Hetty Green: The Witch of Wall Street [Outliers]  ## Metadata - Author: [[The Knowledge Project]] - Full Title: Hetty Green: The Witch of Wall Street [Outliers] - Category: #podcasts - URL: https://share.snipd.com/episode/d86d5544-a498-411b-9161-511af26d4bf0 ## Document Notes ## Highlights - **Early Finance Education** - Hetty Green learned finance as a child reading market reports to her failing-eyed grandfather. - She opened a savings account at eight and watched compound interest shape her future. Transcript: Shane Parrish Hedy Holland Robinson was born in 1834 into one of New Bedford's wealthiest whaling families. But she was unwanted. Her father, Edward Mott Robinson, had desperately wanted a son. When Hedy arrived, instead, he was, as the records show, devastated by the birth of this child. When her baby brother Isaac died just weeks after birth, her father's rage consumed the household. Hedy was cast aside and sent to live with her grandfather. Quick with numbers and good at reading, her grandfather put her to work. His eyesight was failing. His shipping empire demanded constant attention. So he had six-year Hedy sit on his knee and read him the financial news, stock prices, commodity reports, shipping manifests, while other children her age read fairy tales, Hetty read Railroad bonds up three percent, whale oil futures declining, gold steady at twenty dollars per ounce. There was no other little girl for me to play with, she later recalled. I had listened to bulls and bears and all that. This way i came to know what stocks and bonds were by age eight she had opened her own savings account depositing her weekly allowance and watching compound interest work its magic her Father initially disappointed by his daughter began to see hetty's gift with numbers known locally as black hawk robinson for his ruthless business tactics, he started treating Her like the heir he never had. ([Time 0:03:12](https://share.snipd.com/snip/e668e6f9-4221-486d-94bf-f294740ae589)) - **Buy Low And Double Down** - Buy undervalued assets nobody wants and hold until demand returns. - Increase purchases when prices fall to maximize future gains. Transcript: Shane Parrish She said, I buy when things are low and nobody wants them. I keep them until they go up and people go crazy to get them. That's the secret of all success in business. It sounds a lot like Warren Buffett, who would later say the key to investing success is to be fearful when others are greedy and to be greedy only when others are fearful. This is simple advice, but it's not easy. Few other people even attempted this in the 1870s. While everyone chased hot stocks, bought on margin, and speculated, Hedy did the opposite. She approached investing as if it were a business. Take the post-Civil War government bond. They traded at a huge discount because investors feared being paid back in depreciated paper money instead of gold. While skittish investors saw a South and enormous war debt, Hedy saw something different. Vast mineral deposits being discovered out West, massive settlement under the Homestead Act, booming manufacturing, thousands of miles of new railroad track. The way she saw it, the United States was on the right track and had just suffered a temporary setback. The future was bright. She bought bonds trading as low as 50 cents on the dollar from the U.S. Government. When they fell farther, she bought even more. ([Time 0:09:49](https://share.snipd.com/snip/9bfa2e7c-45fc-46c0-ac48-f086104b7eb8)) - **Research Creates Edge** - Obsessive, on-the-ground research created her edge in an era without disclosure. - She inspected rail yards, spoke to workers, and verified freight volumes before buying. Transcript: Shane Parrish Before deciding on an investment, she said, I seek out every kind of information about it. This is the same thing that Buffett would do in the 60s when, at least as the story goes, he'd hire private investigators to follow CEOs to see how they lived. Here's an example of how obsessively detailed she was. When she wanted to buy a horse and buggy in Bellows Falls, she didn't just negotiate with the seller. She found someone with a grudge against the owner and convince them to reveal every fault of the horse and rig. Armed with this knowledge, she got the wagon for less than half the asking price. When she bought Chicago and Rock Island railroad stock, she didn't just read the annual reports. She traveled to Chicago and inspected the rail yards herself. She talked to workers. She analyzed freight volumes. She wanted to know everything about it, good and bad, before investing. ([Time 0:11:22](https://share.snipd.com/snip/9fb3988c-e26f-493e-b523-023486287d2b)) - **Rescuing Her Own Fortune** - Hetty discovered her husband had secretly pledged her funds to cover his debts and rescued the bank with $700,000. - She transferred her deposits and plotted revenge, ending their marriage's trust. Transcript: Shane Parrish However, that request was refused. Her husband was more than $700,000 in debt and had illegally pledged Hedy's money as collateral without her knowledge. This was the ultimate violation. Hedy had spent her life fighting for control of that money, battling her father's will, her aunt's trustees and society's assumptions about women. Now her own husband had pledged her growing fortune to cover his speculative debts. In a scene that became Wall Street legend, Eddie appeared at the bank's offices in her black dress cape, her voice as chilly as the January air. She demanded her deposits. She was the largest depositor at the bank. The problem was her husband was its largest loan. When refused, she erupted, screaming and stamping her feet while onlookers pressed their faces to the window. To save her fortune, Hetty paid $700,000 to rescue the bank. She loaded her millions into satchels and transferred them to Chemical Bank in a cab that got stuck in the snow under the weight of her wealth. In that cab, she plotted her revenge. Their marriage was effectively over. Edward had committed the unforgivable sin. He had risked her money for his own gain. ([Time 0:15:25](https://share.snipd.com/snip/aa7afbec-f918-4722-8f2e-218a8b4733e6)) - **Cornering A Short Seller** - Hetty cornered Louisville and Nashville shares, forcing Addison Camac to pay a $10 premium per share. - She took $400,000 profit but refused to squeeze him dry out of respect. Transcript: Shane Parrish Camac had sold Louisville and Nashville stock short, betting it would fall on bad earnings. But Hedy was quietly cornering the market, buying every share she could find. As the stock rose instead of falling, Kammack found himself trapped. He needed 40,000 shares to cover his position. Hedy had them and made him pay a premium of $10 per share, walking away with $400,000 in profit. She had a lot more leverage than she used in this situation. He needed those shares desperately, and she only charged him a $10 premium. ([Time 0:18:12](https://share.snipd.com/snip/61a46a54-84ae-4829-97d3-703b7de5e887)) - **Sleep On Decisions** - Sleep on big decisions and reflect overnight before closing deals. - If offered full price, accept; if offered less, delay response to preserve leverage. Transcript: Shane Parrish Just like Munger, who inverts problems, she offered Ned a list of don'ts. Don't cheat in our business dealings, for sooner or later, your conscience will trouble you and you will worry yourself into the grave. Don't fail to be fair in all things, business and otherwise, and don't kick a man when he's down. Don't envy your neighbors. Don't overdress, whether you have the means or not. Don't fail to go to church, for the church needs you, and you need the church. Don't forget that riches dishonorably gained must be left behind someday, and when you depart you will find the gates of heaven doubly bolted against you. Don't forget to be charitable and don't falsify. Don't forget to obey the laws of God, for they were the first laws. And she offered one more piece of advice. After your business is over, you may take him to dinner and theater, but wait until the transaction has been closed and the money paid. ([Time 0:19:56](https://share.snipd.com/snip/cd32faa1-a431-4368-9553-9ea143a10597)) - **Hold Cash For Crises** - Keep large cash reserves to act during panics when others are forced to sell. - Liquidity lets you buy distressed assets and lend when credit vanishes. Transcript: Shane Parrish She always had available cash, which in a financial crisis, very few possessed. And because of this, during crises or panics, she not only had the available funds, but she had the courage to pick up these distressed assets at bargain prices. ([Time 0:21:45](https://share.snipd.com/snip/0d2cd99e-369e-438a-b086-7038ba002137)) - **Mother Bear At The Auction** - At a Texas railroad auction Hetty backed Ned's $1.4M bid and brandished a gun when Collis Huntington threatened him. - Huntington fled, leaving his top hat behind. Transcript: Shane Parrish The state's 6,000 miles of railroad track included numerous bankrupt branches that major operators like Collis Huntington desperately wanted to consolidate. Hedy wanted them too, partly for profit, but mostly despite Huntington, who had crossed her years before. She sent Ned to Waco to bid on the Waco and Northwestern Texas Railroad. In a heated auction against Huntington's representative, 24-year Ned bid almost $1.4 million and won. When Huntington tried to block the sale and then showed up threatening Ned personally, Hetty's response was characteristic. Up until now, Huntington, you have dealt with Hetty Green, the businesswoman. Now you're fighting Hetty Green, the mother. Herm one hair on Ned's head and I'll put a bullet through your heart. She reached for the gun on her desk. Huntington fled so fast that he left his top hat behind. ([Time 0:22:04](https://share.snipd.com/snip/0dd9f1f9-5fbd-4cb3-863b-09ebc8bd8aea)) - **Capital With Restraint** - During the 1907 panic Hetty lent millions at fair rates and helped stabilize banks and businesses. - She prioritized reasonable interest over profiteering despite having bargaining power. Transcript: Shane Parrish She had seen it coming for months, converting her real estate holdings to cash, calling in loans, and building her reserves. When the Knickerbocker Trust collapsed and depositors stampeded, Hedy was one of the few people in New York with ready cash. J.P. Morgan held his famous all-night meeting in his library, assembling finance titans to save the banking. There were rumors that a mysterious woman in black entered the library at midnight, and that it was Hedy Green, though Morgan later insisted it was Miss Russell Sage. Hedy was already deploying capital, lending a million dollars here, two million there, always at reasonable rates and never taking advantage of the desperate. During the panic, she said, I had a million dollars in cash on my desk every day. The biggest men on Wall Street came to me and begged for loans. Some I helped, some I didn't. That was my privilege. She could have charged 40% interest, but she never took more than six. Never in my life have I practiced usury. Her son, Ned, revealed years later that during the 1907 panic, Hetty had loaned over $6 million in Texas alone in addition to her New York loans. ([Time 0:29:45](https://share.snipd.com/snip/38b7b23b-e14a-48b1-856d-d5298b98ec21)) - **Stay Within Your Circle** - Focus investments inside your circle of competence like Hetty did with railroads and real estate. - Avoid complexity, leverage, and areas you can't personally manage. Transcript: Shane Parrish Number six, structure matters. I go my own way, take no partners, risk nobody else's fortune. Number seven, she mixed patience with decisiveness. She would buy assets and tuck them away for years, sometimes waiting decades for investments like greenbacks to pay off. Her extreme frugality, refusing to take carriages despite being worth millions, wasn't miserless, but rather an understanding that every dollar spent was a dollar that couldn't Compound. Number eight, stick to your circle of confidence. Hetty concentrated on what she knew best, railroads, real estate, and government bonds. She avoided complexity and speculation. She never borrowed money, following her father's advice to never owe anyone anything, and kept her operations simple enough that she could manage everything herself from a desk at Her bank. ([Time 0:41:11](https://share.snipd.com/snip/c22a492a-4bbc-4112-99fb-a1617b7f5d20))