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Three Things You Didn’t Know About the Crash Of 1929
90 Years After Black Monday: Three Things You Didn’t Know About Crash Of 1929
October 28, 1929–90 years ago today — is known as ‘Black Monday’ in financial circles.
The US stock market had peaked the previous month, on September 3, 1929, with the Dow Jones stock index reaching a record high of 381.
But throughout September and October, nervous investors began pulling their money out of the market.
And over a three-day period in late October (including Black Monday), the market lost more than 30% of its value.
Ninety years later, I thought it would be prudent to look at three key insights from that historic crash, starting with:
1) Stocks are more overvalued today than they were in 1929
Back in 1929, the price/earnings ratio of the average company trading on the New York Stock Exchange was about 15.
In other words, investors were willing to pay $15 per share for every $1 of the average company’s profit.
That’s not high at all. In fact, a Price/Earnings ratio of 15 is completely in line with historical averages.
