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What accounted for the dramatic change in stock prices from 1929 to 1932?
Wiki User
∙ 12y ago
All economies float on a sea of confidence.
A boom occurs when the confidence increases based more on emotion than economic reality.
Prices of trade able assets rise , thus causing a buying spree of these trade able assets .This has the effect of increasing the price of same.
The trade able asset can be anything. Stocks and Shares, property
commodities ,paintings ,vintage cars ,precious metals , rare birds eggs ,wine.
During the period of time in question the trade able assets were Stock Market related.
A boom and bust could occur in rare bird's eggs . People would make money -people would lose money-but because the scale of the activity is very low -it would have zero impact on the economy at large
Not so Stock market assets -Not so houses in recent times
During the late 1920's everybody wanted a slice of the action .i.e. Stock market assets.Houses did not feature at that time.
Mass borrowing took place to finance this buying spree.
The brokers who organize the trade often lent the money. 20% down -the Broker supplied the rest .Pay me back later
The emotion element is based on the misplaced belief that prices will rise forever or at least not decline . That attitude is essential for any boom.
On October 24, 1929 saw heavy selling. The bankers stepped in and saved the day. Life is still good
On October 28, 1929 Many people reviewed the events of the few earlier days. Life is still good -but let's not push our luck. Can we always rely on bankers?
Better to get out now whilst we are ahead.
On October 29, 1929 A mass exit from the stock market caused a drop in share values that no power on the planet could control .
Its panic time!
Confidence tanked-Globally
True confidence did not return until USA declared war on Japan .
8th December 1941
Business knew that the American government had no choice but to spend, spend, spend.
Confidence has made a welcome return.
Booms and Busts will remain. Fundamental human behavior has not changed
Wiki User
∙ 12y ago
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A stock market crash is a sudden dramatic decline of stock prices across a significant cross section of a stock market, which results in a significant loss of wealth. Crashes are driven as much by panic as other underlying features.
What was the increase in stock prices from 1920 to 1929?
what was tincrease in stock prices from 1920 to 1929
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Stock prices are based on the potential future earnings of the stock. If a stock's value is projected to increase it is likely a good idea to buy the stock.
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The price of a stock (or share) depends on the confidence that people have in the future of the company. Their confidence is influenced by news from and about the company and its operating environment. Example is that the price of stock may change if the Chief executive officer retires. If people lacked confidence in him then his retirement may cause the stock price to rise.
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Stock prices are influences by a number of factors. The main influences on a particular companies stock price will always be it's performance and profitability, however stock prices can and are influenced by external factors such as the local, national and global economies.
What would happen if there was a stock market crash?
A stock market crash is a sudden dramatic decline of stock prices across a significant cross section of a stock market, which results in a significant loss of wealth. Crashes are driven as much by panic as other underlying features.
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Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
Does the value pf home prices pretty much go up or down just like the stock market does?
Kinda, stock market prices are persistly moving in comparison to house prices, house prices may change in an area for several reasons. So its not exactly alike but the same idea.
What was the increase in the stock prices from 1920-1929?
what was tincrease in stock prices from 1920 to 1929
What was the increase in stock prices from 1920 to 1929?
what was tincrease in stock prices from 1920 to 1929
How do you know when stock prices are good?
Stock prices are based on the potential future earnings of the stock. If a stock's value is projected to increase it is likely a good idea to buy the stock.
Where can I find online information about historical stock prices?
You can find information about historical stock prices at the following websites...www.marketwatch.com/tools/quotes/historical.asp or www.dailyfinance.com/historical-stock-prices/
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