There is always a “however.” Each situation has its benefits and its drawbacks. In the field of market finance we find a compelling example that supports this thesis.
The roaring twenties was a decade which the American economy saw a rapid boom. In fact America’s bull markets, such as the New York Stock Exchange had become so financially inviting by 1927 that even America’s middle class poured its money into the financial forums. Unfortunately on October 4, 1929 the booming twenties came to an abrupt halt when the The York Stock Exchange crashed.
The crash had many negative consequences. Most notably, the stock market crash of 1929 launched America into the Great Depression, a time of starvation and unemployment for millions of American citizens.The widespread optimism of the 1920’s quickly turned into an almost suicidal pessimism. Indeed the Great Depression represents the crippling consequences of the stock market crash of 1929.
However, Franklin Delano Roosevelt established institutions and regulations to prevent future economic catastrophes. Cognizant of the crashes causes, such as pool corruption, overpriced stock values and margin buying, Roosevelt implemented the Social Security Act, the FDIC and stricter rules monitoring credit. His aggressive policies not only ameliorated the uncomfortable climate of the Great Depression but also laid the groundwork for a safer, more successful economy.
The American public also realized the many positive results of the stock market of 1929. In particular, American citizens now have an entirely different fiscal outlook from the one they had before the crash. Speculators have proven to be more prudent and insightful, as they often research market trends before investing. Perhaps most importantly American investors are not as easily swayed by popular optimism and eager advertisement.
While the stock market crash of 1929 was the embryo of the Great Depression, the crash also set the foundation for a sounder economy. If we recognize the good and the bad of the crash we are destined to make fewer economic mistakes.
The roaring twenties was a decade which the American economy saw a rapid boom. In fact America’s bull markets, such as the New York Stock Exchange had become so financially inviting by 1927 that even America’s middle class poured its money into the financial forums. Unfortunately on October 4, 1929 the booming twenties came to an abrupt halt when the The York Stock Exchange crashed.
The crash had many negative consequences. Most notably, the stock market crash of 1929 launched America into the Great Depression, a time of starvation and unemployment for millions of American citizens.The widespread optimism of the 1920’s quickly turned into an almost suicidal pessimism. Indeed the Great Depression represents the crippling consequences of the stock market crash of 1929.
However, Franklin Delano Roosevelt established institutions and regulations to prevent future economic catastrophes. Cognizant of the crashes causes, such as pool corruption, overpriced stock values and margin buying, Roosevelt implemented the Social Security Act, the FDIC and stricter rules monitoring credit. His aggressive policies not only ameliorated the uncomfortable climate of the Great Depression but also laid the groundwork for a safer, more successful economy.
The American public also realized the many positive results of the stock market of 1929. In particular, American citizens now have an entirely different fiscal outlook from the one they had before the crash. Speculators have proven to be more prudent and insightful, as they often research market trends before investing. Perhaps most importantly American investors are not as easily swayed by popular optimism and eager advertisement.
While the stock market crash of 1929 was the embryo of the Great Depression, the crash also set the foundation for a sounder economy. If we recognize the good and the bad of the crash we are destined to make fewer economic mistakes.
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