Well pardon you if October 29th means the two-year anniversary of SuperStorm Sandy rather than the 1929 stock market collapse. That said, Black Tuesday – the crash that many feel began the Great Depression – is 85 years-old today and while it wasnt the first market implosion in U.S. financial history, it was the one that seared itself in the memory of the nation and the markets in particular. Like Pearl Harbor, the Crash of 29 became a before and after point for America.
Unlike todays Flash Crashes, the 1929 Crash was a slow-motion debacle. The panic had ensued days before Black Tuesday with quick selloffs and plummeting returns. Days before the crash, a floor broker by the name of Richard Whitney attempted to jumpstart the free falling stock market by buying U.S. Steel at 15 points above the going rate. It did not work for the future president of the New York Stock Exchange who would be later convicted of larceny.
Heres how Time magazine reported – or mis-reported – Black Friday back in 1929:
Monday, Nov. 4, when the Exchange re-opened there were more sellers than buyers but none were frenetic. Toward noon prices climbed, then dropped again. In general stocks closed lower than Thursday. U. S. Steel closed at 180, Radio at 43, General Motors at 45. The market except at the very opening was dull as though it were tired. But it seemed to rest securely. Stock Exchange Governors ordered the Exchange closed after 1 oclock Wednesday, Thursday, Friday; all day Saturday. Tuesday was a legal holiday (election day). Thus was further rest insured.
Friday there were no quotations nor Saturday for the Exchange was closed. Clerks who had passed many a sleepless night, slept, then returned to clean up the greatest amount of work which brokerage houses have ever had in so short a time. In the hurly-burly many an error had been made. The clerks had to discover them, rectify them. But in the Stock Exchange Friday and Saturday there was quiet.
Thus did Confidence win its subtle race against Panic.
Give credit to Time, they listed this above glass-half-full passage in its roundup of pronouncements that completely missed the mark.
Could we have another market crash? After more than a year of praying for market volatility, the bourses have seen some fluctuations and observers fell over themselves to explain the cause: Ebola? ISIS? Middle East abnd Russian turmoil? For everyone who points to another tech bubble bursting, others point to a softening European economy.
Unlike yesterday’s markets we do have curcuit breakres in place and exchanges are not shy about suspending trading when volume starts to plummet too soon and too fast. In fact, for all of the algorithms and superfact servers, the floor brokers and market makers pride themselves in being abole to recignize what a trading formula might not – that something doesn’t smell quite right.
Are you awaiting a market correction or looking froward to more volatility? Tell us at philip.albinus@sourcemedia.com.
