What happened after the Great Depression of 1929?
After the Great Depression of 1929, stocks spiraled downward for the next three years, losing a crushing 85 percent of their value.
By that point, many investors abandoned the stock market altogether. But some stock strategists did recognize that stocks were ready for a rebound. Stock prices had been battered by a raft of uncertainties but that those bargains would disappear once the uncertainties were gone.
Stocks hit bottom the following summer and then went up 100 percent the next year.
Today’s generation of investors have now witnessed a decline in stocks that has been as tough as any bear market of the past century. In this downturn, stocks hit a major low in October 2002. By that time, this bear market was into its third year, had erased five years of market gains, and had dropped nearly 50 percent. The markets have not fallen into a bottomless pit, however.
Time and again over the past years, stocks set out on promising rallies only to be driven back down.
Troubling news seemed to come from every direction:
- the economic recovery hit a wall,
- corporate earnings stayed in a hole,
- oil prices spiked, and
- the headlines were filled with new accounting shenanigans and corporate greed.
- Looming over it all, terrorism continued to be a threat and the country readied for potential war.
As if the news were not already bad enough, the stock market also had the calendar working against it.
Historically, September has the dubious distinction of being the only month when, on average, the market goes down.
The New era after the Great Depression of 1929
Speculative bubbles and their associated new era thinking do not end definitively with a sudden, final crash. People today remember the Great Depression of 1929 as occurring in one or two days. In fact, after that crash, the market recovered almost all of its lost ground by early 1930.
Ends of new eras seem to be periods when the national focus of debate changes and can no longer be upbeat.
Notable among these are financial crises, such as banking or exchange rate crises. These financial crisis stories illustrate the complicated factors that sometimes capture the attention of economic and financial analysts.
Discussions may focus on these factors and pull attention away from the large changes in public opinion that are reflected in speculative prices.
After the fact, it is known that the run-up in the stock market from 1920 to 1929 was a colossal mistake and that the drop from 1929 to 1932 was another colossal mistake. Virtually nothing actually happened over either of these intervals to the dividend present value.
Anything I Missed?
So this is What happened after the Great Depression of 1929
There you go guys, take all these points into account when entering the stock market.
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