I ask if there are parallels because I am not a financial wizard. There just seems to be a disconnect between the average household disposable income, personal savings and what is going on with Wall Street. Record high Dow but record low personal retirement savings and interest rates it seems. I curious what an 'expert' thinks of the similarities? The Dow stock average soared throughout the Roaring Twenties and many investors aggressively purchased shares, comforted by the fact that stocks were thought to be extremely safe by most economists due to the countrys powerful economic boom. Investors soon purchased stocks on margin, which is the borrowing of stock for the purpose of gaining financial leverage. For every dollar invested, a margin user would borrow nine dollars worth of stock. The use of leverage meant that if a stock went up 1%, the investor would make 10%. Unfortunately, leverage also works the other way around and amplifies even minor losses. If a stock drops too much, a margin holder could lose all of their investment and possibly owe money to their broker as well. From 1921 to 1929, the Dow Jones rocketed from 60 to 400, creating many new millionaires. Very soon, stock trading became Americas favorite pastime as investors jockeyed to make a quick killing. Investors mortgaged their homes and foolishly invested their life savings into hot stocks such as Ford and RCA. To the average investor, stocks were practically a sure thing. Few people actually studied the finances and underlying businesses of the companies that they invested in. Thousands of fraudulent companies were formed to hoodwink unsavvy investors. Most investors never even thought a crash was possible in their minds, the stock market always went up. http://www.thebubblebubble.com/1929-crash/
The stock market has followed the same trend as the great depression before with there being no great depression. The federal reserve system will prevent it. Buy some Christmas presents and don't worry about it already.
Granny says, "Dat's right... ... next year the stock market gonna crash... ... just like it did in 2008... ... `cause it's the schmita anna blood moons... ... dat's why alla Jews is takin' their money outta the banks... ... an' the economy gonna collapse. - - - Updated - - - Granny says, "Dat's right... ... next year the stock market gonna crash... ... just like it did in 2008... ... `cause it's the schmita anna blood moons... ... dat's why alla Jews is takin' their money outta the banks... ... an' the world economy gonna collapse.
Wall Street is a sacred cow in America. If it needs investment, we feed it tax breaks. If it is overheated and doesn't need investment, we feed it tax breaks. If the ratios all make sense, we feed it tax breaks. It's going to fail soon.
Neither Wall street nor banks can fail, they are too big after all. This certainly isn't how a free market works, it is how communism/socialism operates.
