What Did Smart Money Do In the 1929 Crash and Aftermath?
During the same bear market period smart-money moved from the plunging equity markets (i.e. financial assets) to hard asset investments, like Homestake Mining – which is used heretofore as a surrogate for all gold stocks. The stock price of this gold mining company soared relentlessly upward during the entire bear market. Homestake Mining stock rose continuously from $80 in October 1929 to $495 per share in December 1935 – which represents a total return of 519% (excluding cash dividends) during the devastating bear market period. Contemplate and appreciate the monumental difference in investment returns during a serious bear market. Smart-money invested $10,000 in Homestake Mining (hard assets) in late 1929 – which increased in value to almost $62,000 by December 1935. This represents a compound rate of return of 35% per year in appreciation alone! It is meaningful to note that in late 1929 the value of Homestake Mining was about $80 per share. Moreover, during the next six years Home
