Some economists consider the arrest of the 1929 stock market factor main contribution to the Great Depression. The speculative boom of 1920 's resulted in the arrest because of accumulation of economic bubble. The bubble was formed because of 20 years, as stock prices were rising, many people invested in the market. While prices have increased continu Aare have continued to invest in the hope that prices would go up forever. Most people have borrowed money to invest in the market. This has continued to work at about 1929. Then the market started trading down. Most people are leaving panic and this has resulted in the sale of important stocks. By the year 1933, the prices of the shares were down 80% from the levels in 1929.This main sensitivity to the poor people. This led to decrease in the demand for various products in the market. Companies that have tried to raise funds in the market have failed miserable. This has led to scarcity of money for products manufactured or services delivery. Companies have started lay off their employees because they wanted to reduce production. As you can guess, this has led to the Great Depression. This period has lasted about 4-5 years working in 1934. All this was caused due to lacking in strict confidence. This was preceded by confidence in the stock market. This shot of confidence was caused by a small negative sentiment in the market. The speculative boom of 1920 's was one of the factors that have contributed to the Great Depression. The speculative boom was caused due to heavy investment in the market. The heavy investment was made because most people selling on margin. Some traders were selling on margin of 90%. The bank also has invested in the stock market. When stock prices went down, people have lost their faith throughout the financial system and this leads to the bank that is lost by the hundreds. This could be avoided if there were adequate procedures for regular bank and the stock market on the spot. There should be a limit on the margin that you can use to sell. There should be some limitations on the investment of bank depositors' money in the stock market. Needless to say, regulators have learned a lot from these cash. They have requested some time before confidence in the financial system back. The federal government then installed the Federal Deposit Insurance Corporation. due to the presence of FDIC that the bank may act as money to pay back but still to escape while the government has reimbursed the depositors. The rules and procedures at regular hours are more stringent impedicono the economy and the arrest as it did in 1929.You as an investor or a trader can learn a lot from this arrest. Towards the end of 1920 's of people began to invest without doing any research about the stocks they were buying. In those periods, the merchant who was in the floor had more information that the trade of ordinary people. This has led to lack of information among investors. Now, due to the Internet and policies for detection, the common investor can have all the information about a company before the investment in it. Good research will give confidence about your investment and let there not panic when your price of the shares goes down or market conditions overall are defective.
Arkaitz Arteaga
Oct 18