A syndicate of bankers gathered on October 24th to plan out how to end the panic. As acting president of the New York Stock Exchange, Richard Whitney was the face of the operation. The rest ran the six largest banks in the country.

It was like history repeating itself. J.P. Morgan famously did something similar in 1907 when he summoned the leading bankers to save the financial system from collapse. Only this time things didn’t work out as before.

The day after Black Thursday (October 24, 1929), Whitney strolled up to Post No. 2 on the exchange floor and ordered 10,000 shares of U.S. Steel. “205 for Steel” was the bid. It was over $5 above the current asking price. He did the same for several other blue-chip stocks. In a matter of minutes, he placed $20 million in bids. The market reversed course and rallied into the close. It was enough to turn the tide through the weekend.

The selling resumed on Monday. And on October 29th, forever known as Black Tuesday, the market was in a full-on panic. Continue Reading…

It’s been a busy week, so just the links. This is what I’ve found worth reading this weekend. Continue Reading…

Reminiscences of a Stock Operator originally began as a twelve article series for the Saturday Evening Post. Edwin Lefevre wrote the series over 12 months starting in 1922.

But when the first edition of the book was published, the first article was left out. The book begins with the eighth paragraph of the second article — “I went to work when I was a kid out of grammar school…” At least, the version I read began that way (can’t speak for other editions).

Lefevre sets the stage for the book in the first article. He begins with a great line:

The market was so weak that you could see customers counting their dead hopes.

The narrator goes to visit an old friend at a brokerage firm. While there, stocks start crashing. The narrator overhears his friend blame it all on Larry Livingston. He must be raiding the market.

But the narrator didn’t believe him, so he sets out to ask Livingston himself. An introduction is made. A meeting is set.

The first of many conversations begin with a rant by Livingston. He offers a lesson on the perils of trying to get rich quick and expecting a better return than the market will offer. Here’s how the conversation went: Continue Reading…