theCUBE + NYSE Wired present the East Coast AI Leaders Executive Series | Peter Tuchman, Wall Street Global Trading Academy

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More from theCUBE + NYSE Wired present the East Coast AI Leaders Executive Series

Peter Tuchman

Einstein of Wall Street

Moderator at Wall Street Global Trading Academy

play_circle_outline IPO process and differentiators between NYSE and NASDAQ

play_circle_outline Trust and importance of market makers in NYSE

play_circle_outline Peter's first trade experience and learning curve on Wall Street

play_circle_outline Building Trust and Connection: Navigating Wall Street's Demands for Reliability and Relationships

play_circle_outline Manual trading processes and clerical work

play_circle_outline Historical perspective on Wall Street crashes and crises

play_circle_outline Impact of technology and internet on trading

play_circle_outline The Emotional Dynamics of Trading: Lessons Learned From the Yahoo Stock Crash

play_circle_outline Comparing NYSE and NASDAQ: Trust, quality, branding, and market-making with NYSE American listing options

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Transcript

Peter Tuchman, Wall Street Global Trading Academy

Peter Tuchman

Einstein of Wall Street Moderator at Wall Street Global Trading Academy

In the New York Stock Exchange balcony, John Furrier and Peter discuss IPOs and the role of market makers. Peter shares a story from his early trading days. He explains the manual process of confirming trades and resolving discrepancies. The culture on Wall Street is intense, with high pressure and a one-strike rule. There was a system of support around trades, with manual ticketing and reconciliation. The process could take up to seven days for cash transactions to be completed. Back in the day, trades were confirmed in person, and discrepancies were resolve... Read more

explore Keep Exploring

What differentiates the New York Stock Exchange from NASDAQ in terms of IPOs? add

What is the relationship between volatility, electronic trading, and the implementation of curbs in the stock market? add

What was the experience of being tricked into buying stock at a higher price than intended? add

What is being described about the role of relationships in the job of an air traffic controller or a stockbroker? add

What was the process of placing a stock trade before the introduction of AI? add

What was the most notable day for the speaker in terms of experiencing a crash in the financial market? add

What was the experience like for the trader during the reconfiguration of workflows in the early nineties, especially in relation to the rise and fall of Yahoo's stock price? add

What was the experience like for someone on the stock exchange floor during a dramatic market fluctuation? add

What are the differences between NASDAQ and NYSE in terms of listing requirements and support for companies going public? add

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Peter Tuchman, Wall Street Global Trading Academy

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>> Welcome back everyone to theCUBE. We are here in the New York Stock Exchange balcony, looking down over the floor. I'm John Furrier, host of theCUBE. It's our East coast location. It's our pointed presence, our super node. We're going to connect Silicon Valley and Wall Street. Bring the best tech coverage between CNBC and theCUBE. No story would be under reported. We're going to get all the action, of course, wall-to-wall coverage on Wall Street. And no better guest to have than Peter here, the Einstein of Wall Street, who is the legendary trader. You've probably seen him on covers of magazines, newspapers. He wears his emotion on his sleeve, as they say, and when the market's up, he's excited; when it's down, he's pulling his hair out. But a great guest. Got a great podcast. Peter, thanks so much on theCUBE-

Peter Tuchman

>> My pleasure. Honored to be here....

>> and it's great to introduce you to theCUBE community.

Peter Tuchman

>> Welcome theCUBE. Yes.

>> Yeah, we love your style, love your podcast. You do a lot of media. You're a creator. And you're a trader.

Peter Tuchman

>> I'm actually a creator trader.

>> You're a creator and a trader. So, great to have you on.

Peter Tuchman

>> Thank you.

>> First of all, before we get into some of the podcast, I want to get into some of the things you talk about because you do that. But we had an IPO this morning. Ingram Micro went public. I was joking with... I wasn't joking. Ian told me over the comms when the bell went off, I said, "Oh, big trade." Ian went, "No, that's the opening trade." I'm like, "Okay, I'm new to the exchange."

Peter Tuchman

>> Correct.

>> But you've been here, you've seen a lot of IPOs. Take us through the process. How'd this one go and then what happens inside the ropes when things pop?

Peter Tuchman

>> So, look, IPOs are something that we do. First of all, thank you for having me. We're excited to have theCUBE here on the exchange, right? We've had a lot of media studios here over the years, but this is the newest, the best and it really brings, it sort of forges the bridge between Silicon Valley and New York. And so we're thrilled to have you. Welcome.

>> Thank you.

Peter Tuchman

>> As the ambassador of the New York Stock Exchange, I welcome you to-

>> I appreciate that.

Peter Tuchman

>> Thank you. The Wizard of Oz. The wizard welcomes you to-

>> Thank you.

Peter Tuchman

>> So, you've walked the yellow brick road. Anyway, just to jump into it. IPOs are something we do really well here, and it's one of the things that I specialize in over the years. I've been doing IPOs since obviously the mid-eighties. So let's just talk about the process. What differentiates us? Look, companies that go public have a choice. They can go to the New York Stock Exchange or they can go to NASDAQ. And obviously there's no choice because obviously we are the best at what we do. The differentiator for those who are sort of lay persons in this thing is we have market makers. So the way the format of the New York Stock Exchange is, on the outside of the room, we have brokerage firms, Morgan Stanley, Wells Fargo, and JP Morgan connected to Trading Desk. Then we have market makers. Market makers are the people who are flying the plane. Those are people who have been allocated stocks. They're there to inject liquidity into the market, put buyers and sellers together. So, the IPO process is when a company's done their road show, obviously we know the best way to talk about it is Apple started in the garage. They came up with an idea, they came up with a product, then they worked their way around. They did a road show they wanted. There are a couple of different reasons companies will go public, either to cash out or to basically give the opportunity to the public to invest in something that you've got millions and millions of loyal customers of your product and you really want to raise capital through a means of going public on the floor of the exchange. So right now there've been great eras in IPOs, they've been hard times in IPOs. One of the ones that really put a taint on the market was WeWork, for instance, because there's so much. Look, an IPO, the way it's handled, the way it's done and how it trades and the environment, the investing landscape, it's a new instrument for people to invest in. It's a new company that's going public.

>> So why did WeWork go bad? What was wrong? What tainted the process?

Peter Tuchman

>> Well, what ended up happening with WeWork, there was a big road show with Mr. Weinberg who had come to the floor many times and we were talking about an amazing business model. Obviously the idea of public workspaces, the idea seemed perfect for real estate, for individuals trying to find work. But unfortunately, by the end of the road show, when you finally are here on the floor, basically you're the emperor with no clothes. Everything that you've been hiding or anything that you've been doing that's not legit comes out into the open as the night of comes to be. And what ended up happening was, I guess Adam was spending most of his money on cocaine and prostitutes, and it turned out that there was nothing backing their valuation. The company was really a shell of some really bad behaviors, and so it ended up being cut out literally hours into the opening bell and that gave people... Look, it's all about trust here on the floor.

>> Well, I mean that must've been quite a shock to the system because I know how much, from what I've seen, the buildup into the IPO is-

Peter Tuchman

>> Correct. It's huge....

>> it's huge.

Peter Tuchman

>> It's huge.

>> The kill of the day before is like at the altar.

Peter Tuchman

>> Correct. And especially because, think about it, it's like having the biggest party in the world and then canceling the day of. It's not something you do and in a market that's based on trust and confidence when you have something happen like that, that is the opposite of confidence, then it'll affect the whole environment, the IPO market and the environment of investing, right? Because people, look, it's never a sure thing.

>> Trust is huge. I want just back up for a second.

Peter Tuchman

>> sure.

>> We'll continue but I wanted you to explain the trust and this market-making thing because I think to me that jumps out at me as differentiator in NYSE that other exchanges don't have that market-making and explain why that's important versus just the free-wheeling other versions that are out there.

Peter Tuchman

>> Okay, so it's an extraordinary process. What's powerful about it is it's like imagine this, you're on a plane, you're a passenger on a plane. I'm the broker, I'm the passenger on the plane. The market maker is the pilot. We take off from New York on a trip across the ocean, everything is on... After takeoff, you're on automatic pilot, everything's fine, you run into turbulence, The plane starts getting beaten around and you go to the cockpit to ask the pilot what's happening? Well, what's going on? And there's nobody there, right? So, it's a matter of somebody's flying the plane. Somebody also their job is to create a smooth and active market to inject liquidity into the market. In the old days when we were trading open outcry auction market here on the floor, you'd walk into a stock and say to the market maker who has been allocated a stock based on how much money they've committed to other companies and how they create a smooth and active market. So, the company that gives... The stock exchange is an allocation process, the company will pick them because of their past track record. And if they have a good track record where they step in and create liquidity where it's necessary and they keep the stock smooth and active, that's a good market maker. On the other side of it is-

>> Versus volatility where it goes up and then could crash-

Peter Tuchman

>> On NASDAQ, it's strictly electronic. So if you open the stock base by an electronic book that says these are the buy, these are the sell, they match up at a price and all bets are off and it can go up or down without having any guardrails, right? It's like that ball. You remember when you were a kid and they put up-

>> I remember in '87 when I was in college, that big crash, it created the curbs.

Peter Tuchman

>> The flash crash.

>> The flash crash because it just went out of control.

Peter Tuchman

>> Correct.

>> And that then created this idea that, okay, we've got to put curbs on things,

Peter Tuchman

>> Correct.

>> Am I getting, I mean-

Peter Tuchman

>> It's actually a really good thing. So look, think about it. If markets are strictly electronic and there's nobody curating the situation in a market where there's obviously a lot of volatility, the communication highway in the old days used to have people who would sit in front of a courtroom waiting for the story to blow or somebody... Now the information highway is what runs these things. We can find out about something happening before it even happens. So the fact that you have someone at the point, boots on the ground, point of entry who has not an ax to grind, but has a... It keeps everything going smoothly. And so, on NASDAQ, what you're going to see now is a lot of the tech stocks went to NASDAQ because of valuations back in the day. We're starting to see a bit of a transition because the New York Stock Exchange has opened up a thing called NYSE American where they're letting in stocks with softer valuations to come and list here. But imagine this, you go to a NASDAQ where a stock, there's nobody really running the show. There's no one injecting liquidity. So where there's an absence of public buying and selling, it's just a free for all.

>> So it's like an electronic bullet board then.

Peter Tuchman

>> It becomes a free for all.

>> Free for all.

Peter Tuchman

>> The stock can go from three to 20 and back to one based on nothing more than there's no public interest. Here, 7%, the book goes slow. 10% dislocation from the last sale, we stopped trading. And then we find out is there news out? Is there a situation that we need to... Was it a fat finger? And then we try and give everybody, look, it's often responsibility-

>> So the trust comes in into actually kind of not letting perverse behavior come in to potentially manipulate stocks

Peter Tuchman

>> A hundred percent. Look, we would always hope to think that everybody's a good person, but they're not there.

>> There's a bad actor. I cover-

Peter Tuchman

>> There are a lot of rats.

>> I cover the cybersecurity here. Let me tell you, there's highly motivated-

Peter Tuchman

>> Okay, there are a lot of rats. There are a lot of rats.

>> You know they say, the mouse wants the cheese. Cheese is the money and the money's here. So, guess what?

Peter Tuchman

>> They'll do anything to get it. Right, so here, as much as we don't want to over control, there are parameters put on it. So what does a market maker do? In the absence of public buying or selling, they step in. In the old days, I'd walk into a stock and I'd say I'm a quarter for a hundred thousand. There'd be two buyers next to me. We've got three buyers now who want to buy stock for whatever reason. There's a war just started, there's news out whatever it is. We asked the market maker who's running the show, "Where are the sellers?" He'll say there's 200,000 at a quarter, there's 100,000 at a half. The buyers will say, "Well, where do you play?" Right?

>> Yeah.

Peter Tuchman

>> So three buyers, two sellers, the market maker will then become the third seller at a price of his choosing to facilitate the trade. The way Wall Street works is we're putting stock on the tape. That's our goal. So, whether it's an absence of a buyer, he becomes a buyer; absence of a seller, he becomes a seller.

>> All right, so what was your first trade? Your first trade? What was your first trade?

Peter Tuchman

>> Okay, my first trade was Digital Equipment. So the first time I actually... No, it was not.

>> Digital Equipment Corporation?

Peter Tuchman

>> Yeah, that was DEC, decalogue. Now, I'll tell you my first trade. Now you just reminded me of it. So, there's no training for this job. Everybody who works on Wall Street starts as a squad or a teletypist. So you come down here, you start at the bottom of this cast system.

>> They had those old TVs back then hanging from the-

Peter Tuchman

>> It was a machine. It was a static TV set. So imagine this, you start at the bottom as a squad, a runner, become a teletypist, you become a clerk, an option clerk, retail clerk, institutional clerk. And then your goal is to become a broker. In 1903, they issued 1,366 seats like a taxi medallion. It gives you the right to trade and the price of a seat has gone up and down based on the economy and the market. So everyone's goal when they came down here was to get a seat. It used to take 13 to 15 years to get a seat because you have to build trust and you have to-

>> Yeah, then you work your way up.

Peter Tuchman

>> Nobody left the job. It was the greatest job on earth, so nobody left. I got a seat in three and a half years because one guy died, one guy got fired, one guy quit.

>> Yeah, they didn't have the CSI, otherwise you might not have that seat.

Peter Tuchman

>> Exactly, exactly. So I got my seat in 1988. I was sent into a stock called McGraw Hill Partners. I believe it was a-

>> I know. McGraw Hill, that was telecom... Wasn't that a cellular company?

Peter Tuchman

>> MHP. MHP.

>> That was Craig McCaw's company, wasn't it?

Peter Tuchman

>> I don't even know. I was 27 years old and they handed me my first order and they said, "Here's 5,000 shares. Go buy it." Now, back in the day we had kind of fraternity-ish, but there was a bit of a hazing process. When you got your seat as a broker, your parents came, you signed the big book. It was signed by Alexander Hamilton and John Paul Getty and Carnegie, all those people. It's like Santa's books. And so it was a big deal. You got your badge.

>> Yeah, it's an IPOs. Like an IPO.

Peter Tuchman

>> I have my badge. This is a seat.

>> 588.

Peter Tuchman

>> My number's been 588 for 37 years. So they sent me out in the crowd and everyone knows Tuchman's got his first order, let's mess with him. So I go in there, the specialist-

>> You had no idea it was coming.

Peter Tuchman

>> Of course not. The market maker was a guy named Bobby Corso. Fascinating character. An old-school Italian guy. He wore very thick glasses and I walked into the stock and as you would do with an order, I'd say, "Hey Bobby, how is it?" They had already set this up for me and he said, "Peter, it's a quarter a half, 50,000 up." Back then we were trading in ace and quarters, quarters and halves. It was not pennies. So he said, "So what do you want to do?" My instructions were go along. Go along means just don't take the offer. When someone else buys some, you buy a little bit. So I was a little bit hesitant. I was very nervous. So he said, "It's a quarter a half, 50,000 up." I said, "Okay, I'll bid a quarter." Someone else walked in and said, "I'll pay a half for 20,000." He said, "You bought 20,000." I said, "Well, is there any left for me?" "No, you now are bidding a half." I said, "Okay, then I'm bidding a half for 25,000." Someone walks in, "How is it?" It's a half three quarters, 20,000. Another buyer walks in. He says, "How is it?" He goes, "Peter's a buyer. There's 20 at three quarters." He says, "I'll take the 20 at three quarters." I said, "How is it now?" There's none left at three quarters, you're going to have to pay $25. So I've now walked into the stock, it's trading up half a dollar, I haven't bought a share. So I'm like shaking and I'm going, "Okay, I'll pay $25 for 50,000 shares." He says, "Sold." He sold me the stock. By the time I got back to my booth, it was trading three quarters of a dollar lower. So that was my haze, and they realized they got me.

>> Oh, you got snookered big time.

Peter Tuchman

>> I got snookered.

>> You got snookered big time. Okay, yeah, that's not as bad as kind getting pummeled. But I mean that was basically a way, "Hey, welcome to the party, Pal."

Peter Tuchman

>> Exactly, exactly. Put on your big boy pants.

>> So what did you do when you got back? Did you say, "They got me, I'm not going to get fooled next time"?

Peter Tuchman

>> I actually got on with the... I confronted it as you always do here. First of all, honesty is best policy. Tell them what happened. I said, "I got snookered." I said, "If you need an adjustment, I'll do it." Back then it was-

>> You fell on your sword. You did the right thing,

Peter Tuchman

>> Right. I said, "Now I didn't buy them all." I said, "You still leave 50,000 and I'm going to work it for you." He goes, "I'll give you one more chance." You were entitled to one mistake on Wall Street. The second mistake, you're out of here.

>> Yeah, they didn't want see a third.

Peter Tuchman

>> There's a line of people waiting for your job.

>> I know. So that brings up my next question. First of all, that's a great story. So that one strike your out rule, it's not for the faint of heart?

Peter Tuchman

>> No, it's not. And working here is not for the faint of heart.

>> I mean this is a culture... Take us through that Wall Street culture because I think it makes people better at their game knowing I'm sure there's a one and a half mulligan option-

Peter Tuchman

>> Yeah, of course there is.

>> If you've proven yourself, okay, you might've had a bad day, but in three strikes you're totally out, but it's New York of course.

Peter Tuchman

>> correct.

>> But take us through the pressure. I mean, it makes everyone better. When do you see somebody say, "Okay, they're not going to make it"?

Peter Tuchman

>> We see that a lot. Look, this is the next two air traffic controller, the most stressful job on Earth, apparently. That's what it's called. And look, we're trading millions and millions and tens and hundreds of millions of dollars on any given day, and basically you need to know your game. That's why that process of becoming a teletype as a clerk, building trust with your people is a big fine point before you get your seat. Okay, you go out into the crowd, it's a matter of relationships. Back in those days, I wasn't sitting behind a cell phone or a computer and sending out a hundred share orders. I was in a crowd with 20 or 30 other brokers.

>> You were competing.

Peter Tuchman

>> Correct. And the better relationship you had with the market maker and with your fellow brokers, the better it was.

>> So it was almost like it reminds me of playground, baseball. It's like, okay, Peter's over there, I see him. You're like, "Hey, remember us?" You know?

Peter Tuchman

>> Yeah, exactly.

>> So it was really much like reliability. Take me through the process back then too, because there was a lot of legwork you had to do post-trade. I mean, things weren't computerized as well. So it's like you had to do the trade. One, you get the nod, right? I'm in. Let's say it was like an auction, "Okay, go sell. Peter, take that trade." Then you got to do the follow-up, right? You got the ticket. Wasn't it a manual ticket?

Peter Tuchman

>> So let me tell you that story.

>> I mean, what!? Now we got AI.

Peter Tuchman

>> That's what's exciting about that, which people don't talk about.

>> Yeah, I want to hear the story.

Peter Tuchman

>> The way it trades, so it took seven days. So you buy a stock. I bought a thousand shares of IBM at $127. I call. I get to one of the phones that they used to have on the floor. I'd say, "Bob, you bought a thousand shares of IBM 125." He calls it into the customer. They hand that piece of paper to a teletype who inputs it into the system. Then they roll that piece of paper up into a little ball and they put it in a pneumonic tube, which sends it upstairs to a bunch of women who are up there inputting the ticker tape and they put it. Now, in the crowd, there was a whole support system around the trade. So, there's a guy called a reporter, nothing to do with media. A reporter was a guy with old computer cards. So, he wrote down how many shares were bought, who bought them, what their batch number was, what time it happened, how many shares, what stock, what time, and then that would be put into the system. That would also create the ticker tape and then it would go to the back office. It took seven days for that actual cash transaction to be transferred bank to bank. Now, the next day when in an active crowd, you had what's called a QT, a question trade. I may be trading hundreds of thousands of shares of stock. There may be 30 brokers buying and selling. I'm sure people have all seen those movies of the chaos from the original Wall Street movie with Michael Douglas or the Wolf of Wall Street. So, think about an auction crowd-

>> Or trading places when everyone's killed or be killed.

Peter Tuchman

>> Exactly. So if you remember that scene, at the end of the day, Mr. Duke, we close out all things. So if you did not... First of all, your word was your bond. That goes back to 1650 with the Buttonwood Group outside. Then you needed to be able to stand up for your trade. We would always go confirm the trade. I would go back to the other broker's booth and I'd say, "Remember Bobby, I bought a thousand for you at 125." They'll go, "Yes, we would check that off. We'd bring it back into the booth. We had that ledger that the blockchain-

>> So it was almost like... It was like classic two sets of books. You had the front end, you guys were keeping track here, the lag with the little funnel thing up the tube thing as you've seen in old movies.

Peter Tuchman

>> And then you had the back office.

>> And that's a lagging days. Then there's all this reconciliation going on the back end. What a nightmare.

Peter Tuchman

>> So think about millions and millions of dollars are being traded. Money is never transferred hands from our point of view, but many days later, money is transferred bank to bank. Now think about it, in those days if it took seven days to do that, you may be in an active crowd trading and there would be what's called a question trade. So I may even have this on me. It's a fun thing. So we used to have a... I hope I have it on me. So, back in the old days when you would have... It's not here. Anyway, I'll bring it to you another time.

>> Yeah, we'll definitely do more segments. Sure.

Peter Tuchman

>> If there was a disagreement in a crowd--I thought that I bought, you thought that you sold; I thought I paid a quarter, you thought you sold them at a half. We would have to go back to a governor. We would either go to a five governor panel upstairs or you could do the flip rule. The flip rule was everybody when they got their seat was given a silver coin, which had a bull on one side and a bear on the other. You would call the governor if you did not want to wait for that five governor panel-

>> Yeah, the bureaucracy just gets-...

Peter Tuchman

>> or that you just want to clear everything up. If it was a small discrepancy or-

>> I'll flip it for you.

Peter Tuchman

>> We'll flip, but you have to live up to the flip.

>> That's cool. I like that.

Peter Tuchman

>> So they would flip the trade. I just recently made a new coin because in the old days everybody who got a seat got a coin from the company you worked for, and then it kind of went by the wayside. I just created the new flipping.

>> Yeah, you got to bring the coin back for sure.

Peter Tuchman

>> I will bring the coin back. So anyway, you'd flip and whatever way you'd have to live by the flip.

>> That's awesome. And then now that was just... I mean, that was-

Peter Tuchman

>> That was the beginning of-...

>> a fine-tuned machine to do all those trades-

Peter Tuchman

>> On paper ....

>> and the tape's moving. So you have a tape that's moving. So you have all these things being documented.

Peter Tuchman

>> Correct.

>> But this lagging kind of bureaucratic administrative workflow.

Peter Tuchman

>> Yeah. So think about this for a second.

>> Oh my God, my head's exploding.

Peter Tuchman

>> There's a famous photo that's going around in the archives of the stock exchange. One day that would be a nice trip for you to take. Peter Asch and a woman named Anna Melo upstairs are in charge of all the archives of the New York Stock Exchange. They have all that old stuff.

>> Yeah, Pete's cool.

Peter Tuchman

>> You've met Peter Asch?

>> I've met Pete.

Peter Tuchman

>> Yeah, he's a wonder.

>> I haven't done the tour yet, but he's awesome.

Peter Tuchman

>> The history of this room goes back into the 1650s when we traded outside under the buttonwood tree. Then this building was built in 1903 and how slowly one stock after another was gone public. They were allocated to different market makers. When I came here, there were 70 market making firms. There were five rooms. There was a blue room, expanded blue room. So this room expanded. Nothing as grandiose as this, but there was so much necessity for humans-

>> And it was crowded. Humans were... I mean, up until 9/11 public was allowed to come in and trade.

Peter Tuchman

>> No, no, no. The public was allowed to be on the balcony seeing the trading down below, but the public was never allowed to trade.

>> Okay.

Peter Tuchman

>> But we, at one point in the eighties, there were 8,000 people in this room. Brokers, clerks, support staff, reporters, everybody. So it was a huge thing going on. The room was back-to-back people.

>> I've seen some old photos. I remember growing up in New Jersey and seeing photos of... It was packed-

Peter Tuchman

>> It was packed. It was chaotic....

>> and it was active trading.

Peter Tuchman

>> But very organized chaos.

>> Yeah. And then you had those old monitors that were like, if they fell on someone, I think four people would die.

Peter Tuchman

>> Correct.

>> They were like a monster box-

Peter Tuchman

>> They were teleprompter protons.

>> And they were hanging from-

Peter Tuchman

>> They were static. They're hanging from arms.

>> Oh my god. You know what I'm talking about. Okay.

Peter Tuchman

>> Of course I do. I remember it well.

>> All right. I mean I love having you on. I think we got some time here. The next guest's not going to be on for a while. So, what are the moments? Take us through the folks who don't have that historical perspective of being on the ground. I mentioned '87. Again, I was in college because I did a whole thing on high-frequency trading at that time. I wrote a paper on it in college because the big issue was the speed of communications was kind of screwing things up in terms of that system was a fine-tuned orchestrated machine.

Peter Tuchman

>> Yeah, theCUBE.

>> Now it's now intricate, it's infiltrated by this new thing called information.

Peter Tuchman

>> Correct.

>> Like, oh my god, this is-

Peter Tuchman

>> And who's the fastest. There were people who had set up offices closer to the unit-

>> Yeah, get those packets?

Peter Tuchman

>> Correct.

>> And ICE is master at this. They got the data center in I think Secaucus.

Peter Tuchman

>> Mahwah.

>> Mahwah, Jersey. So it's all fat pipes now. Okay, I get that. But now, and then you got '87 and you got the nineties. What was the best boom? I mean the nineties was not that bad. The nineties was a good time up until the bubble burst.

Peter Tuchman

>> So I've been around for all of the crashes in crisis that I don't use the word lightly. We've literally had a handful of those in history. Obviously I wasn't here for the crash of '29, but I was here for '87. I was a clerk and that was for me the most notable day because we were still in open outcry auction market mode. I was a clerk. I remember you have to realize that the percentage that stock were down. I was trading digital equipment as a clerk. It was $168 stock. It closed at 60 that day.

>> Yeah, it was a plummeting.

Peter Tuchman

>> The market maker had to buy stock. I'm talking about those parameters and guidelines. In the absence of public buying it, the market makers had to buy stock all the way down. Many firms went out of business that night. I just mentioned to you that I got here, there was 70 market-making firms. Most of them family-owned. A guy came down here in the old days, there were the Henderson's, they were the Cohen's, Irish, Jewish and Italian. That was it.

>> Good diversity.

Peter Tuchman

>> Guys from the neighborhood who started on Wall Street as a squad and they went up rags to riches, wonderful stories about the guy. There's a guy named Gene German. He was the shoeshine guy who ended up becoming a market maker and a multi-millionaire. It's a great story. Right?

>> I love capitalism.

Peter Tuchman

>> It's wonderful.

>> How could you not love capitalism?

Peter Tuchman

>> It's wonderful. So, the crash of '87 was an extraordinary day. Yeah, that was a bad day. It was nothing like it. And I think even to date, because there was no technology or back then everything was done on paper. I had $2-

>> So you'd say that was the most disruptive to the system because it was a combination of a crash and then a new normal was obvious that this was a force majeure-

Peter Tuchman

>> The system was overloaded....

>> that just crushed. Now, this is a seed change. It's kind of like the AI moment is like, "We can't do it anymore like this."

Peter Tuchman

>> Correct.

>> It was almost like you say, "We're screwed."

Peter Tuchman

>> We had never... On January 21st in 1987, we had the biggest busiest day in history on Wall Street, 183 million shares. The following October was we had never done these kinds of numbers, so you had the numbers, the insanity of that day, the market was down double digits intraday and stocks were trading in $3, $4 increments.

>> That inflection point obviously is very notable and it was great to get that color. Okay, take me to what happened next? Because the next five years was essentially a reconfiguration of workflows.

Peter Tuchman

>> Correct.

>> How did that change your life as a trader? Was it good? Was it hard? Was it a grind? Was it just another day at the office for you? What was it like?

Peter Tuchman

>> You know what? Things changed. It's sort of hard. I don't remember that much of the early nineties. I'm sorry.

>> Put it and flush it.

Peter Tuchman

>> I'm sorry, I was on Wall Street.

>> It's like in baseball when the ball was under your legs, you flush it right up, "Hey, move on to the next play." You know?

Peter Tuchman

>> Remember, it was the nineties. I don't remember that, but there was a fascinating time when the internet came along, when Yahoo came out at $3 and went to 400, right back to three. There was all that time and there was fascinating to be around the old-timers who were here. And I often tell the story, there was the day that Yahoo crashed after everybody had been walking around like, "You know what, their P&L was up big." They had all bought it at three, it went to 480 and then they didn't think it was ever going down. It was the early version of it's going to the moon. Like the meme stock phenomenon, right? AMC, it's a $2 stock, it's going to the moon. I said, "No, it's not." But anyway, so that day I was trading convertible arbitrage, which is a different field of this business. There's common stock, there's preferred stock, there's convertible preferred. It's a way of raising capital by a company offering a higher dividend and whatever. So that was a very little special niche here on the floor.

>> It's almost like derivative trading, but kind of like or in that same genre.

Peter Tuchman

>> Correct. A hundred percent.

>> So essentially you're buying an option for converting.

Peter Tuchman

>> So what you're doing is you're buying a convertible preferred, you're shorting the common so that you're getting a yield, you're getting a high dividend.

>> You're playing both sides.

Peter Tuchman

>> Yeah, but you're in every trade. You use a two-sided trade because you're acting against the common.

>> That's smart.

Peter Tuchman

>> So the other side of that trade is a short. It's called Chinesing. It's you're shorting the preferred and buying the common. So you're always in head, you're trading for small bits, but when it works you're writing four tickets.

>> Yeah, that's a lot.

Peter Tuchman

>> So it kind of like printing money. But anyway, so the day the-

>> Until the ends.

Peter Tuchman

>> The day... Exactly.

>> Look, we'll come back to the next question on highs and lows of the hair up and then the hair is looking great.

Peter Tuchman

>> They have been through Frank Murphy, a bit of a curmudgeon trader for JJC. It was a market making firm the day that Yahoo went belly up and everyone who has been on a high horse, because the '90, '95 moment was everyone there-

>> Yeah, they are on a high horse....

Peter Tuchman

>> never another down on Wall Street. The internet is a sensation.

>> Yeah, everything's up-

Peter Tuchman

>> First there were the non-believers.

>> Everyone's a genius, right?

Peter Tuchman

>> Everyone is a genius until you get punched in the face. So, on that day that the stock went from 480 to three and the numbers are probably, I'm a little odd. Frank was sitting in the back and he sort of always stood like this and people were ripping their hair out because they had promised their wives a trip to Disney World and new car. Everybody was a millionaire and suddenly they were not millionaires. And so I walked over and I love... I'm a people person. I'm a humanist. I love personalities, emotions. I love to... That's what's so great about this job. When I walked on the floor on March 23rd, 1985, I had just come from West Africa where I was living for two years. I came down here. I had a summer job as a teletypist. My father was a well-known doctor in New York. His patient was a partner at Cowan & Company and I knew I had arrived. The energy, the adrenaline, the people was extraordinary. So anyway, and I loved... And we had a rule too that whatever went on from nine to four, you could have been up in someone's face, you could have been fighting out, short of fisticuffs, at the end of the day, it was over. You started to freshen it. It's like my mother always said, what's the best way to have a great long marriage? Never go to bed angry. We never went to bed angry here. Fresh starting day.

>> Yeah, all new day.

Peter Tuchman

>> Everyone's pulling their hair out. They're screaming and yelling. The market's tumbling, and I walk over to Frank because he's just got a smirk on it. I said, "How come everyone's freaking and you're..." And I was 27. I had never bought stock before. I didn't own any of it.

>> What are you saying?

Peter Tuchman

>> I said, "Why are you smiling?" He goes, "Pete, I bought Yahoo at three, I sold it at 10. I bought it at 40, I sold it at 60. I bought it at a hundred, I sold it at 200. I bought it at 375, I sold it at 430. By the time it went to 480 and back to three, I had made $20 million and I did not care where it went." That gave me that idea-

>> He was in the money....

Peter Tuchman

>> that's a smart investor. I teach day trading now I have a day trading academy called Wall Street Global Trading Academy. We'll talk about that another time.

>> Yeah, give the plug real quick. What's the URL?

Peter Tuchman

>> Wsgta.com. There's a link in my bio on Instagram Einstein of Wall Street. We teach technical analysis to thousands of students all over the world. We coach and mentor all our students. We have a boot camp. It's a really wonderful... We started it during COVID when 40 million new traders came into the trading space. But the key thing to learn from, I'm damn sure a lot of your people are day trading, is to use a stop order on every trade, protect your downside risk in a market that goes up and down. Also, take a profit when you can, not when you have to. So the minute you're in a stock and you're up, sell half of your position. No one got broke taking a profit,

>> Yeah, it's same as the tables. Put some chips in your pocket and keep playing with house money.

Peter Tuchman

>> A hundred percent. You know that?

>> Yeah. Absolutely.

Peter Tuchman

>> There's a great analogy of the two different kinds of gamblers. The one who walks in with a thousand bucks. He says, "I'm going to make a thou, I'm going to walk away from the table, go see Celine Dion and go get a steak at Ruth's Chris, and I'm going to go home." The other one has no plan. He's got the same thousand dollars. He's up three grand. He thinks he's got diamond hands. He starts doubling up on his bets. He's up eight grand. I'm never going to lose my money.

>> I'm untouchable. The hot hand syndrome.

Peter Tuchman

>> Next thing you see, he's sitting smoking a lucky strike, drinking a Hennessy. He's been to the ATM four times and he's afraid to tell his wife he doesn't have money for the rent. Those are the two sides of the coin.

>> Yeah, I mean this is a market. I mean, you've lived this and you continue to do it. You have the people on the high horse all the time, but you get knocked down a lot.

Peter Tuchman

>> A hundred percent.

>> I mean, knocked down, you got to get back up. Wall Street, this is not for the faint of heart.

Peter Tuchman

>> It's not.

>> Failure is just... It's like baseball. The ball's going to bounce off your glove. You got to let it go.

Peter Tuchman

>> And we learn so much more from failure-

>> You got to let it go.

Peter Tuchman

>> What we teach people is to journal every trade. Executing a failing trade correctly is the same as executing a winning trade. If you do it the right way. It's discipline, consistency. That's how you've become a good trader.

>> Well, Peter, great. Definitely a long form conversation. Next time we... Almost an hour, but we could do two. We're going to bring you back in because what I want to do is get your perspective because you have a unique perspective on not only the history, you're a historian by default because you've seen the movie many times, but we're now coming into this modern era. You're mentoring traders, which is awesome. That's super cool, but also the world's changed, but the game is still the same. There's trades and so the next question is, okay, AI is this now moment. Like '87, it's an inflection point. I think we're going to see a whole nother ball game coming. I mean, wow.

Peter Tuchman

>> We are in so many ways because, look, this was a party that was very exclusive that no one was invited to. I in 1980 was the doorman at Studio 54. It's one of my great years of my life. I know all about the red rope and not being allowed into a party. What happened during COVID was what I call the perfect storm where everybody who had been excluded from this party was suddenly led in. Through Robin Hood, we build these free trading apps, but not one of these companies had an educational component to their platform. So it was just like-

>> Yeah. The retail investor....

Peter Tuchman

>> I didn't tell you if you drank 12... I let you into my party, but I didn't tell you if you drank 12 vodka's that you were going to get sick and not be able to get home.

>> Those aren't beers.

Peter Tuchman

>> Exactly. So, that is educational. That's why I'm still doing what I'm doing is because it's a matter of what do I do with this great platform I've built and I feel the responsibility to those 50 million-

>> Yeah, you're paying it forward....

Peter Tuchman

>> retail traders to teach them how this works. I don't need to stand at the top of the mountain with a bunch of cash. That does nothing for me. But if I'm able to inspire and motivate 40 million young new... They're the future of the investment community.

>> Well, I'll tell you right now, gamers are great traders because they're just waking up and going, "Okay, I got to start making some money." To your point about capitalism, your story about the people who came here as market makers, essentially a job. They became and went on to multimillionaires. At that time that's like being a billionaire.

Peter Tuchman

>> Yeah.

>> I mean, look at the money-

Peter Tuchman

>> Absolutely.

>> If you factor in being a millionaire in the sixties, seventies, eighties, you were essentially today like a billionaire. You were a fat cat, as they say, and that's what capitalism is all about. This is the American dream. So now you have an online population who are used to looking at signals instead of shooting and capturing the flag as that's a trade.

Peter Tuchman

>> Yeah, it is a trade.

>> They're actually pretty good at it.

Peter Tuchman

>> Some of them are really good at it. I have been lucky enough to have mentor without even knowing it. I'm going to speak in Dubai in November and I'm going to be interviewed by a young guy who's 23. His name is Noah. He started out at 14, hanging out across the street because he wanted to meet me and I inspired him to be a trader. He's now gone on to become a multimillionaire trader and he's already giving and paying it forward. He's already creating a community to teach them what I taught him, but then they're also the bad guys. They're the ones who-

>> What's interesting, I mean, we have a little more time. Just quickly touch this guy, I think this close, full circle to our beginning conversation. The early days here was bounded on trust. You're starting to have even digitally, the shared experiences of trading, the crying, the risk, the high horse, getting knocked off, getting back on, and then winning-

Peter Tuchman

>> And winning....

>> and then paying back. It's just in different digital forms.

Peter Tuchman

>> Correct.

>> So I think that's what you're kind of getting at.

Peter Tuchman

>> I am.

>> That culture of, hey, hard charging, we're going to leave our emotions at the door. Instead of being a day, it's just the trade.

Peter Tuchman

>> You know what? Look, there are different... Everybody deals with success and failure in different ways, and then there's success in fulfillment. It's a matter of what you do with it. There are guys who put on a post, a picture on Instagram on the back of a Bugatti with a bunch of stacks of 10 thousands, or they're guys who actually use the platform that they've done and the money they've made to pay it forward and there are 40 million new people out. 80% or more of people who try the day trading game fail.

>> You know what I love about the NYSE and just as someone coming in from the West Coast? I've only been on West Coast for 25 years, but I grew up in New Jersey and Massachusetts, so I kind of knew about it. I never really was inside the club, but what I noticed is people work their ass off.

Peter Tuchman

>> They do.

>> They work hard, but they play hard. So the culture here-

Peter Tuchman

>> And they're good people.

>> And they're good people. They know each other. It's a community. We need to get that back, that work hard ethic.

Peter Tuchman

>> Yeah. People are still at home are still not wanting to go... I don't get that. How can you not want to go back to work?

>> Yeah.

Peter Tuchman

>> You know what it is though? I always talk about it. You find something you love to do, get really good at it, and then that's what you're going to do. There are a lot of people unhappy in their jobs. That's one of the other things that I talk about is to twenty-year-olds who are about to embark post-college, find something you love to do.

>> I find this place to be like an amusement park. It's fun.

Peter Tuchman

>> We like to call it the Super Bowl. Train every day.

>> Super Bowl. Yeah. I mean this action going on all the time. I mean, if you like action, this is the place to be. All right, final point. Well, since you're the first time on theCUBE and my first time with you here in your building and your territory, I appreciate your support.

Peter Tuchman

>> Thank you.

>> I want you to talk to the people out there. I talk to a lot of people in California and all around the world, and no one really kind of knows the difference between NASDAQ and the NYSE. As people think about going public or I'm a CFO, maybe I don't have my best friend in the bad connection for the other guys or whatever. There's always that... Everyone has their favorites, but I think democratization of capital markets is here.

Peter Tuchman

>> It's here.

>> So it's not like, oh, I have to go here or there because I look like this. I'm a dog. I go here, I'm a cat. I go there. This is a new thing. So why is the NYSE the best place to go public and what's the difference?

Peter Tuchman

>> Thank you for the opportunity to tell that because as the ambassador, I've been here at this point probably longer than most, and I have a wonderful platform that I've turned into. One to motivate and educate people. As an ambassador of the New York Stock Exchange, one of the things that I'm very passionate about is what we do different and what we do better. One quick storm and I mean, this was a place when I came down here as a young person. It was amazing to see that if someone in the community, we were always in high stress mode, but still, and as I said, what went on from nine to four was over at four. You could have been in a huge argument and have a bad trade with someone at two. At four o'clock you were at Gallagher's having a beer and a steak.

>> Yeah.

Peter Tuchman

>> Okay. At the end, the bottom line is this community was such a philanthropy. If someone was struggling at home with money or whatever, we would literally... There'd be a guy who would grab one of those big rolling garbage cans. He would put a bag in it and walk around the room, "Johnny's having trouble here. Here, we're doing a raffle." Somebody would donate something. We would raise thousands of dollars on any given day for charities, for people struggling for whatever. It is the most giving community. So, that's unbelievable.

>> That's DNA. That's like in the DNA.

Peter Tuchman

>> A hundred percent.

>> Okay, got that. All right.

Peter Tuchman

>> Okay, NASDAQ versus NYSE. In the old days, you need... So it's all about valuation in the old days. There was NASDAQ and there were two choices. NYSE had capital requirements of 250 million before you could list here, NASDAQ did not have that rule. So when tech started coming into the -

>> Yeah, they had no revenue....

Peter Tuchman

>> in place. They had no revenue, so they could not support a listing here. They weren't the IBMs or the CAT tractors of the day, so they ended up going to NASDAQ. What they didn't know was there were no market makers, there were no guidelines. It was a bit of a Cowboys and Indians environment, and it still is. So there's nobody there to support it, there's nobody there covering it. From a media point of when you go public, you now need your loyal customers to become shareholders. You don't want people just to buy your coffee. You want them to love your company, be a loyal enough customer to want to buy a share of Starbucks or Nike or Apple, whatever you're a loyal customer of. So, what we're doing now here in the NYSE is we are sort of molding and we are changing the rules a little bit where we have a thing called NYSE American, which is a different opportunity. We've lowered the capital requirements to list here on the floor. What does that offer you? It offers you the branding and marketing of the NYSE. It offers you access to somebody like me that does a lot of wonderful work with startups to try and get them to tell their story and get the new retail community who's looking for an alternative investment to see and hear you. It gives you a market maker who is there to create the smooth and active market.

>> The lower the bar, but it gives you the trust and quality. It allows high quality, not required numbers, revenue, valuation, numbers to come in.

Peter Tuchman

>> Correct. You can come in here now through the NYSE American and be-

>> So you're better at servicing?

Peter Tuchman

>> Servicing. You're better at communications and signage and branding and marketing. You're better in every respect. Okay, you get to ring an opening bell here or a closing bell. You get to have a market maker who stands over your stock and watches it and injects liquidity in so that it's our fiduciary responsibility.

>> You're making the market. It's called the market.

Peter Tuchman

>> You're making a market. NASDAQ, the stock can open at three. It can IPO at three. It can go up to five because of the initial bump. It can end up going down to 30 cents, have a 30 for one reverse split, and it can be out of business within three months. We don't want that for a company.

>> Well, times are changing and I think what's interesting now with the globalization, now you have the American dynamic. I mean, it's like Hollywood to me.

Peter Tuchman

>> It is.

>> It's Super Bowl.

Peter Tuchman

>> It is Hollywood.

>> This is great. This place is phenomenal.

Peter Tuchman

>> It is. It is.

>> People look great.

Peter Tuchman

>> We're so happy that you're here.

>> I love being here.

Peter Tuchman

>> I'm personally happy because-

>> They have to kick me out of this room. I can do a podcast all day here.

Peter Tuchman

>> I think there's so much we can do together of telling the story, right? We're both storytellers.

>> I appreciate you.

Peter Tuchman

>> And to talk about the history.

>> Well, I want to get the Studio 54. I wanted to in the eighties, the Studio 54.

Peter Tuchman

>> You'll get to that soon.

>> No wonder why you forgot the nineties.

Peter Tuchman

>> I set that up. I didn't have to say it. You got it.

>> TheCUBE here. Look, I'm having a lot of fun here. Look, this is the NYSE. They work hard, they play hard. But this is a serious business, serious market. Trust, delegation, stock, making the market. It's all part of the process. The Super Bowl, it's the main stage of the financial markets.

Peter Tuchman

>> The Super Bowl, yeah.

>> It's the center of the financial world of capitalism. Of course, theCUBE is here connecting Silicon Valley Podcast style here at New York. It's wall to wall coverage on Wall Street.

Peter Tuchman

>> Giddy up.

>> Thanks for watching.

Peter Tuchman

>> Thanks for watching.