Chapter 43 Financial Crisis 2
The first and middle months of October were spent in suspicion, worry and wait-and-see. People did not care about the current stock price drop because "organized support" was talked about by almost everyone.
On the 23rd, Fisher (Philip Fisher, a famous securities analyst) and Mitchell were bullish again, but the stock price fell sharply in the afternoon. Ironically, when Fisher evaluated the prospects of the basic industries in the United States, he saw that many industries had supply and demand problems and the prospects were quite unstable. In August 1929, he submitted a "25-year-old big bear market will start" to senior bank executives. This can be said to be the most amazing stock market forecast in a young man's life. Unfortunately, Fisher "shorted and longed", he said: "I can't help being confused by the charm of the stock market. So I looked everywhere for some relatively cheap stocks and objects worth investing in because they haven't risen to the right level." He invested thousands of dollars in 3 stocks. These 3 stocks are all low P/E stocks, one is a locomotive company, one is an advertising billboard company, and the other is a taxi company.
At this moment, "organized support" is still being discussed, and even President Hoover claims that the US economy is fundamentally sound, but the entire Wall Street has been shrouded in an atmosphere of vigilance.
October 24, 1929, New York Stock Exchange, USA.
In the future, you only need to download the securities company's trading software to trade anytime and anywhere through your mobile phone, which is extremely convenient. But now is an era when even home landlines are not popular. If you want to buy and sell securities, you can only go to the exchange.
Therefore, the exchange is very busy every day except Saturday and Sunday, and today is no exception.
Before the opening, the exchange was already crowded with people. Because the trading volume on Monday reached 1.87 million shares, which contributed to the third largest daily trading volume in history. When everyone was excitedly discussing how much their stocks would rise today, they were horrified to find that something was wrong! !
Not only a little, the stocks that were still booming yesterday suddenly began to decline sharply without any warning! !
"Damn it, sell the stocks!" Everyone was shouting, scrambling to the counter to sell their stocks.
No one would consider that this would further increase the decline of the stock. Everyone just wanted to keep their money. After all, many people here have invested their life savings in the stock market!
Soon, the quotation machine caused by the plunge failed. Some people sold their stocks because of uncertainty, and some were forced to liquidate their positions because they could not cope with the margin call. At 11:30 in the morning, it was a mess. People who claimed to be smart lost their minds, became crazy, and fell into a trance. Maybe the devil had just come, or maybe people thought that God had never come.
The New York Stock Exchange has been standing for 112 years. During this period, there have been several crises, but they have recovered quickly. There has never been a crisis that lasted so long. A large number of people who wanted to buy at the bottom began to rebuild their positions, either in the last few days of October or in November. They could not imagine that two years later, these stocks would not have 30% of their value.
On the weekend after Black Thursday, bankers responded quickly and joined forces to protect the market. The panic in the market seemed to have subsided and the market rebounded. On the weekend, President Hoover gave another speech: the basic business conditions of the country, whether it is commodity production or sales, are on a healthy and prosperous basis. Other politicians and businessmen also expressed the same opinion, so people expected that the buying on Monday would recover the lost ground and God would come again.
But on Monday, the disaster really began, and once it started, it was difficult to stop easily.
On the 28th, the market fell 49 points, with a trading volume of 9.25 million shares. The bankers met again, and of course the market was still healthy.
On the 29th, the darkest day since the advent of the New York Stock Exchange, the trading volume reached 16.41 million shares, the industrial stock average index fell 43 points, and investment trust stocks suffered heavy losses due to the emergence of the anti-leverage effect. The stock price shrank by almost half, and some were even above 2/3. The bankers held two more meetings on this day, and the conclusions were very monotonous, but later it was discovered that some bankers also began to sell.
No one believed in "organized support" anymore. Thousands of Americans watched their life savings vanish in a few days. This was the darkest day in the history of American securities, the most influential and harmful economic event in American history, and the impact spread to Western countries and the entire world.
On the 30th, the stock market rebounded technically, so even Rockefeller expressed his confidence in the stock market, and Hoover also spoke. So far, his role was just to repeat the argument of the health of the stock market tirelessly. In addition, there were also such great opinions from senior executives of the Ministry of Commerce and Goldman Sachs, who were respected and convincing people who worked hard for the happiness of the country.
On the 31st, the stock market opened for 3 hours and rose slightly again. It was closed until the next Monday. Optimism began to appear, and any straw was regarded as a hemp rope.
On November 3, the stock market fell 22 points, with a trading volume of 6 million shares. On the 5th, it fell 37 points, with 6 million shares traded. It then rebounded slightly. From November 11 to 13, it fell 50 points. During this period, the real economy was also deteriorating rapidly. Cotton trading volume plummeted, and wheat prices plummeted. The leveraged trading and margin trading of investment trust companies built a perfect device for stock market suicide. The anti-leverage effect quickly pulled down the stock price. The margin system forced the liquidation of part of the position to save some stocks. At the same time, the stocks that were sold pulled the overall stock price down, and the cycle continued. It is said that at this time, the front desk receptionist of the New York hotel would ask the guests who came to stay in the hotel whether they wanted to stay or jump off the building, because 11 well-known speculators had committed suicide. The body of a commission trader was salvaged from the Hudson River, and 4 US dollars in change and several margin reminders were found in his pocket.
In mid-November, the stock market hit a bottom and closed at 224 points. On September 3, it was still 452 points. President Hoover, who thought the storm was over, appeared and announced a policy to stimulate the economy and implement tax cuts, but unfortunately the intensity was not great. In addition, a meeting attended by people from all walks of life was held in the White House, but it was mainly to exchange ideas, express attitudes, enhance confidence and let things go. Hoover could have taken more effective measures, but he was very satisfied with being the worst president of the 20th century. The New York Stock Exchange also joined in the fun and announced an investigation into short selling, but to no avail.
The whole country, the entire capitalist world, was wailing!
These had nothing to do with Yannick. Erwin Schacht, who was sent to the United States by him a year ago and was ready for battle, returned with a full load after several successful operations.
The 500 million working capital that Yannick had scraped together doubled in his hands! !