bitcoms on Nostr: Are early 2020s US markets more or less volatile than in 1920s Weimar Germany? In the ...
Are early 2020s US markets more or less volatile than in 1920s Weimar Germany?
In the run up to the 1923 peak insanity of Germany’s notorious hyperinflation, its financial markets were (unsurprisingly) tumultuous.
This is chronicled in Adam Fergusson’s 1975 book, ‘When Money Dies’.
To illustrate the face-peeling volatility, Chapter 5 gives three examples of share prices in 1920, how they exploded in 1921 and then cratered in 1922.
The first example is a car maker, the Daimler Motors Corporation (later Mercedes-Benz):
1921 pump 170%
1922 drawdown 63%
How does this compare with today’s biggest US car-making company, Tesla?
2021 pump 1350%
2022 drawdown 75%
Observation: 2020s Tesla is more volatile than early 1920s Daimler.
Is Tesla just a rank outlier? No.
Facebook
2021 pump 180%
2022 drawdown 77%
Observation: 2020s Facebook is more volatile than early 1920s Daimler.
Netflix
2019-2021 pump 160%
2022 drawdown 76%
Observation: 2020s Netflix is just as volatile as early 1920s Daimler.
It’s often said that history may not repeat, but it often rhymes.
Looking at stock volatility 100 years on, what can Weimar Germany tell us about today’s America?
In the run up to the 1923 peak insanity of Germany’s notorious hyperinflation, its financial markets were (unsurprisingly) tumultuous.
This is chronicled in Adam Fergusson’s 1975 book, ‘When Money Dies’.
To illustrate the face-peeling volatility, Chapter 5 gives three examples of share prices in 1920, how they exploded in 1921 and then cratered in 1922.
The first example is a car maker, the Daimler Motors Corporation (later Mercedes-Benz):
1921 pump 170%
1922 drawdown 63%
How does this compare with today’s biggest US car-making company, Tesla?
2021 pump 1350%
2022 drawdown 75%
Observation: 2020s Tesla is more volatile than early 1920s Daimler.
Is Tesla just a rank outlier? No.
2021 pump 180%
2022 drawdown 77%
Observation: 2020s Facebook is more volatile than early 1920s Daimler.
Netflix
2019-2021 pump 160%
2022 drawdown 76%
Observation: 2020s Netflix is just as volatile as early 1920s Daimler.
It’s often said that history may not repeat, but it often rhymes.
Looking at stock volatility 100 years on, what can Weimar Germany tell us about today’s America?