5 – He Made a Fortune from Insider Trading
There is no doubt that Joseph Kennedy was an extremely bright individual with a strong work ethic. He was the youngest president of a bank in America at the age of 25, and he knew how to make money from the markets. Had Joseph played fair, he would probably have become a multi-millionaire but he wanted it all, and he wanted it as soon as possible. That’s why he became involved in the nefarious practice of insider trading.
He specialized in using this information to help drive down the price of stocks or to increase the price artificially. One of his earliest âsuccesses’ came when the principal stockholder of the Pond Creek Coal Company, Galen Stone, confided in him. Stone told Joseph that he was selling his huge interest in Pond Creek to Henry Ford as the great industrialist was planning to expand his already huge empire.
Never one for half measures, Joseph borrowed an estimated $225,000 and purchased shares in Pond Creek at $16 apiece. Once news of Ford’s imminent acquisition reached the newsstands, the price of Pond Creek shares rocketed to $45, and Joseph sold his stake for a profit of $435,000; which became $210,000 after he repaid the loan. He began to make obscene sums of money in âstock pools’ while other unfortunate investors were financially ruined.
While the Great Depression led to chronic unemployment, poverty, and suicides, Joseph Kennedy used stock market manipulation to increase his impressive fortune. During the stock market crash of October 1929, Joseph made millions of dollars by short selling. There is a suggestion that he helped to manipulate the market into crashing. It is not that far-fetched a theory given his knowledge of the markets and complete lack of morality. With a fortune available to back up his political ambitions, he was able to make large contributions to Franklin D. Roosevelt’s first presidential campaign in 1932. With his foot in the door, Joseph became very powerful, but his dubious political affiliations resulted in more controversy.