Penned by a long-time New Yorker contributor, one of the main strengths of Business Adventures is its wonderful prose and stories. Business Adventures’ lessons are about human nature in the context of business, and though technologies and best practices change, people never do. Perhaps above all, Business Adventures teaches lessons about people – how they act, what makes them thrive and flounder, and what devilry they’re likely to get up to if left to their own devices.

The story of the Ford Edsel is the epitome of a product launch gone wrong.Business Adventures details 12 critical moments in American industry, including the rise of Xerox and Piggly Wiggly, the Ford Edsel fiasco, and the GE and Texas Gulf Sulphur scandals. In fact, the only thing that can be predicted about the market is, to quote famous banker J.P. This inherent irrationality translates into the market’s unpredictability. But all stock exchange officials could come up with was that the government needed to pay more attention to the prevailing “business climate,” i.e., the mood and irrational expectations, of the financial market. Three days after the crash, the market had fully recovered.Īfter this bizarre event, everyone was searching for rational explanations.

So when the value came close to that limit, a buying panic broke out as everyone expected prices to go up. Their expectations became self-fulfilling, causing a crash that annihilated $20 billion in stock value.īut just as emotions triggered the crash, they also helped move along the recovery: investors considered it common knowledge that the Dow Jones Index, which measured the value of the general stock market, could not go below 500 points. Consequently, they rushed to sell off their shares, which created a downward spiral in prices. Investors panicked when they realized they could only know a stock’s true price with a time lag of some 45 minutes, by which time they assumed the true price had fallen. There was a lot of trading going on that morning, and the central office was running late in updating stock prices, as this was done manually. On May 28, 1962, the mood on Wall Street was distinctly glum after six months of stock market decline.

This three-day turmoil neatly illustrates how bizarre the behavior of Wall Street bankers can be, and how investors are guided more by their mood than actual facts. How much can a person miss in three days? Well, if you happened to be a stock market investor who fell into a three-day coma on May 28, 1962, you might have woken up to almost no noticeable change in your investments, but you also would’ve slept straight through the chaos of the 1962 Flash Crash.

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