The Wall Street Crash

When share prices are rising greed exaggerates the rise and when share prices are falling fear exaggerates the fall. Share prices tend to rise steadily with many buyers expecting to be able to sell at a profit later. Price falls are much more dramatic since those holding shares are afraid that if they do not sell their shares quickly they may face even further losses as the price falls further. This fall was the cause of the Wall Street Crash of 1929 in the US. This took place in three phases: Black Thursday, Black Monday and Black Tuesday. This crash followed on from a six year run when the average price of shares increased fivefold. The first major fall came on Thursday 24 October only to be followed by a catastrophic downturn on Monday and Tuesday 28, 29 October. Many had borrowed the money to invest when the share price was rising and panicked as the fall in price meant that they could no longer meet their debt. It was this crash that was the major contributor to a long economic depression for the US and parts of the world.