Paper Outline
I. The Great Crash (October, 1929) Overview
A. The Great Crash happened in October of 1929, two worst days being October 24 and October 29, known as Black Thursday and Black Tuesday, respectively. Stock prices dramatically increased in 1928, with the Dow Jones Industrial Average reaching a peak of 381.2 on September 3. Stock prices fell about ten percent following this peak, but then rose again about 8 percent by mid-October. Panic selling appears to have set in October 23 and on October 24, a record breaking thirteen million shares were traded, compared to an average four million shares per day in September. Although prices steadied for a few days, panic started again, with the trade of 16.5 million shares on October 29. A coupe …show more content…
Many public officials stated that stocks were overvalued and that speculation could hurt the economy. These type of statements caused investors to believe that the market would continue to be strong, which could be possibly be one of the causes of the crash. Citing speculation led stocks to be overpriced. The Federal Reserve Board had tried to tighten the monetary policy to lower these inflated prices. There was a policy to reduce the amount of broker loans, which had risen in the earlier years. This in turn lowered the liquidity of …show more content…
This is believed to be the second largest one-day market crash in history. The Crash of 1987 came on the heels of a spectacular stock bull market that started in 1982 that was fueled by a supercharged business environment. The Dow stock index nearly doubled from 1986 until the fall of 1987, when the market began to drop. On Monday October 19th, 1987 (“Black Monday”), an avalanche of very aggressive “sell” orders hit the market as investors began to panic, which resulted in a panic selling frenzy once again.
Experts believe that the 1929 crash played an important role in the onset of the 1987 crash. If the 1929 crash had not occurred, the 1987 crash would never have happened.
Causes leading to the market crash of ‘87 and the similarity to ‘29
Experts believe that there is a resemblance in both the ’87 and ’29 crashes. Some of the causes of the ’87 crash listed below
1. Over-valuation of stocks:
Very similar to the 1929 crash, one of the main reasons of the 1987 crash was the inflation in the prices of stocks. Many analysts agree that stock prices were overvalued in September 1987. Although massive fraud and illegal manipulation was alleged in the 1929 crash, later evidence suggested that there was very little to no manipulation
I. The Great Crash (October, 1929) Overview
A. The Great Crash happened in October of 1929, two worst days being October 24 and October 29, known as Black Thursday and Black Tuesday, respectively. Stock prices dramatically increased in 1928, with the Dow Jones Industrial Average reaching a peak of 381.2 on September 3. Stock prices fell about ten percent following this peak, but then rose again about 8 percent by mid-October. Panic selling appears to have set in October 23 and on October 24, a record breaking thirteen million shares were traded, compared to an average four million shares per day in September. Although prices steadied for a few days, panic started again, with the trade of 16.5 million shares on October 29. A coupe …show more content…
Many public officials stated that stocks were overvalued and that speculation could hurt the economy. These type of statements caused investors to believe that the market would continue to be strong, which could be possibly be one of the causes of the crash. Citing speculation led stocks to be overpriced. The Federal Reserve Board had tried to tighten the monetary policy to lower these inflated prices. There was a policy to reduce the amount of broker loans, which had risen in the earlier years. This in turn lowered the liquidity of …show more content…
This is believed to be the second largest one-day market crash in history. The Crash of 1987 came on the heels of a spectacular stock bull market that started in 1982 that was fueled by a supercharged business environment. The Dow stock index nearly doubled from 1986 until the fall of 1987, when the market began to drop. On Monday October 19th, 1987 (“Black Monday”), an avalanche of very aggressive “sell” orders hit the market as investors began to panic, which resulted in a panic selling frenzy once again.
Experts believe that the 1929 crash played an important role in the onset of the 1987 crash. If the 1929 crash had not occurred, the 1987 crash would never have happened.
Causes leading to the market crash of ‘87 and the similarity to ‘29
Experts believe that there is a resemblance in both the ’87 and ’29 crashes. Some of the causes of the ’87 crash listed below
1. Over-valuation of stocks:
Very similar to the 1929 crash, one of the main reasons of the 1987 crash was the inflation in the prices of stocks. Many analysts agree that stock prices were overvalued in September 1987. Although massive fraud and illegal manipulation was alleged in the 1929 crash, later evidence suggested that there was very little to no manipulation