We Study Billionaires - The Investor’s Podcast Network

TIP280: A History of 5 US Market Crashes w/ Scott Nations (Business Podcast)

Feb 2, 2020
Guest
Scott Nations
In a fascinating conversation, financial history expert Scott Nations delves into the stock market's five biggest crashes, highlighting the turmoil of 1907, 1929, 1987, 2008, and 2010. He draws intriguing parallels between the Fed’s monetary policies then and now. Nations reveals how portfolio insurance worsened the 1987 crash and discusses the risks associated with algorithmic trading during the 2010 flash crash. He also offers investment strategies, emphasizing the crucial balance between greed and fear.
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ANECDOTE

J.P. Morgan's Intervention

  • During the 1907 crash, J.P. Morgan saved the stock market by demanding bankers raise $25 million.
  • An exchange clerk's coat was ripped during the ensuing chaos as investors scrambled for loans.
INSIGHT

Birth of the Fed

  • The 1907 panic highlighted the need for a lender of last resort, leading to the Federal Reserve's creation in 1913.
  • The government realized relying on one person like J.P. Morgan wasn't sustainable.
INSIGHT

1920s Market Euphoria

  • Euphoria and new technologies, like radio and automobiles, fueled the 1920s market boom.
  • The Federal Reserve's low interest rates, intended to help England, contributed to the bubble.
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