In 1935 the stock market had taken a catastrophic hit, on the order of 85% to the downside. There was no big government bailout of component companies, nor was the Federal reserve pumping trillions into the economy to keep prices at prosperity levels. It was a true “blood in the streets” situation, which is a veritable cornucopia of opportunity for a determined investor.

Today, even with a weak economy and even weaker job and real estate markets, we have the Dow at 10,500, or only about 25% off peak levels. The speculation hasn’t been thoroughly wrung out of the markets in anything like the way it was in the 30s, so there is still considerable risk even with buy and hold.