The Joseph Kennedy Moment, or the Story of the Shoe Shiner
While in Germany, Charles Mitchell, chairman of National City Bank of New York, told his shareholders the following: "The state of industry in the United States is perfectly sound, and the credit situation is by no means critical... The general interest in brokered loans is always exaggerated... On the whole, the stock exchange is now in a healthy condition. During the last six weeks a considerable quantity of commodities has been sold, owing to the decline in prices... I am not aware of any malfunction on the stock exchange or with the main business and credit structure." The date on the calendar was October 20, 1929, a Sunday.
On Monday, October 28 of that year, Joseph Patrick Kennedy, father of the future U.S. President John F. Kennedy, sold all of his stock assets. It is believed that Old Joe, as Kennedy Sr. was known among his colleagues, was so successful in getting out of the game that a term even appeared in trading Joseph Kennedy Moment - An unrealistically fortunate closing of the bets. What made Kennedy do this? Market analysis? A press review or the results of a poll?
Time Magazine has a reasonable version: "Old Joe had a great success in the Great Bull Market in 1929 and survived the crash because he had a passion for facts, didn't rely on feelings and had a keen sense of timing (one word timing is hard enough - it means "knew when to get in and when to get out"). Plain and simple: analyze the facts, do not give vent to emotions, carefully calculate the duration and dynamics of transactions - these are your success factors. We have no reason not to trust Time, but for the sake of objectivity it is worth mentioning a legend which quite unusually interprets Old Joe's haste in withdrawing his assets from the markets.
Exchange legends about the shoe shiner
On the morning of October 21 Joseph KennedyThe boy, on his way to work, stopped to shine his shoes and called the shoe-shine man. The nimble boy deftly began to shine the millionaire's shoes.
- Mister, do you know anything about the stock market? - the boy asked casually.
- I guess so," smiled Old Joe.
- I have some shares railroad companies. What would you advise to do with them?
- Do you have stock? - Kennedy wondered.
- Yes. My father bought a hundred, and I bought ten. What better way to spend it.
Overcoming his confusion, Kennedy advised... However, his advice is hidden from us, but for us another thing is more important: the involuntary advice to end the game the trader received from the boy who was shining his shoes. Kennedy's astonishment at the fact that the shoeshiner was a shareholder is easy to understand - in the 1920s, the stock market was considered the privilege of the rich and powerful. When Kennedy realized that even street boys had stock, he knew something terrible was coming. A beautiful legend.
Here's another one. Multimillionaire John Morgan also dumped shares of outsider companies just hours before another stock market crisis. Morgan was accused of manipulating the market. "How did you know which assets to get rid of?" - they asked him. "What kind of manipulation? What nonsense you are talking! - The banker was indignant. - It's just that every morning I shine the same boy's shoes. The day before he bragged that he had bought shares in the railroad companies at a bargain price. That's when I realized that since the cleaners were coming to the stock exchange, there was nothing to see and it was time to withdraw capital.
Compare the previous two paragraphs. They are very similar, aren't they? Only the names are different. Surprising, isn't it? Let's put our emotions aside and apply logic. Cleaner Boy - is a collective image of the poorest of the poor. When the two market insiders realized that stocks were selling at prices that even this social class could afford, they both realized that the market had collected all the money it could. So the bubble had inflated to its maximum size, and if it bursts not today, then tomorrow.
The presence of the cleaners in the success story does not seem coincidental. К
The creation of the Great Bull, which will bring down the market.
There is plenty of evidence against the conspiracy theory, too. First, Kennedy was the one who stopped the panic in the stock market. Second, John Morgan depended on the stability of the economy like no one else. Operating billions of dollars in transactions, Morgan owned a laughable fortune of only $80 million. After his death, his rival friend Rothschild exclaimed in amazement: "So he's not rich at all!" It is unlikely that Morgan was so eager to destroy the source of his own wealth.
Attention to detail and the ability to get information from unexpected sources served Joseph Patrick Kennedy well, but he was able to use it because of the qualities attributed to him by Time magazine. Much has changed since then-at foreign exchange market People of different statuses and incomes play. The only thing is that there are fewer and fewer shoe shiners - they are being replaced by automatons. Who will tell the new Kennedy when his moment has arrived?