In March 2009, three days before the markets saw the bottom (one trading day, for it was on a Friday) I was idly watching the screens and thought about how I would set up a breakout to the upside by first faking weakness to accumulate some stock and then let 'er rip, onward and upward. The result was a post, "Manipulating the Dow Jones Industrial Average", the second half of which was a reprised condensed version of the story of the Radio Pool of '28:
...Speaking of specialists in the old days, one of my favorite stories is how Joe Kennedy and the boys decided to form a pool to manipulate the Google of the 1920's, RCA. From our June '07 post "Robert Kennedy Jr., Global Warming and Wall Street":
...Already a wealthy man Joe Kennedy had another Wall Street trick up his sleeve, a classic pump-and dump. In 1928 he and some other rascals got together to run the .com of the day, Radio Corporation of America.
What a run it was! The pool picked up $5 million in ten days. My BLS inflation calculator says that's a bit over $60 million today (although the PBS special linked below says $100 million).
When the question arose as to who should manage the pool the answer was easy. Who better than the specialist in the stock, Michael J. Meehan! PBS did a good job on their show "The Crash of 1929", even interviewing Meehan's grandson. Here are some of my links, Senate Hearings (4 page PDF), 1948 SEC chief counsel memo on the Act of '33 (5 page PDF), Colliers story on the early SEC.
One of Joe Kennedy's most quoted comments:
"It's easy to make money in this market," said Kennedy, famously, to an associate. "We'd better get in before they pass a law against it."
Mr. Kennedy went on to become the first Chairman of the Securities and Exchange Commission.
All of this is background for what Yellen and Powell and the SEC will be doing over the next few weeks. Here's some more background from 1934, hosted as a public service by Dow Jones & Co.
STOCK EXCHANGE PRACTICES
REPORT
OF THE
COMMITTEE ON BANKING AND CURRENCY
PURSUANT TO
S.Res.84
(72d CONGRESS)
A RESOLUTION TO INVESTIGATE PRACTICES OF STOCK EXCHANGES
WITH RESPECT TO THE BUYING AND
SELLING AND THE BORROWING AND LENDING
OF LISTED SECURITIES
MUCH MORE (17 page PDF)
Earlier today:
