r/investing
What actually happened on Black Tuesday 1929 and why it took 25 years to recover
Analysis of the 1929 crash shows policy failures prolonged the bear market, taking 25 years for full recovery.
- Market crashes often continue for years after the initial shock, causing prolonged damage.
- Poor policy responses like monetary tightening and protectionism can deepen a crash into a depression.
- Leverage amplifies losses and nominal market recovery can take a generation.
Most people know 1929 was brutal.
What gets talked about less is that the Dow did not get back to its 1929 high until 1954.
That’s 25 years.
Retire near the top in 1928 or 1929, and there’s a real chance you never lived to see your portfolio break even.
And the common story is a little too simple.
The crash wasn’t just one terrible day in October.
The Dow dropped 11% on October 28th, then another 12% on October 29th. But the real damage came later. From 1930 to 1932, the market kept bleeding. By July 1932, the Dow was down roughly 89% from its 1929 peak.
October got the headlines.
The next three years did the real damage.
It also wasn’t only about speculation. Sure, margin buying was everywhere, and people were taking reckless risk. But policy made things much worse.
The Fed tightened into a contraction. Smoot-Hawley hit global trade in 1930. Deflation took hold. By 1933, around 9000 banks had failed.
The turning point came when policy finally changed.
FDR’s bank holiday in 1933 helped stop the panic. Leaving the gold standard gave policymakers more room to expand the money supply. And the FDIC helped break the bank-run cycle.
The lesson isn’t just “markets crash.”
It's:
- Crashes are rarely over just because they feel over.
- Policy response matters more than the first shock.
- Leverage cuts both ways.
- A nominal recovery can still take a generation.
AI slop
tf u talking about
The turning point never really came until the war. A strong case could be made that 1937 would have been much more severe if it wasn't for all the war demands hitting US manufacturing. FDR had to agree to the tightening because of the deficit. Governments did NOT run deficits on the Gold standard. It was literally impossible to even under the bastardized Bretton Woods system. Nixon had no choice but fo off the standard in 72.
IMO the benefit that people attribute to war being good for the economy is actually because during serious conflicts countries went on rationing, no consumer goods like cars were bought and the nation had 4 plus years of forced savings. So coming out of the war comsumers had no debt and the mother of all credit cycles began. During the Vietnam war the powers that be didn't force rationing, so the mother of all inflation cycle we have ever seen (in duration no other period comes close)
There is never even close to a single cause for economic cycles like that. It will be the same when this incredible and historic bull market collapses. And it will.
I have no idea why I posted this to what is likely an AI post. I'm getting Chemo and the steroids got me jazzed up I guess.