My Stock Forum

Does anyone see similarities between current market conditions and stock market crashes of 1929 & 1990s?

Does anyone view the recent stock market weakness in a similar light to crashes of 1929 & the 1990's tech bust. In the 1920s people were investing with money they couldn't afford through broker loans. The world markets heavily relied on the US market conditions which showed extraordinarily high p/e ratios. In the 1990's there was lots speculative buying based on the potential of success of the dot coms rather than based on success itself... Today I see similarities in that we have large volumes of borrowed funds in investment (margin loans etc), we have a market that seems heavily reliant on one area of the globe (that being the great expansion of the Chinese) and we have a large level of speculative buying within the Chinese markets with some phenominal p/e ratios and no solid history to back it up (but there's argument that potential is there).... What do you think?

Public Comments

1. I think you are right, but I don't think that there will be a lot of suicides this time like there was in 1929.
2. times have changed since 29 (and the dot com bust as well) the Nymex has shutdown procedures if the market seriously tanks. But otherwise you are pretty much right stupid people borrow money to invest and they wind up losing everything plus the fact they want to chase the hottest trend right now. which means the Chinese and Japanese markets and they are getting roasted right now. I have stop losses on my entire portfolio and if this trend continues I'll be on the sidelines by mid next week. This is why you diversify invest in multiple areas. I'm not even the least bit worried about the market right now.
3. Similarity lies in what followed the big word R. In the 20's there was lot of speculative buying and the the economic policies initiated then after the stockmarket crash actually were contractionary in nature and it created a Recession. In 87 the black mondy and there was a small recession in 89. In 2000 again there was a mild recession after the stock market crash. The 27th February carsh must have been caused by Mr. Alan Greenspan's prediction about the American economy and the R word can or might not occur since the Fed is all more knowledgable about avoiding recession now.