5 episodes

Two old friends talk finance, money, and investing, every Friday.

The Rotterdam was a popular, downtown Toronto, Canada pub known for its extensive European beer selection. It was the perfect place for two rookies working for a large, US investment dealer to hang out after work on Fridays and discuss the capital markets.

The discussion continues today on our podcast, with more perspective. We will tackle a new topic each week and try to keep the sessions shorter than thirty minutes. There seems to be an unprecedented amount of crisis news in current headlines. Our podcast explains why those who ignore history and react to noise typically have poor investment results.

Always challenging but historically important, the stock, bond, currency, crypto and derivatives markets provide a unique look at human economic behavior. Jeff and Rasheed are not macro “talking heads” selling theory as fact. Rather than making short-term calls, we seek to simplify, clarify and discuss the financial markets from an honest theoretical and historical perspective. Importantly, our views come from our personal wide and deep experiences in the field.

We hope that you enjoy the discussions.

Please feel free to use the links to send comments or questions.

HOSTS:

Rasheed Saleuddin holds a PhD in Financial History from Cambridge University where he remains a fellow after completing his post-doc. He also holds an MSc in regulation from the London School of Economics. Rasheed was the founder and manager of a specialized distressed investment fund from 2008-2018, and he continues to be a professional angel venture investor and consultant. 
Dr. Saleuddin has authored two well-received books, The Government of Markets, dealing with the creation of modern futures markets and Regulating Securitized Products, a Post Crisis Guide, defining the risks that emerged during the 2008 Global Financial Crisis.

Jeffrey Sandler is a retired portfolio manager with a large US investment firm’s Canadian subsidiary. He  previously managed large divisions for two Canadian, bank-owned investment dealers.  Jeffrey has been a frequent guest on radio shows and other media outlets for many years where he commented on the capital markets, usually during times of market unrest. Prior to entering the investment industry, he worked in broadcasting covering crime and business.

At The Rotterdam At The Rotterdam

    • Business
    • 5.0 • 2 Ratings

Two old friends talk finance, money, and investing, every Friday.

The Rotterdam was a popular, downtown Toronto, Canada pub known for its extensive European beer selection. It was the perfect place for two rookies working for a large, US investment dealer to hang out after work on Fridays and discuss the capital markets.

The discussion continues today on our podcast, with more perspective. We will tackle a new topic each week and try to keep the sessions shorter than thirty minutes. There seems to be an unprecedented amount of crisis news in current headlines. Our podcast explains why those who ignore history and react to noise typically have poor investment results.

Always challenging but historically important, the stock, bond, currency, crypto and derivatives markets provide a unique look at human economic behavior. Jeff and Rasheed are not macro “talking heads” selling theory as fact. Rather than making short-term calls, we seek to simplify, clarify and discuss the financial markets from an honest theoretical and historical perspective. Importantly, our views come from our personal wide and deep experiences in the field.

We hope that you enjoy the discussions.

Please feel free to use the links to send comments or questions.

HOSTS:

Rasheed Saleuddin holds a PhD in Financial History from Cambridge University where he remains a fellow after completing his post-doc. He also holds an MSc in regulation from the London School of Economics. Rasheed was the founder and manager of a specialized distressed investment fund from 2008-2018, and he continues to be a professional angel venture investor and consultant. 
Dr. Saleuddin has authored two well-received books, The Government of Markets, dealing with the creation of modern futures markets and Regulating Securitized Products, a Post Crisis Guide, defining the risks that emerged during the 2008 Global Financial Crisis.

Jeffrey Sandler is a retired portfolio manager with a large US investment firm’s Canadian subsidiary. He  previously managed large divisions for two Canadian, bank-owned investment dealers.  Jeffrey has been a frequent guest on radio shows and other media outlets for many years where he commented on the capital markets, usually during times of market unrest. Prior to entering the investment industry, he worked in broadcasting covering crime and business.

    Episode 005: Hyped up inflation? Lessons from interwar Germany

    Episode 005: Hyped up inflation? Lessons from interwar Germany

    Recorded December 2, 2022
    For episode five of At The Rotterdam, Jeff and Rasheed recount how the weak Weimar Republic in Germany caused hyperinflation of the early 1920s, and why it is an extremely important event in history, but not for the reasons generally given. 
    The German hyperinflation that has been so often invoked as a warning against monetary overexpansion should in fact be a warning that paying too much attention to one rather unique incident in Western economic history risks not doing enough to bail out economies in crisis.
    As terrible as it was, the hyperinflation did not directly contribute much to the rise of the Nazis. 
    But it did have a tremendous negative effect on the global economy and polity of the 1930s and 40s: It specifically served to dissuade Germans and Americans from expanding the money supply at the start of the Great Depression. As the Austrian economist von Mises wrote, 
    A nation which has experienced inflation till its final breakdown will not submit to a second experiment of this type until the memory of the previous one has faded. No German government could succeed in the attempt to inflate the currency … as long as the men and women are still alive who have been the witnesses and victims of the 1923 inflation.
    The proper response, of reversing deflationary influences, was not considered because the last time money was freely available, hyperinflation resulted. Too little money too late was the major cause of the Great Depression and the economic and political turmoil in which the National Socialist rose to power in Germany in the 1930s. 
    Ben Bernanke knew this (he is one of the key scholars on the economics of the Great Depression) and did not hold back in the face of a potential second Great Depression in 2008. He said to monetarist Milton Friedman years earlier,
    I would like to say to Milton and Anna [Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.
    Taking the wrong lesson from the German hyperinflation would have been deadly for our global economy.
     
    Some references:
    As an antidote to When Money Dies (Kimber, 1975) and Jens Parsson’s Dying of Money (Wellspring Press, 1974), I highly recommend Tobias Straumann’s 1931: Debt, Crisis, and the Rise of Hitler (Oxford, 2019).
    Straumann’s link between austerity and Nazism is further detailed, and argued convincingly, in a fresh-off-the-press Galofre-Vila et al “Austerity and the rise of the Nazi party” (JEH, 2021). See also Haffert et al “Misremembering Weimar” (E&P, 2019).
    The prolific and popular economic historian Niall Ferguson has written on this exact topic in “Constraints and room for manoeuvre in the German inflation of the early 1920s” (EHR, 1996).
    Links:
    Contact us at contact@attherotterdam.com
    Show Twitter: https://twitter.com/AtTheRotterdam
    Show Website: www.attherotterdam.com
    Rasheed’s Twitter: https://twitter.com/r_sale
     
    Disclaimer: Nothing At The Rotterdam should be considered as investment advice. Always speak to a registered financial advisor before investing in anything mentioned on this podcast. 
     

    • 22 min
    Episode 004: Should you listen to the Macro Talking Heads and their Doom Porn?

    Episode 004: Should you listen to the Macro Talking Heads and their Doom Porn?

    Recorded November 25, 2022
     
    Episode four of At The Rotterdam takes aim at the bearish echo chambers on YouTube, Twitter and mainstream media, shouted at us by “the contrarians”.
    Macro doom porn sells, and is not currently contrarian.
    Many commentators are perma-bears and even a stopped clock is right twice per day. Some have been bearish since 2010, during a period that had near record US stock market returns.
    Will you learn anything from listening?
    Jeff takes us through the motivation of the media, from experiences on both sides of the mic. Rasheed digs deep to see if the talking heads have actually made good recommendations, for themselves and their clients.
     
    We'd love to hear from you. Get in touch at contact@attherotterdam.com
     
    Links:
    Show Twitter: https://twitter.com/AtTheRotterdam
    Show Website: www.attherotterdam.com
    Rasheed’s Twitter: https://twitter.com/r_sale
     
    Disclaimer: Nothing At The Rotterdam should be considered as investment advice. Always speak to a registered financial advisor before investing in anything mentioned on this podcast. 

    • 23 min
    Episode 003. Lessons from 2000-1: Should We Buy Falling Knives?

    Episode 003. Lessons from 2000-1: Should We Buy Falling Knives?

    Recorded October 15, 2022
     
    For our third episode of At The Rotterdam, Jeff and Rasheed go back in economic history again, but this time only to the turn of this century, to 2000-1. Here is a nice piece about that era: http://www.paulgraham.com/bubble.html
     
    Then, like now, tech experienced a major correction that took years to recover from. But the recovery post 2001-2 lows was unprecedented. 
     
    The worst losses this year have been in zero revenue and zero profit technology companies, as well as crypto assets. Cathie Wood’s ARK Invest is down over 75% from ATHs as of this podcast. Electric vehicle companies such as Lordstown (RIDE) and Velodyne Lidar are down more than 90%. Streaming company ROKU is down around the same. 
     
    So where do we go now with tech? To be honest we have no idea. But we came up with eight lessons from the dot-com crash that may or may not be applicable to our listeners.
     
    Stocks such as Amazon and Apple collapsed in 2000 but eventually not only rallied back to above their previous highs but have skyrocketed since. Apple fell 80% in 2000-1 but is currently up 11,300% from its 2000 ATH and 59,000% from its 2003 ATL. Any time was the right time to buy such stocks. The lesson here may be that what you buy is more important than when you buy.
    Some stocks never recovered after the crash (e.g. Pets.com). They were a bust at any price. Once again, market timing didn’t matter. Bad ideas generally can’t survive austerity. Corollary of lesson 1.
    Some ideas were good ideas but the companies didn’t have the runway to make it. Because bear markets generally last a while and funding can dry up for a long time, eventual winners need positive cash flow or strong balance sheets. Watch for cash burn especially. New firms with fresh funding can enter and take all of the spoils if competitors are weak. This is what Google did, post-2000.
    Even the best stocks took years to bounce back after the 2000 crash. It took Amazon almost 10 years to beat its old high. Other than the COVID crash and 1987, recent bear markets have lasted years. Patience has historically been a highly-valuable  virtue. 
    The strong firms stood on the shoulders of their fallen brethren. Without Global Crossing putting fiber across the Atlantic and then going under, would we even have e-commerce? Bubbles change dynamics. They fund bad ideas and good ideas alike. There is time to see who will take advantage of the weaknesses and failures of others. 
    Don’t hold the losers through the bear. There are lots of bear traps, rallies where everybody is filled with some hope before markets collapse again. There were multiple 10-20% rallies in 2000-2003 where it would make sense to dump the losers.
    The collapse did not invalidate the internet thesis. Far from it: It created the next generation of champions that could build on positive cash flow and/or strong balance sheets and business models. Is this true of newly-emergent tech like electric vehicles?
    2000-1 is an example where a few bgi winners dominated the best portfolios. The best way to have ensured you bought and held Apple, Amazon and Microsoft, to name three winners, was to be very diversified. Diversity has historically been finance’s free lunch. Rasheed holds a barbell of safe assets and emergent companies. One future Apple pays for a lot of mistakes.
    In hindsight, the dot-com crash of 2000 is a hardly-noticeable blip in the NASDAQ. WIll this be true of 2022-3?
     
    Links:
    Show Twitter: https://twitter.com/AtTheRotterdam
    Rasheed’s Twitter: https://twitter.com/r_sale
    Disclaimer: Nothing At The Rotterdam should be considered as investment advice. Always speak to a registered financial advisor before investing in anything mentioned on this podcast. 

    • 25 min
    Episode 002. A Financial timebomb? Systemic risk lurks in Canadian mortgages

    Episode 002. A Financial timebomb? Systemic risk lurks in Canadian mortgages

    Recorded October 25, 2022
    Our second episode of At The Rotterdam sees Jeff and Rasheed discuss a market they follow closely. Both are homeowners in two of the world’s frothiest housing markets, and Rasheed ran a fund that invested in distressed mortgages from the US, UK and peripheral Europe.
    Could Canada really be in danger of a major financial system shock triggered by the real estate market? The answer is yes.  Even though the probability remains low, the threat is there.  
    Of course there is an opportunity to go back into financial history again. This time Rasheed recounts the US mortgage crisis of the 1930s and uses that to explain why Canada needs to clean up its act when it comes to the structure of its mortgage market.
    Just before the Great Depression, US mortgage markets looked a lot like Canada’s do right now, with most loans due in the 0-3 years and very little principal being paid down. In the 1930s, severe deflation across the board put pressure on housing prices. Those with mortgages coming due could not refinance as the new required down payment (LTVs were often 50%) while banks with credit troubles were reluctant to lend at any price. During the downturn, most US mortgages came due and at one point almost half the mortgage market was in default. 
    Policy makers then realized that longer term fixed rate mortgages would be safer, and that is what the US now has: 30 year fixed rates.  As long as the borrower can afford the monthly, they can stay in their home for a very long time. There is less chance of a wave of required refinancing in a bear market resulting in forced sales by homeowners who borrowed when prices were much higher.
    Canada’s reasons for having a market of mostly 5 year terms with 20-30 year amortization periods are structural, related to the Bank Act, how mortgages are financed, and the term of available mortgage insurance. These can all be changed through government policy to incentivize long-dated mortgages. Those mortgages are less likely to mature at a point where prices are below the borrower’s origination price, and a crisis is much less likely. Is it worth it? 
    We think so.
    Readings:
    A history of the Canadian mortgage market
    The US experience and response
    C.D. Howe and the IMF on the resilience of the Canadian mortgage market
    Links:
    Show Twitter: https://twitter.com/AtTheRotterdam
    Rasheed’s Twitter: https://twitter.com/r_sale
    Disclaimer: Nothing At The Rotterdam should be considered as investment advice. Always speak to a registered financial advisor before investing in anything mentioned on this podcast.

    • 22 min
    Episode 001. FTX. Why we have financial regulation.

    Episode 001. FTX. Why we have financial regulation.

    Recorded November 15, 2022
     
    Our inaugural episode of At The Rotterdam uses the recent events in crypto – FTX and Celsius failures – to explain why we (in the US) have the financial regulation we do. 
     
    It’s all due to history: From the Forgotten Depression of 1920-1, through the Crash of 1929, the bank and mortgage market failures of the early 1930s, and the broker defaults of the 1970s.
     
    The US government, its agencies and the financial industries themselves regulated financial markets in order to restore investor trust and confidence. 
     
    In the 1920s, the Chicago exchanges and the Federal government cleaned up and legitimized commodity futures markets by requiring brokers to segregate funds and eliminate manipulation and conflicts of interest. 
     
    The regulation that established the SIPC in the 1970s ensured that retail client funds would be safe even if the broker defaulted. The SIPC helped repay all of Madoff’s small investors.
     
    If FTX and Celsius were regulated like their traditional counterparts, at the very least the losses would likely have been mitigated and likely compensated, and the events might never have happened.
     
    We shouldn’t need crises to remind us why we have consumer protection regulation in financial markets. History should be enough.
     
    References:
    What do we know about FTX so far.
    What happened at Celsius.
    Coinbase’s policies.
    Rasheed’s book on the regulation of markets in the 1920s and 30s
    Reminiscences of a Stock Operator (1923)
    The history of the Securities Investor Protection Corporation (SIPC)
    Refco bankruptcy

    Links:
    Show Twitter: https://twitter.com/AtTheRotterdam
    Rasheed’s Twitter: https://twitter.com/r_sale
    Disclaimer: Nothing At The Rotterdam should be considered as investment advice. Always speak to a registered financial advisor before investing in anything mentioned on this podcast. 
     

    • 29 min

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