← The Master Investor Podcast with Wilfred Frost
The Master Investor Podcast with Wilfred Frost
Andrew Ross Sorkin: Echoes of 1929 and The Leverage Behind Every Crisis
00:39:07
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- [00:00]
A
Jamie Dimon famously has this great line. His daughter came home, this is actually back in 2008 or nine, and says, Daddy, what's a financial crisis? And he says, something that happens every seven or eight years. Every seven or eight years, people lose their head. People believe this time is different. And invariably there is some form of a correction. Sometimes the correction is deep and painful. Sometimes we call it a crash, sometimes we call it a panic. In 1929, we ultimately called it a depression. The bigger question, and I don't think we know the answer right now, unfortunately, is how much leverage is really in the system. So to me, the match that lights the fire of every crisis is the leverage that is the match. We don't know where the leverage lies because so much of it lives in private credit today. And so that's where things could get hairy. Look, the truth is it has paid to be, at least in the United States, a professional optimist, much more than it's ever been paid to be, to be a professional Cassandra or skeptic. Because over the last hundred years, even with the depression that we had then and even with the crisis 2008, you would have been way better off being in the market, invested, and to some degree even speculating than you would have if you had your money under the mattress.
- [01:16]
B
Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors and business leaders in the world, giving you, our listeners, the edge. Please remember that nothing you hear in the Master Investor Podcast should be considered direct financial advice. More on that in our show notes, if you want to refer to them. My guest today is a dear friend and colleague as the anchor of CNBC's Squawk Box in the US and while that tops the list, in my opinion, of his many accolades, it's far from the only one. He's the founder and editor of Dealbook, the business section in the New York Times. And. And he's the producer of shows like Billions. He's the author of perhaps the most important book on the global financial crisis of 15 years ago called Too Big to Fail. It took you inside the room, the unfolding nature of that financial crisis. And now he's the author of a new book, to 1929 Inside the Greatest Crash in History and How It Shattered a Nation. I am, of course, talking about. About Andrew Ross Sorkin. Andrew, great to see you. And welcome to the Master Investor Podcast.
- [02:26]
A
Thank you for having me. I feel like I just came across the pond. This is so great to see you.
- [02:29]
B
You landed fresh this morning.
- [02:31]
A
Fresh this morning. I don't know how fresh. We'll see. You'll test me.
- [02:34]
B
Well, you're looking very fresh and it is so good to have you with us. Enormous congratulations on the book. It's been out for a couple of weeks. It's flying off the shelves. The reviews have been terrific. I knew I was going to like it. It was right up my street. I loved Too Big to Fail, but I really did, in fact, adore it because I learned a lot. It wasn't actually a crash I knew huge amounts about, but it was proper edge of your seat kind of reading. It was like a novel in that regard. And it was very, very quick and easy to write. Right. It took you a couple of. Couple of passes over a few weeks.
- [03:09]
A
Just a couple. It sounds like it took you just a couple of passes to read it, but it took me about eight years to write it.
- [03:15]
B
This is the thing.
- [03:15]
A
Eight years, yeah. About. I think I started in really the end of 16, early 17 now. There were given all the other things that I do. There were definite pauses along the way, and the pandemic did not help, but it definitely took a toll.
- [03:31]
B
But we've spoken about this before. The reason it took you so long, you're always meticulous in your preparation, but it was to try and get to that, take you inside the room, edge of your seat type style. But you did with Too Big to Fail.
- [03:45]
A
The hardest part about this project was everybody is dead, so there's nobody to call. And so to get to the sort of granular kind of detail so I can put the reader in the room required, really going through notes and letters and diaries and memos and all sorts of transcripts and other kinds of materials. And the truth is that it didn't really exist in one or two or three or even four archives that you could just go mine. The way I think oftentimes an historian might, you know, find an archive and then sort of really just excavated. In this case, it required going to several dozen different libraries and museums and reaching out to family members of some of the characters and getting unpublished memoirs and ultimately actually getting the New York Fed to release to me their board minutes from that period. They'd never been released. And we. We had a bit of a brouhaha over that for some time, including the lawyers trying to redact parts of the minutes 96 years later.
- [04:46]
B
Wow. God, I didn't know that. But I mean, either way, the detail is there and you've made it sing off the page. In a fantastic way. So many different aspects to get to what the area I want to start with is the New York Stock Exchange. And I used to host my show there. You host yours from the nasdaq, obviously. I saw you rang the bell New York Stock Exchange recently. I mean, I've always loved the energy of the place. Presenting a show there was a real privilege. But it doesn't touch what the energy would have been like back in the day where literally all trading took place in that one location.
- [05:23]
A
Oh, goodness. I mean, by the way, my son who was with me at the New York Stock Exchange when I rang the bell, asked me what is it exactly that they still do here? Present CLOSING BELL and it was interesting because I was trying to explain to him how the exchange had grown up and what it used to be like. And the idea that every single trade physically happened on the floor. There was a physical human that was called the specialist that ran a stock and that then traders would literally be taking phone calls from brokerages all around the country, taking those and then making orders effectively to those specialists to buy and sell those stocks. And so when you saw those images of people screaming, they were screaming to buy and sell. And that was it. That was real. In fact, the other piece of all this, before even that, was something called the curb market, which I learned is called the curb market because it happens on the curb, physically on the street. And there was a market that existed as well and outside of the exchange.
- [06:22]
B
Amazing stuff. I didn't know that. And the other thing I learned is that the New York Stock Exchange used to be open on a Saturday for half a day. That seems like madness to me. We need our weekends used to be.
- [06:32]
A
Open on a Saturday, every morning, I believe, till noon. It was open back. This is in the 1920s. And interestingly, a guy named John Rascob, who really was sort of the Elon Musk of his time, sort of a philosopher, king, entrepreneur. He had made a small fortune in General Motors and did all sorts of extraordinary things. Ultimately builds the Empire State Building. But he had this idea in actually November of 1929 that America should move to a five day workweek. And it wasn't because he thought that people should have more time just for fun. It was because he thought it would actually increase the consumer economy. If you had two days over the weekend, people would buy more cars because they'd been able to go places on the weekends. They'd buy gardening equipment, they'd buy different kinds of outfits, all sorts of things. So a completely different world But a lot of the world that we all live in today, both here in London and in New York, I actually think was born in the 1920s.
- [07:31]
B
It's really interesting that that's the rationale for getting rid of Saturday trade is almost the opposite of what you would have expected. I want to spend a little bit of time before the crash happened to sort of set the scene, because it was crazy to me reading your book. The extent to which people back in the 1920s, before the technology that we have today that allows you to do things at the touch of a button, were A, trading stocks and B, doing so with leverage. I mean, how was it possible that people could buy and sell a share in their lunch break, which they were doing?
- [08:07]
A
Well, the first thing to know, which I didn't appreciate until I started working on the book, is prior to 1919, at least in America. And I think in other parts of the world, too, taking on leverage or getting a loan was considered a moral sin. I mean, you just did not do such a thing. That was not what a proper person was doing. And it was only actually that because of General Motors, who was trying to sell more cars, that such loans became part of the norm. Meaning. And actually it was this guy, John Rascob, who said, if we loan people money, then they'll buy more cars. And that was true. And then you saw companies like Sears, Roebuck and other companies do the same. And then Wall street said, okay, we see what's happening. We can do this too. And as a result, brokerages emerge all over the city, in New York and actually here in London and all over.
- [08:55]
B
The world, but in places like hotel lobbies.
- [08:57]
A
Hotel lobbies. So in the Plaza Hotel, there's a famous bar called the Oak Room, which was actually replaced in 1929 by E.F. hutton, which was one of the big brokerage houses. And in fact, E.F. hutton, interestingly, the man lived in Mar a Lago. That was his home back in 1929. And so brokerages were the thing. You would walk in, you could put down a dollar and they would loan you $10. So it was often a 10 to 1 bet on a stock. And now the truth is, you did have to hand over your home or some form of collateral. But back then, because it was such a new phenomenon, most Americans didn't really understand what they were potentially giving up and what the risks they were taking.
- [09:37]
B
And this is just what I wanted to dwell on. Because by the late 1920s, today we know that Jane street and Bill Ackman and other hedge Funds Millennium and Citadel are using huge amounts of leverage, and that's fine. But I don't think most Americans, certainly not Brits, are trading their 401ks with leverage. It's more like you buy and hold a stock, and if it goes up 10% or down 10%, those are your gains or losses. Whereas by late 1920s, the average American was heavily levered into the stock market, because that is an. We'll come to the comparisons to today, but I think in that sense, there's less risk today than there was then.
- [10:17]
A
I think in the stock market itself today, there's a lot less risk because, you know, maybe you're buying, you know, one of these levered ETFs, which. But it's. It's two to one, three to one, something like that. Probably, by the way, in crypto, it may be different. So you. There's some option products where, you know, for Bitcoin, you can buy to 20, you know, 20 times leverage, 50 times leverage. But for the most part, what was happening in the 1920s is very different than what's happening now in the stock market. But it was super widespread. I mean, everybody was using leverage. And that's really why things tumbled the way they did. Because when the market did begin to falter, it wasn't just that the equity prices were going down 20, 30, 40%. It was that you were on the hook not just for it, but for 10 times it.
- [11:03]
B
And it then shows, you described this, that the sort of hysteria when people were trying to get out, it was on cruise ships crossing the Atlantic. They were trampling over each other to try and get their sell orders into the brokerage, which we'll come to in a moment.
- [11:17]
A
The craziest part about it, sometimes we all see these images. You've seen the pictures of people down at the New York Stock Exchange, not on the floor, I'm talking about outside the building. You see these thousands of people that are just outside. I didn't know this. I think for years I'd look at these pictures and I didn't really understand what was happening. The reason they were all there was was because they were trying to figure out what was happening to their money. I mean, physically, like they literally couldn't find out what the prices were, what was happening. And part of it was a technology issue, in fact, because the stock prices that were on the boards, even inside the exchange, were often four or five hours late. So you could be looking at a price that was what the price was in the morning at 3 o' clock in the afternoon.
- [12:01]
B
And.
- [12:02]
A
And even worse, if you were on a boat or even if you were at a brokerage house trying to find out the ticker price, even uptown on Fifth Avenue, you were potentially even farther behind. And that's why they had physically gone down there. Cause they were so scared.
- [12:16]
B
Yeah, amazing. Amazing that people were even trying to trade on a boat. You just think that wouldn't have been the case back then. Maybe today it would be with your phone. Just before we get to the crash itself, one other sort of snapshot that jumped out to me of the time back then, you wrote this about President Hoover and you said he was the first president to recognize the awesome power of the mass market. And you're referring to radio, because back then in political campaigns or others, people would get a lot of people showing up in a town hall or a bigger venue. And he learned that actually if he articulated that speech well for the microphone, it could go much further afield. I just wonder, when you were kind of researching that, did you snapshot and think, do you know what? President Trump's not dissimilar, the first person to really harness the power of social media.
- [13:04]
A
Oh, I think the parallels between then and now are so similar. And he clearly understood social media, he understands tv. I mean, he really knows how to sell in a fascinating way. What may be different, by the way, about Hoover is that Hoover understood how to use the radio and understood how to use his voice to get himself elected. He actually struggled once the crash happened to really be able to capture the imagination of the public. And for so long, frankly, sort of lost the public because he didn't understand how to recapture them and thought he could convince them by sort of jawboning and telling them that the crash was actually not the crash and it was almost a psychological problem and that what was happening in the markets and was happening in the real economy were different, things were separate. And in fact, most Americans were saying, Mr. President, I don't think you understand what's really going on here.
- [13:59]
B
President Trump's comments, of course, towards the market work at the moment. We're at all time highs, but we'll see next kind of area. I'm really interested in kind of comparing the difference then and now as we lead into the crash. But central banks and the government as well, but central banks in particular kind of looked at Wall street with quite a clear negativity and criticism. And I think after the financial crisis, too big to fail, which captures so well, clearly there was an anti Wall street agenda. Same with banks Here, but I think it's kind of passed. And I don't think it was as pronounced as what you describe in this, which is that central banks really kind of criticized Wall street quite aggressively and that led to them deciding not to step in to help when things really started to turn south.
- [14:53]
A
Well, so there's a fascinating sort of thing to think about with the Federal Reserve in the US and then we can talk about the central bank actually here in Europe and in the UK in particular. But one of the things that was happening was the Federal reserve in the US was so new, born in 1913. And so they, if you read the diaries of some of the board members, they were so concerned about the politics of the moment. Talk about Fed independence. They were so concerned about, you know, getting hauled up in front of Congress if in fact they had raised interest rates to try to snuff out all the speculation. They were worried about the speculation. They did not like the speculation. They wanted to end it if they could, but they were so concerned that if they raised interest rates too much that they could topple the entire economy and therefore they would be blamed. And then similarly, once the crash happened, there was a little bit of a Capitalism is capitalism. If you win, you win. If you lose, you lose. And we'll just let people lose. That was also the view of Andrew Mellon, who happened to be the Treasury Secretary to President Hoover at the time. So there really was a lot of people within the Fed effectively sitting on their hands during this period and ultimately didn't do. What I think we all have now learned is the lesson, which is when you have a crisis, assuming you can't catch it on the front end, the answer on the back end is to flood the system with money. Oftentimes it's politically unpalatable because you're bailing out banks and people that you think of the arsonists and also flooding the banking system with money. Back then, by the way, there was a gold standard which also made that very difficult to do. And in fact there was sort of a political view about not getting off the gold standard. And that was probably also a mistake.
- [16:36]
B
Yeah. And in that absolute key moment, 24th of October 1929, it was a bloodbath day of selling. Thursday you recapture the moment where Thomas Lamont was running J.P. morgan at the time. He gathered a group of senior bankers who, because the central bank wasn't acting together, commit to buy $120 billion worth of the 37 biggest, heaviest hit stocks. Obviously it didn't work. My question for you is could the central bank have stopped the crisis then? I mean, it's a counterfactual we can't really explore. But do you think if they had, they would have had enough firepower to act in a way that 120 billion from banks?
- [17:19]
A
I don't know if they could have prevented the crash in October and November of 29. I think part of it would have been infusing the banking system with money, which probably would have helped the market from faltering further. I think what more likely the Fed could have done is in 1930, in 1931, in 1932, as the dominoes continued to fall, that perhaps they could have stepped in and prevented what ultimately turned out to be 25% unemployment by 1932, 9,000 banks going out of business by 1933. So I think if you sort of in the hole in October itself, they probably could have stemmed the tide somewhat, but they probably could not have prevented a massive correction. Between October 24, you're talking about, and effectively November 13, the market dropped, drop, I believe, by about 48% all in at that point. Interestingly, the stock market, and this is something I think will surprise people, including myself. As I was working on it, stock market was only down 17% at the end of 1929. But the truth is most people, because they had been so leveraged, lost everything during the fall and couldn't actually reinvest money to actually capture any of the upside because at least at this point, they've lost their home, they're mortgaging their house, they've got nothing.
- [18:42]
B
So that October period, October, November 29, obviously the peak we're going to come to, the recession, the depression that followed in the years afterwards. But October 28th, 29th, Black Monday, Black Tuesday, crazy, crazy days of selling. And again, the color you bring in the book is fascinating for people to refer to. I want to dwell a little bit on London's position then, I think very, very powerful financial center. You talk of a moment where the bank of England governor, Montague Norman, which is a great name, isn't it? A great name, played a role in bursting the bubble a little bit when he hiked bank of England rates and it pulled capital. And the bank of England was significant enough that it played a role in that. But the bit that jumps out to me from the British perspective is Winston Churchill.
- [19:30]
A
Yes.
- [19:30]
B
Who was on a tour of the US at the time.
- [19:33]
A
My goodness. This, to me was one of the great moments as an author of writing about this period.
- [19:37]
B
Okay, I'm gonna set it up for you because I completely agree. He obviously, just to set the scene for everyone, obviously wasn't yet, hadn't been Prime Minister yet, but he'd been Minister of War, he'd been Home Secretary, been Chancellor, he was traveling the US for a tour of the US and by.
- [19:52]
A
The way, a tour of the US cause he had no money and he was basically on a lecture series trying to make some of the money back that he didn't have because he thought that he lost all his money while he was a politician and then catches the speculative bug of buying stocks.
- [20:08]
B
So this is what I want you to capture. All of this is Churchill, fantastically. He gets drawn in as a bit of a sort of gambler type, gung ho character, loses a lot of money, still is touring and having dinners and drinking a lot with the most powerful.
- [20:24]
A
People and they love them.
- [20:25]
B
And although he loses a lot of money in this process, he falls for American capitalism in the process. Brilliant.
- [20:33]
A
So the most interesting thing about this is two things. One is he happens to actually be on the floor of the New York Stock Exchange as literally the crash is taking place. And then there's this spectacular dinner that's held for him where all of the major characters in the book happen to come together as an author, a storyteller. It's just sort of a magical moment. But later on, as he's leaving the us, having watched somebody he thinks jump out of a window, by the way, after the crash, which he watches from his own room in the Plaza Hotel, he writes about his experience in the US and says that he ultimately believes that the US form of capitalism, this idea around speculation, this idea of resilience is so strong and it's actually something he wishes that the UK had.
- [21:23]
B
I've got the quotes. Let me read these because these jumped out to me that you found in your research. In a letter that he wrote whilst he was there in the peak of the craziness, despite losing lots of money, he said he was impressed by America's unshakable faith in a golden future. And he said Englishmen, quote, would do well to acquaint themselves with the inherent probity and strength of the American speculative machine. It's not built to prevent crises, but to survive them. And he just lost a fortune.
- [21:50]
A
He just lost a fortune.
- [21:51]
B
And that was right. I mean, clearly the following years were terrible for America, but it always bounces back.
- [21:58]
A
Look, the truth is, and it's interesting because I've been talking a lot about this book over the past couple weeks and People inherently say, are we about to have a crash? And I say it very well may be that we will. But it has paid to be, at least in the United States, a professional optimist, much more than it's ever been paid to be a professional Cassandra or skeptic. Because over the last hundred years, even with the depression that we had then and even with the crisis 2008, you would have been way better off being in the market, invested, and to some degree, even speculating than you would have if you had your money under the mattress.
- [22:35]
B
And again, a reminder that nothing you hear in this podcast should be considered financial advice. And you should listen to the this part that's coming up, because I think we'll give, or Andrew might give, the other point of view. So this then brings me, Andrew, to what I think is the quote of the book, and this is what you wrote. Long, uninterrupted booms like the one in the 1920s produce a collective delusion. Optimism becomes a drug or a religion or some combination of both. Propelled along by a culture of hot tips, once of a kind deals, killer sales pitches, and irresistible slogans. People lose their ability to calculate risk and distinguish between good ideas and a bad one. You say the 1920s in that quote. Could you be saying the 2000s?
- [23:20]
A
Sure. I mean, I think this is human nature. I think every 10 years, 20 years, whatever. Look, Jamie Dimon famously has this great line where he. It's not really a line. His. His daughter came home, this is actually back in 2008 or nine, and says, Daddy, what's a financial crisis? And he says something that happens every seven or eight years. Well, so yes, every seven or eight years, people lose their head. People believe this time is different. And invariably there is some form of a correction. Sometimes the correction is deep and painful. Sometimes we call it a crash, sometimes we call it a panic. In 1929, we ultimately called it depression. That was a phrase, by the way, interestingly termed and defined by President Hoover, who actually stopped calling it a panic because he thought the word depression was better.
- [24:10]
B
Comes back to your earlier point. He didn't always connect that well. So let's have a quick snapshot on today in that sense, because I've been bearish for the last couple years. Too early, obviously. Now I feel like everyone's talking about this being a bubble, which almost certainly suggests it's got further to go. At least if we're all saying, oh.
- [24:40]
A
Gosh, you gotta be careful, it likely does. And that's the complicated part. You know, Charles Merrill, who had founded Merrill lynch, famously told a lot of his clients, in 1928, get out of the market. And Charles Merrill would have been sort of right, but probably a lot wrong in that. Between the beginning of 1928 and September of 1929, the stock market went up 90%. And so, you know, timing being the Cassandra and sort of calling it is one thing, timing it is really another. And when people are saying, are we in a bubble? Are we in a bubble? Oftentimes it can extend out great periods. I remember in 2004, there was big cover stories that I was part of about real estate bubbles in the United States. And I remember a whole bunch of friends of mine who were thinking about buying a home, and they said, oh, we're going to wait. We'll wait till 2005. Yeah, yeah, 2005, the market's then up 15%. You know what? We're going to wait. 2006, now the market's up 30%. At some point, the problem is you say to yourself, oh, my goodness, the train has left the station. If I don't get on the train, I. I'll never get in. But it's usually right then when the problem hits.
- [25:55]
B
Well, in terms of that impossibility of timing the market, I refer people back to our episode two weeks ago with Howard Marks, who talks about that with great expertise in terms of the comparisons today. And then I think, understandably, a lot of people think if today's a bubble, it's more similar to 1999 because it's sort of tech driven today on AI then on the Internet. And that many people compared 2008 much more to potentially being like 1929, because it's more centered on the financial system. And obviously 1929 led to the Great Depression, whereas in 2008, they kind of at least poured enough liquidity into the system that there was a slow recovery to follow. The area that I want to explore with you is, is whether actually today could be like 1929 in the way that if we do have a bubble bursting, could it trigger a Great Depression, an extended recession, because of the amount of debt? The debt we said earlier is not so much in retail traders, but it's in governments. And that was one of the key problems, I think I'm right in saying, from your book, after the bubble burst in 1929, for why there was a Great Depression, because people were so indebted, right? And their asset value fell.
- [27:11]
A
So I too, am in the sort of 1999 camp, it looks a lot more like that, in terms of the tech bubble and the like, and over spending, almost indiscriminate spending to some degree. And you'd think that there'd be a correction of sorts with that. The bigger question, and I don't think we know the answer right now, unfortunately, is how much leverage is really in the system. So to me, the thing that the match that lights the fire of every crisis is the leverage. That is the match. You can do all the crazy things you want. As long as there's not enough leverage, it's hard to have a demonstrable panic. What we don't know is in this sort of AI buildout against this again, by the way, we're sort of living through this euphoric moment, very similar to the late 20s in terms of all the new technologies that are happening then, we don't know where the leverage lies because so much of it lives in private credit today. So it used to be that we knew within the banking system how much they were loaning out. Now we don't really know. We also don't really know how connected the private credit markets are to the banking system. So some of these private credit funds are actually leveraged by the banks, meaning they owe money back to the banks, and some of them have liquidity lines to the banks as well. So there are these connections. And then the last piece which makes it perhaps the most concerning is Ben Bernanke did his thesis in Princeton on the Great Depression and learned that when you have a crisis, what do you do? You flood the system with money. And that's what he did after 2008. So if we were to do such a thing today, it might be more complicated because we have such enormous government debt that at some point you would think that the bond market and investor class would raise their hand and say, excuse me, we like you folks in the United States over here, or we like you focus in Europe over here. But we're only going to lend you money at a much higher rate because we need you to pay us for the risk. And we haven't really figured out all. All of that math yet. And so that's where things could get hairy.
- [29:10]
B
The one positive, or perhaps less of a negative Today compared to 1929, you briefly touched on it earlier, is that we're not on the gold standard.
- [29:21]
A
There's a lot of things we're not on the gold standard, by the way, in the U.S. there's an SEC, by the way, over here. There are all sorts of rules around insider trading and the like. By the way there's all sorts of shenanigans going on in the 1929. In 1929 that would be considered illegal today that were not illegal then. There are bank capital requirements. There were no bank cap, there were no bank regulations back in 1929. So I like to think that we've learned some lessons. Again, not to say we can't have a crash or a panic or something of the sort, but the idea that we would create a sort of, you know, 15, 20 year depression, I don't want to say it's off the table, but it would have to manifest itself in a very different way.
- [30:05]
B
Really, really, really interesting, that perspective. I want to dwell on a couple of these characters in the book. We mentioned Herbert Hoover, you mentioned Rackskin, Andrew Mellon, you can touch on who was the treasury secretary. We touched a little bit on Thomas Lamont, who's running J.P. morgan. What about Charles Mitchell? Because he's a massive character in the book. I've heard you in a different press interview refer to him as sort of the Jamie Dimon of his day. He ran National Citibank, which you could sort of argue, though there's been a lot of changes, has some continuation into Citi today. But there's a big difference to Jamie Dimon, is there? Not in that. I don't think you'd ever hear Charles Mitchell saying, I have a fortress balance sheet that I want to maintain.
- [30:49]
A
No, no. I think when I've referred to him in the context of being like he was as famous as Jamie Dimon. He was the banker who would be on the COVID of magazines in the 1920s. He was that guy.
- [31:01]
B
Hero to villain as well.
- [31:03]
A
Hero to villain. I actually think he's more akin to, to a Michael Milken, oddly enough, because Michael Milken transformed also using debt, the credit markets through junk bonds and the like. He was as famous as ever and ultimately was considered a villain. So in many ways I would put him more in the Milken category. With the level of fame of a Jamie Dimon.
- [31:27]
B
We shouldn't let Jamie hear us describing him as a villain in that regard. But I guess the point I'm getting to on this is there are some amazing characters in this which I didn't know about before reading the book.
- [31:38]
A
I became enamored with Charlie Mitchell because he really, he really transformed the whole industry. The whole idea that people were buying stock on credit was really almost his invention. I mean, he really popularized that around the whole country. And he was about to. He was the largest bank in the US and was trying to become the largest bank in the world to overtake the London banks.
- [32:00]
B
In fact, do you know what one other just dwelling on Jamie Dimon for a moment because I am sure I have heard him say this, whether it's in an interview with you or me or elsewhere on CNBC over the years. And I'm never sure where it came from. But you write about J.P. morgan, the original, who died in 1913. So he's not a central character of your book. But you refer back to him a bit and that he apparently rated character above all else when considering doing a deal. That's the sort of rhetoric that's clearly influenced Dimon today and some other business leaders as well.
- [32:35]
A
Oh, I think that there's a lot of business leaders that talk about character. I think that Jamie's one of the few that actually lives it. I do have of all of the bank leaders and maybe even among business leaders more broadly, I have such high regard for him because I do think that he thinks about that and cares about that more than anything. And he's not like Charlie Mitchell. He in that he really approaches the entire world around, around that idea of character. And it's very few and far between where he has totally made a major misstep on gone wrong. And when he has, he's usually the first to fess up about it and say, you know, I want everyone to know what happened here.
- [33:17]
B
So I want to bring it back a bit to you, Andrew, as we kind of start to conclude, he's one of the characters extraordinary list of characters you've been lucky enough to interview on cnbc and your DealBook conference, which I know is coming up again soon. Who has had the biggest impact on you as a leader that you've interviewed and who has still proven elusive.
- [33:40]
A
It's proven elusive.
- [33:42]
B
Who haven't you got yet that you want to get?
- [33:44]
A
Well, one person, I've always I know her and I've tried to find the right moment for it. I've always admired Oprah Winfrey enormously, in part because she does. I can't even say that she does what we do because I think she does it in this other almost magical way. And she's become this unbelievable entrepreneur. Right. I've always wanted to interview her. I've been blessed now to know her and to over the years and we've done some things over the time, but I have yet to to corral her, to sit down. She's the Queen. She's the Queen.
- [34:23]
B
She's the queen.
- [34:24]
A
She's the ultimate Queen. Yeah.
- [34:26]
B
And I. Well, look, please book that interview. I'd love to watch it.
- [34:30]
A
I'm still working on it.
- [34:31]
B
I know. Well, if anyone can get it over the line, I believe you can. The book, too big to fail, I think it's fair to say, transformed your career. It was going to incredibly well.
- [34:47]
A
Yep.
- [34:48]
B
But kicked it into a new gear. Is that fair?
- [34:52]
A
It's totally fair. And to be honest with you, it's one of the reasons I think I was actually so scared to write this book over all this time.
- [34:59]
B
Because it's going to be compared to that book.
- [35:01]
A
Because we compared to compare. I mean, I think I was writing this book for two reasons. One, I. I think I was not writing this book for a while because I was scared. And I think I was writing this book in a certain way to almost prove to myself that I could. Because I think I remember when that book came out, you know, knock on wood, it almost. It felt like lightning in a bottle. And you never know, you say to yourself, did I do that? Maybe it was luck. Maybe the timing was it. So I think for me, writing this book was almost as much of an emotional challenge as it was a writing challenge.
- [35:33]
B
Well, that's fascinating to hear you say. Cause you've always just been, you know, a titan of our. Of our field. And I'm amazed to hear you express that nervousness.
- [35:46]
A
Oh, goodness. Of course. I mean, of course, of course. How could you not?
- [35:50]
B
Well, you obviously already know this. Cause I know it's flown off the shelves, but well worth having done. Cause there was no need to be nervous. What about the legacy of the book more widely? I mean, it's not trying to be a warning to people that this could be around the corner.
- [36:06]
A
No, no, no. In fact, when I began the book, I had no idea there'd be these parallels. It sort of emerged as. As perfect almost as I was writing. It's not so much a warning as it is, I think, a lesson just about history and hopefully an attempt to prevent history from happening again. Not to say that it'll happen tomorrow, but to sort of offer people an opportunity to see what's happened in the past, whether it's in 1929 or 2008, and maybe have a little bit more, all of us, we need, including myself, a little more humility and maybe a little less certainty about what's going to happen next.
- [36:44]
B
Well, on top of that, it's a thrilling read. I have no doubt people will be banging down the door for the TV and film rights as they have done with your other too big to fail with billions and the like. So congrats on the book. To wrap things up, Andrew, I wanted to ask, you know, we often ask as we wrap up investors, what's the greatest piece of investing advice? I wonder if we can ask you, as an author, as a journalist, as a TV presenter, what's your overriding piece of career advice for our listeners, if you don't mind sharing it.
- [37:15]
A
So many years ago, when I actually just joined Squawkbox, I was told by somebody who I probably shouldn't mention my name, and he could see the impatience in me. I had an enormous amount. I still have. I'm a very impatient person. And he said, andrew, do you know the three T's? I said, what if? No, I don't know what the three T's are. And he said, things take time. Remember the three T's? Things take time. And I try in my own way, as impatient as I am, to remember that things do take time. You can try to accelerate them a little bit. But patience, there's a value to patience, too.
- [38:01]
B
Well, eight years is a patient period of time to write a book over. It was well worth it. 1929 is out everywhere now. I highly recommend it. And Andrew, thank you so much for your time on the Master Investor Podcast today.
- [38:14]
A
Thank you. This is such a privilege. It's great to be with you.
- [38:16]
B
That was Andrew Ross Sorkin on the Master Investor Podcast. A reminder once again, nothing you've heard in the podcast should be considered direct financial advice. More on that in our show notes if you'd like to refer to them. Next week on the podcast, we'll be talking to Morgan Stanley's top strategist, Mike Wilson. Very much looking forward to that conversation. The Master Investor Podcast is produced by Paradine Productions and Master Investor Podcast Ltd. In association with Birdline Media. If you've enjoyed the podcast, please do subscribe on YouTube or click follow on your podcast platform, and then you'll be automatically notified each time a new episode drops. For now, though, our thanks once again to Andrew Rossorkin.
- [39:00]
A
Thank you.