Episode summary
The 1st Stock Market Bubble Looked Just Like AI Today (William Goetzmann Explains)
The Meb Faber Show
· · Hosts: Meb Faber · Guests: William Goetzmann
Summary
William Goetzmann argues that finance is far older than most people assume and that core ideas like compound interest, corporate ownership, and long-duration debt helped make civilization possible. He points to a Babylonian tablet at Yale as the first recorded war settlement and, in his reading, the first compound-interest calculation, then connects that ancient logic to modern lending, risk, and time value of money.
He traces the development of corporations to medieval southern France, where mill companies had boards, dividends, accounting, and limited liability, and notes that a Dutch water bond from 1648 is still being serviced today. From there, he moves to bubbles, comparing tulip mania, the 1720 boom, and the NFT surge, arguing that speculative episodes are driven by beliefs about the future and by new financial structures that let people trade abstract claims.
On investing, Goetzmann says history favors patience, equity ownership, and diversification, especially over multi-year horizons. He also argues that investors should match assets to specific goals, hold safer assets for near-term needs, and recognize that markets and companies tend to adapt through wars, shocks, and technological change.
Key takeaways
- Goetzmann says the Babylonian tablet at Yale is both the first recorded war settlement and the first compound-interest calculation in history.
- He argues that medieval southern France had corporations with boards, dividends, accounting, limited liability, and perpetual life long before modern joint-stock firms.
- Goetzmann says the NFT bubble exceeded tulip mania as a historical bubble, showing how new narratives can drive extreme valuations.
- He says investors who stay in diversified equities for 3 to 5 years are more likely to keep compounding gains than to lose them.
- His biggest personal investing win was simply putting his 403b into stocks for 30 years, which he says became life-changing only when withdrawals approached.
Notable quotes
“that document is the first document recording a war in history and it was a war between two Sumerian city states sometime kind of mid 2,600 I don't know almost 5,000 years ago”
“I argued that that is the first instance of compound interest calculations in history. So it's a twofer. It's the first war and it's also the first compound interest calculation”
“so I think that taking risk should be allowed. We shouldn't be outlawing it, but it c it is of course dangerous for people too if they take risks they can't afford”
How the episode opens
Welcome to a special series of the Meb Faber Show on the past, present, and future of America. I'm sitting down with some of the most notable historians, Thinkers, Investors in US Financial History. All tied to my new coffee table book, Investing in America: The Rise of a 250year Bull Market, out July 4th.
Met Faber is the co-founder and chief investment officer of Camry Investment Management. Due to industry regulations, he will not discuss any of Camry's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates.
For more information, visit Cambria.com.
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From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- financial history
- investor behavior
- historic bubbles
- global investing
- stock market valuations
Companies and tickers mentioned
- SpaceX
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Meb Faber Show, this episode and its artwork belong to The Idea Farm. Octagon is not affiliated with the show; this page is an independent summary.
