How One Trader Won Big While Everyone Else Panicked on Black Monday

Joe Weisenthal (0:09)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:14)

And I'm Tracy Alloway.

Joe Weisenthal (0:16)

So Tracy, we have a lot of anniversaries coming up in terms of major financial news and events in financial history.

Tracy Alloway (0:25)

Oh yeah, well, we have, let's see, the 10-year anniversary of the 2008 financial crisis, that's next year.

But even more importantly, I think we have the 30th anniversary of the movie Wall Street coming up in December. That's the one I'm the most excited about.

Joe Weisenthal (0:42)

That's the real, that's the big one.

Tracy Alloway (0:45)

Yeah, I know.

Joe Weisenthal (0:46)

I think we may have talked about it before, but I'm kind of dreading the next two years and hearing everyone, including many of our colleagues, just endlessly recant war stories about, I was there the day this bank went bankrupt and here's the thing I wrote or whatever. It's like, we're gonna have two straight years of that.

Tracy Alloway (1:06)

Joe, I'm gonna love it and I'm gonna force you to sit through an entire Odd Lots episode where I just talk about September 2008

Joe Weisenthal (1:14)

All the great coverage you did during that time.

Tracy Alloway (1:17)

Yeah, exactly.

Joe Weisenthal (1:18)

But besides the movie Wall Street and besides the financial crisis, we are at another really important 30 year anniversary. And of course that is the 30 year anniversary of the Black Monday crash in 1987

Tracy Alloway (1:36)

Ooh, has it been 30 years already?

Joe Weisenthal (1:39)

Can you believe that?

Tracy Alloway (1:40)

We are old.

Joe Weisenthal (1:41)

We are old.

We think in our history is like, okay, there was this crash, the stock market fell a lot in a very short period of time, and then the stock market recovered and then we kind of move on. But I think you would agree that there's a lot of fascinating stuff to unpack from this experience in terms of what it tells us about how markets work and how traders work and all kinds of stuff like that.

Tracy Alloway (2:05)

Oh yeah, people have been drawing lots of parallels to Black Monday recently, and I'm sure we can get into that later. But more importantly, I think there's a tendency as we get further and further away from these events to kind of forget about what a big deal they actually were at the time. And Black Monday in particular was huge for markets and led to some regulatory reform, but when you contrast it with what happened in 2008, it kind of seems like there was a fairly quick rebound.

But the actual day, the actual event was just huge and full of drama. Not that I was there, but.

Joe Weisenthal (2:45)

No, but from what we understand, I don't recall it either. And not too much of a sad, I was seven years old at the time, but I don't remember it in the news. I mean, I was kind of aware of some stuff. Do you remember it?

Tracy Alloway (2:57)

No, I was even younger. I thought you were gonna tell me that you were trading futures at the time.

Joe Weisenthal (3:01)

No.

Tracy Alloway (3:02)

Euro dollars or something.

Joe Weisenthal (3:04)

I was not. Anyway, I'm very excited about today's episode because we are going to be talking about someone who, unlike us, lived through Black Monday. He was an active trader. He still is active, but he was active during the crash.

And he's known for having made crucial trades the day after that performed very well. So I don't think, I think we're going to get a very rare perspective on this event today.

Tracy Alloway (3:32)

This sounds amazing. I want to hear all the anecdotes.

Joe Weisenthal (3:36)

Me too. So without further ado, I want to bring in Blair Hull. He was the founder of Hull Trading Company in 1985, so just a couple of years before Black Monday. He's still active in proprietary trading. He has a firm called Ketchum Trading. He even has an ETF that's based on his market timing. And he's featured in Black Monday Revisited, an oral history of the crash. It's put together by Richard Dewey. It's running in this month's issue of Bloomberg Markets Magazine. It's really awesome. Amazing oral history. The piece also features Peter Borish, Michael Lewis, Jim Chaynos, Nassim Taleb. Gotta check it out.

So pretty much the perfect person to talk to about this historical episode.

Blair Hull, thank you very much for joining the Odd Lots podcast.

Blair Hull (4:39)

Sure, it's good to be with you, Joe.