Episode 6: Meet The Man Who Made Millions Trading Mules

Joe Weisenthal (0:05)

Hello, it's Monday, the 14th of December. Welcome to another edition of the Odd Lots Podcast. I'm Joe Weisenthal, managing editor of Bloomberg Markets.

Tracy Alloway (0:14)

And I'm Tracy Alloway, executive editor of Bloomberg Markets.

Joe Weisenthal (0:17)

So today, I'm really excited, because we're going to talk a lot about the trading business. And Tracy, you and I, we sit in front of the Bloomberg Terminals all day, basically staring at these streams of data and headlines and economic information and charts.

Tracy Alloway (0:34)

Lots of numbers, lots of electronic things.

Joe Weisenthal (0:37)

And I think what people, including myself, think of what a trader does, they imagine a similar environment, wouldn't you say?

Tracy Alloway (0:44)

Yeah, I think they think of that or the New York Stock Exchange floor, even though there's no one actually on it anymore.

Joe Weisenthal (0:51)

But basically, this idea is that a trader looks at a lot of numbers and spots things that they see as undervalued and things that's overvalued. Maybe they use a spreadsheet, maybe they use algorithms, but it's just this very digital type of thing.

Tracy Alloway (1:06)

Yeah, a very abstract set of numbers and an abstract kind of activity. Yeah.

Joe Weisenthal (1:11)

But obviously, trading hasn't always been like that. And today, we're going to be talking about a very different style of trading.

Here is an audio hint of what we're going to be talking about.

Ray Lum (1:31)

Sold, Oscar, Google, Pippin, $100 bill.

Tracy Alloway (1:33)

So that kind of sounds like auctioneering to me.

Joe Weisenthal (1:37)

Pretty much. That's almost exactly right. So we're going to be talking about mule trading, and specifically a guy who made his fortune trading mules in the early 1900s in Mississippi.

Tracy Alloway (1:51)

Joe, you have to tell me, was mule trading a big thing back then?

Joe Weisenthal (1:54)

So I wouldn't have guessed this. I mean, it makes sense, I guess, because mules were important for farms and other activity.

Tracy Alloway (2:02)

No one had cars, right? Or a few people had cars.

Joe Weisenthal (2:04)

So yes, mules were a big thing. A few years ago, I was visiting my wife's grandmother down in northern Mississippi, and I walked into a bookstore in Oxford, Mississippi, and I saw this book on the shelf called Mule Trader.

And I didn't even need to open it. I'm a very big believer in judging a book by the title or the cover. And it was called Mule Trader, so I had to buy it.

Tracy Alloway (2:25)

No idea you were so attracted to mules.

Joe Weisenthal (2:28)

Well, I'm attracted to mule trading.

And it's a fantastic book by this guy, William Ferris. He's a professor currently at the University of North Carolina. And it's about this guy, Ray Lum. The full title is Mule Trader, Ray Lum's Tales of Horses, Mules and Men. And the idea is there's this guy who grew up in northern Mississippi. And at the age of 13, he did his first mule trade.

And then he bought more mules and he had a really good sense for what mules were valued. And he started trading all over the South, in the Southwest, in Texas, in Tennessee and everywhere. And he became a huge deal, eventually more than in just mules, but in cattle, horses, livestock in general.

Tracy Alloway (3:15)

Was he like the citadel of mule trading?

Joe Weisenthal (3:17)

I think so. I think one of the things is that there's a lot of interesting parallels and things that we can learn about what he did and trading today. For example, he engaged in interstate arbitrage, buying mules in one state, selling them elsewhere.

He also engaged in warehousing. So he had these huge stables that he bought. And then when other farmers needed a place to store their mules, he made a lot of money keeping the mules for them.

Tracy Alloway (3:44)

Well, this sounds awesome. I'm really excited.

Yeah.

Joe Weisenthal (3:47)

And one other thing, I mean, something we've been watching in the markets a lot lately, especially you, is sort of this illiquidity in certain areas of the market.

Tracy Alloway (3:56)

Are mules illiquid?

Joe Weisenthal (3:58)

Very much so. And so to the point where there was very poor price discovery. Again, they didn't have mule Bloombergs back then.

So you couldn't just look up a price. You could sometimes buy a mule and sell it for twice as much that very same day.

Tracy Alloway (4:12)

All right. I'm very intrigued.

Joe Weisenthal (4:15)

On that point, I want to bring in the author of the book, William R. Ferris, a history professor at the University of North Carolina. Bill, thank you so much for joining us.