Today in Market History

In a New York Times article from July 7, 1932, Urges Minimum For Stock Prices, the author wrote, “In the belief that the stock market has ceased to be a reliable yardstick of values, some business leaders are discussing the advisability of establishing minimum prices for securities as a means of establishing confidence in industry.” The stock market would do that for them the very next day, making its final minimum price. Two years, eight months and twenty-two days after Irving Fisher said “stock prices have reached what looks like a permanently high plateau,” they would finally reach a permanent low.

The Dow Jones Industrial Average fell from a high of 381.17 to 41.22, an 89.18% decline. Arriving at the bottom was a full-blown liquidation. By March 1932, the Dow was already 77% off its September 1929 highs. And then in the next four months, in a straight line, it crashed another 54%. Here is what the New York Times financial section looked like on this day in 1932. There was nothing in here to suggest the selling was over. Not a single mention of how far stocks had fallen, nor a single mention of the Dow Jones Industrial Average.

screen-shot-2017-07-08-at-4-53-38-pm

There was however, one very interesting piece of information, and it’s something that would have been glossed over at the time: “The acquisitions between April 6 and June 29 formed the greatest government security-buying program in history and were designed to ease credit, offset the outflow of gold and indirectly to improve the government securities market in view of the tremendous volume of new issues by the Treasury.”

Between 1930 and 1951, only 8 people were hired to work on the New York Stock Exchange trading floor. The Great Depression wiped out a generation of investors. I guess a 90% crash and a twenty-five year recovery will do that to you. It’s impossible to really know what it was like to live through this period, but if you want to get pretty darn close, read The Great Depression: A Diary.

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.