Yeah, your old boss was totally right. Water cools the steel way too fast and makes it brittle, so it can crack or even shatter. Oil cools it slower and keeps it tough. Learned that the hard way myself, just like @grant_ross27 is asking about. Ruined a perfectly good ball-peen by dunking it in water and it split right at the eye. Switched to old motor oil and haven't had a problem since. The difference is night and day.