I made a lot of inaccurate predictions in the book, which we left in. I guess honesty’s important. But one that was correct, I think, was that I felt like there was this credit heart attack, a real collapse of economic activity, and that after the restoration to normal, of the basic plumbing of credit, you would see a bounce back of activity, you would see an inventory restocking, but you’re still going to hit a wall. More…
My new life is substantially more relaxing than my old life. I moved to Austin. I am enjoying a life of leisure down there. It’s amazing how little I miss New York. I thought I would miss it more than I do. Maybe it’s just that I’m more adaptable than I think. But Austin’s a great town. It’s very laid back. I wonder how much of what I thought was finance driving me crazy was really New York. More…
Look, the interview process is short, relative to how long you’re going to have to live with these people, right? And almost anybody with any amount of self-control can portray themselves as someone completely different through the space of five or six interviews. But, not everybody’s such a sociopath and is willing to do that just for a job. More…
And I always used to think that the reason that financial markets’ memory is so short is not because individuals are short-sighted or they easily forget lessons bought at very high cost, but that the average life of an investor is kind of like the life of a mayfly, I mean, they just turn over really fast. More…
Suddenly, you see Link 1 go. You’re like, “Holy cow. Six months ago I thought that was a 1 percent probability, but now it’s just happened, well, maybe the next link isn’t a 1 percent probability, it’s a much higher probability, and now if I multiply all these probabilities together, there’s like a meaningful probability that we could get blown up!” More…
People talk about corruption, but really effective corruption requires something like organization. Like Argentina. It’s organized, it’s very organized corruption. Africa is certainly corrupt. But it’s more that it was chaotic. The infrastructure is poor, volatility is high. In Africa, anything can happen. More…
What was happening was that the pay scale for finance was just—incredibly out of whack. You had guys who were literally just a couple of years out of college, maybe they’d done a year or two at an investment bank, making several hundred thousand dollars a year doing pretty low-value-added Excel-modeling tasks. More…
I had never heard of Bernie Madoff, OK? But one of the guys here who is very active in the options world, which is what Bernie Madoff was allegedly trading, as soon as the headline came across—it didn’t say what he was arrested for—he said two things. He said, “I knew it, I knew that guy was a fraud.” And the second thing he said was, “This is going to be huge. This is going to be the biggest thing ever.” More…
Ah, yes, but here’s the question. Who paid that Mexican guy to hammer together those houses? Well, the developer. Where did the developer get the money from? The developer got the money from a bank. Where did the bank get the money from? The bank got the money from a depositor. The depositor doesn’t think he spent the money. The depositor still thinks he has a claim on the money, right? More…
n+1: All right, let’s get to it. Is America now a Third World country? HFM: No, we’re a First World country with a weak currency. From time to time, the dollar’s been very weak; from time to time, it’s very strong; and unfortunately what tends to happen is people tend to just extrapolate. But over the very long term, currency processes tend to be fairly stable and mean-reverting. More…
It’s been a really turbulent couple of weeks. Obviously the market has been in some, uh, degree of crisis since the last time we spoke, but what’s new is that it’s really been spreading … The particular market that I trade, I’ve seen prices much more distressed than they are today. But I’ve never seen the financial system as a whole more distressed. More…
