Post Time For Bank Stocks

When I picked out “1929”,  Andrew Ross Sorkin’s long tome, I hoped to understand how a coterie of bankers,  brokers methodically raped our country’s financial system. These were mainly waspy, middle-aged operators and heads of toney brokerage houses.

Before investing in bank stocks, catch some flavor of what happened to our financial system in 1929 and who bears the blame. Was it the man in the street overreaching with his trades or was something more systemic percolating? 

Lest we forget, banks, especially reserve city banks, were in the midst of overspeculation that led us to the ’29 debacle. Let’s concede, too, financiers caused deep recession that followed overspeculation in the home mortgage market over a decade ago.

Some precepts, never accept poverty as an enforced way of life. If you want to learn how greedy and rapacious even small town operators waxed, read “1929”. If I had my way, operators who then destabilized the world’s financial system would have been roped in for their ruinous acts.

Just a handful of players created 1929’s disaster.  The white-starched-shirt bankers in 3-piece suits did the trick. Before you invest in bank stocks, gather some sense for what happened to our financial system in 1929 and who bore responsibility for this fiasco. Nobody to stop crispy bankers who overtraded and overspeculated.

It was termed using OPM, Other People’s Money that got trashed. Faceless names created this disaster for the financial world. Smug traders destroyed countless nuclear families like the Sosnoffs. I learned never, never accept poverty as your lifetime sentence. Just read “1929’. Find out how greedy grownups destroyed innocent lives. Then take action. 

In 1929, my father then ran a tailor shop in Harlem. We lived on 128 th Street. Three brothers shared a tiny bedroom hardly accommodating 3 beds and a chest of drawers. Since the Twenties, the east Bronx has been filled with 5-story walkups, mainly two bedroom apartments.  Now filled with Hispanics and people of color. Sherman Avenue still stands after a century or more of harsh poverty.

Italians and Catholics since moved elsewhere. I remember my soiled, bloodied 2-piece gloves. Nobody called me a dirty Jew without a fist fight. I got a decent grade school education, then, my teachers mainly gray- haired spinsters, tough as nails. They’d rap your head now and then, with good reason. Mainly, misattention. We were dubbed as “sneaks”. Maybe so, but we worked for good grades and some recognition.

Struggled to put bread on the table and get diplomas. My brother, Gene, worked his way through Yale Law School waiting on tables. Without Mayor LaGuardia,  who established special high schools at the height of the Depression, I would not have gotten to first base. At M&A we made do with an old building from City College. My work in the woodwinds found a home and mentor.

Sadly, we now know there are still more banks than than bankers in the country.  Such guys created business cycles, put millions out of work and destroyed family life. If it wasn’t for Fiorello LaGuardia,  I’d be out of luck in the Great Depression, no saxophone, clarinet and flute lessons for me to master and later prosper with dance bands. 

Manufacturers like U.S. Steel, General Motors and Dupont picked their way through the sad Thirties. Finally, World War II percolated and started a new economic cycle.

I dug a hole and whispered there-in, never own a bank stock, ever again. I kept my word for over a decade, but do now own what I consider a sharp operator, namely Morgan Stanley.  Past week, it showed a 10% sprint.

Today, stocks like Wells Fargo, J. P. Morgan and Morgan Stanley are again polite goods. Memories of stock price amplitude run now pretty short. Even General Motors rests 50% above its 12-month low.  The trajectory for General Electric is awesome, a double. Morgan Stanley, my favorite house, has risen over 20%, year-to-date. Compare such results with the S&P  500 Index which year-to-date has levitated just 5% or so.

Let’s hope “1929” becomes the coda book on how the country nearly destroyed itself, overleveraged and unwise in trading . “Today, anyone who operates without a plan, a consistent plan, is a fool.”