It's September 1929 and youv'e just sold your share portfolio and your house - at the top of the market.
Where is the best place for your money for the next 10 years or so.
Is it Gold, Cash, and Gold Mining Stocks.
Does anyone know what investments did best after October 1929.
Full Version: 1929 Crash
QUOTE(lowrentyieldmakessense(honest @ Aug 28 2005, 06:11 PM)
It's September 1929 and youv'e just sold your share portfolio and your house - at the top of the market.
Where is the best place for your money for the next 10 years or so.
Is it Gold, Cash, and Gold Mining Stocks.
Does anyone know what investments did best after October 1929.
Where is the best place for your money for the next 10 years or so.
Is it Gold, Cash, and Gold Mining Stocks.
Does anyone know what investments did best after October 1929.
I think it is different this time. The 1929 slump was an attempt by nature to have a Kondratieff winter - but it was stopped by the New Deal and reckless government intervention. The period from the early thirties until now has been a historic paper/fiat boom of unprecedented proportions. Government meddling is only now reaching it's stratospheric elastic limit, before nature cracks it back to the start line.
Because, in the 1929 struggle, paper appeared to win, I imagine that cash did best (I would think that the actual figures, and your answer, are in Robert Prechter's book "Conquer the Crash"). This time I think paper will lose and gold (nature's currency, for now) will be the last man standing. The mechanism I would imagine is that multinationals will bail out of paper currencies as they implode and trade instead with privately run, gold-backed digital currencies (either the ones that exist, or their own creations).
What will become of the governments and their currencies - who knows? It will be very bloody.
Just my opinion.
http://www.gold-eagle.com/editorials/great_crash.html
What Happened to Gold Stocks in the Great Crash Era (1929 - 1935)?
In October 1929 equities had reached unprecedently high levels of valuation. Although there were several causes of the 1929 crash, much of the blame may be attributed to the abuses of the infamous investment trusts - which enjoyed wildly accelerated growth from 1924 to 1929.
It is interesting to recall that the investment trusts of the 20s were the forerunners of what we refer to today as mutual funds. It was primarily through the channeling of the public's savings via the investment trusts that drove stock valuation ratios to astronomical - indeed unrealistic - levels in late 1929. Unfortunately, there was no securities' law nor S.E.C. at that time to curtail market abuses, manipulations and/or excesses leading to the bear market debacle which followed. Nor was there a Fed Chairman cautioning that "IRRATIONAL EXUBERANCE MAY RESULT IN A FINANCIAL ASSET BUBBLE!"
Financial assets as reflected by the Dow Jones Industrial Average (DJIA) reached its peak value of 385 in October 1929, marking the beginning of our country's worst bear market. And although the DJIA finally bottomed at 41 in June 1932, the vast majority of stock investors continued to suffer the effects of the languishing bear market during the next three years. By December 1935 the stock market (DJIA) had only recovered to 140 from its 1932 bottom -- still down a whopping 64% from its October 1929 peak.
As might be expected, interest rate sensitive equities were also decimated during the Great Crash of 1929. In September 1929 the Dow Jones Utility Average (DJUA) hit its peak at 145. From late 1929 the DJUA tumbled to its abysmal l o w of only 15 in March 1932 and again in March 1935. The interest rate sensitive utilities had plunged a cardiac arresting 90% from their unrealistic and lofty 1929 highs.
Three years after hitting its nadir, the DJUA was still severely depressed. Imagine: A $10,000 investment in the relatively "safe" utilities in late 1929 was only worth a mere $2,100 on New Year's Eve 1936! This is heart-wrenching financial history...
What Did Smart Money Do In the 1929 Crash and Aftermath?
During the same bear market period smart-money moved from the plunging equity markets (i.e. financial assets) to hard asset investments, like Homestake Mining - which is used heretofore as a surrogate for all gold stocks.
The stock price of this gold mining company soared relentlessly upward during the entire bear market. Homestake Mining stock rose continuously from $80 in October 1929 to $495 per share in December 1935 - which represents a total return of 519% (excluding cash dividends) during the devastating bear market period.
Contemplate and appreciate the monumental difference in investment returns during a serious bear market. Smart-money invested $10,000 in Homestake Mining (hard assets) in late 1929 - which increased in value to almost $62,000 by December 1935. This represents a compound rate of return of 35% per year in appreciation alone!
It is meaningful to note that in late 1929 the value of Homestake Mining was about $80 per share. Moreover, during the next six years Homestake Mining paid out a total of $128 in cash dividends. In fact the 1935 dividend alone reached $56 per share. That's almost a 70% dividend yield payout (basis 1929) in only one year! Indeed, hard asset investments (gold mining shares) were islands of economic refuge during the grueling years of the Great Depression.
Unfortunately, those innocent souls who remained invested in stocks - and had a buy and hold strategy - saw their initial $10,000 investment slowly dwindle to only $3,600 by late 1935. This represented a devastating capital loss of almost two-thirds of their investment savings. T H A T'S R I G H T! The hapless naive investor with a buy and hold strategy in financial assets lost the greater part of his original stake. Pathetically, he could ill-afford to risk - let alone lose - his precious capital during the many long despairing years of the Great Depression.
What Happened During the Next Great Market Crash (1973/1974)?
From the market high in 1973 to its low in 1974 the DJIA and the S&P 500 lost almost half their value - while the previously high-flying technology stocks plummeted more than 60%. Enough to cause heart-failure to the credulous believers of THIS TIME IT'S DIFFERENT. Even the relatively "safe" utilities were decimated - as they dropped more than 50% from their 1973 high to their nadir in 1974. H-O-W-E-V-E-R, students of financial history took profitable refuge in gold metal stocks. The Gold Mining Index, composed of ASA, Campbell Red Lake and Dome Mining, appreciated more than 260% from its 1973 low (40) to its 1974 high (147). This merits being redundant. During the severe 1973/74 bear market, stocks lost half their value - while gold mining companies almost quadrupled.
What Happened to Gold Stocks in the Great Crash Era (1929 - 1935)?
In October 1929 equities had reached unprecedently high levels of valuation. Although there were several causes of the 1929 crash, much of the blame may be attributed to the abuses of the infamous investment trusts - which enjoyed wildly accelerated growth from 1924 to 1929.
It is interesting to recall that the investment trusts of the 20s were the forerunners of what we refer to today as mutual funds. It was primarily through the channeling of the public's savings via the investment trusts that drove stock valuation ratios to astronomical - indeed unrealistic - levels in late 1929. Unfortunately, there was no securities' law nor S.E.C. at that time to curtail market abuses, manipulations and/or excesses leading to the bear market debacle which followed. Nor was there a Fed Chairman cautioning that "IRRATIONAL EXUBERANCE MAY RESULT IN A FINANCIAL ASSET BUBBLE!"
Financial assets as reflected by the Dow Jones Industrial Average (DJIA) reached its peak value of 385 in October 1929, marking the beginning of our country's worst bear market. And although the DJIA finally bottomed at 41 in June 1932, the vast majority of stock investors continued to suffer the effects of the languishing bear market during the next three years. By December 1935 the stock market (DJIA) had only recovered to 140 from its 1932 bottom -- still down a whopping 64% from its October 1929 peak.
As might be expected, interest rate sensitive equities were also decimated during the Great Crash of 1929. In September 1929 the Dow Jones Utility Average (DJUA) hit its peak at 145. From late 1929 the DJUA tumbled to its abysmal l o w of only 15 in March 1932 and again in March 1935. The interest rate sensitive utilities had plunged a cardiac arresting 90% from their unrealistic and lofty 1929 highs.
Three years after hitting its nadir, the DJUA was still severely depressed. Imagine: A $10,000 investment in the relatively "safe" utilities in late 1929 was only worth a mere $2,100 on New Year's Eve 1936! This is heart-wrenching financial history...
What Did Smart Money Do In the 1929 Crash and Aftermath?
During the same bear market period smart-money moved from the plunging equity markets (i.e. financial assets) to hard asset investments, like Homestake Mining - which is used heretofore as a surrogate for all gold stocks.
The stock price of this gold mining company soared relentlessly upward during the entire bear market. Homestake Mining stock rose continuously from $80 in October 1929 to $495 per share in December 1935 - which represents a total return of 519% (excluding cash dividends) during the devastating bear market period.
Contemplate and appreciate the monumental difference in investment returns during a serious bear market. Smart-money invested $10,000 in Homestake Mining (hard assets) in late 1929 - which increased in value to almost $62,000 by December 1935. This represents a compound rate of return of 35% per year in appreciation alone!
It is meaningful to note that in late 1929 the value of Homestake Mining was about $80 per share. Moreover, during the next six years Homestake Mining paid out a total of $128 in cash dividends. In fact the 1935 dividend alone reached $56 per share. That's almost a 70% dividend yield payout (basis 1929) in only one year! Indeed, hard asset investments (gold mining shares) were islands of economic refuge during the grueling years of the Great Depression.
Unfortunately, those innocent souls who remained invested in stocks - and had a buy and hold strategy - saw their initial $10,000 investment slowly dwindle to only $3,600 by late 1935. This represented a devastating capital loss of almost two-thirds of their investment savings. T H A T'S R I G H T! The hapless naive investor with a buy and hold strategy in financial assets lost the greater part of his original stake. Pathetically, he could ill-afford to risk - let alone lose - his precious capital during the many long despairing years of the Great Depression.
What Happened During the Next Great Market Crash (1973/1974)?
From the market high in 1973 to its low in 1974 the DJIA and the S&P 500 lost almost half their value - while the previously high-flying technology stocks plummeted more than 60%. Enough to cause heart-failure to the credulous believers of THIS TIME IT'S DIFFERENT. Even the relatively "safe" utilities were decimated - as they dropped more than 50% from their 1973 high to their nadir in 1974. H-O-W-E-V-E-R, students of financial history took profitable refuge in gold metal stocks. The Gold Mining Index, composed of ASA, Campbell Red Lake and Dome Mining, appreciated more than 260% from its 1973 low (40) to its 1974 high (147). This merits being redundant. During the severe 1973/74 bear market, stocks lost half their value - while gold mining companies almost quadrupled.
Invest in tins of beans.
Everyone is gonna need tins of beans in their bunkers while the sky falls in.
Everyone is gonna need tins of beans in their bunkers while the sky falls in.
Needle I think you believe we are being doom-mongers.
I don't believe in Armageddon - I think this would be a change for the better. It's just a little temporary discomfort.
The future for humanity is always choppy but very rosy. Wonderful things lie ahead. Onwards and upwards.
I don't believe in Armageddon - I think this would be a change for the better. It's just a little temporary discomfort.
The future for humanity is always choppy but very rosy. Wonderful things lie ahead. Onwards and upwards.
QUOTE(needle @ Aug 29 2005, 01:48 AM)
Invest in tins of beans.
Everyone is gonna need tins of beans in their bunkers while the sky falls in.
Everyone is gonna need tins of beans in their bunkers while the sky falls in.
When we get to the tins of beans stage - you'll need guns to hold on to them.
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