In this absorbing, smart, and accessible blend of economic and cultural history, Scott Nations, a longtime trader, financial engineer, and CNBC contributor, takes us on a journey through the five significant stock market crashes in the past century to reveal how they defined the United States today
The Panic of 1907: When the Knickerbocker Trust Company failed, after a brazen attempt to manipulate the stock market led to a disastrous run on the banks, the Dow lost nearly half its value in weeks. Only billionaire J.P. Morgan was able to save the stock market.
Black Tuesday (1929): As the newly created Federal Reserve System repeatedly adjusted interest rates in all the wrong ways, investment trusts, the darlings of that decade, became the catalyst that caused the bubble to burst, and the Dow fell dramatically, leading swiftly to the Great Depression.
Black Monday (1987): When "portfolio insurance," a new tool meant to protect investments, instead led to increased losses, and corporate raiders drove stock prices above their real values, the Dow dropped an astonishing 22.6 percent in one day.
The Great Recession (2008): As homeowners began defaulting on mortgages, investment portfolios that contained them collapsed, bringing the nation's largest banks, much of the economy, and the stock market down with them.
The Flash Crash (2010): When one investment manager, using a runaway computer algorithm that was dangerously unstable and poorly understood, reacted to the economic turmoil in Greece, the stock market took an unprecedentedly sudden plunge, with the Dow shedding 998.5 points (roughly a trillion dollars in valuation) in just minutes.
The stories behind the great crashes are filled with drama, human foibles, and heroic rescues. Taken together they tell the larger story of a nation reaching enormous heights of financial power while experiencing precipitous dips that alter and reset a market where millions of Americans invest their savings, and on which they depend for their futures. Scott Nations vividly shows how each of these major crashes played a role in America's political and cultural fabric, each providing painful lessons that have strengthened us and helped us to build the nation we know today.
A History of the United States in Five Crashes clearly and compellingly illustrates the connections between these major financial collapses and examines the solid, clear-cut lessons they offer for preventing the next one.
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About the Author
Scott Nations is the president of NationsShares, a financial engineering firm. He is a regular contributor to CNBC, where he frequently appears on-air to discuss markets, derivatives, and other investment topics. He is the author of two technical books for option traders, Options Math for Traders and The Complete Book of Option Spreads and Combinations. He lives in Chicago, Illinois.
Table of Contents
Panic | 1907 1
Crash | 1929 55
Black Monday | 1987 117
Meltdown | 2008 177
Flash Crash | 2010 245
Source Notes 303
Most Helpful Customer Reviews
A fascinating and gripping history that reads like a thriller -- complete with villains & heroes. Meticulously researched and yet there is nothing dry about this look at greed and fear that have shaped the most destructive times in our American financial markets' history. We learn of the people, the schemes and the heartbreak. It's a compelling read and one I highly recommend to anyone interested in how past behaviors might be influencing what we are witnessing today.
I made the mistake of trying to read this when I couldn't really focus on it. When I was finally able to read the book I found it completely fascinating. Nation goes back years to explore why our markets crashed in 1907, 1929, 1987, 2008 and 2010. As I read the section on 1987 I wondered about how what I experienced in Oklahoma affected the overall economy. In Oklahoma and in Texas we experienced the oil glut. From my experiences I wanted to read more about the oil glut and even the savings and loan scandal, neither of which was explored in this book. What was really disturbing was reading about the 2010 crash. To read about how a computer program could cause a crash because it was poorly written was surprising. It's an interesting book and depending on what you remember from the later crashes it may cause you to read more about events happening parallel to the events in this book.