For those of you who would prefer to listen:
Wall Street lost a legend this week. His name was Art Cashin. He was a unique character in so many ways.
Art Cashin was the Director of Floor Operations for UBS at the New York Stock Exchange. He started his career at a small brokerage firm, becoming one of the youngest traders to obtain a seat on Wall Street. He went to Paine Webber a couple decades later. Paine Webber was acquired by UBS. Cashin stayed on board. As the years passed and trading volume moved from human hands to machines, the number of people on the floor dissipated. Cashin’s presence remained, with passion and purpose. He was a legendary figure.
Cashin was a savvy Market professional and a historian. He was a sensational storyteller, with a quick wit. The guy had a special skill for making complex issues relatable and understandable to the masses. It was a gift. I really value that. He also helped push back against the Wall Street stereotype of elitism, arrogance and greed. Cashin was about class, character and ethics. I value that even more. Everyone stopped to listen to Art Cashin as they knew a nugget of knowledge would be gained. Art was called “Wall Street’s version of Walter Cronkite.” He was the NYSE’s Babe Ruth.
Art Cashin never went to college. He graduated high school in 1959. That’s the year his dad died too. In his senior yearbook, the line where students listed their pending college, Art Cashin’s entry simply stated “working”.
Art wrote a daily piece called Cashin’s Comments. It was in circulation for a quarter-century. I really enjoyed reading it. After a brief history lesson, he cleverly tied that historic event to the day’s Market events. It was a work of art from a guy named Art.
One of Cashin’s best pieces was about price discovery; Finding the true value of an asset. It was a story about J.P. Morgan and Tiffany. Not the companies mind you; The actual guys.
It went something like this:
A local jeweler in Manhattan named Charles Lewis Tiffany tried to sell an expensive diamond stickpin to the financial mogul John Pierpont Morgan. Tiffany knew that J.P. Morgan loved diamond stickpins, which he used to put in his ties. One day, the jeweler sent a man to Morgan’s office with an envelope and a box wrapped in gift paper. Morgan opened the envelope, and in it was a message from Tiffany: “My dear Mr. Morgan, I know of your great fascination with diamond stickpins. Enclosed in this box is an absolutely exquisite example. Since it is so exquisite and unusual, its price is $5,000.”
Keep in mind, $5,000 at the turn of the 20th century was worth over $150,000 in today’s Dollars. The note continued: “My man will leave the stickpin with you and will return to my office. He will come back tomorrow. If you choose to accept it, you may give him a check for $5,000. If you choose not to accept it, you may give him the box back with the diamond stickpin.”
The next day, Tiffany’s man returned to Morgan’s office. Morgan presented him with the box rewrapped in new paper, along with a note, which said, “My dear Mr. Tiffany, as you’ve said, the stickpin was magnificent. However, the price seems a bit excessive. Instead of $5,000, enclosed you will find a check for $4,000. If you choose to accept that, you may send the pin back to me, and if not, you may keep the pin and tear up the check.”
The man returned to Tiffany, who read the note and saw the offer for $4,000. Tiffany knew he could still make money on the offer, but felt the pin was still worth the $5,000 he was asking. The jeweler said to the man, “You may return the check to Mr. Morgan, and tell him I hope to do business with him in the future.” Tiffany then took the wrapping off the box, opened it up and found not the stickpin, but a check for $5,000 and a note that said, “Just checking the price.”
Tiffany got his price. And Morgan, in his natural genius, figured out that he would offer the guy somewhat less, and if the guy took it, that was to Morgan’s advantage. And if the guy refused, then that was indeed the price and he had to pay. That was true price discovery in a most eloquent manner.
A key moment in Art Cashin’s career came following the September 11 attacks. He helped lead the creation of the NYSE Fallen Heroes Fund. It supported the families of the first responders who lost their lives that tragic day. Reflecting on that time, Cashin described walking through streets choked with ash and debris as a moment that underscored the resilience and camaraderie of New Yorkers. Art Cashin was indeed a proud New Yorker and a proud American.
Thinking about Art Cashin and his legacy really frames things for me. With all the language, strategies, mechanics, systems and numbers associated with investing; It’s the people that make the difference. Bulls and Bears will go on forever. Let’s hope good people will carry on great legacies. Storytelling is a powerful tool in that pursuit. It’s people that make that possible.
Back to the Market:
The major indices hit fresh, all-time highs this week as the 2024 rally continued. The November Job Report beat the Street expectations. October was revised higher too. But the unemployment rate ticked up to 4.2%, indicating a cooling of the Labor Market. That provided some data supporting another rate cut. The Fed meets in 2 weeks. The Market is now assigning an 85% probability of another ¼-point cut. It was 71% yesterday. It was 66% a week ago.
It hasn’t just been stocks that have rallied. Bonds have rallied too. The 10-Year Treasury yield fell from 4.5% in November to the current 4.15% level. Lower yields mean lower rates which are generally good for asset prices. Valuations have gotten a bit lofty of late. A breather is more than due. But this is the heart of the seasonally strong stretch for stocks. We anticipate it continuing into year-end, with Santa on his way. The Tech Titans are definitely pulling the sleigh again. 2025 seems destined to bring some more corrective price action. But that’s then. For now, we’re not going to fight the tape.
Art Cashin was known to be a bit thirsty. He loved whiskey; Both Scotch and Bourbon. He had a hobby he playfully called “marinating ice cubes”. Cashin would always end a Friday interview by saying, the ice cubes don’t stand a chance this weekend. I will be raising a glass this weekend to Art Cashin. He was truly a Wall Street legend.
Have a nice weekend. We’ll be back, dark and early on Monday.
Mike
