Mark Twain famously said, “history doesn’t repeat itself, but it often rhymes.”  Andrew Ross Sorkin’s vivid new book, 1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation, strikes an unnerving rhyme today.  His tale of greed, corruption and incompetence makes the 2020s—our own gilded, speculative decade–feel suspiciously like the “Roaring ‘20s” of a century ago.

Today’s markets display the same heady mix of optimism, financial innovation and unchecked hubris.  Easy credit, new ways to speculate dressed up as “democratization” and a familiar conviction that “this time is different” make the financial zeitgeist rhyme uncomfortably well with that era.

The cast of characters and technologies have changed, but the underlying human behavior and structural vulnerabilities are eerily similar.

The stock market crash of 1929 occurred from Thursday, October 24, 1929 (“Black Thursday”) through Tuesday, October 29, 1929 (“Black Tuesday”), when panic selling broke the market.  Over those four trading days, the Dow Jones Industrial Average (DJIA) fell from 305.85 to 230.07, a 25% decline.​  From its peak of 381.17 on September 3, 1929 to its eventual bottom of 41.22 on July 8, 1932, the DJIA lost roughly 89% of its value.  Unemployment soared to roughly 25% (15 million Americans). 

Our nation was shattered, both economically and psychologically.

Sorkin recounts the  Crash and Great Depression like a true crime novel, tracing the characters and their motives that fueled disaster.  In the late 1920s, Charles “Sunshine Charlie” Mitchell promoted National City Bank (which would become Citigroup) as the “Bank for All.”  He extended loans to small depositors so they could speculate in the stock market, luring “throngs of inexperienced investors” with promises of effortless riches, all wrapped in the flag of “democratizing access.”

A New York Times story  titled ‘The Magnet of Dancing Stock Prices,’ marveled, ‘The people who know the least about the stock market have made the most money out of it.  Even Charles M. Schwab declared the old-timers are behind the times and a new speculative era has dawned.”  The article wasn’t describing Roaring Kitty or the legion of social media “finfluencers” touting the meme stock (think GameStop) or crypto scheme du jour–because it was published on March 24, 1929.

Fast forwarding a century and the rhetoric about democratizing investing sounds strikingly similar.  Robinhood CEO Vlad Tenev has been lionized as a “cult hero” to legions of traders flooding markets with risky bets.  In my 2021 column, “’Commission-free’ trades a toxic combo for young investors,” Charlie Munger, Warren Buffett’s long-time partner, called such activity “speculative orgies,” likening it to casino gambling or racetrack betting.

Robinhood protested, arguing it was expanding access for those without generational wealth and dismissing critics like Munger as “elitist.”

Sorkin argues—and experience confirms—“the almost singular through line behind every major financial crisis is one thing: debt.”  Debt is a powerfully optimistic force: if we envision the future as a land of ever‑expanding opportunity and affluence, why not marshal some of that wealth for use today?  Debt draws the wealth of tomorrow into the present—exhilarating on the way up, devastating on the way down.

Reckless lending helped fuel the Great Depression, just as the subprime mortgage bust triggered the Great Recession of 2008.  Today, cracks are appearing in the $1.5 trillion private– credit market, which aims to replace traditional banks as commercial lenders.  Subprime auto dealer-lender Tricolor and auto-parts supplier First Brands collapsed after pledging the same collateral multiple times, saddling their lenders with billions in losses.

JP Morgan CEO Jamie Dimon compared the bankruptcies to spotting a cockroach: “when you see one cockroach, there are probably more.”  Co-CEO Marc Lipschultz of private-credit giant Blue Owl fired back that if Dimon saw cockroaches, “there might be a lot more cockroaches at JPMorgan.”  The exchange underscores how much uncertainty lurks in the rapidly growing, lightly-tested corner of the credit markets.

Policy mistakes also rhyme.  After the 1929 Crash, President Herbert Hoover signed the Smoot-Hawley Tariff Act into law on June 17, 1930, sharply raising duties on thousands of imports.  Smoot-Hawley didn’t cause the Great Depression, but it intensified the downturn by provoking foreign retaliation, collapsing trade and further damaging U.S. farmers, factories and banks.

Echoing that protectionist impulse, President Trump announced his own sweeping, “reciprocal” tariff policy on April 2, raising broad-based barriers in the name of fairness and leverage.  The details differ, but the political logic—using tariffs as a blunt instrument to punish trading partners and “fix” perceived imbalances —would have been instantly recognizable in 1930.

This is not a prediction of a 1929-style market crash, but the parallels are too potent to ignore as Wall Street continues to churn out dubious products, the line between investing and gambling blurs and regulatory guardrails are being rapidly dismantled.

There is an old saying: those who fail to learn from history are doomed to repeat it. Investors who forget how quickly euphoria, leverage and policy mistakes can turn a boom into a bust may find the “rhyme” between the 1920s and the 2020s far more literal than they ever imagined.

The opinions expressed in these articles are those of the author as of the date the article was published. These opinions have not been updated or supplemented and may not reflect the author’s views today. The information provided in these articles are not intended to be a forecast of future events, a guarantee of future results and do not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular stock or other investment.