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SE SD | I’m calling a top in 2025. Hopefully it’s not as bad as 1929.
Yes, there were numerous signs of overvaluation and speculative frenzy in the stock market leading up to the 1929 crash, indicating a frothy market. These signs included:
1. Rapid Price Increases and Overvaluation: Stock prices had been soaring for several years, leading to overvaluation compared to the actual value of companies. Investors were buying stocks based on the expectation of continued price increases, rather than the fundamental value of the companies themselves.
2. Margin Buying and Debt: Many individuals purchased stock on margin, borrowing money to buy stocks, which amplified the risk and volatility of the market. This practice was widespread, indicating a speculative bubble driven by borrowed funds.
3. Excessive Optimism and Speculation: The public displayed excessive optimism and a belief in the continued upward trajectory of the stock market, leading to widespread speculation and a frenzy of buying.
4. Warnings from Economists: Some economists, like Roger Babson, warned about the unsustainable nature of the market and the potential for a crash. However, their warnings were largely ignored by the public and the financial community.
5. Economic Weakness: While the stock market soared, the underlying economy showed signs of weakness, including declining steel production, sluggish construction, and falling automobile sales.
6. Signs of Overextension: The stock market's rapid growth was not reflected in the real economy, and the economy showed signs of overextension, such as increased debt and overproduction in some sectors.
In essence, the stock market bubble leading up to the 1929 crash was characterized by overvaluation, excessive speculation, widespread use of margin buying, and a general lack of awareness of the underlying economic weaknesses that would eventually trigger the crash. | |
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Politics aside, I think these are actually a good investment.
