There were two qualities about the mutual funds of the 1920s that made them extremely speculative. One was that they were heavily leveraged. Two, mutual funds were allowed to invest in other mutual funds.
More Quotes from Ron Chernow:
I think one of the important things that's happened in the course of the century is that life expectancy has doubled.Ron Chernow
In the 1920s you could buy stocks on margin. You could put 10 percent down and borrow the rest against your stocks.
Ron Chernow
I think those who invest in mutual funds want someone else to do the thinking for them. But the fact that they can move the money around the family of mutual funds just through a phone call lets them feel that they can play tycoons.
Ron Chernow
Mutual funds have historically offered safety and diversification. And they spare you the responsibility of picking individual stocks.
Ron Chernow
Early on, New York already had a national and even international identity.
Ron Chernow
We really haven't had very much experience with people funding their retirement out of the stock market, and we don't know, frankly, how it would work under every scenario.
Ron Chernow
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