Roaring Twenties 2.0

Stock market boom? Check. Economy on fire? For now. But this century isn’t like the last in important ways.

- NELLIE S. HUANG, ADAM SHELL AND ANNE KATES SMITH

The post-pandemic financial boom of the 1920s was epic. Cars, radios and telephones became widespread, and the major market indexes were stuffed with the tech and consumer leaders of the day—from American Telephone and Telegraph to Westinghouse Electric. Brokerage houses proliferated, and new investment trusts enabled ordinary people to buy stocks in a snap. Mom-and-pop investors flocked to the market, many using risky margin loans requiring a scant 10% down, and stock prices soared.

Sound familiar? Investing gurus see parallels today, primarily in outsize stock-price gains and an influx of individual investors into the market. Despite some rocky days in early fall, stocks have doubled since the end of the 2020 bear market through early October, including dividends. Margin debt was at record levels at the most recent count. Individual investors reported more than a 70% portfolio allocation to stocks for seven straight months through September, according to surveys from the American Association of Individual Investors—the longest streak since the tech-bubble days and well above the average of 61%. Stockspeculating communities on social media have exploded, as have accounts on trading apps such as Robinhood.