About the Author


Scott Nations is the president of NationsShares, a financial engineering firm. He is a regular contributor to CNBC, where he frequently appears on-air to discuss markets, derivatives, and other investment topics. He is the author of two technical books for option traders, Options Math for Traders and The Complete Book of Option Spreads and Combinations. He lives in Chicago, Illinois.

Book


A History of the United States in Five Crashes

Stock Market Meltdowns That Defined a Nation
by Scott Nations
About the Book

In this absorbing, smart, and accessible blend of economic and cultural history in the vein of the works of Michael Lewis and Andrew Ross Sorkin, a financial executive and CNBC contributor examines the five most significant stock market crashes in the United States over the past century, revealing how they have defined the nation today.

THE PANIC OF 1907; BLACK TUESDAY (1929); BLACK MONDAY (1987); THE GREAT RECESSION (2008); THE FLASH CRASH (2010): Each of these financial implosions that caused a catastrophic drop in the American stock market is a remarkable story in its own right. But taken together, they offer a unique financial history of the American century. In A History of the United States in Five Crashes, financial executive and CNBC contributor Scott Nations examines these precipitous dips, revealing how each played a role in America’s political and cultural fabric, one building upon the next to create the nation we know today.

Read More About the Book

Scott Nations identifies the factors behind the disastrous runs on banks that led to the Panic of 1907, the first great scare of the twentieth century. He explains why 1920s America adopted investment trusts—a practice that helped post—World War I Britain—and how they were a primary catalyst of the 1929 crash. He explores America’s love affair with an expanding stock market in the 1980s—which spawned the birth of portfolio insurance that significantly contributed to the 1987 crash. And he examines the factors that led to the 2008 global meltdown, and the rise of algorithmic trading, the modern financial technology that sparked the 2010 Flash Crash when American stocks lost a trillion dollars in minutes.

A History of the United States in Five Crashes clearly and compellingly illustrates the connections between these financial collapses and examines the solid, clear-cut lessons they offer for preventing the next one.


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Reviews


Nations, CNBC contributor, president of NationsShares, and author of Options Math for Traders (2012), writes about five significant U.S. stock market crashes in 1907, 1929, 1987, 2008, and 2010, respectively. These crashes have similar characteristics, and each defined an ensuing period of economic challenges. Nations cites a great many sources, including economic reports, government documents, trade magazines, and newspapers. He covers the specific details of each crash and explores how and why each occurred. Covering complex responses, from investment trusts to the Troubled Asset Relief Program (TARP), makes for content that may be complex for the general reader, but the minute-to-minute details are fascinating. Readers who enjoy financial history, political economy, and the work of Andrew Ross Sorkin may find this all interesting. Nations insightfully relays the parallel experiences of stock market meltdowns, the events that led up to them, and their resulting economic and social ramifications.

Booklist, Raymond Pun

Can we time the market? No, but this timely book by an investment executive and CNBC contributor gives some idea of how various the triggers for its collapse can be.

The five market crashes Nations (The Complete Book of Option Spreads and Combinations, 2014, etc.) chronicles are comparatively recent, the first from 1907, the last from 2010. This lifts some of the predictive power from the author’s argument, since the so-called panic of 1893 was easily as severe as any of its successors, while some of the crashes of the early republican era were similarly devastating. Even so, the overarching points are valuable. Nations points out that investment in the market is key in moving the economy forward and that it has indeed led to individual enrichment; he notes that a dollar invested in 1899 would have been worth nearly $157 at the time of the 2010 hiccup. However, he adds, had we not experienced the ruinous crash of 1907, the whole package would have been worth another $45 or so, and if we had been able to avoid the five worst days of the ever cresting and falling cycle, then that dollar would have been worth $319.24. Nations describes some of the mechanisms for these moments of free fall, ranging from malfeasance in the market to technical glitches in our increasingly prevalent computer-driven trades. Interestingly, some of the market crashes, by the author’s account, were set in motion by the government’s doing the right thing in restraining monopoly, short trades, and other examples of the free market gone bad. Do what we will to avoid them, though, crashes are a function of that market and the people who participate in them, fiscal evidence of uncertainty and fear. As Nations also writes, though the climb back can be agonizingly slow, the market eventually recovers. In an account with more villains than heroes, indifferently written but full of useful object lessons, Nations concludes with the warning that for all that, “it will crash again.”
An eye-opening examination of the many ways money can be made—and disappear.

Kirkus

In studying the stock-market crashes of 1907, 1929, 1987, 2008, and 2010, CNBC contributor and investment professional ­Nations offers a comparative history on how crashes occur. For the 1907 panic, he details the backdrop of the San Francisco earthquake, President Theodore Roosevelt’s trust-busting campaign, and the poor capitalization of the burgeoning trust company sector. He explains that all it then took to spook investors and crash the market was a mistake by one of the trust companies. For each ensuing financial disaster, Nations similarly lays out the root causes, profiles the central actors, and offers a fast-paced narrative of the events leading up to it. In drawing parallels among the five events, he concludes that the triggering mechanism in each was a poorly understood financial innovation that, when stressed, spiraled out of control, tearing the markets apart. VERDICT Employing a lively style, Nations’s entertaining and informative work will be appreciated by all readers desiring a survey on market crashes. This work joins Robert Z. Aliber’s and Charles P. Kindleberger’s classic Manias, Panics, and Crashes: A History of Financial Crises.

Library Journal

Nations, a CNBC Contributor, offers a fascinating look at five major stock market crashes: the Panic of 1907, Black Tuesday, Black Monday, the Great Recession, and the Flash Crash. Nations observes that stock market crises mean more than just tanking investment accounts. They also stop people from investing, impacting job availability and the economy as a whole. While these failures don't have a single cause that is easy to recognize before hand, he asserts that all five studied here share important indicators. for one, they all had an external catalyst. He connects the Panic of 1907 to the 1906 San Francisco earthquake, which spurred insurance claims predominately held by British insurers, causing a global bump in interest rates. nations goes into equal depth on each case study, sharing stories such as that of Angeliki Papanthanasopoulou, a pregnant bank employee in Athens killed in 2010 by rioters venting anger over the Greek debt crisis, which then triggered the Flash Crash. Nations's focus on underlying causes is uniquely helpful give the complexities of the ever-changing and intricately connected global economy.

Publisher's Weekly

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