| | | I am reading the annotated version of the Reminiscences book which covers the financial markets from late 1800s into early 1900s. As Jesse says, there is nothing new in Wall Street. But at the same time, there are things that are very different. I will try to post some of my observations later on. But for now, I have this to say:
During Jesse's time, there were massive IPO's, M&A's, pump-n-dump schemes, public infatuations with stock market speculations and so on. There was also a lot of concern about the money supply, interest rates, and the debasing of the currency. So in that sense there is little new. However, everything that the bears complain about as the excesses of the market today, was literally 30x worse back then than it is today.
For example, public infatuation with the stock market meant that there were betting parlors in every town where the people bet on the stock price fluctuations.(not actually trade the stocks). The volume of such "trades" was 10x the volume of actual trades on the stocks exchange, Every hotel lobby and cigar shop carried ticker tape machines and there were people gathering around it 6 deep.
The stock market boom was to a great extent due to the increase in money supply - which in those days meant the discovery and mining of gold in CA and AL.
Market volatility was *HUGE*. There were cases that a stock had a 1000 point swing (it's base price was actually ~150). And there were short squeezes so bad, where the shorts had sold stocks they could not get their hands on, that the company sent agents to the exchange to announced they will not ask for their stock certificates - effectively increasing the supply of shares without issuing any.
The interest rates were equally volatile. They could jump from 20% to over 60%.
The US currency was also on shaky grounds and had been issued in two versions - a "greenback" that was fiat and not convertible, and a "yellowback" that backed by gold (the two were eventually unified).
So whatever excesses one may see today, completely pale compared to what was going on back then.
I loved the original book. And I am finding the new annotated version even more interesting. |
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