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The 1929 Stock Market Crash

1929 Stock Market Crash – What Exactly Happened?

The ‘roaring twenties‘ was a decade of huge wealth and prosperity in the United States of America. Values of stocks and shares on the Stock Market were gradually rising before hitting a peak in September 1929.

Because of high stock prices, public investors continued to speculate, with large return on investment being the norm throughout the decade. Many public investors were borrowing to buy stocks. Investment trusts were having a massive surge in business, with many investors choosing to let professionals buy stocks and shares on their behalf. Economists predicted that the high share values were there to stay, this caused investors to keep borrowing and buying.

After hitting its peak in September 1929, the stock market began to show signs of instability. This instability was a correlation with the fall in real estate prices. The instability caused investors to begin selling their stocks as quickly as possible, in order to minimise loss. Mass selling resulted in “Black Thursday” and “Black Tuesday”, Thursday 24^th October and Tuesday 29^th October respectively, two days where there were huge volumes of trading and share prices dropped dramatically. Black Thursday could be signified as the start of the 1929 Stock Market Crash (Wall Street Crash 1929).

A stock market crash is a massive decline in stock prices. This occurs when there is a huge number of sellers and therefore more demand to sell than to buy, causing prices to fall dramatically. The Dow Jones Industrial Average, a measure of overall stock prices, fell a massive 12.8% on Black Tuesday and a further 11.7% on Wednesday. By November 11^th the Dow Jones Industrial Average had dropped 40% from the September high.

The 1929 was the most significant event in the lead up to the 1929 Great Depression. The Great Depression lasted for over 10 years and was a time of significant economic hardship, and effects of the great depression were felt both in the USA and worldwide.

The 1929 Stock Market crash isn’t the only stock market crash in 20^th century history but is certainly the worst. The stock market crash of 1987 and the stock market crash of 2008 run a close 2^nd and 3^rd respectively. The single worst daily loss in history was actually “Black Monday” in the 1987 crash, which saw the  The Dow Jones Industrial Average drop by 22.6%. Despite this, the 1987 or 2008 crash didn’t have the same global effects as the 1929 crash.

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