Tech Stock Bubbles In the 17th Century

Tracy Alloway (0:10)

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

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:17)

So Joe, you know we just recorded that podcast with Lee Drogen, where we were talking about tech stocks and earnings, right?

Joe Weisenthal (0:24)

Yeah, I really like that one. And there's another one of one of our podcasts, and they're kind of rare for what we do where we actually talk about markets right now as we're going, as are happening, because we often sort of talk about esoteric stuff that doesn't directly involve the day-to-day. So I like that we got a chance to actually talk about what's happening right now.

Give the listener something useful.

Tracy Alloway (0:47)

I really dispute the notion that we talk about esoteric stuff, but as I say that, I realize that I'm about to start talking about esoteric stuff. Well, that podcast about...

Joe Weisenthal (0:59)

Tracy, Tracy, do you know the epi... Do you know what our podcast is called?

Tracy Alloway (1:03)

Odd Lots? But that's about bond trading.

Joe Weisenthal (1:09)

Yeah, but we all know.

Tracy Alloway (1:12)

That episode about tech stocks got me thinking about, I guess, companies and company earnings throughout history. And I was sort of thinking on a very meta level, almost every company is a tech stock, right? Because winners throughout history are companies that have either invented new technology or used it to the best effect, right?

Joe Weisenthal (1:38)

And I think Lee made that point as well, that really we're not seeing an emergence of tech stocks per se.

What we're seeing is an incredible use of technology across a range of industries that allows essentially capital to have incredible leverage over labor. And what we call tech stocks like your Netflix is and your Facebook are really the companies that are at the most extreme end of being able to get incredible amounts of output without that much that many people working for them.

Tracy Alloway (2:07)

Exactly. So after I started thinking about that, I started thinking about what a tech stock per se would look like, say, 100 or 200 or 300 years ago.

Would it be a company that, I don't know, was inventing new methods of producing railroad spikes or something like that? Would that be considered a technology company? And would investors react to it in a similar way that they would to a Facebook or an Amazon? Now, luckily for us, there's someone out there who thinks a lot about this so that we don't have to, and his name is Jamie Catherwood. A lot of people might know him as Finance History Guy.

Joe Weisenthal (2:53)

Yeah, he's on Twitter, he's on Medium, and he's always producing these amazing articles about incredible episodes from financial history. I saw he tweeted something, I think it was just yesterday, about the IPO of the Guinness Beer Company and how people talked about that and how oversubscribed it was. And that was in the 1800s.

And so looking back at financial history, it sort of confirms, I think, what is one of our general themes that to some extent, nothing ever changes. And so manias about what we call tech stocks today presumably have many echoes in the past as well.

Tracy Alloway (3:32)

Exactly. And so we're going to talk about exactly those echoes. And I should just say that Jamie has also been a multiple listener request for an Odd Lots interview, so I'm glad we're finally making it happen.

Jamie Catherwood, aka Finance History Guy, his real life job is an analyst over at Arthur J. Gallagher & Co. Jamie, it's so good to have you on.

Jamie Catherwood (3:54)

Thank you so much for having me.

Tracy Alloway (3:55)

So I guess just to begin with, I'd be really curious to get some insight into how you became Finance History Guy and what exactly piqued your interest in going back to stories from the 1600s and even earlier to talk about finance and investing.

Jamie Catherwood (4:14)

Yeah, so I've always been a history nut.

I did history as my major at King's College London and I became interested in finance. And after joining Twitter, I saw that a ton of people were putting out content related just to investing in finance in general.

But no one had kind of focused on history itself and just financial history. So I figured I can't compete with the people who have been doing finance for decades or investing and, you know, much smarter than I am. But I can bring the history aspect because that's what I kind of know. So it was just kind of finding my own niche. And I'm lucky that no one else was doing it because if they were, I'm sure it wouldn't have worked out as well for me because there's some really good writers out there on Twitter.