|Then & Now - Stock Market Slumps
There have been several stock market downturns since Black Tuesday in 1929. Historically, the stock market operates in cycles, going up for a time and then dropping back.
But none of the downturns have been as deep or lasted as long as the one from 1929 until 1932. That downturn lasted 43 months, and there was another drop in the economy between May 1937 and June 1938. Post- World War II downturns lasted between eight and 16 months. And none of these downturns produced a decade-long depression.
This chart compares stock prices during three time periods as a percentage of total valuations. In other words, at the beginning point of each line about three years before each crash whatever the Dow Average was, is figured as 100 percent. Before each crash in 1929, 1987 and 1997 investors drove up stock prices to levels twice as high as when they started.
Then, investors lost confidence and prices dropped and dropped in almost identical patterns. The difference in 1929 was that there weren't any government programs to bring the market out of the slump, and prices continued to drop for another three years.