gold news

picture a really fancy cruise ship a bunch of rich people getting on to the cruise ship leaving the shores of europe in the time from when they got on the cruise ship in europe to take it over to america those really wealthy people became absolutely penniless during the journey and that's all because of the big stock market crash of 1929 and the reason i'm telling you this it's not all about a history lesson everything i'm going to go through here is to show you some of the things and some of the ways things are turning out exactly like they did back in 1929 and some things are actually very different today than they were in the big stock market crash of 1929. i think it's important for you to realize what you believe to be the differences because i do expect in my opinion and i'm wrong plenty of time this is opinion and it's not trading advice i do expect that a lot of things are going to play out exactly like they did in 1929 in the big stock market crash we saw a lot of investments declining by as much as 89 everything mentioned in this video should be considered opinion only and not personalized investment advice it's important to go back 10 years to say what led up to the situation that was the great stock market crash you know the 20s were known as the roaring 20s so much was going on the economy is developing so well so strongly people were buying toasters refrigerators automobiles for the first time in the 1920s the average worker could not borrow money but by 1929 the year of the stock market crash the average worker was taking on leverage they're taking loans they're paying on layaway buy now pay later kind of thing for the first time ever and now for the first time in the 1920s this is when the average investor got into the stock market it started with liberty bonds they still were trying to pay for world war one which they couldn't afford so now they have to ask for money from the people so they have liberty bonds they've got a lot of famous people promoting liberty bonds and in regular people average people would start buying the bonds and that was kind of like a gateway drug leading into the regular people investing in stocks for the first time the public was fascinated by everything to do the stock market they're fascinated by brokers they're fascinated by bankers and also they were enthralled by all these speculators who seem to be making so much money so easily simply by investing in stocks so then you've got about eight years of just continually rising stock markets you could not go wrong by buying the dip at any point over the 20s up until the last moment this was an era of permanent prosperity and wall street was who was getting all the credit for how well things were going but as always and as it is the case now a lot of power was concentrated into the hands of a few select people not a lot of people were making all the decisions for how the finances of the country are going to go how your finances are going to go just like it is today but as you know just like today it's not a level playing field and the average investor knows that they knew the game was rigged but they kept trying to beat it anyways just like we're seeing today one big difference though was that there's a lot more stock manipulation back then because there wasn't enough regulation yet so even the newspapers were involved in pumping up the shares of different stocks the biggest record was 100 million dollars in market capitalization from a big pump that involved a lot of these newspapers that were on the take for trying to get the stock market higher they made an increase of 100 million dollars in market cap of one company in a single week and that might not sound like an amazing amount or such a significant amount but that was back in 1929 at this point the market strength was based and dependent upon expansion leverage borrowing money to invest and of course there were those who questioned all the prosperity one of these was roger babson he's a statistician and he questioned the boom in the stock market and the economy and he was attacked and accused of a lack of patriotism as well before hoover the president was calvin coolidge and he had his own doubts but he never publicly as the president came out and expressed them as maybe he could have but this all leads us up to friday march 22nd keep in mind this was march and the crash was in october so march 22 of 1929 all eyes were on the federal reserve board the market was now absolutely dependent on borrowed money to maintain its levels and so a lot of people are watching what the fed statement was going to involve sort of like we go through now it was back then and it actually came from the fed's lack of doing anything their lack of statement which freaked people out and blue chip stocks some major stocks started dropping precipitously really violently and this is where the chickens come home to roost when you're borrowing a margin when the stock market starts going the wrong way that can really quickly add up and cost you a lot more because you've been leveraged you've extended yourself further so then you get a bigger hit when the market doesn't do what it's been doing for the last eight years margin calls led to margin calls which led to margin calls investors being forced by their brokers to sell stocks to cover over some of the losses that they're suffering from the declining stock prices which led to a credit crunch where investors are now paying 20 percent for carrying costs to cover off some of the money that they borrowed to buy stocks but one of these high-flying bankers that the world was enthralled with now charlie mitchell was a banker who saved the day by coming in and buying a lot of stocks and stabilized things it stabilized the market right during this first day's crash where it dropped significantly and now that the market's stabilized people put it out of their minds they had a short memory they forgot some of the risks that took the market down a little bit on that friday march 22nd of 1929 investors were distracted by other big things going on in the world at that time and they forgot how quickly they can lose money so quickly with leverage the market stabilized everybody lived to fight another day meanwhile all the top bankers and politicians were jawboning the market higher saying that it's permanent prosperity things only go up when they drop they come down they go back up again but there were signs of trouble starting to show up in the overall economy there was a lot less manufacturing of steel that's a first indicator while the overall construction industry was starting to become a lot more sluggish than enjoyed during the roaring 20s and one of the things that everybody was buying now this time in the world were automobiles and those car sales started to show signs of declining too so if you think there aren't forward-looking indicators that are going to warn you about this stuff then you'd be wrong because a lot of them will show ahead of time how the entire stock market and economy will go together as one and that's what we saw in 1929 since credit became a new thing and it was an easy thing and everyone's taking on credit for the first time a lot of people were in significant debt a lot of people were very poor but those same poor people were getting even deeper into poverty the stock market was still showing or demonstrating all the strength of the growth leading up to that point but it was not yet being more of an indicator for how the economy itself was completely weakening but instead of weakening the stock market actually roared to new heights new records in the stock market kind of similar to what we're seeing today yeah profits didn't matter anymore the prices of the shares were detached from the actual underlying companies meanwhile just as we see with any kind of overenthusiasm people started giving reasons why this was okay they would say things like the world wants american goods and america was the manufacturing hub of the world in 1920s they'd say that we're making so many goods that the whole world wants all the economies are connected now that's why this can keep on going on as it is meanwhile everybody was buying real estate and so that just made the prices skyrocket even more and so the more people jump on board fear of missing out and everyone's buying houses driving up the prices to absolutely unsustainable levels okay now this is where it gets real this is the setup which led into the big stock market crash you've got records on the stock market hitting new all-time highs you've got songs on the radio about the stock market being in the stock market was so cool then it wasn't a boring thing like it is today there was even brokers on cruise ships there were ticker tape machines and nightclubs and restaurants all over the place and it was september 3rd when it hit an all-time high but it was a really quick and almost unnoticeable transition when it went from boom to bust a stock market skeptic roger babson expected a severe decline and he said so and this big stock market downdraft on that day became known as the babson break they blamed roger babson because he's talking about how bad the stock market is going to do or how overheated it had become and the common thing was that people would say well you've been saying that for years roger babson you've said the same thing for years and it hasn't happened yet tell me when any of this sounds familiar to you the market's stabilized but then slowly started drifting slightly lower over time and while many did not yet realize it the collapse had already begun there were wild and volatile swings a couple days when the markets went down as much as 10 percent in a day there was a few bad days like that but there's also some wild volatility taking it back up in response but the american stock markets overall were in a gradual slow decline meanwhile it affected stocks all over the world stock markets across all nations worldwide were also declining together everything's connected everything's linked together it'll be no different this time and william durant who was the ceo of general motors the founder he shifted from making insane amounts of money to making a lot of money also from investing he went from being a automobile manufacturing magnet to investing most of that money and making even more money and durant would say everything will be all right if we all just continue to believe and that's an example of job owning how the people in the media or in certain places and the government analysts they're going to tell you they're going to talk up the market the federal reserve they're going to tell you everything's okay the stock market's strong the economy is strong and that's just the same thing like william durant is doing he wound up losing a billion dollars a fortune of a billion dollars in 1929 that's equivalent to a lot more in today's terms based on the decline in the purchasing power of the dollar but durant did lose his fortune because the stock market declined so suddenly so precipitously and he had to eventually declare personal bankruptcy but let me back up just one second here right before the crash every politician every banker is saying that the stock market's going to keep on going up if it goes down today it will go back up tomorrow that was a common refrain of the time america was the world's industrial giant everything was looking so rosy and wonderful everybody had toasters for the first time you're listening to the radio radio company of america was thriving it was soaring and then we got black thursday on october 24th beginning in the morning the stock market took a pretty significant decline shares were in free fall there's wild panic on the stock exchange sometimes there's no buyers for the shares people trying to sell big blue chip companies shares of those companies trying to sell them and there's no one who wanted to buy them so this small group of bankers that are controlling everyone's lives one of which was jp morgan whose offices were literally a matter of meters from the door to the stock exchange he summoned richard whitney the vice president of the stock exchange over to his office for a meeting at lunchtime richard whitney walks back to the stock exchange and starts making bids to buy stocks well above whatever price they just most recently traded at along with him he had other bankers that also did the same thing and there's just a lot of artificial forced buying of stocks for more than they're worth and that acted to significantly stabilize the market's freefall by 1 30 in the afternoon on thursday black thursday the stock market's panic was over and then it led into the big one you've got thursday markets go down significantly nothing too remarkable friday monday and then tuesday the real crash tuesday 29th of 1929. there was a four hour backlog on the ticker tape if you go to the ticker tape to check the prices of stocks there was a four hour backlog delay just trying to get caught up to all the trades that were taking place at t dropped 50 in one day you've got radio company of america which is once well over a hundred dollars trading around 26 dollars just above that mini plunging stocks saw no one trying to buy there were no buyers at all people said they heard screaming and panicking and shrieking on the floor of the stock exchange no one knew what to do but william durant we talked about earlier he bought the dip and he bobbed the dip and the more the stocks declined he bought more and i've already told you how that worked out for him but keep in mind all the dreams that were lost because we're entering now the great depression people invested on margin and leverage and so it not only eliminated whatever money they had it put them even deeper in debt thousands of banks just failed so if your money's in that bank they're like sorry we're bankrupt you lose that's why you see people sleeping on the bench and you think oh it's in black and white it's just the old days and they went through something that we won't have to go through people will be sleeping on park benches if something like this happens again and there's a lot of people who are quite well known who lost fortunes with the stock market crash including winston churchill groucho marx just pouring more and more money into the stock market it was almost like a vacuum pulling everybody's money into it everyone's wealth into it now let me tell you the total loss was approximately check this out 25 billion dollars and that doesn't even sound like that much does it well i would say that that is because of the loss of purchasing power from then until now just know that 25 billion dollars in 1929 was as significant as you probably imagined and yes there were people who committed suicide and yes were people who left out of office windows because of the crash and we're just getting warmed up here this is just the precursor to what's going to happen next by 1931 over 2000 banks had failed in the next couple years after that another 3 000 banks went under when a bank goes under that's your money gone any money you kept with them if they go bankrupt there's nothing you can do to get it back if you had money with a bank and that bank goes under you lose all your money that scared people of course and so everyone's going to the bank to get their money out that caused just a whole bunch of bank runs all at once people lost trust in banks and bankers and financial institutions and even capitalism as a very concept there are so many bankruptcies and so many people losing their fortunes through so much less demand so businesses suffered more and unemployment just spread and grew and grew some stocks had lost as much as 89 percent of their value that was when roosevelt came out and said the only thing to fear is fear itself he instituted strict supervision of all banking practices of all creditors of all investments roosevelt said there must be an end to the wild speculation with other people's money roosevelt also formed the securities and exchange commission because he needed to restore confidence in the financial system this is what i talk about all the time with the confidence in the us dollar there has to be a certain amount of confidence in it to give it its value a dollar is only an idea that we all agree upon but then politicians do what politicians always do the senate banking committee launched an investigation into the crash and it took three years and 10 000 pages if you ask me that was completely unnecessary because it's not rocket science to figure out what went wrong it's not like anybody that lost their fortunes is going to get any money back but this was the beginning of the great depression and it just expanded worldwide from there and that gave rise to a lot of anti-capitalist movements which we'll see a lot more of this coming up too and it gave rise to fascism and communism and even in america they made laws to prevent any kind of free trade which of course led to trade wars which of course led into world war and over the years from then there's been a lot of regulations which roosevelt put into place to protect us from having the same thing happen again and incrementally over the years parts of it have been dismantled and disabled dismantled and disabled politicians would say that they're outdated regulations and they would find ways to unwind them or roll them back just like before the big crash in 1929 speculation is now allowed to grow unchecked just like then when the government knew that there's a problem but they turned a blind eye just like then the same thing's happening now the government knows we've overreached the government's still turning a blind eye to things so a lot of things are similar now to just what they were in the big crash of 1929 will it happen again the same way i don't think so but will it happen again i think it absolutely will and i'm wrong plenty of time and it's opinion it's not meant to be personalized trading advice but i do expect that we are going to see exactly what we saw before happen again because things are setting up in such a similar way who knows when it's going to begin if it has already begun we might not even know it who knows what it's going to begin who knows how bad it's going to be i just know that when people get too far over one way too exuberant a lot of times there's a period of a return to reality and that can be very painful for anybody who's not seeing it coming or who's not positioned or setting up in case it happens the peter leeds youtube channel is about turning a small amount of money into something much more significant to you everything mentioned in this video should be considered opinion only and not personalized investment advice and peter is not going to say it so i will please subscribe to the channel