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The Next Big Stock Market Crash ?

5 responses

  1. robert M
    October 30, 2014

    Hi BCM,

    I will take the opposite view and say that there was a lot learned from the 1929 crash and that we should all be thankful that someone was paying attention in 2008.

    In a nutshell, the great depression was brought on by a freezing of capital markets and protectionism created by the 1929 panic. The isolationist/protective stance amplified the effects of the downturn and cost many dearly.

    We can be thankful that in 2008, the opposite occurred and governments added billions to the economy to keep the markets liquid and kept global trade moving.

    That is the takeaway from the crash of 1929. We are currently half way through a 9-10 year dept recession and can look forward to clearer skies on the horizon.

    I highly recommend “The Great Crash – 1929” by John Kenneth Galbraith as an interesting study of the event.

    From a personal individual perspective, the crash of 1929 is a perfect example of how one’s portfolio should always have a portion devoted to fixed income to soften the impact of such events.

    As with all downturns, there were a few people who benefited handsomely from the crash. The best example is an estate near Chicago which now holds massive fields of undeveloped lands. It was bought by a middle class family from a former “rich” family and that family now sits on tens of millions of dollars in real estate that they picked up for pennies on the dollar.

    In 2008, the people holding on to insurance on the credit notes made a huge payday when the markets corrected. They had identified correctly that something was amiss. These weren’t wall street wolves but people who were affected by Asperger’s Syndrome , a mild form of autism. The person afflicted has the ability to go through thousands of pages of documents and keep the facts straight. It was a nice talent to have when analyzing prospectuses totalling thousands of pages.

    In summary, while I agree that the details of the crash may not be have much correlation today, the macro aspects of the crash still remain relevant. A point that we both agree on.

    cheers and have a great day. I enjoyed the article.

    rob….

    Reply

    • bigcajunman
      October 30, 2014

      Thanks for the clarification, given the speed of news and such, the situation certainly would come upon us very quickly…

      Reply

      • robert M
        October 30, 2014

        No matter how fast the news, I can never react to it in time. That is why I follow the advice that you and others have given many times. I ignore all financial news and stay away from my investments when the markets go south.

        I rebalance during times of tranquility or when I have surplus cash that needs to be re-invested.

        I stayed away from the rather sour September and October and I am glad that I did . Things are looking better now and I can look at my investments again.

        Often times the simplest advice is the best. Keep reminding us of that fact. I still need the occasional reminder.

        cheers,

        Reply

  2. Bernie
    October 29, 2014

    Imagine all those juicy buying opportunities post 1929 crash! I profited quite well after the 1987 crash & 2008-2009 recession. These days I’m mostly buy, hold & monitor with dividend growth stocks. I live by these great quotes:
    “Slow & steady wins the race”
    “It is not necessary to do extraordinary things to get extraordinary results.”
    “Have patience – good investors do”

    Reply

    • bigcajunman
      October 29, 2014

      Well the fact there was a “recovery” in January 1930 followed by an even bigger drop, suggests there were profits made after the first crash, but I doubt it was by John Q. Public.

      Reply

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