The great stock market crash
The US stock market's history is full of examples of catastrophic crashes that have led to the loss of large sums of money by many investors. Many of these market crashes has occurred in 1929. The Black Tuesday of 1929 is an example of one of these market crashes. It was in October 29th, 1929 that one of the worst days in US stock market occurred. It is known as the Black Tuesday, which combined the negative effects of both the Black Thursday and the Black Monday.
One and a half hours of falling behind of 12.9 million traded shares and the ticker tape was experienced on Thursday, whereas on the Black Tuesday a fall behind of two and a half hours of the ticker tape was experienced during which new 16.4 millions of shares were traded. During the Black Tuesday a 12% loss was experienced by the market as compared to the 13% one-day loss of the stock market on Monday.
Pressured by the quickly declining market, the top US bankers held a meeting during the day. Due to the urgency of the situation the bankers met twice - once at noon and once in the evening. These meetings were surrounded by the skepticism of most investors that suspected the bankers of trading stocks instead of doing their real job of stabilizing the market. The press speaker, Thomas Lamont, managed to dispel the rumors to a certain extent, but did not manage to achieve the same persuasiveness and reliability exhibited the previous day.
Most of the financial newspaper directed their daily issues to the topic of the mass selling of stocks. They tried to provide a logical explanation of the occurred financial chaos, but most of them managed only to give assumptions based on the observed events. Neither of them was able to give the actual reasons for this mass selling and the resulting disorder.
In November, the so called Great Stock Market Crash occurred, which resulted in nearly $100 billion in assets losses for the investors. The remarkable decline of 40% was experienced by the market in just two months - September and October. Generally, the beginning of the Great Depression and the end of the Roaring 20's was marked by the Black Tuesday. The market reached its bottom in July 1932, when the Dow decreased with 89.2% ending up at 41.22. It took as long as 22 years for the market to recover to its previous state, but the effects of the Black Tuesday were still felt.
The market crash of 1929 experienced during the Black Thursday was followed by a general optimism and calmness on the part of investors, since they knew that the bankers have taken the necessary actions to prevent future failures. Their confidence was also based on the assumption that the market is expected to bounce back from the following Thursday. However, the general calmness was greatly disturbed on Monday.
Known in the financial world as the Black Monday, the October 28th, 1929 was one of the most terrible days in the US stock market. No one was brave enough to enter the situation and fix the chaos. No one of the previous "heroes" exercised its knowledge to save the day, neither Richard Whitney, nor the bankers. Even Lamont did not give the usual explanation to the press. Only after the market closed did the latter made a few comments, from which the tone of pessimism was felt. Since it was clear that there is little possibility of saving the market large numbers of shares, amounting to approximately 9.25 million, were traded by the speculators. Everyone hoped not to incur too destructive losses.
This was the second worst day of the US stock market ever experienced. The US stock history knows another Black Monday, which was experienced in October 19th, 1987, to be distinguished as the worst day in the financial history.
The fall of the ticker type a week before the Black Monday and the significant amount of shares, amounting to nearly 6,091,870, gave the first signs to the investors that something is to happen. They embarked on selling. Most of them blindly sold their shares, never making a reasonable analysis of the current situation.
The general confusion was heightened by Professor Irving Fisher, an economist from the Yale University. He gave reasons for the low prices of the stocks and prediction of the increase of their real value. During a bank meeting in the same week, he gave his opinion about the state of the security values, which he viewed as not being inflated. Additionally, he presented his view of the overall US economy as "high plateau of prosperity". Unfortunately, Fisher's reputation as an expert, who has always managed to make the most accurate predictions about the future state of the stock market, was greatly damaged by the events surrounding the Black Thursday, Monday and Tuesday. After the Black Monday the stock market was about to experience its worst day in history, which resulted in destructive losses and long felt negative consequences - the Black Tuesday.
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