GREAT VIDEO: "The Crash of 1929" (PBS, American Experience)

[Nikki Stone1]

Amazing how everything old is new again. Interviews seem to date from the 1970s/early 80s. Really worth seeing.

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


Description:

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.

[slipslidingaway]

1. knr nt

[Nikki Stone1]

2. Thanks

:)

[slipslidingaway]

3. You're welcome....

will be watching soon, you might find this article interesting as well.

:)

snip>>>

"...Moreover, we believe it is critical to at least be open to the thinking that economic and financial market relationships we have grown to know and love over the past three to four decades are in the midst of meaningful change, perhaps secular change. As we see it, from a longer term standpoint linear thinking is death on Wall Street. If there was ever a time to think out of the proverbial box, so to speak, and leave the linear pathway, this is it. And for better or worse, so we will. The current unprecedented character of the credit cycle is simply forcing us to take this unbeaten path."

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=6904527&mesg_id=6904527

[Nikki Stone1]

4. Nicely said!

:)

[slipslidingaway]

5. Well I'm just the messenger :) .....

but I always read their monthly updates.

Watched the show late last night, some great old footage.

This from February 2000, some things never change ...thanks for posting.

:)

http://contraryinvestor.com/moarchive2000/mo020800.htm

"...What does all of this mean? Probably not much to the opening of trading tomorrow, but it is a view from the top by those who have been there. While many new age players can only dream of the top, Japan can tell us exactly what it was like "up there". As you know, many, many Japanese investors were stuck in the bottleneck of the Hillary Step on the way down. Pushing and shoving to get a place in line so as not to be caught on the summit as darkness approached.

Remarkably, 1929 in the US was quite similar in characteristics to Japan ten years ago and the US situation today. Inflation was low. Economic growth was spectacular. Unemployment low. Interest rates low. Corporate earnings good. And most of all, the mountain was full of climbers. Chock full. Of course we hear it said that today is nothing like 1929. Today we have lightweight, portable oxygen canisters (a liquidity proficient Fed). We have dissimilarities such as technologically sophisticated climbing gear (leveraged derivatives), expert guides who know the mountain like the back of their hand, ready to catch us if we fall (Greenspan), and state of the art telecommunications and GPS devices (online day trading). It's true that a lot is different relative to both 1929 and Japan of 10 years ago.

Just maybe, the most important point being sorely overlooked by investors of today is that the characteristics of the mountain remain the same.

The Hillary Step...The bottleneck on Everest responsible for more than a few deaths is well known. The Tibetan and Nepali authorities grant only so many permits to climbers for Everest expeditions. What the authorities cannot control is the "collective decision" to advance on the summit in a herd at any point in time. (Permits are granted for the season.) Teams can try to coordinate among themselves, but one is dealing with teams from many different countries and cultures. Weather conditions largely dictate climbing decisions. Fair weather is the signal to attempt the summit both individually and collectively. A mass of climbers forced to take their turns at the Hillary Step on the way down the mountain is an analogy for today's investors in the Tech and Net stocks.

As we have described to you in many ways over the past few months in our discussions, a mass of investors have already funneled onto the Tech and Net summit. The mo players, the day traders, the sector rotators, the mutual fund crowd, etc. We've described to you the indices top heavy with Tech and Net. The high altitude storm clouds are off in the distance while these investors are high-fiving each other for having summited. They are planting flags at the peak. They're taking pictures, both physical, emotional and psychological, of their incredible victory. At the summit, blue skies and sunshine fill the scenery. 1000 feet below, wisps of clouds have started to form. A few flakes of snow are falling, melting before they hit the mountainside. A small number of climbers have already started down the mountain and are slowly taking their respective turns descending the Step, one by one, cognizant of the forming cloud mass below. For a very large number of today's Tech/Net investors, the Hillary Step awaits. They don't seem to realize that the bottleneck has already started.

Some time ago we penned a piece called "The Other Side of Stock Split Madness". We argued that "on the way down", it's not massive selling that accelerates the decline, it's simply lack of buying. That's what characterizes a bear market. On the way up, price is all that counts in determining number of shares purchased. On the way down, unit volume (number of shares for sale) determines whether everyone descends the Hillary Step before experiencing the deathly chill of a bear market. Here's an update of a table we constructed in the piece describing the sheer number of shares waiting their turn at the Hillary Step for a few of today's investment darlings: ..."