10 more things I learned from Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor
I had taken a lot of notes as I was listening to this book. I dumped them into chatGPT and asked it to summarize them. GhatGPT did a good job. Here is the unedited summary with a few [notes].
- In this manipulated market, insiders profited with returns of up to 20% annually, while the average citizen only made around 4%. [Note: for Japan]
1. 1920s Stock Speculation
In the 1920s, it became popular for women in the U.S. to speculate in the stock market, with media outlets like Ladies' Home Journal covering the trend. Famous figures like Groucho Marx were also known for their large stock market speculations. [note: frequently on margin]
2. Digital Evolution in Finance
Beginning in the 1960s, computerization started impacting finance. The departure of the U.S. from the gold standard and the digitization of money transformed finance from a physical commodity like gold to a conceptual entity.
3. Future Contracts Evolution
Originally, futures contracts were settled by delivery of goods, but by the 1980s, currency was used, converting them from producer insurance to financial speculation tools.
4. Japanese Economy & Speculation
In the late 1980s, Japan shifted from a traditionally collectivist approach against speculation to an economy prone to it, modeling American financing methods. This led to financial bubbles driven by land prices and stock market practices.
5. Banking in Japan
Japanese banks were protected by the government, allowing them to have low reserve requirements. These banks could leverage stock values against the reserve requirement, which amplified stock market speculation.
6. Japanese Cultural Dynamics
The cultural traits of the Japanese, like collectivist tendencies and emotional extremes, were exploited by stockbrokers to push everyday citizens towards risky trades.
7. Insider Trading vs. Average Citizens
8. Criminal Involvement
Organized crime figures were involved in stock market speculations, sometimes resorting to threats or violence when stocks underperformed. [Note: for Japan]
9. Art & Golf in Japan
The art market flourished as paintings were promoted as investment assets, with Japanese collectors becoming dominant in the global art market. Simultaneously, golf club memberships, symbolic of land ownership, skyrocketed in value, with memberships in elite clubs often costing over $1 million.
10. Long-term Capital Management
This financial entity had extreme leverage ratios, sometimes up to 100:1. When it faced disaster, the government had to intervene, believing that its collapse could cause a staggering $14 trillion in damages, a testament to the concept of "too big to fail." [Note: it is a common joke that Long Term Capital Management was none of those things! Short Term Leverage Mismanagement ]