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Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

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Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. So, Tracy, we

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Speaker 1: have a lot of anniversaries coming up in terms of

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Speaker 1: major financial news and events in financial history. Oh yeah,

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Speaker 1: well we we have. Let's see the tenure anniversary of

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Speaker 1: the two thousand eight financial crisis. That's next year. But

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Speaker 1: even more importantly, I think we have the thirtieth anniversary

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Speaker 1: of the movie Wall Street coming up in December. That's

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Speaker 1: the one I'm the most excited about. That. That's the real.

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Speaker 1: That's the real, That's the big one. I think we

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Speaker 1: may have talked about it before, but I'm kind of

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Speaker 1: dreading the next two years and hearing everyone, including many

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Speaker 1: of our colleagues, just endlessly recant war stories about I

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Speaker 1: was there the day this bank, uh you know, went

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Speaker 1: bankrupt and here's the thing I wrote or whatever. It's like,

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Speaker 1: we're going to have two straight years of that. Joe,

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Speaker 1: I'm gonna love it, and I'm going to force you

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Speaker 1: to sit through an entire Odd Thoughts episode where I

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Speaker 1: just talk about September two tho all the great coverage

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Speaker 1: you did during that time. But besides the movie, Wall Street,

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Speaker 1: And besides the financial crisis, we are at another really

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Speaker 1: important thirty year anniversary, and of course that is the

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Speaker 1: thirty year anniversary of the Black Monday crash in Oh

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Speaker 1: has it been thirty years already? Can you believe that

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Speaker 1: we are old? We are old? You know? We think

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Speaker 1: in our history is like, Okay, there was this crash,

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Speaker 1: the stock market, um fell a lot in a very

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Speaker 1: short period of time, and then the stock market recovered

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Speaker 1: and then we kind of move on. But I think

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Speaker 1: you would agree that there's a lot of fascinating stuff

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Speaker 1: to unpack from this experience into in terms of what

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Speaker 1: it tells us about how markets work and how traders

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Speaker 1: work and all that kinds of stuff like that. Oh yeah,

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Speaker 1: people have been drawing lots of parallels to Black Monday recently, um,

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Speaker 1: and I'm sure we can get into that later. But

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Speaker 1: more importantly, I think there's a tendency as we get

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Speaker 1: further and further away from these events to kind of

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Speaker 1: forget about what a big deal they actually were at

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Speaker 1: the time. And Black Monday in particular was huge for

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Speaker 1: markets and led to um some regulatory reform. But when

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Speaker 1: you contrast it with what happened to two thousand and eight.

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Speaker 1: It kind of seems like there was a fairly quick rebound. Um.

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Speaker 1: But you know, the actual day, the actual event was

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Speaker 1: just huge and full of drama. Not that I was there,

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Speaker 1: but no, but from what from what we understand, I

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Speaker 1: don't recall it either, and not that not too much

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Speaker 1: of us had. I was seven years old the time,

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Speaker 1: but I don't remember it in the news. I mean

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Speaker 1: I was kind of aware of some stuff. Do you

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Speaker 1: remember it? No, I was even younger. Um, I thought

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Speaker 1: you were going to tell me that you were trading

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Speaker 1: futures at the time, euro dollars or something. I was not. Anyway,

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Speaker 1: I'm very excited about today's episode because we're going to

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Speaker 1: be talking about someone who, unlike us, lived through Black Monday.

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Speaker 1: He was an active trader. He still is active, but

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Speaker 1: he was active during the crash, and he's known for

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Speaker 1: having made crucial trades. Uh. The day after that performed

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Speaker 1: very well. So I don't think, Um, I think we're

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Speaker 1: going to get a very rare perspective on this event today.

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Speaker 1: This sounds amazing. I want to hear all the anecdotes

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Speaker 1: me too, So without further ado, I want to bring

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Speaker 1: in Blair Hall he was the founder of Hall Trading

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Speaker 1: Company in So just a couple of years before Black Monday.

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Speaker 1: He's still active in proprietary trading. He has a firm

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Speaker 1: called Catcham Trading. He even has his e t F

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Speaker 1: that's based on his uh, you know, market timing. And

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Speaker 1: he's featured in Black Monday Revisited, an oral history of

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Speaker 1: the crash. It's put together by Richard Dewey. It's running

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Speaker 1: in this month's issue of Bloomberg Markets magazine. It's really awesome,

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Speaker 1: amazing oral history piece also features Peter Borish, Michael Lewis,

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Speaker 1: Jim Chanos Now seemed to leb gotta check it out,

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Speaker 1: so pretty much the perfect person to talk to about

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Speaker 1: this historical episode. Blair Hall, thank you very much for

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Speaker 1: joining the Odd Lots podcast. Sure, it's good to be

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Speaker 1: with you. Joe tell us, First of all, I'm curious

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Speaker 1: what did you make of our intro. Do you think

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Speaker 1: we characterized, uh, the events of or we basically sort

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Speaker 1: of framed its historical context? Well, and can you tell

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Speaker 1: us what you were doing at that time career wise

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Speaker 1: and professionally leading up to this big event. Well, at first,

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Speaker 1: I think it isn't an important time First of all,

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Speaker 1: um the eight seven crash was caused by some factors

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Speaker 1: that we now know about, and as a result, we

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Speaker 1: have made some market reforms that I think will reduce

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Speaker 1: um the probability of a catastrophic event in financial markets,

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Speaker 1: and as a result, volatilely will be less in the future.

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Speaker 1: But it was it was a very crazy time. What

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Speaker 1: happened is the market had gone through some It was

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Speaker 1: down five percent the previous week, and then it was

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Speaker 1: it was down. It was down on Monday, and and

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Speaker 1: everybody knew that would be down again on Tuesday, but

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Speaker 1: we didn't know to what an extent it would be down.

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Speaker 1: And there was an event called um in portfolio insurance,

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Speaker 1: or that there was an activity called portfolio insurance that

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Speaker 1: really exacerbated the crash and caused this extreme movement all

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Speaker 1: in all in just a couple of days. Whoever, We're

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Speaker 1: gonna dig into all of that. But before we do,

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Speaker 1: what were you doing before? While I was a market maker?

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Speaker 1: Actually I had been a blackjack player before that, I

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Speaker 1: was a card counter in Las Vegas. I had bought

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Speaker 1: a seat on the Pacific Stock to change and then

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Speaker 1: I had built a firm that had about twenty employers

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Speaker 1: employees that we're making markets in UH index options and

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Speaker 1: futures and stocks, and so we had a presence on

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Speaker 1: most of the major exchanges um in at that time

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Speaker 1: so UH. And one of the things we had is

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Speaker 1: is a screen that would automatically provide option quotes. We

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Speaker 1: were one of the first people to automate the process

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Speaker 1: of creating quotes for as an options market maker. And

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Speaker 1: I was on the Chicago Board of Options Exchange in

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Speaker 1: the SPX pit which had just been really just been created,

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Speaker 1: so that morning, Tuesday morning, that's where I was at

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Speaker 1: that time with as part of a firm. We had

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Speaker 1: a firm of about twenty people at that time. So

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Speaker 1: from what I remember, options were booming in the nineties, right,

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Speaker 1: and that was partially off the back of the creation

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Speaker 1: of black shoals or the discovery of black shoals. Can

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Speaker 1: you kind of walk us through what that market looked like,

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Speaker 1: you know, the day before Black Monday or Black Tuesday happened. Well,

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Speaker 1: the Chicago Board of Options Exchange was the largest exchange

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Speaker 1: at that time, although the American Stock Exchange existed along

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Speaker 1: with the Pacific and Philadelphia um so UM we had

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Speaker 1: we were trading calls and puts on the sp a

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Speaker 1: in a pit an open outcry at that time. Blair,

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Speaker 1: There's so many things that I want to ask you, um,

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Speaker 1: but I feel like I'm going to forget to ask

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Speaker 1: you about this if I don't do it right now.

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Speaker 1: But just briefly, tell us a little bit about the

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Speaker 1: skill overlap between going from being a black jack card

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Speaker 1: counter to a stock trader. We talk about gambling a

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Speaker 1: lot in various ways on this podcast, but I'd love

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Speaker 1: to hear it from your perspective. What specifically is the

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Speaker 1: skill set that sort of transcends both things. Well, there

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Speaker 1: are two skills really. One is dealing with risk and

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Speaker 1: capital fluctuations. That's one skill, and then the second skill

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Speaker 1: is dealing working with the team. I was part of

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Speaker 1: a team playing black jack in Las Vegas, and so

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Speaker 1: um both of those skills. First of all, the capital fluctuations.

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Speaker 1: Even though you have an advantage in any kind of

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Speaker 1: a game or a marketplace, you will have capital fluctuations

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Speaker 1: and capital draw downs. You will go through bad periods,

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Speaker 1: But you have to understand that you do have an

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Speaker 1: edge in the long run and have faith in that,

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Speaker 1: and you have to be able to withstand those losses

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Speaker 1: and stay in there and keep operating, operating in a

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Speaker 1: rational and objective way throughout that time. So it's emotional. Uh,

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Speaker 1: it's it's really Uh. Learning to deal with your emotions

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Speaker 1: is part of it. And the other part is that

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Speaker 1: you need to be able to work with other people

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Speaker 1: in a collaborative way, and that skill, of course is

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Speaker 1: very important also. And is this so that in the

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Speaker 1: context of blackjack, so that the casinos don't recognize you

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Speaker 1: as a card counter being recognized as another issue completely

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Speaker 1: from Uh. No, No, that that wouldn't be. It's it's

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Speaker 1: just in terms of um, just working on a team. UM,

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Speaker 1: people that do significant things collaborate with others. So Joe

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Speaker 1: always brings it back to either gambling or chess usually, Uh,

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Speaker 1: just to stick to the theme. I mean there there

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Speaker 1: is a link between UM gambling in Vegas, say, and

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Speaker 1: Black Shoals and Black Monday, right like people talk about

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Speaker 1: the Kelly criterion and Ed Thorpe and Martin Shoals. Can

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Speaker 1: you kind of square that for us or give us

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Speaker 1: the background? I always say it's getting an edge and

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Speaker 1: staying in the game. Staying in the game is knowing

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Speaker 1: how much money to put on the table at any

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Speaker 1: one time, and if you lose half your bank roll

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Speaker 1: or half your trading account, you must reduce your size

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Speaker 1: of your positions by half uh and so that relates

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Speaker 1: to the Kelly criteria. Knowing how much too um capital

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Speaker 1: to put at risk at any one time and being

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Speaker 1: able to adjust that as your capital either increases or decreases.

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Speaker 1: Let's go back to the events of Black Monday. So

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Speaker 1: one thing I realized we didn't say is that how

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Speaker 1: bad Black Monday was if for people not familiar with that,

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Speaker 1: the Dow fell over in one day absolutely points famously,

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Speaker 1: which you know, these days may not be that much

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Speaker 1: or kind of you know, a volatile day, but just

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Speaker 1: an absolutely extraordinary one day sell off, the likes of

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Speaker 1: which financial markets had really not seen before on such

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Speaker 1: a grand scale. There's also crashes all around the world.

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Speaker 1: But let's go to that Tuesday. So walk us through

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Speaker 1: the event. Obviously everybody completely fried or stunned by the

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Speaker 1: events of the day before. Tell us about how you

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Speaker 1: were thinking going into the markets that Tuesday morning and

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Speaker 1: how people were behaving. But we had screens that actually

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Speaker 1: displayed our prices in the SPX pit at the Chicago

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Speaker 1: Board of Options extrains, and so these were prices that

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Speaker 1: you allegedly to trade on, and in today's market you

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Speaker 1: can trade on them. In those days, they were representative quotes,

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Speaker 1: and so we give gave our best estimate of where

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Speaker 1: volatility was. And I don't have the exact numbers here,

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Speaker 1: but I think we were seen that volatily would have

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Speaker 1: risen from something like twenty to forty. But when implied

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Speaker 1: volatively opened at sixty, it was as a mark. As

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Speaker 1: the lead market maker in the SPX pit, we were

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Speaker 1: essentially run over by orders. We could not respond fast

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Speaker 1: enough to these, uh move our markets fast enough to

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Speaker 1: even stay somewhat in the game. Uh. It was an

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Speaker 1: extremely stressful time where everybody was fighting to get any

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Speaker 1: kind of protection they could. On the downside, so an

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Speaker 1: open alcry pit, people are physically trading, right you're were

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Speaker 1: you doing the hand signals and all of that? Oh

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Speaker 1: it's voice and hand signals, yes both. So what was

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Speaker 1: the atmosphere like then on that day When there's an

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Speaker 1: extreme move either way? Uh, there is usually and there

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Speaker 1: was at that time a Uh, there were a lot

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Speaker 1: of people in the pits. And when I alluded to

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Speaker 1: I think earlier we talked about how later in the week,

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Speaker 1: as actually people were so scared and the FED had

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Speaker 1: increased capital requirements, we actually had there were fewer people

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Speaker 1: in the pits later in the week, but that morning

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Speaker 1: it was extremely chaotic and nobody knew what was going

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Speaker 1: to happen. So what did markets do in the early

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Speaker 1: hours of that Tuesday? And then what did you do

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Speaker 1: in particular to sort of, you know, take a spot

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Speaker 1: an opportunity in the cast and why did you sense

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Speaker 1: that there was an opportunity. Then what happened is in

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Speaker 1: the market actually rallied Tuesday morning, but then it continued

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Speaker 1: to sell off, and we suspect that was because of

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Speaker 1: the portfolio insurance orders that had not been executed from

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Speaker 1: the previous day. So the market UM had a steady

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Speaker 1: decline UM at that time, we UH the Chicago Board

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Speaker 1: of Trade had a contract called the Major Market Index,

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Speaker 1: and we were one of the one of the larger

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Speaker 1: market makers trading across index products, so we had UM.

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Speaker 1: We had positions in the New York Stock Exchange Index

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Speaker 1: on the n y A, and we had a position

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Speaker 1: in the the o e X and the sp X.

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Speaker 1: At the in the SPX, and we also had a

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Speaker 1: position in the Major Market Injects at the Board of Trade,

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Speaker 1: which was a mirror of the Dow average, so it

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Speaker 1: was included twenty stocks twenty large stocks. We had positions

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Speaker 1: all across the board and had to keep track of

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Speaker 1: whether we were we were trying to stay neutral relative

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Speaker 1: to the marketplace. But the reason that I had to

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Speaker 1: go over to the Major Market index was that, um

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Speaker 1: there were no brokers in the pit that could execute

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Speaker 1: our orders because the murk, the Chicago Merchantil and the

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Speaker 1: Board of Trade had said you must have at least

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Speaker 1: a hundred thousand dollars in your account as a broker

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Speaker 1: to execute orders for other people, and as a result,

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Speaker 1: many brokers were excluded from participating, and there was no

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Speaker 1: broker outside broker that could trade for us. Normally we

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Speaker 1: went through a broker in that pit, but I happened

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Speaker 1: to have the full Board of Trade seat, and so

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Speaker 1: I could go over and personally trade. So, even though

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Speaker 1: I was the head of the firm at that time

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Speaker 1: and would not normally be doing at trading in one

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Speaker 1: of those futures bit pits, I did go. I did

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Speaker 1: walk across the street from the cbo E to the

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Speaker 1: border trade. You jumped in. But this is this is

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Speaker 1: what I want to ask, because in the two thousand

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Speaker 1: eight financial crisis, one of the accusations thrown at some

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Speaker 1: of the big market makers was that they just stopped

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Speaker 1: picking up their phone um and taking orders. Was there

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Speaker 1: any of that? On Black Tuesday? I realized some people

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Speaker 1: couldn't trade because they didn't have enough capital. But did

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Speaker 1: anyone just kind of throw their hands up and walk

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Speaker 1: away and say this is too much? Yes? Essentially, the

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Speaker 1: specialists in New York, we're not picking up the phone.

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Speaker 1: In Chicago, there was a pit, So there were those

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Speaker 1: people that were there, and some of them would be

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Speaker 1: quiet and others would open their mouth. Uh. In fact,

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Speaker 1: one of the one of the things I actually learned

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Speaker 1: from a colleague over the Chicago Board of Options Exchange

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Speaker 1: by the name of John Stafford. We had traded together,

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Speaker 1: and one of the things that he did is he

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Speaker 1: he said that when somebody comes in with an order,

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Speaker 1: you always respond to them, even if you can figure

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Speaker 1: out what the price should be, because these are complicated

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Speaker 1: options trades and future trades. But do you always respond

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Speaker 1: to them it maybe with a ridiculous price with an

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Speaker 1: extremely wide market, but you always respond. So I was

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Speaker 1: in the mode of always responding to which sometimes can

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Speaker 1: get you into trouble, but in this case to work

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Speaker 1: to buy advantage. Fill in the details there in terms

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Speaker 1: of how it worked to your advantage. You you had

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Speaker 1: this opportunity of essentially being the only person in this

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Speaker 1: position that you were in. How did things then, uh

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Speaker 1: sort of settle out for you in the days and

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Speaker 1: weeks ahead? Well that first of all, the key was

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Speaker 1: that morning when the market continued to decline, and of

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Speaker 1: course it looked like it was never going to end.

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Speaker 1: And so what what I did was that I was

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Speaker 1: in the major market um kids, and I had been

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Speaker 1: a small buyer trying to reduce our short position. So

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Speaker 1: I was buying five small lots of twos and threes

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Speaker 1: and fours and fives to to try to reduce our position.

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Speaker 1: But there was a rumor that they were going to

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Speaker 1: halt trading on the Chicago and Chicago mercantile in the

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Speaker 1: futures contract that was the big contract. And so if

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Speaker 1: they halt at that, I was fearful that they would

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Speaker 1: halt for a couple of days. Even so I actually

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Speaker 1: sent I actually asked somebody from the firm to go

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Speaker 1: over to the library and do research to determine what

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Speaker 1: happens on trading halts. Now, this was a completely ridiculous

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Speaker 1: request because we obviously didn't have time. We only had

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Speaker 1: about twenty people in the firm. We didn't have time

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Speaker 1: to send somebody over the library in those days, and

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Speaker 1: we didn't have Google. I had a sense that if

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Speaker 1: they were going to halt trading, that this was a

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Speaker 1: buying opportunity, because uh, the panic had gone too far,

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Speaker 1: and so I told told the firm to be long

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Speaker 1: on the halt um. So we were acquiring a position

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Speaker 1: and all at this time. Well, it ends up that

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Speaker 1: um Drexel Burnham, of course, a firm that doesn't longer exist,

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Speaker 1: has had a seller who was selling his position, and

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Speaker 1: they needed to sell this position. I guess the clients

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Speaker 1: that we need to sell it. They knew that it

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Speaker 1: was a very orderly pit. And one of the things

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Speaker 1: that happened was that Pat Harbor, who was Chairman of

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Speaker 1: the Board of Trade at that time, did not get

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Speaker 1: enough credit for actually keeping that market open the entire time.

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Speaker 1: And it was a very orderly market with about old

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Speaker 1: no more than twenty participants, but I wish he had.

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Speaker 1: He should have gotten more credit for not panicking and

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Speaker 1: closing the markets. So as things started to decline, Drexel

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Speaker 1: Burnham had a big order to sell, and knowing that

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Speaker 1: I was I had been probably the only buyer in

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Speaker 1: the in the pit, consistent buyer. UH. They said where

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Speaker 1: were you buy a hundred? And I gave him a

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Speaker 1: ridiculous price, and they said you own him. I was

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Speaker 1: scared to death, had a big of my throat, and

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Speaker 1: UH immediately told the firm that we were a long

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Speaker 1: A hundred contracts was an extremely large trade. UM. And

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Speaker 1: I think that one of the things is the market

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Speaker 1: was trading extremely wide increments. UH. It had normally traded

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Speaker 1: in five and ten cent increments, so it was trading

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Speaker 1: about two ninety It would have been two ninety and

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Speaker 1: five cents at ten cents. In this case, it was

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Speaker 1: two ninety at two ninety five, and there was a

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Speaker 1: h There were bids at two ninety. He actually because

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Speaker 1: it was a large contract, he said, I'll tell him

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Speaker 1: at two eighty five. So I bought these contracts at

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Speaker 1: two eight five trades to eighty seven, trades to eighty

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Speaker 1: eight and he says, then I'll sell you. Then the

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Speaker 1: fifty at the five. I bought them and considered. I

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Speaker 1: considered sharing some of those contracts with the rest of

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Speaker 1: the pit. And by the time I didn't think it happened,

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Speaker 1: it was trading. It was two ninety bid, it was bid,

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Speaker 1: and later in the day I think it finished somewhere

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Speaker 1: in the three sixties, three sixty three, seventy. So it

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Speaker 1: seems so simple in retrospect that you kind of stayed

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Speaker 1: calm and started buying when other people were really panicking

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Speaker 1: and selling. What was it that you saw that other

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Speaker 1: people like drex Sol didn't or what was it about

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Speaker 1: your position that allowed you to do that but prevented

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Speaker 1: them from doing a similar thing. Well, I was providing liquidity,

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Speaker 1: so they were. They were forcing the market. I did

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Speaker 1: have a sense. I did know that. Um I didn't know,

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Speaker 1: but I had a sense that a trading halt provided

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Speaker 1: an opportunity. So that was the reason that I provide

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Speaker 1: liquidity on that side especially, And it was also in

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Speaker 1: conjunction with the fact that the the FEDS had had

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Speaker 1: had raised margins, so we then also had to reduce positions.

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Speaker 1: So I was in the right place at the right

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Speaker 1: time with some sense that this was this was an opportunity.

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Speaker 1: So we have to just about wrap it up here.

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Speaker 1: But I have one very quick question, one slightly longer question.

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Speaker 1: The first question is can you tell us you know

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Speaker 1: how much in the end your firm made from the trade.

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Speaker 1: But more importantly, as we look at the market now

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Speaker 1: and people worry about whether we see things like the

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Speaker 1: echoes of portfolio insurance re emerging and other sort of

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00:22:12,480 --> 00:22:14,840
Speaker 1: volatility products and so forth, what do you think are

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Speaker 1: the key things to understand about the vulnerabilities of market

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Speaker 1: structure today. Well, I think in retrospect, I actually do Mark.

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Speaker 1: I do know Mark Rubinstein, who was really the creator

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Speaker 1: of portfolio insurance, And actually I have a house in California,

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Speaker 1: and he was at a party at my house after

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Speaker 1: the crash, must have been early November, and he was

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Speaker 1: so sad. He was distraught. He said I caused the crash. Later,

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Speaker 1: even though it wasn't well known at that time, it

374
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Speaker 1: was in fact true that the crash was exacerbated by

375
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Speaker 1: portfolio insurance, which now today with the look quidity that

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Speaker 1: is in the market, is probably a very viable product.

377
00:23:04,800 --> 00:23:08,399
Speaker 1: He was distraught, He's a very honorable man, and he

378
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Speaker 1: along with us Heine Leland and John O'Brien, they were

379
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Speaker 1: the founders of portfolio insurance. But now with the circuit

380
00:23:22,400 --> 00:23:28,600
Speaker 1: breakers and the tremendous liquidity is provided by by proprietary traders,

381
00:23:29,280 --> 00:23:32,320
Speaker 1: I think portfolio insurance now is a viable product where

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Speaker 1: it wasn't at that time. So it's just two ahead

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Speaker 1: of the time, Blair, Can I just press this issue, um,

384
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Speaker 1: because a number of people have brought up parallels to

385
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Speaker 1: portfolio insurance. So for instance, UM, the risk parity strategies

386
00:23:46,160 --> 00:23:49,680
Speaker 1: that kind of assume a relationship between bonds and equities,

387
00:23:50,040 --> 00:23:55,639
Speaker 1: various types of programmatic trading, sometimes even volatility trading. Do

388
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Speaker 1: you see any parallels between you know, a potential black Monday,

389
00:23:59,520 --> 00:24:02,840
Speaker 1: Black twos a situation and some of those more modern strategies.

390
00:24:03,760 --> 00:24:07,960
Speaker 1: I haven't thought about this, uh to a large extent,

391
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Speaker 1: but I don't think there's UH. I mean, at that

392
00:24:12,720 --> 00:24:15,760
Speaker 1: time this was a tremendous There was a tremendous amount

393
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Speaker 1: of money in this strategy relative to the liquidity that

394
00:24:19,080 --> 00:24:22,640
Speaker 1: could have been provided. I think they're more diverse strategies now.

395
00:24:23,440 --> 00:24:28,239
Speaker 1: Risk parity is can be adjusted over UM periods of

396
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Speaker 1: time that have to do with the volatility of each instrument,

397
00:24:31,960 --> 00:24:36,480
Speaker 1: and so as a result, those adjustments occurred on a

398
00:24:36,720 --> 00:24:40,280
Speaker 1: on a more gradual basis. Um, I don't see one

399
00:24:40,320 --> 00:24:45,439
Speaker 1: strategy that is overwhelming the others, and so with the

400
00:24:45,480 --> 00:24:47,720
Speaker 1: circuit breakers that we have in place, I think that's

401
00:24:47,760 --> 00:24:52,479
Speaker 1: a and the market structure has caused really this, this

402
00:24:52,560 --> 00:24:57,240
Speaker 1: decline in volatility were the historic lows and volatility. I

403
00:24:57,280 --> 00:25:00,439
Speaker 1: find it interesting the press that says that we're in

404
00:25:00,480 --> 00:25:03,639
Speaker 1: crazy times. We're not. We're in a very stable times

405
00:25:04,080 --> 00:25:06,480
Speaker 1: from a volatili standpoint, or at this point in time,

406
00:25:07,320 --> 00:25:10,280
Speaker 1: from our perspective in the press, we might even say

407
00:25:10,280 --> 00:25:13,720
Speaker 1: it's too stable. We need more interesting stories. Blair Hall

408
00:25:13,920 --> 00:25:17,560
Speaker 1: is fascinating to talk to, great to get your perspective.

409
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Speaker 1: Love hearing the stories of you know, there's a sort

410
00:25:21,000 --> 00:25:23,840
Speaker 1: of different ear of trading. Really appreciate you coming up

411
00:25:24,440 --> 00:25:39,879
Speaker 1: my pleasure, so, Tracy, I love hearing about sort of

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Speaker 1: different eras of trading and what it was like. And

413
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Speaker 1: so obviously crashes and huge crashes can happen at any

414
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Speaker 1: time and they'll they'll be big ones again in our future.

415
00:25:50,400 --> 00:25:54,119
Speaker 1: But thinking about things like being the only person physically

416
00:25:54,280 --> 00:25:56,760
Speaker 1: in the room or having to go to the library

417
00:25:56,880 --> 00:25:59,240
Speaker 1: and look up how the rules of the trading hall

418
00:25:59,440 --> 00:26:03,800
Speaker 1: could feartically affect market that's distinct to a certain time,

419
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Speaker 1: and it's sort of like, you know, I find it

420
00:26:06,520 --> 00:26:09,920
Speaker 1: very interesting. Yeah. Um, I thought it was really sad

421
00:26:10,000 --> 00:26:13,480
Speaker 1: that that little bit um that anecdote about Mark Rubinstein

422
00:26:13,640 --> 00:26:16,000
Speaker 1: going to the party and saying that he caused the crash,

423
00:26:16,080 --> 00:26:19,359
Speaker 1: because of course, the whole idea about portfolio insurance was

424
00:26:19,359 --> 00:26:22,840
Speaker 1: that you protect yourself in times of crash. Um, so

425
00:26:23,160 --> 00:26:26,240
Speaker 1: poor guy. Kind of Um. You know, one thought that

426
00:26:26,320 --> 00:26:30,200
Speaker 1: struck me. Some things are the same when it comes

427
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Speaker 1: to trading, like the notion of some market makers just

428
00:26:33,880 --> 00:26:38,040
Speaker 1: panicking and not picking up their phones. That happened, you know,

429
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Speaker 1: in two thousand eight. But I wonder if there's one

430
00:26:41,119 --> 00:26:45,080
Speaker 1: thing that's different now, and that's the sort of regulation

431
00:26:45,680 --> 00:26:49,960
Speaker 1: and legal aspect of everything. Like I just wonder, if

432
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Speaker 1: you really had the market falling apart, how many compliance

433
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Speaker 1: people are you going to have descending on your market

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Speaker 1: making or maybe even trading um units or teams telling

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Speaker 1: you that you can't in all honesty do anything because

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Speaker 1: you just don't know what's going on, and you have

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Speaker 1: a whatever, an obligation to your shareholders or clients. I

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Speaker 1: just wonder if that's the thing that's going to change

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Speaker 1: this time around. Yeah, and it's really interesting that lesson,

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Speaker 1: that's our trading lesson here are late about you know,

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Speaker 1: if you don't know what to do, don't say you

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Speaker 1: don't know what to do, don't not answer the phone,

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Speaker 1: just go out there with a ridiculous quote. So just

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Speaker 1: in other words, give yourself a huge margin of error

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Speaker 1: to be wrong. And if the client, if the person

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Speaker 1: on the other end of the trade doesn't want to

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Speaker 1: take it because they think that's a ridiculous quote, then okay,

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Speaker 1: they don't have to. But if they do take it,

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Speaker 1: then you give yourself the opportunity to make a you know,

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Speaker 1: you put the choice back on them, but you give

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Speaker 1: yourself an opportunity to potentially make a lot of money.

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Speaker 1: Just seems like one of those interesting ideas about how

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Speaker 1: in a period of extreme volatility or extreme move you

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Speaker 1: can sort of protect yourself in that way, continue your

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Speaker 1: obligation as a trader, as a market maker, but give yourself,

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Speaker 1: you know, that cushion. But again, you have to have

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Speaker 1: a lot of autonomy and a lot of confidence to

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Speaker 1: do that, and I wonder if that's kind of what's

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Speaker 1: lacking in modern finance. I guess we'll find out the

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Speaker 1: next time we have a flash crash or uh, black

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Speaker 1: Friday or Black Monday or Black Tuesday or black any

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Speaker 1: day of the week type event, and there will definitely

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Speaker 1: be those days and hopefully we're still doing our podcast

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Speaker 1: by the time the next one time, so we can

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Speaker 1: talk about it. Yeah, and we'll actually be there and

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Speaker 1: we'll have war stories of our own to tell exactly.

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Speaker 1: This has been another episode of the Odd Lodds Podcast.

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Speaker 1: I'm Joe wi Isn't though. You can follow me on

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Speaker 1: Twitter at the Stalwart, and I'm Tracy Alloway. I'm on

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Speaker 1: Twitter at Tracy Alloway. And you can follow our producer

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Speaker 1: Sarah Patterson on Twitter at Sarah pett With two teas.

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Speaker 1: Thanks for listening to