Economic Turmoil Post-WWI: Investor Sentiment and Market Trends

This chapter examines the economic landscape of the U.S. following World War I, focusing on the Federal Reserve’s monetary policy and its effects on the gold standard and investor behavior. It discusses the speculative mania driven by low interest rates, the contrasting economic conditions of inflation and deflation, and the implications for stock market stability. By analyzing historical investor sentiment during bear markets, the chapter provides insights that relate to contemporary economic challenges and market dynamics.

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In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down two of the greatest bear market bottoms in stock market history which left stocks incredibly undervalued, as outlined by Russell Napier’s book The Anatomy of the Bear.

You’ll learn why it’s important to study financial history, what bear markets have in common, how the bear market of 1921 differed from 1932, how the financial system has evolved over the last century, which factors really caused the Stock Market Crash of 1929 and the Great Depression, plus so much more!

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IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

01:31 - Why it’s important to study financial history

03:53 - What similarities and differences there are between major bear markets

08:51 - Why the Federal Reserve was first founded and how its role evolved

10:22 - What types of stocks led the stock market across the 1910s and 1920s

11:56 - What circumstances led up to the great bottom of 1921 and how you could have identified the bottom

38:44 - Why the economy boomed in the 1920s

47:17 - What sparked the Stock Market Crash of 1929

55:40 - How a stock market selloff turned into an economic depression

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Russell Napier's book, The Anatomy of the Bear.
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