Andrew Ross Sorkin: belief

Transcript context

…The 1929 stock prices right before the crash — were they really a bubble? Doesn’t America have an amazing century to come? Arguably, those prices were too low, and the so-called speculators are the heroes of this story? Oh goodness, what a place to start. Yes and no. In some ways, so many of these companies clearly represented the future. You think about an RCA and radio and the future of radio and what that represented, but three years later, I think RCA was sitting at $3. On a split-adjusted basis, it had been up in multi-hundred dollars. So yes, you could argue that they were betting on a future that truly was better than people thought, but the chasm between 1929 and, frankly, the end of World War II was a long and tortured period. No? Sure, but if we look at 30-year returns, we find in American history, like any 30-year period, stocks do quite well, 6 percent to 7 percent, and most of the gains come just in a few of the years in the 30-year period. That seems to be the case even if you bought at the peak in 1929. By 1959, you would have had a real return, something like 6 percent. A lot of the gains coming later, but that’s not unusual. Even then, World War II — that it was so bad, seems like a super unlucky event. So, ex ante, you might have expected something even better.…

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