The 1929 crash

The roaring twenties saw great prosperity with a booming economy driven by industrialization and technology. People from all walks of life invested their new found wealth in the stock market. As the market steadily grew and gathered momentum, more and more individuals were drawn in, tempted by quick profits. Easy money fuelled the boom with amateur investors using margin loans and extreme leverage to finance increasingly risky stock and mutual fund purchases.

With speculation rampant throughout all levels of society, the Federal Reserve raised interest rates several times in 1929 to try and slow the economy. The 24th of October 1929 saw the beginning of the crash as panic selling gripped the stock market. As almost every investor tried to sell, there was nobody left to buy, causing the market to plunge. The Dow Jones Industrial Average index continued falling from a peak of 381.17 until bottoming out to 41.22 in July 1932 for a loss of approximately 90%.



Interestingly not everybody lost during this event, Jesse Livermore who became known as the 'boy plunger' made over 100 million dollars profit by shorting stocks on the day of the crash, he went on to become a legendary figure on Wall Street.

The great depression followed the crash, lasting from 1929 to the mid 1930's. Millions lost their life savings, even those not directly invested in the stock market were affected as many banks lost depositors funds. Others committed suicide by jumping out of windows, unable to cope with margin calls and the realization that they had lost everything. The Dow Jones eventually did recover, it took 25 years to make up the lost ground and surpass the 1929 high.

Market Crash
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