What caused the stock market to crashe on October 29,1929?

Answer 1

The 1920’s were a time of peace and great prosperity. After World War I, the “Roaring Twenties” was fueled by increased industrialization and new technologies, such as the radio and the automobile. Air flight was also becoming widespread, as well. The economy benefited greatly from the new life changing technologies.

From 1921 to 1929, the Dow Jones rocketed from 60 to 400. Millionaires were created almost overnight. Soon stock market trading became America’s favorite pastime as investors jockeyed to make a quick killing. Investors mortgaged their homes, and foolishly invested their life savings in hot stocks, such as Ford and RCA. To the average investor, stocks were a sure thing. Few people actually studied the fundamentals of the companies they invested in. Thousands of fraudulent companies were formed to hoodwink unsavvy investors. Most investors never even thought a crash was possible. To them, the stock market “always went up”.

By 1929, the Fed raised interest rates several times to cool the overheated stock market. By October, the market was beginning to slip daily. On Thursday, October 24 1929, panic selling occurred as investors realized the stock boom had been an over inflated bubble. Margin investors (those who bought on credit) were being decimated as every stock holder tried to liquidate, to no avail. Millionaire margin investors became bankrupt instantly, as the stock market crashed on October 28 and 29. By November of 1929, the Dow sank from 400 to 145. In three days, the New York Stock Exchange erased over 5 billion dollars worth of share value. By the end of the 1929 stock market crash, 16 billion dollars had been shaved off stock capitalization.

Answer 2

Two key things ... first, people were involved in a obsession of buying. They saw that by purchasing stocks at a given price they could sell it for more. So the next person 'had' to buy it, and they sold it for a profit. It became the classic artificial bubble of economics like the land speculators of the early 1800s and the South Seas bubble of Britain in the 17th century. The second issue was the allowance of margin buying in which a person could purchase far more stock than they had money for. By borrowing they further drove up prices and artificially inflated the value of stocks. When this happens, sooner or later the bubble is going to burst, people will realize the stocks are over-valued, and then, in one sudden torrent, everyone has to sell in order to regain the money they invested or else lose as little as possible. Once the stocks begin to go down, however, fewer people are willing to risk their money in buying a stock that does not always go up.

Answer 3

The Site Below is Very Informative. I only copied and pasted a tiny part of it (what you wanted to know). Hope it helps.

With so many investors buying high-priced stocks with money they didn't have, there was bound to be trouble. It was clear that the stock market couldn't maintain this frenzied pace. During 1928 and 1929, there were a few small indications that trouble might be brewing:

*in 1928, the market experienced a few sharp downturns, but quickly recovered
*some banks were closing
*large companies were running at a loss
*investors who saw disaster in the future began to move their assets to bonds, cash and gold.

Answer 4

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Answer 5

A huge flood of uneducated investors and the manipulation of stock prices by unscrupulous investment bankers, brokers, traders and owners.

Answer 6

i think it was the great depression....