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In the darkest days of the Civil War, Abraham Lincoln learned that Confederate cavalry had captured a Union general and a hundred horses. Lincoln knew what was scarce, and it wasn’t the general.In this special episode, recorded at More Than Capital’s Global Annual Meeting at Rice University’s Baker Institute in Houston, we sit down with four leaders who have made consequential decisions under pressure:* Retired Lt. Gen. George W. Smith Jr., former commanding general of I Marine Expeditionary Force* Ambassador David Satterfield, director of the Baker Institute* Dr. Kenneth Medlock, senior director of the Center for Energy Studies* Britt Harris, who has led major financial institutions like Bridgewater, TRS and UTIMCOChapters(00:00) Lt. Gen. George W. Smith Jr. on knowing what’s scarce(05:08) Britt Harris’s seven storms(15:11) Ambassador David Satterfield on the Iran war and its two likely outcomes(19:08) Maritime choke points and asymmetric forces(26:26) Satterfield on the administration’s “two original sins”(29:06) Dr. Kenneth Medlock on how oil markets reorganize(32:24) 1970s industrial power generate and why data centers may follow the same path(40:59) The Marine Corps’ trust tactics(44:52) Britt Harris on leading UTIMCO through COVID(50:18) Core values as a fixed point in uncertain timesSponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn how EQT is unlocking energy to power AI, go to PoweredByEQT.com.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

From iron horses to infinity machines, every great technological revolution starts with a curious mind chasing discovery for its own sake. Discoveries lead to technological breakthroughs that, when commercialized, change the capital markets, organizational structures, and living conditions.As a follow up to our railroad series, we chat with Sebastian Mallaby—Paul A. Volcker Senior Fellow for International Economics at the Council on Foreign Relations, co-host of The Spillover podcast, and author of books on hedge funds (More Money Than God), Alan Greenspan (The Man Who Knew), and venture capital (The Power Law). His latest book, The Infinity Machine, is a riveting biography of DeepMind’s Demis Hassabis.Railroads changed more than transportation—they changed corporate scale, financing, market power, the social contract, and the relationship between technological progress and investor returns. Measured as a share of GDP, the railroads were the largest capital investment wave in history. AI is on pace to overtake them.We explore how the market history of railroads helps frame the AI era. We also contrast the similarities and differences between the AI boom and railroads by exploring market power, competitive dynamics, and capital formation.You can find Sebastian at the Council on Foreign Relations (https://www.cfr.org/experts/sebastian-mallaby) and on X (@scmallaby).Chapters(01:37) The sweetness of discovery: why Hinton and Hassabis chased AI(06:01) Why AI carries risk but extinction talk may be overblown(10:16) Railroads, the corporation, and AI’s governance experiments(14:31) How AI outgrew venture capital(23:42) Where the profits will accrue and the fight over open weights(30:18) Bottlenecks, chips, and why AI competition is political(36:57) Data center backlash and the new social contract(40:32) Will AI break the labor market?(53:46) Safety, capital, and the limits of governance(1:03:07) What could knock AI off its trajectory(1:13:09) AI as a tool for learning, not rote outputSponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn how EQT is unlocking energy to power AI, go to PoweredByEQT.com.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

By 1869, the transcontinental railroad is finished, the Civil War debt is refinanced, and the business that made Jay Cooke reach the pinnacle of private banking in the US is disappearing. He had spent the war building something nobody had built before: a retail distribution machine that sold Union bonds to farmers, mechanics, and merchants. He had created the template for war financing that would inform government playbooks for the next 100 years, and it made him the best known banker in America. But by focusing on that, he had missed the banking business for the major railroads that were booming in financial markets.As the government financing business shrinks and excitement builds over the completion of the Union Pacific and Central Pacific linking New York to California, Cooke turns to the Northern Pacific transcontinental railroad. The structure is elegant on paper but the project combines massive capital needs with a speculative vision on an unprecedented scale.This is the perfect story to answer the question of what happens when enormous capital funds transformative infrastructure ahead of the demand that must eventually pay for it.Chapters(05:01) Jay Cooke in Philadelphia, 1839 as a young banker(11:51) The retail distribution in Pennsylvania(16:38) The financier of the Civil War(22:56) Jay Cooke looks for non-government business after the war(30:19) The Northern Pacific comes calling(36:13) Jay Cook signs a deal with the Northern Pacific(45:47) Harris Fahnestock, Cooke’s partner, warns him about funding the Northern Pacific(50:36) Jay Cooke & Co. almost fails on October 1872(56:10) Fahnestock closes the New York office and triggers the Panic of 1873(59:15) The realization of a visionReferencesJay Cooke, Private Banker by Henrietta Larson (link)1873: The Rothschilds, the First Great Depression, and the Making of the Modern World by Liaquat Ahamed (link)Jay Cooke’s Gamble: The Northern Pacific Railroad, The Sioux, and The Panic of 1873 by M. John Lubetkin (link)Panic on Wall Street: A History of America’s Financial Disasters by Robert Sobel (link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn more and explore the latest data on energy affordability, go to eqt.com/eqt.com/permitting-reform-now.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

DescriptionIn the 1860s, railroads are rewiring the American economy. The old value chain built around steamboats, canals, and local commerce is coming apart, and nobody knows which parts of the new one will be profitable.Cornelius Vanderbilt is almost 70 years old and one of the wealthiest men in America. He has spent four decades mastering steamboats. He comes to railroads without a master plan for an empire. Instead, he sees a problem he thinks he can fix: the New York and Harlem Railroad, an unprofitable line that Wall Street brokers joke is only good for wrapping paper, and the only railroad running into the heart of Manhattan.What follows is five years of escalating fights, each one set off by a structural problem Vanderbilt discovers as he’s trying to turn railroads from speculative projects to great businesses. Along the way we ask what actually built Vanderbilt’s moat, why he tried diplomacy before waging battles almost every time, and what operating in a fog with enormous amounts of capital, market, and operational risk might teach us about today’s markets.Chapters(02:02) How a technology revolution rewires an entire value chain(06:04) Vanderbilt forcing a boat up the San Juan River in Nicaragua(13:31) Railroads as an accessory and saving the Harlem in the Panic of 1857(16:20) Selling the steamships and buying a railroad nobody wants(20:37) The Harlem Corner(23:21) No market power with the Harlem(27:28) Diplomacy first and taking on the Hudson(38:17) The January 1867 blockade of the Central(47:35) The Erie War against Daniel Drew, Jay Gould and Jim Fisk(1:00:06) The Lake Shore campaign and Black Friday in 1869(1:05:37) The Vanderbilt playbook and what it means for the AI buildoutReferencesThe First Tycoon: The Epic Life of Cornelius Vanderbilt by T.J. Stiles (link)The Invention of the Trillionaire by T.J. Stiles, WSJ Article (link)The Visible Hand: The Managerial Revolution in American Business by Alfred D. Chandler, Jr. (link)History of the New York & Harlem Railroad by E. Clarence HyattIncreasing Returns and the New World of Business by W. Brian Arthur (link)The Innovator’s Dilemma by Clayton Christensen (link)7 Powers: The Foundations of Business Strategy by Hamilton Helmer (link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn more and explore the latest data on energy affordability, go to eqt.com/energy-affordability.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

You think you know the history of the American Revolution. George Washington crossing the Delaware. Thomas Jefferson writing the Declaration. But there’s one founder you’ve likely never heard of, and he was just as important.The war for independence started and ended on a financial note, and the man at the center of the money problem was someone most of us have never heard of: Robert Morris, the Financier of the American Revolution.Morris was a Liverpool-born merchant who moved to America at thirteen in 1747 and went on to become one of the most important leaders of the American Revolution. He understood shipping, credit, and global trade well enough to keep Washington’s army from collapsing.We trace the arc of the war to understand how a small group of colonies banded together to finance a rebellion against a world superpower. We cover colonial paper money, the fiscal tensions leading up to Lexington and Concord, how the Continental Congress tried to fund everything, and how they ultimately saved the war by handing extraordinary executive powers to Robert Morris.Chapters(05:35) The colonial economy: farming, a chronic trade deficit, and a chronic shortage of gold(08:15) Robert Morris: the Liverpool-born merchant who masters colonial trade(12:50) Money as a flashpoint: the Currency Acts and Morris’s own private currency experiment(17:38) From taxes to revolution: the Stamp Act, the Intolerable Acts, and Lexington and Concord(19:43) Funding a war with no power to tax: Congress invents the Continental Dollar(29:35) Christmas Supplies: Morris helps Washington cross the Delaware(34:02) “Not worth a Continental”: hyperinflation and the collapse of the printing era(44:17) Superintendent of Finance: a desperate Congress hands Morris near-total control(52:13) Yorktown: kegs of French silver and the financing behind the decisive victory(54:47) Newburgh and the Treaty of Paris: the army nearly turns and the war endsReferencesRobert Morris: Financier of the American Revolution by Charles Rappleye (Link)The Continental Dollar: How the American Revolution Was Financed with Paper Money by Fairley Grub (Link)Financial Founding Fathers: The Men Who Made America Rich by by Robert E. Wright and David J. Cowen (Link)Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation by William Hogeland (Link)One Nation Under Debt by Robert E. Wright (Link)The Power of the Purse by E. James Ferguson (Link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To join us in celebrating America’s 250th anniversary, go to https://www.eqt.com/community/america-250.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

In the 1840s, Britain deployed more capital in railways than any nation had ever invested in anything outside of war. At the peak, capital invested was more than 7% of GDP… in a single year. That’s three times what the US is spending on AI today. And almost all of it came, not from governments or great banks, but from the savings of private individuals.At the center of it stood another George. This time, it’s not George Stephenson, the father of locomotives. This time it’s the Railway King, George Hudson, who started as an orphaned draper’s apprentice in York, inherited a fortune at twenty-seven, and use it to dive into politics, to start a bank, and ultimately to build the largest railway empire in Britain, controlling a third of the nation’s track at his height.We follow Hudson’s rise from a single line through York, to the serial mergers that built the Midland Railway, to a seat in Parliament and a place at the epicenter of the mania that he both rode and amplified. Then we trace the unraveling: the Irish famine, the Bank Crisis of 1847, collapsing dividends, and the shareholder meeting in 1849 where a single question started a snowball effect that brought George down. But it didn’t bring down the vast network of railways he built; a network that would go on to underpin the Victorian golden age.Along the way we dig into how this market actually worked (cash calls, parliamentary approval, project dividends), and how, as the mania took off, investors ignored competitive pressures and succumbed to a “collective hallucination”.Chapters(08:00) Intro to George Hudson(10:18) The inheritance(18:15) George Hudson meets George Stephenson and builds the York & North Midland(19:03) How the capital structure of railways actually worked(30:07) The 1844 Midland merger masterstroke(38:32) Railway Mania at its peak(43:12) Conflicts of interest everywhere(46:02) The Bank Crisis of 1847(52:22) The dominoes fall(1:02:14) Takeaways from the storyReferencesGeorge Hudson: The Rise and Fall of the Railway King by AJ Arnold and Sean McCartney (link)George Hudson: The Railway King: A New Biography by Matthew Wells (link)History of Railway Mania by Gareth Campbell (link)Papers on Technology and Financial Manias by Andrew Odlyzko (link)Boom and Bust: A Global History of Financial Bubbles by William Quinn & John Turner (link)Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor (link)Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Perez (link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn more and explore the latest data on energy affordability, go to eqt.com/energy-affordability.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

Every so often a technology arrives that changes everything. For over 5,000 years, the fastest a human being or a ton of freight could move overland was the speed of a horse. Then, in the span of a single generation, that constraint was gone.We are living through one of these revolutions right now, sparked by artificial intelligence. When you look at other revolutions in history, nothing quite compares to AI… except for rail.This is the first episode of our Rail Revolution series. We start with the technology breakthrough in this episode before turning to the markets it unleashed in our next episode. It’s the story of how steam power and the railway were born, and why that story rhymes so closely with the AI buildout happening right now.We begin in 1700s England, a country running out of wood and forced underground for coal, where flooding mines created the desperate problem that the steam engine was invented to solve. From there we trace a century of breakthroughs including Newcomen’s atmospheric engine, James Watt’s separate condenser, Richard Trevithick’s high-pressure locomotive, and the incremental improvements in iron technology.We tell the story of George Stephenson: born dirt-poor in a colliery village, illiterate until 18, with no patrons and no formal training. We follow him from his first locomotive through the Stockton & Darlington, into a brutal Parliamentary cross-examination engineered by the canal lobby to break him, and on to the Rainhill Trials and the opening of the Liverpool & Manchester Railway, which was a national spectacle with a great tragedy that could have derailed the growth of railways.Why did the railway take decades to arrive when the technology was ready years earlier? What does it actually take to commercialize a working invention? And what allowed a self-taught underdog to pull it all together?Stay tuned for our next episode: the railway works, the dividends are real, and the fuse is lit. George Hudson and one of the largest investment manias in history.Chapters(04:48) Life in 1700s England: the wood crisis and the desperate need for coal(08:13) How a steam engine works: vacuum, pistons, and Newcomen’s atmospheric engine(15:13) James Watt’s separate condenser and the partnership with Matthew Boulton(16:41) Richard Trevithick, high-pressure steam, and the first locomotive on rails(21:49) The iron problem: why cheap wrought iron unlocked the railway(22:56) Meet George Stephenson: from illiterate colliery boy to the Stockton & Darlington(29:51) Liverpool’s canal monopoly and the fight for a Parliamentary bill(38:02) George crushed in Parliament(48:49) The Rainhill Trials(53:00) Opening day 1830: spectacle, the Duke of Wellington, and the Huskisson tragedy(1:04:48) Takeaways: the total product and the three ingredients of a tech revolutionReferencesGeorge and Robert Stephenson: The Railway Revolution by LTC Rolt (link)Richard Trevithick: Giant of Steam by Anthony Burton (link)The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen (link)History of Railway Mania by Gareth Campbell (link)Papers on Technology and Financial Manias by Andrew Odlyzko (link)Visualizations of the Newcomen and Watt steam engines, and the Puffing Devil locomotive by Michael De Greasley (link)AI Could Be the Railroad of the 21st Century. Brace Yourself by Derek Thompson (link)Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Perez (link)Crossing the Chasm by Geoffrey Moore (link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn more and explore the latest data on energy affordability, go to eqt.com/energy-affordability.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

The final chapter in our 80s on Wall Street series bridges the story from the rise of high yield bonds and leveraged buyouts to the birth of modern distressed debt investing. At the center of it are two legendary investors: Howard Marks and Bruce Karsh.Howard Marks grew up in Queens, studied finance at Wharton, and trained under the Chicago School’s efficient market hypothesis before watching the Nifty 50 collapse early in his career. He learned that it’s not what you buy, it’s what you pay. He eventually moves into high yield bonds and becomes one of the first institutional investors in the market.Bruce Karsh was a rising star as a lawyer before stepping out to work for Eli Broad analyzing investments and structuring transactions. His work on the Johns-Manville asbestos bankruptcy planted the seed of an idea that would evolve into distressed investing.By 1988, the two had found each other at TCW in Los Angeles with a shared philosophy around investing at the right price, tracking the market cycle, and finding good companies with bad balance sheets to invest in. By 1990, with high yield default rates above 10%, Drexel bankrupt, and collapsing demand for bonds, Howard and Bruce were on their way to building a reputation as legendary credit investors.Chapters(02:50) Context on Howard Marks and Bruce Karsh(06:45) Howard’s early career: Wharton, the Chicago School, and the efficient market hypothesis(10:32) The Nifty 50: one-decision stocks and their collapse(15:26) Howard moves to bonds and Bruce Karsh goes from law to investing(19:47) Howard meets Milken and discovers high yield bonds(25:22) Howard builds Citi’s high yield portfolio and moves to TCW(30:34) Bruce Karsh’s distressed debt thesis and joining TCW(39:42) The Howard Marks investment philosophy: market cycles and probabilistic thinking(42:39) The 1989-91 crisis: S&L collapse, FIRREA, and the high yield market meltdown(52:18) Deploying capital in the crisis, TCW’s 45% returns, and founding OaktreeReferencesHoward Marks Investor Series with Bruce Karsh (link)Howard Marks Memos, The Complete Collection (1990-2025) (link)The Most Important Thing by Howard Marks (link)Mastering The Market Cycle: Getting the Odds on Your Side by Howard Marks (link)Acquired with Howard Marks and Andrew Marks (link)Junk Bonds: How High Yield Securities Restructured Corporate America by Glenn Yago (link)Beyond Junk Bonds: Expanding High Yield Markets by Glenn Yago, Susanne Trimbath (link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn more and explore the latest data on energy affordability, go to eqt.com/energy-affordability.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

Oil is one of the most important commodities in the world. Despite that, it’s probably one of the most misunderstood and underappreciated markets even by sophisticated market participants. Especially when you consider that oil is about a third of global energy, more than 90% of transportation energy, and the price of oil directly impacts everything else in the economy.But that’s not the whole story. As our guest Bob McNally so eloquently points out, part of what makes this market so fascinating and so complex is how volatile oil prices can be and how often the load-bearing assumptions of market participants break down.Arguably the entire history of oil is the history of our repeated attempts to manage its price volatility. And no one understands that better, or has been right more often during times of crisis, than Bob McNally.In this episode, we sit down with Bob—founder of Rapidan Energy Group, former White House energy advisor to President George W. Bush, longtime hedge fund analyst at Tudor Investment Corporation, and author of Crude Volatility—to add historical context to the crisis in the Strait of Hormuz, to better understand how oil markets work, and to shed light on the psychology of market participants and policy makers.You can find Bob on X (@Bob_McNally) and LinkedIn. You can find Rapidan Energy Group at https://www.rapidanenergy.com/Chapters(01:38) Variant perception and Bob’s Iran call(08:19) Why the market misread Hormuz(10:56) Why oil prices are uniquely volatile(17:06) The Texas Railroad Commission: OPEC before OPEC(23:00) Spare capacity and the swing producer(30:38) How the U.S. lost the swing producer role(38:11) How OPEC took over market management(49:50) How shale changed the oil market(54:11) How policy makers make decisions during energy crises(1:01:28) Second and third order effects from the current crisisReferencesCrude Volatility: The History and the Future of Boom-Bust Oil Prices by Robert McNally (Link)“Ships stranded by Strait of Hormuz closure” 60 Minutes on CBS, March 15 2026 (Link)Chart: oil supply shocks and spare capacity since 1955 (Link)Oil Market Black Swans: Covid-19, the Market-Share War, and Long-Term Risks of Oil Volatility by Robert McNally (Link)A Crude Predicament: The Era of Volatile Oil Prices by Robert McNally and Michael Levi (Link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn how EQT is unlocking energy to power AI, go to PoweredByEQT.com.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com

In the first three parts of this series, we covered Michael Milken building the high-yield bond market, Ross Johnson triggering the RJR Nabisco bidding war, and KKR winning the biggest LBO in history. But there is a missing piece to the puzzle: where did all the money come from?The answer leads us to Fred Carr, a largely forgotten figure who may be the most important person in 1980s finance that almost nobody has heard of. A scrappy outsider from Watts, Los Angeles, he first rose to fame as the hottest mutual fund manager in America during the go-go years of the late 1960s before flaming out spectacularly with the Enterprise Fund.His second act was even bigger. In 1974, Carr took over a near-bankrupt life insurance holding company called First Executive Corporation and transformed it into a powerhouse. He pioneered single premium insurance products that offered higher yields than competitors, built a revolutionary sales incentive model, and earned top-tier safety ratings that unlocked massive institutional capital flows from pension plans and municipalities.First Executive became the largest buyer of high-yield bonds in America, participating in 90% of all Drexel underwritings between 1982 and 1987. But when the junk bond market collapsed, the same concentration that fueled Carr’s rise became his undoing.Along the way, we explore how insurance companies work, why the end of the Great Inflation broke every financial business model in America, how regulatory gaps allowed risk to build invisibly, and why the California aftermath of First Executive’s collapse became very relevant to one of the biggest financial institutions in modern finance.Chapters(01:36) Set up to sources of capital for the junk bond boom(07:11) Fred Carr’s origin story: from Watts to Wall Street outsider(12:16) The go-go years and the Enterprise Fund’s meteoric rise and fall(19:30) First Executive: taking over a near-bankrupt insurer and starting over(23:23) The Great Inflation breaks insurance: why old business models stopped working(27:22) The Milken-Carr flywheel: high-yield bonds meet single premium insurance products(39:03) First Executive becomes a junk bond giant: growth, ratings, and warning signs(48:56) The collapse: Drexel’s bankruptcy and its consequences for the junk bond market(1:03:15) Seizure, conservatorship, and the wild aftermath with Apollo and Credit LyonnaisReferencesThe Fall of First Executive: The House That Fred Carr Built by Gary SchultePerceptions and the politics of finance: Junk bonds and the regulatory seizure of First Capital Life, Journal of Financial Economics, 1995 (link)Dangerous Dreamers: The Financial Innovators from Charles Merrill to Michael Milken by Robert Sobel (link)Junk Bonds: How High Yield Securities Restructured Corporate America by Glenn Yago (link)SponsorsBig thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn how EQT is unlocking energy to power AI, go to PoweredByEQT.com.Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com