STOCK MARKET CRASH OF 1929

The world had regained its peace after the First World War and those days were called the Roaring Twenties. It was the time just before the Great Depression which was caused by the Stock market crash of 1929. The Stock market crash of 1929 was characterized by a sharp dip in the U.S. stock values. Though there were several factors which were responsible for the Great Depression, the stock market crash of 1929 was believed to be the prime reason behind it. There has not been a more severe crash in the stock trade since the stock market crash of 1929.

After the effects of the First World War, there was an economic boom in the world which led to the soaring rates of stocks. There was such a tremendous increase in the value of the stocks that everybody who had invested in the stock market had profited in some way or the other. The Dow Jones average plummeted to new highs and there was a surge in the number of investors in the stock market. In order to bring back the normality in the stock market, Fed increased the interest rates by several folds. This led to the Stock market crash of 1929 as investors realized that the stock market boom was just a big economic bubble waiting to burst.

The Stock market crash of 1929 was characterized by two important days popularly known as “Black Thursday” and “Black Tuesday”. The Stock market crash of 1929 was not a one day affair but it lasted over 5 days starting from that fateful Thursday to the Tuesday the following week when the stock market finally crashed. This created a sense of panic among the stock market investors and almost one third of America was under the poverty line. But there were a few analysts who did predict the stock market crash of 1929 and very few investors were pro-active enough to sell the shares just before the crash and these were the ones who benefitted greatly from the stock market crash of 1929.

The Depression that followed the stock market crash of 1929 lasted for over a year till 1930 but it took over twenty years for the market to regain a new high. Since then, economists have been prepared for market crashes and economic lulls as they do not want a repeat of the stock market crash of 1929.

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