Comparison of the stock market of 1929 and 2006

Essay by xiaoxiaoyuxie July 2007

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The stock market crash of 1929 played an important role in our nation's history. After the crash, United States turned to a great depression from its greatest period of prosperity. There are differences and similarities between the stock market of 1929 and the stock market of 2006.

Unlike the stock market today, the government had no control over the market in 1929.

§There were no laws to guide the market in 1929. As a result, the large investors ruled the market to increase their wealth.

§Unethical activities, like insider trading, emerged in the stock market of 1929.

§The government regulates stock market today. The Securities and Exchange Commission was established to punish people who violate it in today's market.

The stock prices in 1929 were over-valued which were much higher than today.

§There were some stocks doubled its value in 1929. They reached the highest in the history.

§Investors in 1929 had enough confidence to believe that they couldn't go wrong buying stocks.

Many Americans, including the poor workers, began to buy stocks to get great profits.

§Buying stocks was considered to be very risky now. Stock prices are related to performance.

Investors in 1929 started to buy stocks on margin, which was still a method of buying stock in today's market.

§In 1929, the poor workers could "buy now pay later" in the stock market. Then, they could use plans like monthly payment for the rest of the money. At that time, investors only needed to put down only 10% cash in order to buy stocks.

§People are still buying stock on margin now, but it is strictly controlled.

The banking system was worse in 1929 than now.

§Money was available for more people at a lower interest rate from banks in 1929. After the banks were heavily invested...