The Causes of the Crash
The Causes of the CrashStock market crash are social phenomena which external economic events combine with crowd behavior and psychology in a positive feedback loop where selling by some market participants drives more market participants to sell their stocks.Crashes are often distinguished from bear markets by panic selling and dramatic price declines. Bear markets are periods of declining stock market prices that are measured in months or years. One of causes stock market crash it happened in 1929.There were many causes that resulted in the great depression of 1929. The first and foremost reason is overvalued stocks. Analysts tell that the stocks were priced much and the P/E ratios were quite high. The P/E ratio of the traded stocks in 1929 averaged around 60. (March,19th,2014 , Tom DeGrace)
The Wall Street Crash of 1929 was the crash of the stock market in the United States, which marked the start of an era that called the Great Depression. This collapse is one of the events of the crash of the greatest in American history.The crash event is also known in some stages known as Black Thursday , which is the beginning of the collapse of the stock and Black Tuesday that when the destruction occurred which caused panic until five days later.This caused by 5 main factors, which include : 1. The fall of the Stock ExchangeThese events result in causing almost all shareholders suffered losses estimated at more than four billion US dollars. The US government tried to cope with the impact of the fall of the stock market by forcing most banks to shut down, resulting in a panic that the effect is not only experienced by the American population but has cross-country. This panic makes people who are worried their savings in banks lost flock to the banks that are still open to be able to pull their money. This is a quick impact on the occurrence of bankruptcy in a number of banks, and the Great Depression at the end of 1930 can not be inevitable.