On Oct. 30, 1929, John D. Rockefeller Sr. spoke up. His name stood for money in America. He said business was in good shape and the past week's selloff had gone too far. Then he added that "my son and I have for some days been purchasing sound common stocks." The Dow jumped 29.40 points that day, or 12.3%. It was one of the best days the index has ever had. The Journal's In Market History box adds four words. "The bounce didn't last."
Think about how that day felt. The market had just lived through a brutal week. Then a man whose name meant money said he was a buyer. Of course people followed him. That's the whole appeal of the famous buyer. He saves you from doing your own math. You don't have to know what a stock is worth if someone richer than you is buying it.
A famous buyer can make a headline. He can't make a bottom. Rockefeller could afford to be early and wait it out. Someone buying with the rent money can't. A rich man's patience is a different asset from yours, and it isn't for sale. He may well have meant every word. Stocks were cheaper than a week before. None of that made the day a floor.
A plan beats a hero
We won't compare this week to that one. Nobody knows what the next month holds, and anyone who says they do is guessing. The history box makes a smaller point. A bounce built on one famous name didn't hold. What holds up better is a plan you wrote before the headline. It says what you'd buy, at what level, with how much and in how many pieces. You write it down, with a date on it, on a calm day.
Our read
This is Behavioral, the module about why smart people do odd things with money. The urge to follow a famous buyer is one of the oldest. Now it's a billionaire's post or a fund manager on TV. In 1929 it was Rockefeller in the newspaper. The pull is the same, and so is the fix. The desk writes its plans down in advance, in letters clients can read, and puts money to work in planned pieces. A headline isn't on the list.
For your own plan, the thing this story touches is the cash you're tempted to put to work on a down day. Before you buy anything this week, write one sentence. "I'll buy this fund when the index hits this level, in three pieces." If you can't fill in the level, you don't have a plan yet. You have a feeling, and Rockefeller's followers had one of those too. Buying the dip with a plan is bringing your own umbrella. Buying it because a rich man did is borrowing his. If the level is hard to pick, that's a good question for your next review.