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QUICK SUMMARY FORMAT
BUBBLE SPOTTING SERIES - 2014
This short presentation on the 1929 Wall Street Crash forms
part of a larger series of presentations on Market Bubbles
Front page graphic - wtf.thebizzare.com
The period after World War 1
was known as the Roaring
Twenties. This period, in
specifically the USA, was
characterised by significant
economic growth, industrial
development and urbanisation.
BACKGROUND
life magazine
Between 1921 to 1929, the Dow
Jones rocketed from 60 to close
to 400. This highly profitable
growth created many new
millionaires and caught the
attention of the public.
life magazine
Investors aggressively invested in
shares, trusting the
life magazine
recommendations of economists
based on the
never ending economic boom.
Speculating became a popular
past time.
Countless investors invested not
only their own money, but also
bought shares on margin
(leveraged), took out second
mortgages on their property,
even investing all their life
savings.
As can be expected, some shady
characters saw the perfect
opportunity for a quick buck,
forming fraudulent companies to
trick investors into investing.
By August 1929, brokers were
routinely lending money to small
investors to buy shares with – to
the total tune of $ 8.5 billion.
The Federal Reserve tried
several times to cool the market,
raising interest rates during the
year to curb the access to cheap
finance.
In September, the market became
jittery and unstable, after high
profile arrests took place in
London for fraud and forgery on
the London Stock Exchange.
Finally, on 24 October, panic
selling ensued as investors
FINALLY realised the boom was
actually an over-inflated
speculative bubble. Major
investors tried calm the market
by buying stock above market
price.
Over the weekend, the news
spread like wild fire country-
wide via newspaper, and many
investors decided to pull out.
On October 28, "Black
Monday", the Dow dropped
another 13%,
to be followed by another
drop of 12% on "Black
Tuesday", October 29.
DOW JONES
During November of 1929, the
Dow dropped from almost 400
down to 145.
Many millionaires, and even more
ordinary investors, were wiped
out as a result.
To make matters worse, some
banks had invested their clients’
deposits in the stock market,
wiping out these savings as the
Stock Exchange plummeted –
leading to a run on the banks.
The financial markets were in
chaos. Many desperate investors
committed suicide.
Some savvy investors pulled out
in time, eg pres. Kennedy's
father,
Joseph Kennedy, decided to sell
his stocks because he overheard
shoeshine boys and other novices
swopping advice tips speculating
on stocks.
This presentation is provided in the sake of public interest, and has been compiled based on
publically available information sources on the web.
While great care has been taken in the preparation and compilation of information indicated here,
the author does not accept any legal or other liability for any inaccuracy, mistake, misstatement or
any other error of whatsoever nature contained herein.
This presentation is not investment advice, not a solicitation for any type of investment, financial
or otherwise, nor is this presentation an opinion expressed on, nor endorsement of markets,
commodities or investments.
Any names, trademarks and images are copyright their respective owners and rights in the
graphic artwork and photos used in this presentation belongs to, and are courtesy of the
respective owners thereof. Unless where otherwise indicated, I don’t claim to have any rights
therein.
1929 Wall Street Crash- Sources and further
reading
http://globaltrehttp://en.wikipedia.org/wiki/Wall
_Street_Crash_of_1929
http://www.thebubblebubble.com/1929-crash/
http://www.investopedia.com/terms/s/stock-
market-crash-1929.asp
http://www3.nd.edu/~jstiver/FIN462/US%20Mar
ket%20Crashes.pdf
http://www.wallstreetsurvivor.com/blog/2013/0
6/28/fridays-not-so-fun-fact-the-1929-stock-
market-crash/
http://www.reuters.com/article/2008/01/21/us-
market-crashes-idUSL2126592320080121
http://globaltrendtraders.com/stock-market-
crash/learning-from-the-stock-market-crash-of-
1929/
