Investopedia

Continue to Site »

Stock Market Crash Of 1929

Filed Under » , , ,
Dictionary Says

Definition of 'Stock Market Crash Of 1929'

A severe downturn in equity prices that occurred in October of 1929 in the United States, and which marked the end of the "Roaring Twenties." The crash of 1929 did not occur in one day, but was spread out over a two-week period beginning in mid-October.

The first portion of the crash occurred on October 24, a day known as Black Thursday. The following week brought Black Monday (Oct. 28) and Black Tuesday (Oct. 29) – the Dow Jones Industrial Average fell more than 20% over those two days. Pre-existing selling pressures and fear in the stock market were exasperated by a flood of sell orders that shut down the ticker-tape service that provided stock prices to traders. With key information missing from the markets, selling intensified even further.

Despite a few attempts at recovery, the stock market continued to languish, eventually falling almost 90% from its peak in 1929.

Investopedia Says

Investopedia explains 'Stock Market Crash Of 1929'

The lead-up to October 1929 saw equity prices rise to all-time high multiples of more than 30 times earnings, and the benchmark Dow Jones Industrial Average (DJIA) had risen 500% in just five years! This type of hyper-growth has shown itself to be unsustainable over time, as markets generally perform their best when they can grow steadily.

It took over 25 years for the DJIA to get back to the highs of the 1929 market, as the U.S. economy suffered through what we now call the Great Depression. Major new legislative and regulatory changes were enacted following the speculative bubble and crash of the 1920s in an effort to prevent the same situation from happening again.

Articles Of Interest

  1.

    October: The Month Of Market Crashes?

    In the finance world, October is a month to be feared, but is it justified?

  2. The Crash Of 1929 - Could It Happen Again?

    Learn about the series of events that triggered the Great Depression.

  3. Sell In May – Yay Or Nay?

    Seasonal timing in the market, best personified by the adage, “Sell in May – Go away,” has long been the subject of debate among investors. The question remains: Is there anything to it?

  4. Other Options For The Cyprus Bailout

    Find out the other options Cyprus could use to resolve it's financial troubles, since its proposal to tax bank deposits didn't work out.

  5. The Cyprus Crisis 101

    Discover what's behind the Cyprus debacle and what investors should do about the situation.

  6. 5 ETFs Flaws You Shouldn't Overlook

    Despite their popularity, exchange traded funds have some drawbacks that investors should know about.

  7. Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!

  8. All The Cliffs You Need To Know About

    In addition to the oft-cited fiscal cliff, there are economic, tax, political, geopolitical and earnings pitfalls to avoid.

  9. Which Mutual Fund Market Cap Suits You?

    Different funds invest in companies with different market caps. Find out which is right for you.

  10. Liquidity Vs. Solvency

    Learn about the differences between these two words and how each one is used in the stock market.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center