After a speculative boom in the 1920s, the stock market crashed on October 24, 1929, which became known as Black Friday and sent to the U.S. the Great Depression. The Dow Jones fell 89% for almost three years.
On October 25, 1929, to go down in history as "Black Friday", a major stock market crash on Wall Street in New York marks the beginning of a global economic crisis. It will leave a major impact on the 1930 twentieth century.
Stock prices fell to a record low. The credit system collapses, for the first time in the United States, then in all industrial nations. The dependence of the German economy in credit of America now comes home hard: U.S. banks begin to withdraw their short-term loans Reich. The collapse of many companies is the immediate consequence. The number of partially and completely unemployed workers rises rapidly.
After the First World War, America experienced a great economic expansion was driven by new technologies and improved production processes. Between 1927 and 1929, industrial production output increased by 25%. The electricity was broader and purchases of electrical appliances - such as modern comforts - took hold. Ford assembly line was created that allows cars to be produced at lower cost. The Roaring 20 were a time of rebirth for most Americans.
So how does this noise comes to a halt? What exactly is contributed or caused the stock market crash of 1929?
The events that led to the stock market crash of 1929
Many people blamed investors for making speculative approaches in the market and drive stock prices far above fundamental values. But was it true? Let's take a quick look at the three infamous days of the time.
October 24, 1929 - Black Thursday
The stock market actually crashed during a period of five days. The first sign of trouble was the Black Thursday - October 24, 1929. At that time, the stock traded normally about 4 million shares each trading day. However, on Black Thursday, a record 12.9 million shares were traded.
Systems to monitor market prices could not keep up with the trading volume and may have contributed to the panic selling that day. At one point, ticker tapes running nearly 90 minutes behind the market. At day's end, the market fell 33 points or about 9%.
October 28, 1929 - Black Monday
Following Black Thursday, the market recovered a bit on Friday. This leads to a sense of security during the weekend as investors felt the market could rebound. However, market conditions deteriorated rapidly again in the Black Monday - October 28, 1929 - and the high volumes of trade, an increasing pressure on the flow of information.
Black Monday, trading volumes were about 9.25 million shares and market confidence fell sharply. At day's end, the market fell by 13%.
October 29, 1929 - Black Tuesday
Black Tuesday - October 29, 1929 - the day that most historians agree the final blow to the roaring 20s and was the starting point of the Great Depression. Black Tuesday, a record 16.4 million shares changed hands. Teletype machines fell behind almost 3 hours. With all hopes of a market recovery is gone, panic selling continued and the market fell 12%.
Recovering from the 1929 stock market crash
Over the next month the market continued to decline sharply, however, the market will not bottom out until July 1932 when the Dow Jones reached a maximum of 41 381 in 1929. That is a drop of almost 90%! Although the market began to rise in 1932, would take another 22 years before the Dow Jones rose above the levels seen in 1929.
Why is the market crash?
Interestingly, economists have examined later the foundations of the 1920 I think it was a stock market bubble to burst in 1929. In fact, most stock values had continued to rise more than expected dividend payments. The economy was expanding rapidly and companies were enjoying this expansion. Those same companies that were enjoying these years of prosperity has increased dividends and is expected to continue to do so.
The stock market keeps track of the economy after the 1929 crisis - this time in the negative. From the consumer perspective was decidedly pessimistic, the economy contracted sharply. The companies were hard hit by the decline in consumption and this trend will continue for almost three years.
Therefore, besides panic selling in those few days in October 1929, causing severe price declines in shares, there was nothing unusual or "inflated" about stock prices in the days before or after the crash stock in 1929. Panic selling led the market down. The laws of supply and demand were in place - no one willing to buy shares and everyone trying to sell at the same time, the market had nowhere to go but down.
On October 25, 1929, to go down in history as "Black Friday", a major stock market crash on Wall Street in New York marks the beginning of a global economic crisis. It will leave a major impact on the 1930 twentieth century.
The events that led to the stock market crash of 1929
Many people blamed investors for making speculative approaches in the market and drive stock prices far above fundamental values. But was it true? Let's take a quick look at the three infamous days of the time.
The stock market actually crashed during a period of five days. The first sign of trouble was the Black Thursday - October 24, 1929. At that time, the stock traded normally about 4 million shares each trading day. However, on Black Thursday, a record 12.9 million shares were traded.
Systems to monitor market prices could not keep up with the trading volume and may have contributed to the panic selling that day. At one point, ticker tapes running nearly 90 minutes behind the market. At day's end, the market fell 33 points or about 9%.
October 28, 1929 - Black Monday
Following Black Thursday, the market recovered a bit on Friday. This leads to a sense of security during the weekend as investors felt the market could rebound. However, market conditions deteriorated rapidly again in the Black Monday - October 28, 1929 - and the high volumes of trade, an increasing pressure on the flow of information.
October 29, 1929 - Black Tuesday
Black Tuesday - October 29, 1929 - the day that most historians agree the final blow to the roaring 20s and was the starting point of the Great Depression. Black Tuesday, a record 16.4 million shares changed hands. Teletype machines fell behind almost 3 hours. With all hopes of a market recovery is gone, panic selling continued and the market fell 12%.
Recovering from the 1929 stock market crash
Over the next month the market continued to decline sharply, however, the market will not bottom out until July 1932 when the Dow Jones reached a maximum of 41 381 in 1929. That is a drop of almost 90%! Although the market began to rise in 1932, would take another 22 years before the Dow Jones rose above the levels seen in 1929.
Interestingly, economists have examined later the foundations of the 1920 I think it was a stock market bubble to burst in 1929. In fact, most stock values had continued to rise more than expected dividend payments. The economy was expanding rapidly and companies were enjoying this expansion. Those same companies that were enjoying these years of prosperity has increased dividends and is expected to continue to do so.
The stock market keeps track of the economy after the 1929 crisis - this time in the negative. From the consumer perspective was decidedly pessimistic, the economy contracted sharply. The companies were hard hit by the decline in consumption and this trend will continue for almost three years.
Therefore, besides panic selling in those few days in October 1929, causing severe price declines in shares, there was nothing unusual or "inflated" about stock prices in the days before or after the crash stock in 1929. Panic selling led the market down. The laws of supply and demand were in place - no one willing to buy shares and everyone trying to sell at the same time, the market had nowhere to go but down.
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