The Stock Market Crash Of 1929 And The Great Depression (2)

The scientific study of complex systems has transformed a wide range of disciplines in recent years, enabling researchers in both the natural and social sciences to model and predict phenomena as diverse as earthquakes, global warming, demographic patterns, financial crises, and the failure of materials. The stock market crash of 1929, a major trauma that still haunts the national memory, has received surprisingly little attention from scholars in seventy years and has produced even less agreement as to its causes and consequences. However, the benefits of using an indicator like this is that you miss out on the worst of the stock market’s declines. The Securities and Exchange Commission was set up to regulate the functioning of the stock market and other bonds and commissions. This quick and precipitous decline in stocks’ value in October 1929 became known as the Stock Market Crash of 1929. Naturally, the working class saw the stock market as the fastest and best way to grow their money.Stock Market Crash

To take closer look at the current sentiment on the stock market as well as to define the general market tendency I decided to take closer look at higher-time frame chart in particular on 2-year DJI chart. The history of the stock market did not see such extremely huge panic selling ever before. Altogether, between September 1929 and June 1932, the nation’s stock exchanges lost $179 billion in value. For example, following this strategy and exiting once the VIX crosses 25, you would have moved to cash on September 12, 2008 – just ahead of a 45% stock market plunge.

The panic increased with the communication blackout and cause a stock market crash. Had you paid attention during 1999 or 2000 to a specific stock market prediction you could have avoided a significant drop in your retirement funds. By year’s end it would go up to around 290 and just before the Crash of ’29, it had a High of 381.Stock Market Crash

This mass hysteria and negative sentiment on the stock market fuels a craze of selling which keeps on driving stock prices down, thus causing the stock index to suffer. He stock-market crash of 1929 is perhaps the most memorable crash in the history of the stock market. However, a stock market crash is often sudden and dramatic occurring over several days.Stock Market Crash

That kind of panic selling tends to feed upon itself, sending the market spiraling lower for an extended period of time. Brokers in the 1920s were allowing their investors to borrow on average of up to 66% on margin , and this was an unprecedented amount of margin that the market ever experienced. See period from July 2007 until May 2008 and period from August 2000 until March 2002. In the fall of 1928 and the spring of 1929 (see Table 1) 8 more stock splits occur, causing the Dow Divisor to drop to 10.77.