The large stock market crash took place in 1929, and this period of time was known the roaring 20s that was close to its end. At that moment, people’s living was easy in America and the economy of this country was booming. This period was good for many citizens because their prosperity abounded, so most of them shared the sense of invincibility in the good fortune of their country, but soon they would have to change their lifestyle considerably.
In the 20s, the stock market was booming because investing in different stocks was a profitable endeavor to almost all people, from common citizens to bankers. Major banks were earning a lot of money on those clients who borrowed funds to invest in stocks. It seemed that everyone was happy and earning a good living, but soon things changed dramatically. Many investors were blinded with their hole to earn a great fortune, and most of them failed to understand that something bad would happen.
In 1929, endless forecasters called for this market to enter its major recession, but most people didn’t listen to them, and their words came true. There is no single cause directly responsible for the event that is historically known as a great stock market crash. That’s because it was caused by a number of occurrences combined at a specific moment of time to lead the US economy to its recession.
Some of the main factors that can be attributed to the crash of the stock market in 1929 include wild speculations because many people made their money on it, and margin trades were standards. Stock prices kept rising because there were always some buyers, but the main problem was that the supply of potential buyers would eventually decrease, just like prices on stocks. It was easy for people to get money to invest them in stocks because banks were giving credits like hot pies.
Easy credits empowered margin trades and they proved to be very profitable for all people who were in a hurry to buy more stocks. They knew that they could receive amazing returns (up to 20%) very fast, and this is what forced citizens to buy stock on any margin because this investment seemed to be a safe and sure way to get rich. Unfortunately, their margin trading plays a huge role in the major stock market crash in 1929. After it, American entered a long period of its economic recession and other relevant financial problems. It took a while for this country to recover.
The large stock market crash took place in 1929, and this period of time was known the roaring 20s that was close to its end. At that moment, people’s living was easy in America and the economy of this country was booming.