The tremendous increase in stock market prices during the 1920s was largely based upon value. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. The market continued to soar during 1928 and much of 1929, with these twenty-five leading industrial stocks reaching the 452 point mark in early September 1929, almost doubling the stocks’ selling price in less than two years.
The Warren Buffett Indicator,” also known as the Total Market Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment. As you may see from the charts below, 200 pointsof crash down in 2 months in 1929, then 100 points up for the next 5 months (until May 1930) and then 2 years and 2 months (until July 1932) down to the $40 level.
What made Black Thursday such a bad day in the history of the New York Stock Exchange was the loss of people’s faith in Wall Street For more, see Timeline of the Great Depression. But President Hoover had other ideas, together with Federal Reserve policy board head Miller he decided to clamp down the share prices and bring the market down by keeping away banks to extending loans that …
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