The widely known saying dictates that the history is our teacher, which can also be applied to the stock market predictions as well, which is why the notorious market crash of 1929, still matter even beyond the history.
The stock market crash back in 1929 was followed by the Great Depression, and as the historical day known as “Black Monday” is a long way from being forgotten, market analysts and historians following up with financial market are learning from the Great Depression by tracing the factors that caused the stock market crash in the first place.
What Caused the Notorious “Black Monday” of 1929?
After collecting significant gains throughout the period of from 1921 to 1929, known among historians as “the Roaring 20’s”, the stock market fell by 13% in a single day by the end of October 1929.
Within the period of booming prices in the stock market, Dow Jones Industrial average recorded an impressive performance in the stock market, allowing the average to reach 381 points starting from 63.
Even though the general opinion states that the Great Depression came in the course of a single day, this is not the case, as it took more than several days to get to the point of a major crash.
Only several days before the crash that became the most obvious within the period of two days, October 28th and October 29th, 1929, the market actually showed an amazing performance, collecting rises, however, this was only the case because investors were trying to stabilize the market by rallying up on stocks on the last Friday before the crash took place.
Although the 20’s were the years of great economic expectations and even greater predictions, the case was that the stocks were highly overvalued as more investors were raising credits in order to invest and buy more stocks, which eventually led to the crash.
Factors such as high corporate and consumer debts, unregulated industries, leverage, and investors’ speculations are what pushed the stock market towards the Great Depression, while many economists have in mind a mild version of 1929 crash that could take place 90 years later.