Investing In The Stock Market During The Great Depression

Financial Essay – Ryan Little

Stock markets are volatile; they always have been and will continue to be in the future. The main question investors ask themselves is how can I minimize risk? If you truly want no risk, convert your money into gold bricks, but for the majority of the population that is not an option. Instead we invest in safe, stable stocks or mutual funds that present the best opportunities for long term growth. This enables the investor to have their money grow over time, rather than just sit at the same amount and maybe get 10 cents of interest from your bank every year. However, there will always be risk when investing, the most dreaded of those risks are financial crisis, which can range from a small, local crisis to a

During this time period called the Roaring Twenties, everything was new and was occurring as fast as possible, and that cannot be truer when speaking of the financial markets. People saw this opportunity of investing as a way to become rich without having to work, never thinking that they could lose all there money as well. Then came October 24, 1929, or what has now become known as Black Thursday. This day marked the beginning off the Great Depression, the worst economic downturn in the history of the United States and even the entire world. On this single date, over 13 million shares were traded and investors lost a total of 5 Billion USD. Over the next thirteen years, the United States saw its unemployment rate rise to over 20%, 13 million jobs were lost, billions of dollars in stock were lost, and the country overall began a tailspin that would ensue until the start of World War II. As we now look back at the Great Depression, economists often wonder why did this happen and how could this have been prevented. There is no simple answer, this event was the culmination of many factors including reckless speculation, an ensuing drought that went on to become the Dust Bowl, and lack of federal regulations to patrol the stock market. However there were many risky decisions made by over confident businessmen who at the time had no regard for the few laws that were in place. These men had the ability to invest money from one of their customer’s savings account and until the Wall Street Crash that started the Great Depression they would get away with it. Then when the customer went to the banks to withdraw their money, the bankers didn’t have their money it was all lost after the crash. This method was not illegal, but rather another way for banks to make more money. After the initial crash in the stock market, the government should have