AssetArchitect

The Great Depression (1929-1932)

Basis: Peak-to-trough 1929-1932, nominal

What happened

By July 1932, the United States stock market had lost 90% of its peak value. Not 90% of speculative excess. 90% of total value. Companies that had existed for decades, paid dividends reliably, and been considered cornerstones of a modern industrial economy were worth a tenth of what they had been three years earlier.

The crash itself began in October 1929 but the destruction did not stop there. It compounded for three years. People who bought the dip in 1930 lost more. People who bought the dip in 1931 lost more again. The conventional wisdom at every stage was that the worst was over. It was not.

What made 1929 categorically different from every panic before it was the failure of the banking system itself. Prior crashes had destroyed investment value. The Great Depression destroyed savings. Over 9,000 banks failed between 1930 and 1933. Deposits were not insured. The money people had never invested in anything, the money sitting in a checking account at a local bank because that was the responsible thing to do, disappeared. The safe part failed.

Cash that survived outside the banking system became extraordinarily powerful. Prices for goods, property, and labor collapsed so far that a dollar in 1932 bought significantly more than a dollar in 1929. The people positioned to take advantage of that were the ones who had either gotten out early or held assets that existed outside the system that was failing around them.

How assets like yours fared

Equities: The model applies a 0.10 multiplier, a 90% loss. This is not a worst-case projection. It is the documented historical outcome from peak to trough between 1929 and 1932. Individual holdings varied, but the broad market did not recover its 1929 peak in nominal terms until 1954. A 25-year recovery timeline is not a footnote. It is the actual cost of being fully exposed at the wrong moment.

Physical cash: The model applies a 1.40 multiplier, a 40% gain in real purchasing power. Deflation ran approximately 25% between 1929 and 1933. Physical dollars that existed outside the banking system bought significantly more at the bottom than they had at the peak. The holder who could meet obligations without selling into a collapsing market was in a position of real structural advantage.

Bank deposits: The model applies a 0.90 multiplier, a 10% loss. Over 9,000 banks failed between 1930 and 1933. Deposits were not insured. The FDIC did not exist until 1933. The 10% figure is a survivor-weighted average across the full banking system. If your deposits happened to be in one of the institutions that failed, the actual loss was total. This is the distinction the tool now models explicitly: physical cash and bank deposits are not the same asset in a systemic banking crisis. They behave differently.

Physical gold and pre-33 coins: The model applies a 1.30 multiplier. Gold was fixed at $20.67 per ounce while the general price level fell roughly 25%, meaning gold's real purchasing power rose substantially. This is the best-performing asset class in the 1929 scenario and reflects documented historical outcomes rather than a projection.

Physical silver: The model applies a 0.50 multiplier. Industrial demand collapse took silver from roughly 53 cents per ounce to 28 cents. Silver's partially industrial demand profile meant it did not share gold's monetary floor during this period.

Real estate: The model applies a 0.70 multiplier. Property values fell as distressed selling accelerated through 1931 and 1932. If you carry a mortgage, the engine models the equity position separately: the property value falls while the debt obligation does not, which is a compounding loss the flat multiplier alone does not capture. The covid-era froth adjustment compounds this further for properties purchased at above-trend valuations.

The yield curve context: If the yield curve is currently inverted when you run this scenario, equity and digital holdings receive an additional friction multiplier. Yield curve inversion preceded the 1929 crash. It is one of the more reliable leading indicators in the historical record, which is why this tool surfaces it as a live macro signal rather than a static data point.

The 1929 scenario is the most unforgiving in this tool. The number you see against your portfolio is not a prediction. It is a question. If that number appeared on your screen tomorrow morning, what in your current allocation would still be standing?