The Great Bull Market: Wall Street in the 1920s

This book is one of the best I have read on the Bull Market. He takes Galbraith as his foil and expresses his profound discontent with Galbraith's unilinear formulation of govt. inactivity and outright stupidity. As Sobel argues, the The Great Bull Market was a product of a particular world view that grew up in the easy-money days of the 1920s. Parts of this world view were: 1) A notion that everyone should and could get rich 2) that hard work and risk as a pre-requisite for gaining wealth was a thing of the past -- indeed, inside the large brokerages it was loudly spoken that such older ethos' were not part of modern Wall Street. 3) supplanting risk and hard work was an ethos of power elites that scrathed each other's back. And that was assumed to be part of the normal healthy business processes. 4) There was a general overall lack of attention to detail and people working through the risks of financial euphoria. In addition, unlike Galbraith, Sobel says that the powers that be actually made good choices, that the falls were really not as bad as they were made to look at the time. It is a well written and cogent analysis of this exciting time.

While many stock market books have lots to say about parallels in financial history, this one is very different. The Great Bull Market is not really about the stock market at all. It's about the factors that led to the market mania of the late 1920s. Changes in social patterns, dramatic changes in the economy and living standards and a liberalisation of financial laws all led to the belief that life had really changed for everyone for the better. Of course, there are wider things to consider than the rather simplistic and sometimes left-wing views put forward here. Even so, The Great Bull Market does take you away from the now perfunctory trawl through margin statistics and takes you into the heads of those who were actually parting with cash. For that it's a great read.

The market could only go up. Margin requirements were minimal. Investment in equities, seemingly ANY equities was a risk-less, rock solid path to fortune. Why buy one of the new electronic phonographs, or a refrigerator, on "time" (credit) when for the same amount of money, one could buy equities on margin, gain immense leverage, and be "guaranteed" to make the money back many times over, and be able to buy many more luxuries. According to Mr. Sobel, this was, in a nutshell, the mentality of the average investor. Investment houses and financial institutions fueled the fire by making margin cheap and easy. Ultimately, stock prices were held up by nothing. Tremors of instability began to ripple through the market as the impending crash approached, often dismissed as buying opportunities. Ultimately, reality set in, and the unthinkable happened. Are things different today? Yes and No. More safeguards would seem to be in place, however valuations of today make those of the 20's look miniscule. While a direct comparison is difficult to make between the period covered in the book, and the market of 2000, there are lessons to be learned. "The Great Bull Market" provides a fascinating account of the crash and the events that led up to it. A must read for anyone feeling a little jittery about the climate on Wall Street today!