1929 Stock Market Crash

It’s time to consider the possibility of a Mega financial crisis in the month of September 2015 or earlier. But despite the government’s efforts to prevent another stock market crash, in theory, a free market society isn’t supposed to have any intervention in its economy. In 1995, Rosario Mantegna and Gene Stanley analyzed a million records of the S&P 500 market index, calculating the returns over a five-year period. When risk is high (ie prior to market crashes), the curve will be flat or inverted. The speculative boom of the 1920’s was one of the factors that contributed towards the great depression.Stock Market CrashStock Market Crash

If the Dow 30 were a fixed lineup of companies instead of rotating in new ones at will, the 1929 Dow 30 would be down 90+{d07e726dc35321c1887ba4b2e6d346fe7eafad5ef6cfcf877aa9d8d8ffdb003a} between then and now. Their move led to a slight increase in stock price on Saturday, October 26. But over the weekend many investors lost faith in the stocks and decided to sell their shares. After the crash bottomed out in August of 1921, this decade saw tremendous growth in the stock market and the economy (often called the roaring twenties). The forex market is not locked into the bull vs bear mentality as is the case with the stock market- this recent crash is a glowing example of the ‘bear’ as investor’s were reacting to the US sub prime crisis. Eventually dreams and reality have to be reconciled, and that means some kind of crash.Stock Market Crash

On September 6, the market jumped over 200 points to four-year highs, based upon the latest encouraging news regarding the European debt crisis. Many bear markets have occurred without being preceded by a stock-market crash and many stock-market crashes have occurred without the hint of a bear market. After the Wall Street Crash of 1929, the next important stock market crash occurred in 1987. In fact, a major new stock market crash warning sign just appeared that could seriously rattle markets this year. But when the stock prices have stabilised, then the stock selection process is important.

As a professional stock trader and a trading coach, I cannot but marvel at the aptness of what my beautiful wife had said about picking knives, and how they would relate to picking stocks after a market crash. Charles Schwab chief investment officer Liz Ann Sonders summed up this volatility the best — with a nod to U2. Running to Stand Still: Wild Swings Taking Market Nowhere” is the title of her most recent market commentary. As discussed in Dow 25-Year Moving Average History , the market has very rarely fallen below its 25-year moving average.

Just as was true of the wealth gap in the late 1920s before the onset of the great depression, the severity of a crisis does not depend on average wealth, but the distribution of the wealth. Proctor and Gamble (PG) is another large stock that will do ok. They make many staples that people must have. Their study is based on surveys conducted periodically since 1989 that asked respondents to assess the risk over the subsequent six months of a 1987- or 1929-magnitude crash. With all the investor doom and gloom currently around, there’s clearly an incongruity between the economic conditions the yield curve is signalling, and the current market sentiment. By 1933, unemployment had soared to 25 percent, up from just 3.2 percent in 1929. Plus the majority of money invested into the market doesn’t come from mum and dad investors but huge corporations and fund managers.