Roaring Twenties Fashion: Sexy Looks, Stupid Bets, Brutal Ends
July 17, 2025
“When even the shoeshine boy is handing out stock tips, it’s time to get out.” — paraphrased from Jesse Livermore.
The year is 1920. America’s roaring, jazz-blaring, automobile-pumping, radio-crackling economy is on fire. Everyone from industrial tycoons to maids and milkmen is diving headfirst into the stock market. Wall Street is no longer a bastion of the elite—it’s a three-ring circus. And the crowd? Drunk on profit and blind to risk.
The poster child of this madness? A shoeshine boy. Jesse Livermore, one of the most notorious speculators in history, took his legendary short position after a kid shining his shoes started dishing out stock picks. That wasn’t a warning—it was the damn klaxon. The market was drowning in amateurs. When novices start thinking they’re geniuses, a bloodbath usually follows.
The Powder Keg: Economic Boom Meets Mass Delusion
Post–World War I America was a nation reborn. Factories that once pumped out tanks were now cranking out Fords. Radios connected the country. Refrigerators invaded kitchens. Aeroplanes started nibbling at the edge of commercial travel. Progress wasn’t just visible—it was loud, fast, and intoxicating.
But with every innovation came exaggeration. As Benjamin Graham put it, the market is a voting machine in the short run, not a weighing machine. In the 1920s, the votes came from millions of wide-eyed speculators, not from any serious evaluation of a company’s intrinsic worth.
Wages were up. Productivity was off the charts. People had savings and—crucially—credit. Enter margin trading. With just 10% down, the average Joe could swing for the fences. And why wouldn’t he? The market was a stairway to heaven, and it only went up.
Until it didn’t.
Mass Psychology: The Invisible Hand That Strangles the Crowd
John Templeton made his fortune by betting against mass stupidity. He understood that bull markets are born on pessimism, grow on skepticism, mature on optimism—and die on euphoria. The 1920s were a period of pure euphoria on steroids.
Consider the psychology:
- “New Era” thinking suggested that old rules no longer applied.
- People were so terrified of missing out that they’d mortgage their homes to buy stocks.
- Everyone believed the Fed had tamed the cycle. Sound familiar?
- Self-proclaimed experts and celebrity investors drove a narrative of endless riches.
It was the spiritual predecessor to our modern crypto enthusiasts and Reddit-fueled pump-and-dump schemes. Same delusion. Different tools.
RCA: The Poster Child of Mania
Let’s talk about RCA—Radio Corporation of America. In 1921, it was a solid, innovative company. By 1929, it was a religion. The stock soared from $1.50 to $573 with zero dividends. Why? Because radio was the future, and the future was always priced to perfection.
RCA was to the 1920s what Tesla or Nvidia is to today’s market—a cult. And like all cults, it thrived on hope, not numbers. Investors weren’t buying earnings; they were buying dreams.
Buffett warned that innovation doesn’t guarantee returns. RCA proved him right long before he was born.
Investment Trusts: Leverage Dressed as Sophistication
To the average investor, investment trusts looked smart and sophisticated. In reality, they were just shell games of leverage. Imagine a trust that owned another trust that owned another trust—each one juiced with borrowed money.
Goldman Sachs launched the Goldman Sachs Trading Corporation, which invested heavily in… other Goldman trusts. The circular ownership turned a modest downturn into a death spiral when things reversed.
Graham would later call these creations a “house of cards built on a foundation of sand.” He was being generous. Try the house of dynamite built by drunken jugglers.
A Culture Transformed: The Gospel of Easy Money
Wall Street went mainstream in the 1920s. Newspapers ran daily stock tips. Ticker tapes streamed into barbershops. Taxi drivers debated P/E ratios. Investment clubs mushroomed.
As Jesse Livermore observed, the average man didn’t want to understand markets. He just wanted tips—preferably ones that didn’t require thinking. That laziness was weaponised by brokers and manipulators alike.
William Durant, the founder of General Motors, became a household name for playing the market like a fiddle. But he died broke. A reminder: it’s easy to get rich once. The trick is staying rich.
Credit: The Silent Killer
By 1928, margin loans totaled $6 billion—twice what they were in 1925. This wasn’t investing; it was financial Russian roulette. People weren’t just risking their money. They were betting money they didn’t have on valuations they didn’t understand in a system no one could control.
George Soros’s theory of reflexivity comes in handy here. The perception of rising markets created the very conditions that kept them rising—until reality intruded. The feedback loop reversed. Prices fell, margin calls hit, and the floor vanished.
The Ignored Warnings
There were signs—plenty of them.
- P/E ratios were absurd.
- Volatility spiked.
- Industrial production slowed.
- Corporate insiders were cashing out like it was the last chopper out of Saigon.
But the masses were deaf to reason. As always, they thought they were witnessing a new paradigm. And as always, they were setting the stage for a massacre.
Lessons Carved in Blood
Warren Buffett’s dictum—“Be fearful when others are greedy”—could’ve been written in 1929. The great tragedy is that most investors never learn the lesson. They just repeat it with new toys and shinier apps.
The takeaways:
- Speculative bubbles don’t need rational fuel—only narrative.
- Leverage multiplies gains—and annihilation.
- Popular sentiment is usually a contrarian indicator.
- True innovation gets hijacked by fake prosperity.
- Psychology, not fundamentals, determines short-term market moves.
Templeton nailed it: “This time it’s different” are the most dangerous words in investing. The moment you believe that, you’re already toast.
Déjà Vu, Over and Over Again
We’ve seen the 1920s playbook recycled over and over:
- Dot-com boom: Everyone was a tech genius until 2001.
- 2008 housing mania: Everyone was a real estate mogul until Bear Stearns collapsed.
- 2021 crypto/NFT hysteria: Everyone was a blockchain evangelist until Luna imploded.
The tools change. The delusions don’t.
Climax: What the Roaring Twenties Still Teach Us Today
The 1920s stock market was a morality play disguised as an economic miracle. It exposed the naked truth about human behaviour when hope replaces reason and greed replaces discipline.
It wasn’t just a financial collapse—it was a cultural reckoning.
The same elite players—then and now—understand one thing: The crowd is predictable. They chase. They panic. They blow themselves up. And they’ll do it again tomorrow.
That’s why the patient, prepared, and psychologically disciplined investor always wins in the long run. Not because they’re smarter, but because they know the rules never change.
You can listen to the noise, or you can learn from history.
And if a shoeshine boy ever offers you a stock tip?
Smile politely.
Then sell.
