1929
October stock market crash

After several years of steadily rising stock prices, the Dow Jones Industrial Average fell from a peak of 381.17 in September 3, 1929 to 230.07 October 29, 1929 a 66% decline in value. The crash of the US stock market was followed by the great depression as the destruction of capital in the markets also affected the liquidity of most businesses that rely on credit. Just like most stock market crashes that followed, the crash of 1929 followed a boom cycle where most securities were bought using borrowed money provided by brokerages and banks. The causes of this crash was deeply contested but during this era investors and traders were highly leveraged as a result of the effect of a market in euphoria which promises nothing but continued growth. Brokerages were also spawning left and right and most has even set up offices on transatlantic liners powered by Radio Corporation of America's (RCA) wireless technology.

The abundant supply of credit and a booming economy helped spur astronomical gains in the equities market. Also during this time, Europe was slowly recovering from the devastations caused by the first world war. As European industry started to come back into its former state, demand for US goods declined slowly. Surpluses forced prices to fall and the value of land which is used to borrow capital from banks also fell. This weakened state on the rural areas has spread through the chain of weakening banks. On July 8, 1932, the Dow Jones Industrial Average was at 41.88 a 90% drop from its peak of 381.17 in September 3, 1929.












Stocks | Forex | Options | Economics | Bonds | History | Language learning | Technology | Technical Analysis | Fundamental Analysis
Copyright © 2014 econtrader | Risk disclosure | Terms of Use