Stock Prices Crashed 89% From 1929 – 1932; Bond Prices Went Up 15%; Diversification Reminder

The piece of data in my subject line was shared on X recently – and I thought it was fascinating because so many investors continue to pour everything they have into stocks.

Stocks may continue to surge too, as long as investment banks, equity funds, commercial banks, and central banks continue to inject liquidity into the markets like they have been for years now – according to Michael Howell.

Here is Howell’s most recent interview on the Monetary Matters podcast, and it is very interesting: From “Everything Bubble” To “Everything Bust”: Liquidity Godfather Michael Howell on 2025 & Beyond.

But here is my broader point – investors might want to truly diversify.

I often tell friends that, and they say, “I am diversified; I have stocks in tech, energy, retail, finance, utilities, emerging markets, small caps, large caps…”

Analysts, however, frequently remind us that diversification within stocks is not diversification.

Diversification across all asset classes is often prudent (for safety and insurance), even if it means giving up some gains within a particular hot asset class.

All asset classes, of course, include equities/stocks, bonds, cash and cash equivalents (like T-Bills and Money Market Funds), real estate, commodities, gold, and crypto.

I’m certainly no expert, but I follow many. And most of them are aware of what happened from 1929 – 1932, and, while most of them still recommend stock-heavy investment portfolios, most of them still recommend broader diversification.