The Joe Kennedy Story
How An Eight Year Boy Saved the Kennedy Fortune: Bullish Consensus
Bullish Consensus is the measure of how many market advisors are recommending
a long (or buy) position in a given market. This is also known as “Contrary
Opinion” and “Bullish Sentiment.”
On a day-by-day basis, bullish consensus should not be a major influence on your
estimate of a given market situation, but in years when a prolonged trend has
attracted more and more traders, bullish consensus is a major tool to help one
decide when the top (or bottom) is at hand.
Open interest is the number of contracts on the books (at a futures exchange in this
case) that must be off-set with an equal, but opposite, transaction at some future
Joe Kennedy, the father of the 35th president of the United States, as a young man,
was a highly motivated to amass a fortune. He was educated about business
management and married the daughter of Boston’s mayor, which facilitated his
business growth. Prohibition of alcohol became law in 1919 and presented another
opportunity for Kennedy to expand his successful business enterprises by
providing whiskey to those willing to pay high prices for illegal spirits. Kennedy
became a savvy investor in stocks and commodities. He made another fortune in
the booming stock market of the 1920’s.
In the 1920’s, stocks could be bought on a slim margin, meaning a few dollars of
cash could be leveraged to buy $100 worth of stock. People who had never heard
of stocks were persuaded by stock brokers to use their life savings to buy stocks on
margin. The stock market exploded in the late 1920’s, and Joe Kennedy became
one of the richest men in America by 1929.
In the midsummer of 1929, some 300 million shares of stock were “owned” by
being carried on a slim amount of “margin money.”
There was a day in the third week of September, 1929, when Kennedy, as usual,
was headed to his office building in downtown Boston with the morning
newspaper in-hand. He walked into the elevator to go to his top floor office with a
splendid view of the Boston skyline.
As always, the 8-year-old elevator operator boy said, “Good morning, Mr.
Kennedy.” Kennedy was always polite to the boy and often chit-chatted with him.
This particular morning, Kennedy was reading the newspaper headline about how
the stock market had made new highs with a spectacular move the previous day.
The elevator boy asked Kennedy, “Mr. Kennedy, have you heard about the stock
market? It is making a lot of people a lot of money.”
Kennedy said, “Really? Tell me about it.” Kennedy was intrigued that an eight-
year-old boy knew about the stock market.
“Well, Sir, last Friday my grandma told me she had invested $20 in the stock
market, and a week later that $20 was worth more than $500! Can you believe that,
Mr. Kennedy? $500! Grandma said that is more money than she earns in six
months! I had saved $5, and Grandma invested it for me on Monday. I have
already made more than $100! Mr. Kennedy, I am sure you could really make a lot
of money in the stock market!”
Kennedy told the boy he greatly appreciated the investment advice and gave the
boy triple his normal tip.
As Kennedy walked by his secretary’s desk, he told her to contact all his stock
brokers and tell them to be in his office within the hour.
An hour later, all sixteen of Kennedy’s stock brokers were in his office. Kennedy
told them to not to bother finding a chair as this was going to be a very short
meeting. Then he told to them sell every stock he owned.
All of them were quick to argue with him. Kennedy quickly raised his hand and
He said, “Any of you who do not sell my stocks by noon today, I will fire you and
find a broker who will do what I tell them to do. Now get out of here and get to
On October 18, the market went into a free-fall. The wild rush to buy stocks gave
way to an equally wild rush to sell. The first day of real panic, October 24, is
known as Black Thursday. On that day, a record 12.9 mill