below a certain price caused the big losses in 87; circuit breakers have since been installed to stop the surge of computer trading. The Dow Jones industrial average set a record one gain of 102.27 the day after the crash and within 15 months the market gained back all it had lost. 1987 was a minor compared to what the 1929 crash did to the welfare of the average individual.The 20's believe it or not had more in common with the present day than most would think the economy was doing well and confidant economists ensured investors that stocks were the best investment for the long term and were generally risk free. Technology stocks such as those of RCA fueled the market. RCA exerted a remarkable hold over a revolutionary form of mass communication-radio. The company's top executive David Sarnoff was the Bill Gates of his day, between 1923 and1929 RCA stock rose from $5 to over $500 a share. News of amazing profits like these motivated individuals to loan money to buy stock, investors took advantage of loose margin rules, borrowing nearly 90% of the money they needed to buy the stock. What caused the crash in 29? There are many contributing factors, stocks were over priced, Fraud and insider trading, poor federal reserve policy and margin buying are all to blame for the October 29th nose dive. In the first few hours of October 29th stock prices fell so far as to wipe out all the gains that had been made in the previous year. Public confidence was shattered and those who had bought the now worthless stocks with loans were bankrupt. There was no social safety net in 1929 no welfare no unemployment insurance, the unemployment rate was 25% at the peak of the depression and these people had nothing to rely on. Since then the governments of Western industrialized nations have adopted laws and policies to prevent economical turmoil.What has been changed since the 1987 crash to prevent another such event? Of course things are much different. The ...
