Learning From The Great Depression And Benjamin Roth's Diary | Exploring Markets

Learning From The Great Depression And Benjamin Roth's Diary

Benjamin Roth was a lawyer living in Ohio and during the Great Depression he kept an amazing diary. He documented his thoughts, commentary, and observations during one of the worst economic and stock market crises of our nation's history.

Undoubtedly, one of the most important lessons he learned was the concept of preparation. In regards to the stock market, some might call this a form of holding "dry powder." Mr. Roth observed that saving money and holding cash would have been extremely beneficial throughout the Great Depression. Here's what he said:
"I see now how very important it is for the professional man to build up a surplus in normal times. A surplus capital of $2500 wisely invested during the depression might have meant financial security for the rest of his life. Without it he is at the mercy of the economic winds."

"Again and again during this depression it is driven home to me that opportunity is a stern goddess who passes up those who are unprepared with liquid capital."

"This depression has indelibly impressed on my mind one thing, and that is the value of having on hand sufficient capital to cover emergencies. My experience as a lawyer shows that a large proportion of business failures are caused by lack of capital rather than by lack of technical business knowledge."

"The greatest chance in a lifetime to build a fortune has gone and will probably not come again soon. Very few people had any surplus to invest—it was a matter of earning enough to buy the necessaries of life."
Source: Lessons From America’s Greatest Investment Tragedy