A terribly unexpected thing happened on Tuesday, October 29, 1929, so terrible that that particular day became known as “Black Tuesday.” OK, maybe it wasn’t that unexpected. After pressing stratospheric highs into the late 1920’s, the actual decline began in September of 1929. It continued into early October before the selling frenzy started in earnest on Friday, October 18. The first “Black” fall occurred on, appropriately named, “Black Thursday,” October 24th. There were some feeble attempts to settle things down (although with the usual Black Helicopter theories as to why these attempts failed), but the following Monday (also given the moniker “Black”), saw a far greater drop. Panic selling had set in. Then, on Black Tuesday, the bottom fell out. (Oddly, Black Monday saw a greaterpercentage drop than Black Tuesday, yet the 29th gets all the credit.)
One thing the 1929 stock market crash shouldn’t get credit for it the Great Depression. It may have accelerated the economic calamity, but most site the policies of Hoover and Roosevelt as the prime reason the American economy fell apart. This doesn’t mean it wasn’t indicative of significant problems within the capital markets themselves. There were, and, to his credit, Roosevelt let the way in truly stabilizing equity exchanges. In a flurry of activity, the government created The Securities Exchange Act (two of them in fact) laying the groundwork for the markets as we know them today.
“The Securities Exchange Act of 1933 (33 Act) was designed to provide some basic rules of engagement, level the playing field and assign some accountability to protect investors,” says Vern Sumnicht, CEO of iSectors in Appleton, Wisconsin. Continue reading.