A lot of comparisons are being made about the current environment and the 1930s, resulting in even more fear and panic as an unthinkable repeat of that era seems possible. The action of the stock market bears some resemblance to the 1930s, but the policy response is vastly different.The stock market fell 89% from peak to trough during the Great Depression. Oddly, there were ferocious rallies along the way. Of the 36 days in the last 80 years that saw the market rise 6% or more in a single day, 32 occurred between 1929 and 1933.
There was no unemployment insurance in the 1930s, so there was no net to catch the unemployed. Distrust between banks is the problem we face today, but in the Depression, check writing ground to a halt, and cash payments were the norm. Ben Bernanke's economic background includes much study of the Great Depression. We might argue among ourselves about the speed of some of the policy responses, but the reaction to today's crisis is 180 degrees opposite to the 1930s. Nobody ever made a dime by panicking, says Jim Cramer. Moneymaking opportunities exist despite the market turmoil. So where's a market master like Cramer putting his money these days? Check out his personal portfolio at Action Alerts PLUS. Take a free trial now.