Echoes of 2007: private credit worries

Former Goldman Sachs chairman and CEO Lloyd Blankfein joins Wilfred Frost in London for a candid conversation about risk, resilience and what it really takes to survive multiple crises at the very top of global finance. In this episode of The Master Investor Podcast, Lloyd reflects on his journey from the Brooklyn projects to running Wall Street’s most famous firm, why he was initially rejected by Goldman, and how a scrappy commodity trading outfit called J. Aron reshaped the culture of an Ivy League-dominated investment bank – and how Lloyd embodied that transformation.

Drawing on stories from his new memoir, Streetwise: Getting To and Through Goldman Sachs, Lloyd explains the trading lessons that truly matter: why the best traders are more like great poker players than economic forecasters (he can “barely predict the present, let alone the future”), know how to play the cards they’re dealt, and are the quickest to adapt to changing situations. He also dives into the long-running tension between traders and investment bankers, why brilliant traders are often underestimated and investment bankers overestimated, and what the financial crisis looked like from the hot seat of one of only two major bank CEOs who led their institutions into 2008 and out the other side stronger.

Lloyd reflects on the echoes of 2008 today, and why it will pay to be wary of the built up risks in the system after 15 years of no reckoning. In particular he highlights the inability of Private Equity to exit their positions despite the most attractive financial markets in history as a warning sign. “At some point there will be a forced reckoning.”

He also shares key lessons in navigating corporate politics to rise up through a competitive firm from outsider to CEO, and how once at the top you need to ensure you do not become deluded by your own self importance ( something he also reflects on with President Trump in mind).

Along the way, Lloyd and Wilf discuss social mobility, imposter syndrome on Wall Street, the value and limits of stock picking,  the responsibilities that come with influence in markets and politics, and why despite starting as a gold trader he is not a gold bug (“gold might go to $100k but it will go there without me”).

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