Speculative stock market bubbles always burst, sometimes leading to economic panic. A tragic event, 1929, the panic and crash of the American stock market often cast a shadow over the stock market for decades. At the same time, this incident also opened the prelude to the painful and long Great Depression in 1930s.
In the "Black October" of 1929, there was a big market crash. Everyone was involved, from grandiose experts to insignificant novices-Abalone, john rockefeller, President herbert hoover, the engineer, and Irving Fisher, the greatest American economist.
When the bottom of the stock market continues to sink at 1929, investors who rely on margin to buy stocks, no matter how big or small, can no longer come up with new funds to "cover their positions", so the market price falls further. The bull market turned into a bear market (a market with falling prices). By the time 1933 reached the trough of the Great Depression, the market price had fallen by 85%.
The stock price index can track the changing trend of the stock market; The stock price index is the weighted average of the stock prices of a package of companies. Commonly used include the Dow Jones Industrial Average (DJIA) of 30 large companies and the Standard & Poor's 500 Index, which is the weighted average of the stock prices of the 500 largest companies in the United States.
The experience of the stock market in 1980s is a good example to illustrate the risks and benefits of "game market". Since 1982, the stock market has risen on average for five consecutive years, with an increase of nearly 140%. Those lucky or discerning people who put all their assets into the stock market make a lot of money. The stock market peaked in the summer of 1987. On the day of 1987, 10, 19, (Black Monday), the stock market plunged by 22% in six hours. The impact of the securities market vividly reminds people that once they buy stocks, they have to take risks.
The 1990s was another period of bubble economy and stock market boom. During this period, the major stock price indexes rose by 300%. Internet stocks have become investors' favorite, and their P/E ratio is above 100, while the P/E ratio of traditional stocks is only twenty or thirty. Federal Reserve Chairman Ben alan greenspan warned people to be wary of "irrational prosperity"; Experienced people began to notice the expansion of the internet and the early investment in tulip and Florida real estate co., ltd; Robert Schiller, an economist at Yale University, published a best-selling book, warning the overvalued market driven by unrealistic irrational behavior. But people ignored these financial forecasts and rushed to move on.
The stock market crash triggered by the subprime mortgage crisis in 2008 eventually led to the global financial crisis, which is still vivid.