"Thursday, October 24, 1929 has the dubious honor of being called Black Thursday because it was on this day that the New York Stock Exchange crashed, heralding the end of the "Roaring Twenties" and the beginning of the Great Depression. We've all read about it in the history books, but what was it like for the people of the time? What did they see in the newspaper when it happened? What did they see that might have warned them of the impending trouble -- or worse, might have helped cause it?? "
While there have been many suggested explanations for the cause of Stock Market Crash, no one can fully account for it. Here are some of the explanations proposed:
*1. Stocks were Overpriced
*Many people believe that stocks were overpriced and the stock market crash brought the share prices back to a normal level. However, some studies using standard measures of stock value, such as Price/Earnings ratios and Price/Dividend ratios, argue that the share prices were not too high.
*2. Massive Fraud and Illegal Activity
*A number of people believe that fraud and illegal activity was one of the causes of the 1929 Stock Market Crash. However, evidence revealed that there was probably very little actual insider trading or illegal manipulation.
*3. Margin Buying
*Margin buying is another scapegoat for the cause of the Stock Market Crash. However, it is not the main reason because there was very little margin outstanding relative to the value of the market (the margin averaged less than five percent of the market value).
*4. Federal Reserve Policy
*The new President of the Federal Reserve Board Adolph Miller tightened the monetary policy and set out to lower the stock prices since he perceived that speculation led stocks to be overpriced, causing damage to the economy. Also, starting from the beginning of 1929, the interest rate charged on broker loans rose tremendously. This policy reduced the amount of broker loans that originated from banks and lowered the liquidity of non-financial and other corporation that financed brokers and dealers.
*5. Public Officials' Repeated Statements
*Many public officials commented that the stock prices were too high. For example, the newly elected President of the United States, Herbert Hoover, publicly stated that stocks were overvalued and that speculation hurt the economy. Hoover's statement suggested to the public the lengths he was willing to go to control the stock market. These kinds of statements encouraged investors to believe that the market would continue to be strong, which could be one of the causes of the Stock Market Crash.
=======================================
http://www.australiansharetrading.com/ the complete online resouse for share trading
Please use this aricle, you have my prior consent to do so,
just don't change a thing.australian share trading
By Nik Halik => http://www.australiansharetrading.com offers share trading news
===========================================
