Caledonia Mining Corporation (CMCL)

[NYBob]

What Did Smart Money Do In the 1929 Crash and Aftermath?

history often repeat itself ex. -

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 Homestake Mining paid out
a total of $128 in cash dividends.

In fact the 1935 dividend alone reached $56 per share.

That's almost a 70% dividend yield payout (basis 1929)
in only one year!
Indeed, hard asset investments (gold mining shares) were
islands of economic refuge during the grueling years of
the Great Depression.

Unfortunately, those innocent souls who remained
invested in stocks - and had a buy and hold strategy -
saw their initial $10,000 investment slowly dwindle
to only $3,600 by late 1935.
This represented a devastating capital loss of
almost two-thirds of their investment savings.

T H A T'S R I G H T!
The hapless naive investor with a buy and hold strategy
in financial assets lost the greater part of his
original stake.
Pathetically, he could ill-afford to risk -
let alone lose - his precious capital during
the many long despairing years of
the Great Depression.

One does not have to be a Ph.D. in higher mathematics
to understand the 1929-1935 comparative
investment results stated below.

Investment
Vehicle Investment
Date Amount Investment
Value @ Dec. 1935
DJIA Oct - 1929 - $10,000 - $3,600
DJUA Oct - 1929 - $10,000 - $2,100
Homestake Mining - Oct - 1929 - $10,000 - $62,000

Note:
For simplification cash dividends not taken into account
It is a nightmarish thought for the Buy-N-Hold
advocates to take careful note that it took
the next 25 years for a 1929 investment to break even!
Not even Job of the Bible would have had
the patience to wait.

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