1929 wall street crash

shannon_tek

Im doing a presentation on the 1929 crash and watch a video outlining what happened. The gist is that it crashed over night. when the machines could no longer keep up. and they were a day behind work.

Just wondering did
A) Wall street continue to stay open but with few people.
Could the machines although all electronic have anything to do with the 2008 Crash.

Now to research how it managed to recover and start trading.

Black Swan

MOD COMMENT:
Please be advised that your thread topic is not a good fit for US Politics. Consequently, I am moving it to Economics. It is being moved locked, so that the Economics forum mods can review if for appropriateness.

andrew

Hi OP,

This probably is the best forum for your question, though I'm not sure how economics based your question is; are you purely asking about what happened on the Stock Exchange on the day? You seem to be under the impression that some sort of mechanical failure caused the crash, which isn't the case. Is this presentation for an economics (or even a history) module?

later12

shannon_tek wrote: »

Im doing a presentation on the 1929 crash and watch a video outlining what happened. The gist is that it crashed over night. when the machines could no longer keep up. and they were a day behind work.

What machines are you thinking about?

As far as I am aware, the only machines which would have been used in the vicinity of stock exchanges in 1929 were rudimentary teleprinters... and these really had nothing material to do with the Wall Street Crash.

Arguably, the inability to disseminate information rapidly to the public with regard to the professed confidence of serious investment houses in equities did have a negative effect on the public. Newspapers were slow in reporting interventions to put a floor under stock values, for example.

However, in the modern era, we see that despite the rapidity with which political and banking leaders can profess such confidence, and despite the rapidity with which financial and political leaders are capable of intervening (and we learn about this in real time) we still have financial crises nevertheless.

shannon_tek

andrew wrote: »

Hi OP,

This probably is the best forum for your question, though I'm not sure how economics based your question is; are you purely asking about what happened on the Stock Exchange on the day? You seem to be under the impression that some sort of mechanical failure caused the crash, which isn't the case. Is this presentation for an economics (or even a history) module?

Yes its for Quantitative Methods(maths Class) There will be a question about it in our January examinations.

From what i gathered on the documentary video there telegram machines that were used to print the latest results were backed up. Workers that had to tap in the latest indexes spent upto 4hours past closing time trying to catch up with the amount of stock sold. over 16million shares were traded the day before. Yes i must take into account that this happened from thurday to tuesday. then the rest just fell im place afterwards.

But like were people still trading during the great depression.

later12

I've never heard of it.

What's the name of the documentary?

shannon_tek

later10 wrote: »

I've never heard of it.

What's the name of the documentary?

1929 The Great Crash

https://www.youtube.com/watch?v=mjpZVA4O9Ss

DublinWriter

Go read "The Great Crash: 1929" by John Kenneth Galbraith.

krd

shannon_tek wrote: »

Im doing a presentation on the 1929 crash and watch a video outlining what happened. The gist is that it crashed over night. when the machines could no longer keep up. and they were a day behind work.

Just wondering did
A) Wall street continue to stay open but with few people.
Could the machines although all electronic have anything to do with the 2008 Crash.

Now to research how it managed to recover and start trading.

Black Monday in 1987 is blamed on automatic trading. Traders were using a computerised system that issued sell orders once a stock fell below a certain price. Basically, everyone tried to dump the stock at once, driving down prices further and triggering more sell orders, further depressing prices and causing more sell orders. I heard the volume of trading was so high, the computer systems that processed trades were jamming.





The Flash Crash of 2010, is blamed on high frequency trading algorithms. Computer programs, programmed to order and sell based on their code. The algorithms try to second guess the market (which all a trader is ever trying to do), if they see it sink, they try to dump whatever they're carrying (devil take the hindmost).




People have their explanations, but I think regardless of whether it's humans or computers, or any mechanical system, these flash crashes are down to torschlusspanik; the panic of crowd trying to get out a door they believe is closing.

These flash crashes are not great for the rest of us, but some traders love them. If you can successfully dump your stocks before everyone else. If someone has a short order, the sudden drop can make them a huge amount of money.

Nicholas Naseem Taleb personally made over $20 million for himself on Black Monday 1987.

shannon_tek

krd wrote: »

shannon_tek wrote: »

Im doing a presentation on the 1929 crash and watch a video outlining what happened. The gist is that it crashed over night. when the machines could no longer keep up. and they were a day behind work.

Just wondering did
A) Wall street continue to stay open but with few people.
Could the machines although all electronic have anything to do with the 2008 Crash.

Now to research how it managed to recover and start trading.

Black Monday in 1987 is blamed on automatic trading. Traders were using a computerised system that issued sell orders once a stock fell below a certain price. Basically, everyone tried to dump the stock at once, driving down prices further and triggering more sell orders, further depressing prices and causing more sell orders. I heard the volume of trading was so high, the computer systems that processed trades were jamming.





The Flash Crash of 2010, is blamed on high frequency trading algorithms. Computer programs, programmed to order and sell based on their code. The algorithms try to second guess the market (which all a trader is ever trying to do), if they see it sink, they try to dump whatever they're carrying (devil take the hindmost).




People have their explanations, but I think regardless of whether it's humans or computers, or any mechanical system, these flash crashes are down to torschlusspanik; the panic of crowd trying to get out a door they believe is closing.

These flash crashes are not great for the rest of us, but some traders love them. If you can successfully dump your stocks before everyone else. If someone has a short order, the sudden drop can make them a huge amount of money.

Nicholas Naseem Taleb personally made over $20 million for himself on Black Monday 1987.

Thank-you for that. That is some really helpful info. So basically technology still can cause a crash.

SBWife

shannon_tek wrote: »

Thank-you for that. That is some really helpful info. So basically technology still can cause a crash.

I'd say technology can still exacerbate a crash - only humans can actually cause one.

shannon_tek

SBWife wrote: »

I'd say technology can still exacerbate a crash - only humans can actually cause one.

Had to google that one. ha ha

martyoo

People have their explanations, but I think regardless of whether it's humans or computers, or any mechanical system, these flash crashes are down to torschlusspanik; the panic of crowd trying to get out a door they believe is closing.

I don't believe that for a second. During that flash crash last year the Dow lost nearly 4% in 7 minutes! That was not caused by humans especially considering that nowadays HFT makes up a huge percentage of all trading (estimated at 75%).

But on the other hand it's humans thats code these algorithms so in a way it was caused by humans but you know what I mean.

Jim2007

DublinWriter wrote: »

Go read "The Great Crash: 1929" by John Kenneth Galbraith.

Definitely well worth a read - I do every time there is a crash and I've lived through a few!

Jim2007

shannon_tek wrote: »

Thank-you for that. That is some really helpful info. So basically technology still can cause a crash.

Read the recommend text, the technology used in 1929 did not cause the crash, but once the crash came it's inability to keep up with events made it difficult for people to get clear picture of what was going on.

Today's technology might cause small distortions over short periods, put they are quickly detected and corrected.

krd

Jim2007 wrote: »

Today's technology might cause small distortions over short periods, put they are quickly detected and corrected.

Detected by whom?

Corrected by whom?


If all the machines decide to dump the assets they're carrying, then the market will crash. There's no gentleman's agreement. After a crash a market can be depressed for weeks, months, years.

There isn't any mechanism to detect or correct "distortions".

The actual mechanisms in the market exacerbate any crash once it begins. People who've borrowed money to invest in the market, suddenly start getting margin calls, and have to deleverage. The more deleveraging, the more asset dumping, the more the prices are depressed.

A crashing market is rational behaviour on the part of the players within the market. A crashing market is not in the players best interest. But getting out quickly is individual players least worst interest.

It's the same with the property market. Many people who bought into it, assumed there was some kind of gentlemen's agreement, to rig the market so prices couldn't fall. To a certain extent that was true. But never really count on the kind of gentlemen who would rig a market in the first place.

If you haven't noticed. People who work in finance, dress and talk a lot like estate agents. They'll tell you the markets are as safe as houses.

shannon_tek

krd wrote: »

If you haven't noticed. People who work in finance, dress and talk a lot like estate agents. They'll tell you the markets are as safe as houses.

Well thats just false info by them the houses built in the past 10 years are ready to crumble ha ha. As we saw with the apartments in Dublin a complete fire hazard.

gjim

shannon_tek wrote: »

Thank-you for that. That is some really helpful info.

Only if you don't care about veracity. The flash crash last year was not caused by high frequency trading and the cause of Black Monday is disputed to this day but the idea that it was caused by program trading does not tally with the fact that the drop started in Asia where the trading was done manually.

CajunOnTour

But the Asian trading was the trigger?

The spark that ignited the petrol?

happyman81

Without know much about the topics being discussed, I am quite confident that one factor rarely, if ever, causes a major economic event.

Jim2007

krd wrote: »

Detected by whom?

Corrected by whom?

By both the exchange and risk management at the bank/broker in question. I've seen two cases of this on the Swiss exchange last year... One resulted a major share falling 34% in a matter of minutes.

gjim

CajunOnTour wrote: »

But the Asian trading was the trigger?

The spark that ignited the petrol?

Maybe. The Dow, for example, was up almost 50% that year when the crash happened and finished the year slightly up. You could view it as a rational (but admittedly rather violent) market correction after an equity bubble.

buck65

Anyone read "Lords of Finance"?