43.680 and going, oh, yeah, this is crazy and it's definitely 0:24:44.080 --> 0:24:48.960 a speculative mania, and yet it's still happened. Why was that. 0:24:48.960 --> 0:24:51.480 That was the craziest part to me is that we're 0:24:51.880 --> 0:24:55.119 you know, I'm writing today, you know, all high and mighty, like, 0:24:55.160 --> 0:24:59.359