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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Happy 80th Anniversary, 1929 Crash!”

1. Richard Sylla Says:
   October 28th, 2009 at 10:47 am

   Financial Historian on ‘29: ‘Great Crash’ Vs. ‘Break in the Market’
   Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets at New York University:

   Because their teachers and their history books said so, most people know that the Great Crash of 1929 caused the Great Depression of the early 1930s. I am not one of these people.

   What I know is that the Dow Jones Industrial Average closed at 306 the day before Black Thursday, October 24, 1929, and at 199 on November 13, three weeks later. That drop of 35 percent was the Great Crash. I also know that on April 17, 1930, the day before Good Friday, the Dow closed at 294, or 96 percent of its level before Black Thursday. In other words, almost all of the decline of the crash proper had been undone by a recovery of 48 percent in the Dow between Halloween ‘29 and Easter ‘30. Most people don’t know that, or if they ever did they forgot it.

   On Good Friday ‘30, the New York Times referred not to the Great Crash, but to “the break in the market last Fall.” The Times that day also noted that the day before, April 17, “average prices worked higher and a few outstanding issues shot up smartly to new high prices for the year to date,” and that “British interests were investing heavily in these issues.”

   The Great Depression began sometime after the spring of 1930, most likely when a lot of banks failed late that year. But the so-called Great Crash a year earlier had almost nothing to do with those bank failures, the first of thousands of bank failures that occurred from late 1930 to March 1933.

   What’s interesting from the perspective of 2009 is that from September 12, 2008, the Friday before Lehman, to the low of March 9, 2009, the Dow lost 44 percent. The Great Crash of 2008-09 was actually a greater crash than the Great Crash of 1929. And half a year after the crash lows of last March, the Dow again is up about 50 percent, as it was half a year after October 1929.

   Is the market’s recovery since March now giving us a better forecast of what lies ahead than it did in April 1930? Let’s hope so. Let’s hope, too, that people stop exaggerating the effects of “the break in the market” in October ‘29.

2. HarryWanger Says:
   October 28th, 2009 at 11:11 am

   There’s a lot of support in the 9830 level on the Dow right now but it’s only a matter of time. When GS couldn’t make a break above 180 yesterday after several futile tries, it hurt. All the leaders, including AAPL, are starting their descent.

   The transports are ugly. We’re getting close to the “buy the dip” calls from the analysts. This will spell disaster. We may see a bit of stabilization due to the chase on the dips for a bit. Now comes the dangerous waters of trying to chase dips that will cause heartbreak.

   Listening to the traders talk about the Crash on the PBS’ American Experience was priceless. They were interviewing these old veterans of the market in the 70′s reminiscing about those dark days. Scary part was everything they were saying could have been fast forwarded perfectly to today.

3. arbitrader Says:
   October 28th, 2009 at 11:15 am

   According to the chart posted here the Thursday the 24th opened at 305, closed at 300 and had an intraday move down to 272. Friday the 25th was a calm day. Then Monday the 28th opened at 295 and closed at 260. Tuesday the 29th gapped down to open at 252, closed at 230 with an intraday move down to 212.

   So when looking at that the 24th, 28th, and 29th all had intraday moves of similiar size and the 28, and 29th also both had open to close moves of similar size (actually the 28th lost more at the close from the previous day than did the 29th).

   So why is the 29th consider “the crash” It seems that the crash played out over the course of atleast 2 days if not 3 or 4. Whereas the 1987 crash was clearly played out on 1 day, even though the Friday before was not a good day, the monday move in 87 was 5 times bigger than the Friday move.

   Anyone know why the 29th is consider the day in 1929 other than it was the low for the next few days until it went lower?

4. TakBak04 Says:
   October 28th, 2009 at 11:20 am

   BR, the PBS “Crash of 29″ was an incredible watch. The more things change the more they remain the same. Could be the “Dot Com Bubble” or more seriously the “Flip this House” Bubble we’ve just gone through.

   In case some of your readers missed it and want to watch the video here’s a link to the site from PBS and a description. Worth the watch to see the footage of the great Jesse Livermore who is still a guru to some current traders, who recommend his book.

   ———–
   viewable here:

   http://www.pbs.org/wgbh/americanexperience/crash/

   By 1929, Charles Mitchell, President of the National City Bank (which would become Citibank), had popularized the idea of selling stock and high yield bonds directly to smaller investors. Mitchell and a very small group of bankers, brokers, and speculators manipulated the stock market, grew wealthy and helped create the economic boom of that fabulous decade. Their successes made them folk heroes of the day. The Crash of 1929 chronicles a fateful year through the words and experiences of the descendants of these titans of finance.

   In 1929, while the market was rising, seemingly without limits, there were few critics. Based on eight years of continued prosperity, presidents and economists alike confidently predicted that America would soon enter a time when there would be no more poverty, no more depressions — a “New Era” when everyone could be rich.

   Instead it was the rich who became richer. Jesse Livermore, a Wall Street insider, drove around town in one of six yellow Rolls Royces. His daughter-in-law describes his two yachts, private railway car and five homes, including an apartment on Fifth Avenue he bought to have a place where he could change clothes for the theater.

   Michael Meehan was the stock specialist who manipulated the glamour stock of the day, RCA, from $2.50 a share up to a peak of over $500 a share, making millions for the few who were in on the deal. William Durant, founder of General Motors, was called “King of the Bulls.” In October of 1929, he would lose millions in a desperate, single-handed effort to stop the stock market crash.

   Before the crash, the success of these men convinced small investors that the stock market was a sure thing, that Wall Street was the smart place to put one’s money. The film features the recollections of people whose families experienced the crash. Groucho Marx’s son, Arthur, remembers how his famous father detested gambling, yet put his entire life savings in stocks.

   The Crash of 1929 captures the unbounded optimism of the age, a time when the stock market epitomized the false promise of permanent prosperity.

5. Joe Retail Says:
   October 28th, 2009 at 11:24 am

   Interesting. I know a lot about the “Great Depression” but have never really paid attention to the “Great Crash.” Maybe because I heard about how my parents lived through the depression, and their concern at the time was day-to-day survival. I don’t think they were spending a lot of time worrying about the financial markets.

   So, if there’s a message here, it’s a reminder: the market and the economy (and individuals’ daily lives) are not always tightly linked.

6. torrie-amos Says:
   October 28th, 2009 at 11:25 am

   so old school, we have high frequency trading and electronic money, we’re going to the moon alice, or maybe china, but we’re all on the bus running at warp speed

   29th, just an easier number too remember, stuff becomes like folk-lore, like folks jumping out of buildings, the more something is repeated—-”greenshoots”………the more folks believe it

   cultures are based on communication and hearing, not neccesarily specific facts, close facts are close enough to provide context

   most folks do not realize afghan is right on the edge of being are longest war in history, sans korea if you don’t count manning the border for fifty years, or are we still at war there?

7. DM RTA Says:
   October 28th, 2009 at 11:39 am

   A perfect moment to suggest the 1996 title, The Fourth Turning which borrows the ancient Greek idea of the saeculum.

8. Mark E Hoffer Says:
   October 28th, 2009 at 12:44 pm

   re: ‘market break’ v. “Great Crash”

   History is fables agreed upon. -Voltaire (1694-1778)
   http://noetic.oathill.com/Quotes/voltaire.html
   ~~
   saecŭlum (poet., esp. Lucretian, sae-clum ; less correctly sēcŭlum, sē-clum ), i, n. dim. [etym. dub.; perh. root si- = sa-; Gr. saô, to sift; Lat. sero, satus; whence Saturnus, etc.; hence, orig.] ,

   B. The utmost lifetime of man, a period of a hundred years, a century:
   http://cc.bingj.com/cache.aspx?q=saeculum+definition&d=4793698933998560&mkt=en-US&setlang=en-US&w=4e7c142a,d7a7a7b

   alternatively, 1921-29 ~ Economy Ramp ‘n Crash1.0
   thx. http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=The+Federal+Reserve+Act+of+1913