1929 stock market chart compared to today

1929 stock market chart compared to today

Posted: polbatona On: 16.07.2017

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1929 stock market chart compared to today

If it was only a joke. After spending almost the entire time in…. Today is a day of little economic news other than serial bond defaulter Argentina seeing strong demand for its new year sovereign bond issue. This is a syndicated repost courtesy of Money Morning - We Make Investing Profitable.

To view original, click here. The Dow exploded for triple-digit gains starting at the beginning of the bull market in October The current Dow bull market has also delivered triple-digit gains. And that has some investors alarmed we could be heading for another stock market crash. While there are some key differences between the two periods, we want to remind investors to be prepared for a market crash, especially when the Dow is breaking record highs again….

To show you the similarities between the stock market of the s and today, we put together a side-by-side chart of both.

The chart below shows the Dow in inflation-adjusted dollars grew differently in each era. But you can see the growth trend is very steep in both periods.

During the s, the Dow closed at a record high 27 times over the eight-year period. The current bull market has seen the Dow close at a record high 28 times over its seven-and-a-half-year period. One of the mentalities of the s that led to the stock market crash being so catastrophic was a sense that the soaring markets would continue to grow. This mindset led investors to speculate recklessly throughout the s. The logic was simple.

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As long as the stock market kept rising, money was better spent on stocks than anywhere else, and the loans investors were taking out could easily be paid back later. And as more and more money was dumped into the stock market, prices kept rising, further justifying stock purchases.

However, this inflation was artificial. When stock prices dipped and nervous investors began selling, the entire market crashed. Today, the market continues to be influenced by speculative behavior. Another stock market bubble could be forming. Get all the details. Investors are taking out more and more money to buy stocks as prices continue to rise.

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Low interest rates set by the Federal Reserve have further contributed to speculative investing. Earlier this year, Robert R.

1929 stock market chart compared to today

Johnson, the president and CEO of the American College of Financial Services, told U. Rates remained at this historically low level until December , when rates were raised to just 0.

First, low interest rates mean borrowing money is cheap, especially for large organizations like corporations. This is in part the reason the Fed uses lower interest rates to stimulate economic growth. The logic is that corporations will be able to borrow money more easily and then funnel this money into new projects or expansion, growing the economy. And this is only part of a longer trend. Second, low interest rates mean returns on fixed-income investments like bonds are near zero.

Investors seeking better returns are forced into the stock market. This, again, has caused stock prices to rise unnaturally. In a period of higher interest rates where bonds are more competitive and offer a safer return, much less money would be going into stock purchases. It also means money is going into riskier investments just because they continue to go up in price. That could cause a stock market crash.

Or the Fed could raise rates and trigger a different kind of sell-off. Gold will provide your portfolio stability, but it will also rise in price as buying increases during times of market tumult.

The Stock Market Crash Versus Today - The Wall Street Examiner

The stock market crash of led to a massive collapse in the value of stocks. If stocks tank, then gold can serve as your life preserver. Gold ETFs allow investors to reap the benefits of gold ownership through vehicles traded just as easily as stocks. IAU is designed to reflect the price of the physical gold market, so when gold prices go up, so does IAU. But if the stock market crashes, owning a fund like IAU could keep you afloat.

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1929 stock market chart compared to today

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