Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. So, Tracy, we
Speaker 1: have a lot of anniversaries coming up in terms of
Speaker 1: major financial news and events in financial history. Oh yeah,
Speaker 1: well we we have. Let's see the tenure anniversary of
Speaker 1: the two thousand eight financial crisis. That's next year. But
Speaker 1: even more importantly, I think we have the thirtieth anniversary
Speaker 1: of the movie Wall Street coming up in December. That's
Speaker 1: the one I'm the most excited about. That. That's the real.
Speaker 1: That's the real, That's the big one. I think we
Speaker 1: may have talked about it before, but I'm kind of
Speaker 1: dreading the next two years and hearing everyone, including many
Speaker 1: of our colleagues, just endlessly recant war stories about I
Speaker 1: was there the day this bank, uh you know, went
Speaker 1: bankrupt and here's the thing I wrote or whatever. It's like,
Speaker 1: we're going to have two straight years of that. Joe,
Speaker 1: I'm gonna love it, and I'm going to force you
Speaker 1: to sit through an entire Odd Thoughts episode where I
Speaker 1: just talk about September two tho all the great coverage
Speaker 1: you did during that time. But besides the movie, Wall Street,
Speaker 1: And besides the financial crisis, we are at another really
Speaker 1: important thirty year anniversary, and of course that is the
Speaker 1: thirty year anniversary of the Black Monday crash in Oh
Speaker 1: has it been thirty years already? Can you believe that
Speaker 1: we are old? We are old? You know? We think
Speaker 1: in our history is like, Okay, there was this crash,
Speaker 1: the stock market, um fell a lot in a very
Speaker 1: short period of time, and then the stock market recovered
Speaker 1: and then we kind of move on. But I think
Speaker 1: you would agree that there's a lot of fascinating stuff
Speaker 1: to unpack from this experience into in terms of what
Speaker 1: it tells us about how markets work and how traders
Speaker 1: work and all that kinds of stuff like that. Oh yeah,
Speaker 1: people have been drawing lots of parallels to Black Monday recently, um,
Speaker 1: and I'm sure we can get into that later. But
Speaker 1: more importantly, I think there's a tendency as we get
Speaker 1: further and further away from these events to kind of
Speaker 1: forget about what a big deal they actually were at
Speaker 1: the time. And Black Monday in particular was huge for
Speaker 1: markets and led to um some regulatory reform. But when
Speaker 1: you contrast it with what happened to two thousand and eight.
Speaker 1: It kind of seems like there was a fairly quick rebound. Um.
Speaker 1: But you know, the actual day, the actual event was
Speaker 1: just huge and full of drama. Not that I was there,
Speaker 1: but no, but from what from what we understand, I
Speaker 1: don't recall it either, and not that not too much
Speaker 1: of us had. I was seven years old the time,
Speaker 1: but I don't remember it in the news. I mean
Speaker 1: I was kind of aware of some stuff. Do you
Speaker 1: remember it? No, I was even younger. Um, I thought
Speaker 1: you were going to tell me that you were trading
Speaker 1: futures at the time, euro dollars or something. I was not. Anyway,
Speaker 1: I'm very excited about today's episode because we're going to
Speaker 1: be talking about someone who, unlike us, lived through Black Monday.
Speaker 1: He was an active trader. He still is active, but
Speaker 1: he was active during the crash, and he's known for
Speaker 1: having made crucial trades. Uh. The day after that performed
Speaker 1: very well. So I don't think, Um, I think we're
Speaker 1: going to get a very rare perspective on this event today.
Speaker 1: This sounds amazing. I want to hear all the anecdotes
Speaker 1: me too, So without further ado, I want to bring
Speaker 1: in Blair Hall he was the founder of Hall Trading
Speaker 1: Company in So just a couple of years before Black Monday.
Speaker 1: He's still active in proprietary trading. He has a firm
Speaker 1: called Catcham Trading. He even has his e t F
Speaker 1: that's based on his uh, you know, market timing. And
Speaker 1: he's featured in Black Monday Revisited, an oral history of
Speaker 1: the crash. It's put together by Richard Dewey. It's running
Speaker 1: in this month's issue of Bloomberg Markets magazine. It's really awesome,
Speaker 1: amazing oral history piece also features Peter Borish, Michael Lewis,
Speaker 1: Jim Chanos Now seemed to leb gotta check it out,
Speaker 1: so pretty much the perfect person to talk to about
Speaker 1: this historical episode. Blair Hall, thank you very much for
Speaker 1: joining the Odd Lots podcast. Sure, it's good to be
Speaker 1: with you. Joe tell us, First of all, I'm curious
Speaker 1: what did you make of our intro. Do you think
Speaker 1: we characterized, uh, the events of or we basically sort
Speaker 1: of framed its historical context? Well, and can you tell
Speaker 1: us what you were doing at that time career wise
Speaker 1: and professionally leading up to this big event. Well, at first,
Speaker 1: I think it isn't an important time First of all,
Speaker 1: um the eight seven crash was caused by some factors
Speaker 1: that we now know about, and as a result, we
Speaker 1: have made some market reforms that I think will reduce
Speaker 1: um the probability of a catastrophic event in financial markets,
Speaker 1: and as a result, volatilely will be less in the future.
Speaker 1: But it was it was a very crazy time. What
Speaker 1: happened is the market had gone through some It was
Speaker 1: down five percent the previous week, and then it was
Speaker 1: it was down. It was down on Monday, and and
Speaker 1: everybody knew that would be down again on Tuesday, but
Speaker 1: we didn't know to what an extent it would be down.
Speaker 1: And there was an event called um in portfolio insurance,
Speaker 1: or that there was an activity called portfolio insurance that
Speaker 1: really exacerbated the crash and caused this extreme movement all
Speaker 1: in all in just a couple of days. Whoever, We're
Speaker 1: gonna dig into all of that. But before we do,
Speaker 1: what were you doing before? While I was a market maker?
Speaker 1: Actually I had been a blackjack player before that, I
Speaker 1: was a card counter in Las Vegas. I had bought
Speaker 1: a seat on the Pacific Stock to change and then
Speaker 1: I had built a firm that had about twenty employers
Speaker 1: employees that we're making markets in UH index options and
Speaker 1: futures and stocks, and so we had a presence on
Speaker 1: most of the major exchanges um in at that time
Speaker 1: so UH. And one of the things we had is
Speaker 1: is a screen that would automatically provide option quotes. We
Speaker 1: were one of the first people to automate the process
Speaker 1: of creating quotes for as an options market maker. And
Speaker 1: I was on the Chicago Board of Options Exchange in
Speaker 1: the SPX pit which had just been really just been created,
Speaker 1: so that morning, Tuesday morning, that's where I was at
Speaker 1: that time with as part of a firm. We had
Speaker 1: a firm of about twenty people at that time. So
Speaker 1: from what I remember, options were booming in the nineties, right,
Speaker 1: and that was partially off the back of the creation
Speaker 1: of black shoals or the discovery of black shoals. Can
Speaker 1: you kind of walk us through what that market looked like,
Speaker 1: you know, the day before Black Monday or Black Tuesday happened. Well,
Speaker 1: the Chicago Board of Options Exchange was the largest exchange
Speaker 1: at that time, although the American Stock Exchange existed along
Speaker 1: with the Pacific and Philadelphia um so UM we had
Speaker 1: we were trading calls and puts on the sp a
Speaker 1: in a pit an open outcry at that time. Blair,
Speaker 1: There's so many things that I want to ask you, um,
Speaker 1: but I feel like I'm going to forget to ask
Speaker 1: you about this if I don't do it right now.
Speaker 1: But just briefly, tell us a little bit about the
Speaker 1: skill overlap between going from being a black jack card
Speaker 1: counter to a stock trader. We talk about gambling a
Speaker 1: lot in various ways on this podcast, but I'd love
Speaker 1: to hear it from your perspective. What specifically is the
Speaker 1: skill set that sort of transcends both things. Well, there
Speaker 1: are two skills really. One is dealing with risk and
Speaker 1: capital fluctuations. That's one skill, and then the second skill
Speaker 1: is dealing working with the team. I was part of
Speaker 1: a team playing black jack in Las Vegas, and so
Speaker 1: um both of those skills. First of all, the capital fluctuations.
Speaker 1: Even though you have an advantage in any kind of
Speaker 1: a game or a marketplace, you will have capital fluctuations
Speaker 1: and capital draw downs. You will go through bad periods,
Speaker 1: But you have to understand that you do have an
Speaker 1: edge in the long run and have faith in that,
Speaker 1: and you have to be able to withstand those losses
Speaker 1: and stay in there and keep operating, operating in a
Speaker 1: rational and objective way throughout that time. So it's emotional. Uh,
Speaker 1: it's it's really Uh. Learning to deal with your emotions
Speaker 1: is part of it. And the other part is that
Speaker 1: you need to be able to work with other people
Speaker 1: in a collaborative way, and that skill, of course is
Speaker 1: very important also. And is this so that in the
Speaker 1: context of blackjack, so that the casinos don't recognize you
Speaker 1: as a card counter being recognized as another issue completely
Speaker 1: from Uh. No, No, that that wouldn't be. It's it's
Speaker 1: just in terms of um, just working on a team. UM,
Speaker 1: people that do significant things collaborate with others. So Joe
Speaker 1: always brings it back to either gambling or chess usually, Uh,
Speaker 1: just to stick to the theme. I mean there there
Speaker 1: is a link between UM gambling in Vegas, say, and
Speaker 1: Black Shoals and Black Monday, right like people talk about
Speaker 1: the Kelly criterion and Ed Thorpe and Martin Shoals. Can
Speaker 1: you kind of square that for us or give us
Speaker 1: the background? I always say it's getting an edge and
Speaker 1: staying in the game. Staying in the game is knowing
Speaker 1: how much money to put on the table at any
Speaker 1: one time, and if you lose half your bank roll
Speaker 1: or half your trading account, you must reduce your size
Speaker 1: of your positions by half uh and so that relates
Speaker 1: to the Kelly criteria. Knowing how much too um capital
Speaker 1: to put at risk at any one time and being
Speaker 1: able to adjust that as your capital either increases or decreases.
Speaker 1: Let's go back to the events of Black Monday. So
Speaker 1: one thing I realized we didn't say is that how
Speaker 1: bad Black Monday was if for people not familiar with that,
Speaker 1: the Dow fell over in one day absolutely points famously,
Speaker 1: which you know, these days may not be that much
Speaker 1: or kind of you know, a volatile day, but just
Speaker 1: an absolutely extraordinary one day sell off, the likes of
Speaker 1: which financial markets had really not seen before on such
Speaker 1: a grand scale. There's also crashes all around the world.
Speaker 1: But let's go to that Tuesday. So walk us through
Speaker 1: the event. Obviously everybody completely fried or stunned by the
Speaker 1: events of the day before. Tell us about how you
Speaker 1: were thinking going into the markets that Tuesday morning and
Speaker 1: how people were behaving. But we had screens that actually
Speaker 1: displayed our prices in the SPX pit at the Chicago
Speaker 1: Board of Options extrains, and so these were prices that
Speaker 1: you allegedly to trade on, and in today's market you
Speaker 1: can trade on them. In those days, they were representative quotes,
Speaker 1: and so we give gave our best estimate of where
Speaker 1: volatility was. And I don't have the exact numbers here,
Speaker 1: but I think we were seen that volatily would have
Speaker 1: risen from something like twenty to forty. But when implied
Speaker 1: volatively opened at sixty, it was as a mark. As
Speaker 1: the lead market maker in the SPX pit, we were
Speaker 1: essentially run over by orders. We could not respond fast
Speaker 1: enough to these, uh move our markets fast enough to
Speaker 1: even stay somewhat in the game. Uh. It was an
Speaker 1: extremely stressful time where everybody was fighting to get any
Speaker 1: kind of protection they could. On the downside, so an
Speaker 1: open alcry pit, people are physically trading, right you're were
Speaker 1: you doing the hand signals and all of that? Oh
Speaker 1: it's voice and hand signals, yes both. So what was
Speaker 1: the atmosphere like then on that day When there's an
Speaker 1: extreme move either way? Uh, there is usually and there
Speaker 1: was at that time a Uh, there were a lot
Speaker 1: of people in the pits. And when I alluded to
Speaker 1: I think earlier we talked about how later in the week,
Speaker 1: as actually people were so scared and the FED had
Speaker 1: increased capital requirements, we actually had there were fewer people
Speaker 1: in the pits later in the week, but that morning
Speaker 1: it was extremely chaotic and nobody knew what was going
Speaker 1: to happen. So what did markets do in the early
Speaker 1: hours of that Tuesday? And then what did you do
Speaker 1: in particular to sort of, you know, take a spot
Speaker 1: an opportunity in the cast and why did you sense
Speaker 1: that there was an opportunity. Then what happened is in
Speaker 1: the market actually rallied Tuesday morning, but then it continued
Speaker 1: to sell off, and we suspect that was because of
Speaker 1: the portfolio insurance orders that had not been executed from
Speaker 1: the previous day. So the market UM had a steady
Speaker 1: decline UM at that time, we UH the Chicago Board
Speaker 1: of Trade had a contract called the Major Market Index,
Speaker 1: and we were one of the one of the larger
Speaker 1: market makers trading across index products, so we had UM.
Speaker 1: We had positions in the New York Stock Exchange Index
Speaker 1: on the n y A, and we had a position
Speaker 1: in the the o e X and the sp X.
Speaker 1: At the in the SPX, and we also had a
Speaker 1: position in the Major Market Injects at the Board of Trade,
Speaker 1: which was a mirror of the Dow average, so it
Speaker 1: was included twenty stocks twenty large stocks. We had positions
Speaker 1: all across the board and had to keep track of
Speaker 1: whether we were we were trying to stay neutral relative
Speaker 1: to the marketplace. But the reason that I had to
Speaker 1: go over to the Major Market index was that, um
Speaker 1: there were no brokers in the pit that could execute
Speaker 1: our orders because the murk, the Chicago Merchantil and the
Speaker 1: Board of Trade had said you must have at least
Speaker 1: a hundred thousand dollars in your account as a broker
Speaker 1: to execute orders for other people, and as a result,
Speaker 1: many brokers were excluded from participating, and there was no
Speaker 1: broker outside broker that could trade for us. Normally we
Speaker 1: went through a broker in that pit, but I happened
Speaker 1: to have the full Board of Trade seat, and so
Speaker 1: I could go over and personally trade. So, even though
Speaker 1: I was the head of the firm at that time
Speaker 1: and would not normally be doing at trading in one
Speaker 1: of those futures bit pits, I did go. I did
Speaker 1: walk across the street from the cbo E to the
Speaker 1: border trade. You jumped in. But this is this is
Speaker 1: what I want to ask, because in the two thousand
Speaker 1: eight financial crisis, one of the accusations thrown at some
Speaker 1: of the big market makers was that they just stopped
Speaker 1: picking up their phone um and taking orders. Was there
Speaker 1: any of that? On Black Tuesday? I realized some people
Speaker 1: couldn't trade because they didn't have enough capital. But did
Speaker 1: anyone just kind of throw their hands up and walk
Speaker 1: away and say this is too much? Yes? Essentially, the
Speaker 1: specialists in New York, we're not picking up the phone.
Speaker 1: In Chicago, there was a pit, So there were those
Speaker 1: people that were there, and some of them would be
Speaker 1: quiet and others would open their mouth. Uh. In fact,
Speaker 1: one of the one of the things I actually learned
Speaker 1: from a colleague over the Chicago Board of Options Exchange
Speaker 1: by the name of John Stafford. We had traded together,
Speaker 1: and one of the things that he did is he
Speaker 1: he said that when somebody comes in with an order,
Speaker 1: you always respond to them, even if you can figure
Speaker 1: out what the price should be, because these are complicated
Speaker 1: options trades and future trades. But do you always respond
Speaker 1: to them it maybe with a ridiculous price with an
Speaker 1: extremely wide market, but you always respond. So I was
Speaker 1: in the mode of always responding to which sometimes can
Speaker 1: get you into trouble, but in this case to work
Speaker 1: to buy advantage. Fill in the details there in terms
Speaker 1: of how it worked to your advantage. You you had
Speaker 1: this opportunity of essentially being the only person in this
Speaker 1: position that you were in. How did things then, uh
Speaker 1: sort of settle out for you in the days and
Speaker 1: weeks ahead? Well that first of all, the key was
Speaker 1: that morning when the market continued to decline, and of
Speaker 1: course it looked like it was never going to end.
Speaker 1: And so what what I did was that I was
Speaker 1: in the major market um kids, and I had been
Speaker 1: a small buyer trying to reduce our short position. So
Speaker 1: I was buying five small lots of twos and threes
Speaker 1: and fours and fives to to try to reduce our position.
Speaker 1: But there was a rumor that they were going to
Speaker 1: halt trading on the Chicago and Chicago mercantile in the
Speaker 1: futures contract that was the big contract. And so if
Speaker 1: they halt at that, I was fearful that they would
Speaker 1: halt for a couple of days. Even so I actually
Speaker 1: sent I actually asked somebody from the firm to go
Speaker 1: over to the library and do research to determine what
Speaker 1: happens on trading halts. Now, this was a completely ridiculous
Speaker 1: request because we obviously didn't have time. We only had
Speaker 1: about twenty people in the firm. We didn't have time
Speaker 1: to send somebody over the library in those days, and
Speaker 1: we didn't have Google. I had a sense that if
Speaker 1: they were going to halt trading, that this was a
Speaker 1: buying opportunity, because uh, the panic had gone too far,
Speaker 1: and so I told told the firm to be long
Speaker 1: on the halt um. So we were acquiring a position
Speaker 1: and all at this time. Well, it ends up that
Speaker 1: um Drexel Burnham, of course, a firm that doesn't longer exist,
Speaker 1: has had a seller who was selling his position, and
Speaker 1: they needed to sell this position. I guess the clients
Speaker 1: that we need to sell it. They knew that it
Speaker 1: was a very orderly pit. And one of the things
Speaker 1: that happened was that Pat Harbor, who was Chairman of
Speaker 1: the Board of Trade at that time, did not get
Speaker 1: enough credit for actually keeping that market open the entire time.
Speaker 1: And it was a very orderly market with about old
Speaker 1: no more than twenty participants, but I wish he had.
Speaker 1: He should have gotten more credit for not panicking and
Speaker 1: closing the markets. So as things started to decline, Drexel
Speaker 1: Burnham had a big order to sell, and knowing that
Speaker 1: I was I had been probably the only buyer in
Speaker 1: the in the pit, consistent buyer. UH. They said where
Speaker 1: were you buy a hundred? And I gave him a
Speaker 1: ridiculous price, and they said you own him. I was
Speaker 1: scared to death, had a big of my throat, and
Speaker 1: UH immediately told the firm that we were a long
Speaker 1: A hundred contracts was an extremely large trade. UM. And
Speaker 1: I think that one of the things is the market
Speaker 1: was trading extremely wide increments. UH. It had normally traded
Speaker 1: in five and ten cent increments, so it was trading
Speaker 1: about two ninety It would have been two ninety and
Speaker 1: five cents at ten cents. In this case, it was
Speaker 1: two ninety at two ninety five, and there was a
Speaker 1: h There were bids at two ninety. He actually because
Speaker 1: it was a large contract, he said, I'll tell him
Speaker 1: at two eighty five. So I bought these contracts at
Speaker 1: two eight five trades to eighty seven, trades to eighty
Speaker 1: eight and he says, then I'll sell you. Then the
Speaker 1: fifty at the five. I bought them and considered. I
Speaker 1: considered sharing some of those contracts with the rest of
Speaker 1: the pit. And by the time I didn't think it happened,
Speaker 1: it was trading. It was two ninety bid, it was bid,
Speaker 1: and later in the day I think it finished somewhere
Speaker 1: in the three sixties, three sixty three, seventy. So it
Speaker 1: seems so simple in retrospect that you kind of stayed
Speaker 1: calm and started buying when other people were really panicking
Speaker 1: and selling. What was it that you saw that other
Speaker 1: people like drex Sol didn't or what was it about
Speaker 1: your position that allowed you to do that but prevented
Speaker 1: them from doing a similar thing. Well, I was providing liquidity,
Speaker 1: so they were. They were forcing the market. I did
Speaker 1: have a sense. I did know that. Um I didn't know,
Speaker 1: but I had a sense that a trading halt provided
Speaker 1: an opportunity. So that was the reason that I provide
Speaker 1: liquidity on that side especially, And it was also in
Speaker 1: conjunction with the fact that the the FEDS had had
Speaker 1: had raised margins, so we then also had to reduce positions.
Speaker 1: So I was in the right place at the right
Speaker 1: time with some sense that this was this was an opportunity.
Speaker 1: So we have to just about wrap it up here.
Speaker 1: But I have one very quick question, one slightly longer question.
Speaker 1: The first question is can you tell us you know
Speaker 1: how much in the end your firm made from the trade.
Speaker 1: But more importantly, as we look at the market now
Speaker 1: and people worry about whether we see things like the
Speaker 1: echoes of portfolio insurance re emerging and other sort of
Speaker 1: volatility products and so forth, what do you think are
Speaker 1: the key things to understand about the vulnerabilities of market
Speaker 1: structure today. Well, I think in retrospect, I actually do Mark.
Speaker 1: I do know Mark Rubinstein, who was really the creator
Speaker 1: of portfolio insurance, And actually I have a house in California,
Speaker 1: and he was at a party at my house after
Speaker 1: the crash, must have been early November, and he was
Speaker 1: so sad. He was distraught. He said I caused the crash. Later,
Speaker 1: even though it wasn't well known at that time, it
Speaker 1: was in fact true that the crash was exacerbated by
Speaker 1: portfolio insurance, which now today with the look quidity that
Speaker 1: is in the market, is probably a very viable product.
Speaker 1: He was distraught, He's a very honorable man, and he
Speaker 1: along with us Heine Leland and John O'Brien, they were
Speaker 1: the founders of portfolio insurance. But now with the circuit
Speaker 1: breakers and the tremendous liquidity is provided by by proprietary traders,
Speaker 1: I think portfolio insurance now is a viable product where
Speaker 1: it wasn't at that time. So it's just two ahead
Speaker 1: of the time, Blair, Can I just press this issue, um,
Speaker 1: because a number of people have brought up parallels to
Speaker 1: portfolio insurance. So for instance, UM, the risk parity strategies
Speaker 1: that kind of assume a relationship between bonds and equities,
Speaker 1: various types of programmatic trading, sometimes even volatility trading. Do
Speaker 1: you see any parallels between you know, a potential black Monday,
Speaker 1: Black twos a situation and some of those more modern strategies.
Speaker 1: I haven't thought about this, uh to a large extent,
Speaker 1: but I don't think there's UH. I mean, at that
Speaker 1: time this was a tremendous There was a tremendous amount
Speaker 1: of money in this strategy relative to the liquidity that
Speaker 1: could have been provided. I think they're more diverse strategies now.
Speaker 1: Risk parity is can be adjusted over UM periods of
Speaker 1: time that have to do with the volatility of each instrument,
Speaker 1: and so as a result, those adjustments occurred on a
Speaker 1: on a more gradual basis. Um, I don't see one
Speaker 1: strategy that is overwhelming the others, and so with the
Speaker 1: circuit breakers that we have in place, I think that's
Speaker 1: a and the market structure has caused really this, this
Speaker 1: decline in volatility were the historic lows and volatility. I
Speaker 1: find it interesting the press that says that we're in
Speaker 1: crazy times. We're not. We're in a very stable times
Speaker 1: from a volatili standpoint, or at this point in time,
Speaker 1: from our perspective in the press, we might even say
Speaker 1: it's too stable. We need more interesting stories. Blair Hall
Speaker 1: is fascinating to talk to, great to get your perspective.
Speaker 1: Love hearing the stories of you know, there's a sort
Speaker 1: of different ear of trading. Really appreciate you coming up
Speaker 1: my pleasure, so, Tracy, I love hearing about sort of
Speaker 1: different eras of trading and what it was like. And
Speaker 1: so obviously crashes and huge crashes can happen at any
Speaker 1: time and they'll they'll be big ones again in our future.
Speaker 1: But thinking about things like being the only person physically
Speaker 1: in the room or having to go to the library
Speaker 1: and look up how the rules of the trading hall
Speaker 1: could feartically affect market that's distinct to a certain time,
Speaker 1: and it's sort of like, you know, I find it
Speaker 1: very interesting. Yeah. Um, I thought it was really sad
Speaker 1: that that little bit um that anecdote about Mark Rubinstein
Speaker 1: going to the party and saying that he caused the crash,
Speaker 1: because of course, the whole idea about portfolio insurance was
Speaker 1: that you protect yourself in times of crash. Um, so
Speaker 1: poor guy. Kind of Um. You know, one thought that
Speaker 1: struck me. Some things are the same when it comes
Speaker 1: to trading, like the notion of some market makers just
Speaker 1: panicking and not picking up their phones. That happened, you know,
Speaker 1: in two thousand eight. But I wonder if there's one
Speaker 1: thing that's different now, and that's the sort of regulation
Speaker 1: and legal aspect of everything. Like I just wonder, if
Speaker 1: you really had the market falling apart, how many compliance
Speaker 1: people are you going to have descending on your market
Speaker 1: making or maybe even trading um units or teams telling
Speaker 1: you that you can't in all honesty do anything because
Speaker 1: you just don't know what's going on, and you have
Speaker 1: a whatever, an obligation to your shareholders or clients. I
Speaker 1: just wonder if that's the thing that's going to change
Speaker 1: this time around. Yeah, and it's really interesting that lesson,
Speaker 1: that's our trading lesson here are late about you know,
Speaker 1: if you don't know what to do, don't say you
Speaker 1: don't know what to do, don't not answer the phone,
Speaker 1: just go out there with a ridiculous quote. So just
Speaker 1: in other words, give yourself a huge margin of error
Speaker 1: to be wrong. And if the client, if the person
Speaker 1: on the other end of the trade doesn't want to
Speaker 1: take it because they think that's a ridiculous quote, then okay,
Speaker 1: they don't have to. But if they do take it,
Speaker 1: then you give yourself the opportunity to make a you know,
Speaker 1: you put the choice back on them, but you give
Speaker 1: yourself an opportunity to potentially make a lot of money.
Speaker 1: Just seems like one of those interesting ideas about how
Speaker 1: in a period of extreme volatility or extreme move you
Speaker 1: can sort of protect yourself in that way, continue your
Speaker 1: obligation as a trader, as a market maker, but give yourself,
Speaker 1: you know, that cushion. But again, you have to have
Speaker 1: a lot of autonomy and a lot of confidence to
Speaker 1: do that, and I wonder if that's kind of what's
Speaker 1: lacking in modern finance. I guess we'll find out the
Speaker 1: next time we have a flash crash or uh, black
Speaker 1: Friday or Black Monday or Black Tuesday or black any
Speaker 1: day of the week type event, and there will definitely
Speaker 1: be those days and hopefully we're still doing our podcast
Speaker 1: by the time the next one time, so we can
Speaker 1: talk about it. Yeah, and we'll actually be there and
Speaker 1: we'll have war stories of our own to tell exactly.
Speaker 1: This has been another episode of the Odd Lodds Podcast.
Speaker 1: I'm Joe wi Isn't though. You can follow me on
Speaker 1: Twitter at the Stalwart, and I'm Tracy Alloway. I'm on
Speaker 1: Twitter at Tracy Alloway. And you can follow our producer
Speaker 1: Sarah Patterson on Twitter at Sarah pett With two teas.
Speaker 1: Thanks for listening to