The other day I received an unusual update from one of the mutual fund wholesalers who I have known for many years. He shared that he recently had taken some time off to mourn the passing of his grandmother, who was born in 1923. He shared his observations of her – independent, intelligent, loving, and opinionated – and then offered some perspective on the markets of 1923 versus 2016. I truly enjoyed his comments, and it got me thinking.
In 1923, the United States and Europe were in states of tremendous transition. Leadership, from within and globally, was a cause of great concern. This continues today.
Fitzgerald was writing great stories that captured history and human relationships. Hemingway was probably fishing, drinking beer, and beginning his prodigious writing career. His stories have always been some of my favorites. Gertrude Stein, born in Pittsburgh, was living in Paris collecting the artwork of friends like Picasso, and writing pithy prose. Like my friend’s grandmother, Stein was certainly independent, intelligent, loving and opinionated. Her most famous quote: “A Rose is a rose is a rose.”
As for the U.S. economy and markets at that time, the Federal Reserve was still a new and not fully embraced entity. For a good read on the subject, check out “America’s Bank” by Roger Lowenstein. It is on my recommended reading list.
The Dow Jones Industrial Average was comprised of twenty stocks, not thirty as it is today. General Electric is the only company that is still represented in this proxy for American business. I have watched the DJIA for my thirty plus years in this business, and still believe it is a very good reflection of business. It has adapted well, you might say.
One contrast to consider: the 1920’s were a period of optimism in the markets, and money was being made left and right from investments. Even the shoeshine boys in and around Wall Street were regarded for their stock prowess. Insider trading was rampant. This all tumbled apart in the Great Depression of 1929. Today, there seems to be little optimism about the US markets, and global markets are viewed as even weaker.
Regardless of the period, we should learn from history in order to improve our own prospects - whether that pertains to the markets or to life. The inspiration of Sylvia -- independent, intelligent, loving and opinionated – carries on. Let me end with another quote from Gertrude Stein: “We are always the same age inside.”
Ralph McDevitt
Views expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Information provided is general in nature. Past performance is not indicative of future results. Investing involves risk including the possible loss of capital. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.
