After Studying History's Biggest Crashes, Andrew Ross Sorkin Tells Us What Parallels He Sees Between 1929 And Today's Stock Market Frenzy

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Walking up to The Plaza Hotel's east side entrance, Andrew Ross Sorkin is in his element.

Just seconds after his arrival, he dives into what the storied hotel was like a century ago, sending me scrambling to get my recorder out.

"In 1929, people would come here and it was insane — every business guy would be here and they would all sort of gawk at each other," he gushes. "You remember the famous Four Seasons, where people would have lunch in the '80s and '90s? This was like that."

The Plaza is one of the settings in his new book, "1929," a recounting of the infamous stock market crash that preceded the Great Depression. The hotel was frequented by the book's main character, Charlie Mitchell, the chairman of what is now Citibank and one of the culprits in fueling the bubble. One of the book's chapters opens with a scene in June 1929 where Mitchell has lunch at the hotel with General Motors founder William Durant as other diners look on in awe at the celebrity figures. It's an experience Sorkin himself is now familiar with: guests filing out of the hotel on the warm September evening turn their heads as they pass the CNBC host and extend their congratulations on his book release.

In addition to being a gathering place for the city's wealthiest figures, the hotel was also a place where one could directly participate in the stock-market mania that was gripping the country. The hotel's Oak Room bar, which still exists today, had been turned into an EF Hutton brokerage location at the time.

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"Prohibition was happening, so all of the bars were closed, and the national pastime had become speculating," he says, pointing to the north side of the hotel. "There were literally brokerages on the corners of streets like there are Starbucks now."

Ninety-six years on, it's a different world. The drinks flow once again at The Plaza. Many of the ugliest parts of the 1920s frenzy have been regulated away. Lucky for all of us, it's no longer legal to pay actors to bid up the price of a stock on the floor of the New York Stock Exchange. Companies must also now issue a prospectus for their stock. Oh, and now there's a Securities and Exchange Commission.

Still, Sorkin is worried that some elements leading up to the worst crash in history are once again playing out as AI-hungry investors bid the market up to record highs.

"It's human nature to always want more," he said. "Greed drives the market."

Publishing a book on the 1929 stock-market crash right now could itself be taken as a statement by the author.

Investor exuberance around AI in recent years has driven stock valuations to nosebleed levels, drawing comparisons to some of history's most famous bubbles. The Shiller CAPE ratio is at its third-highest level ever, and the so-called Warren Buffett indicator is at an all-time high.

Sorkin, who has been working on the book for several years, insists the timing is a mere coincidence.

"The truth is the publisher would have liked me to be finished a long time ago," he said. "My wife would have liked me to be finished a long time ago."

But as we walked across 59th Street and down into Central Park, eventually settling on a bench tucked in the shadow of The Plaza, Sorkin didn't hesitate to express his worries that things could again get dark for investors.

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"When I started this project, I thought I was writing a book about history," Sorkin said. "However, the more I dug into it and the farther I got along in the project, it became clear to me that almost everything that was happening in 1929 is like a mirror to today."

"I don't want to tell you that today is 1929. That, I have no idea about, and I think it's actually unlikely," he continued. "But do I think we're in a bubble of some sort? Sure, we're in some kind of bubble. The question, of course, is when does the bubble burst?"

Having written the bestseller "Too Big to Fail" about the 2008 financial crisis and now "1929," Sorkin is well-versed in bubbles. He described a few rhymes he can hear when he compares today to 1929, when stocks had peaked after a 500% surge from 1921 before plummeting 90% over the following few years.

First is the emerging technology sweeping investors off their feet. In the 1920s, there was RCA. The company's stock was bid up exorbitantly, and while radio did indeed revolutionize communications, its share price fell from about $530 to $3 in the crash, he said.

Today, he thinks AI will eventually be a transformative technology. In the meantime, however, there are questions about whether the billions of dollars being spent on its infrastructure will be worth the payoff, and how sustainable it is.

"I wouldn't tell you that this is not a great thing for America or for the world. But is there overbuilding going on when you have customers who are ultimately being financed by the supplier?" he said, citing as an example Nvidia investing $100 billion in OpenAI, one of its customers.

Second, the riskiest parts of the market are becoming increasingly available to the average investor.

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"The idea of people trading in the hotels was sort of was sort of draped in the idea that they were democratizing finance. Everyone was gonna have access, right?" he said. "And that has a lot of echoes of what's going on today in terms of we're making crypto available, we're making private equity, private credit, venture capital — you know, the new Trump bill allows all this stuff to ultimately get into your 401ks and retirement funds."

And third, rules and regulations that have guided markets are being rolled back. Quarterly earnings reports are rumored to shift to a twice-yearly schedule, resulting in less transparency for investors. The Consumer Financial Protection Board is being dismantled. The definition of an accredited investor — one who has proven sufficient financial education or has ample funds, thereby gaining access to certain investments — is being revised.

It's not all bad, though. Bubbles do have their upsides: economies change and grow, and people get rich. Speculation, Sorkin points out, is the twin of innovation. Society needs investors willing to take risks and bet on visionary founders.

But people's tendency toward greed means there will always be excesses in financial markets, and a subsequent downside, Sorkin thinks.

In "1929," Sorkin includes an epigraph from Albert Einstein, dated October 26, 1929, just three days before Black Tuesday, when the market fell by more than 11%.

It reads: "The ordinary human being does not live long enough to draw any substantial benefit from his own experience. And no one, it seems, can benefit by the experiences of others. Being both a father and teacher, I know we can teach our children nothing…Each must learn its lesson anew."