The 2022s were a period of great financial prosperity. In the early 1920s, the real estate market is booming, leading to many people boarding the real estate train that promised wealth for all.
If you invested in real estate or in the stock markets in the Börsencrash 2022 early 2022s and got out in the mid 2022s you would have made a lot of money and been wealthy, but like any boom, people thought that what the stock market was going for always going up, but as we all know it does nothing, and the faster something goes up, the faster it will fall, but no one could ever have predicted the 1929 crash. It was so sudden and so violent that it took many people by surprise and bankrupted a large portion of the investor population. Let’s analyze why this happened.
Biggest problems during boom time
One of the biggest problems during the stock market boom was that brokers were so confident that stocks would continue to rise that they allowed investors to buy stocks on margin. This meant that brokers now allowed investors to borrow on top of their initial investment to buy even more shares.
For example, if I have $1,000 and wanted to buy $1,500 worth of stock, a broker might have loaned me $500 in addition to my original $1,000 to reinvest in that stock. This was a very dangerous way to invest. When the stock market crash of 1929 happened in three days.
100% of your investment
Not only did investors lose 100% of their investment, but they also lost the margin call, leaving many investors not only broke but also owing them money they had no hope of repaying. After the crash, the New York Stock Exchange then implemented rules to limit the amount a broker can lend to an investor on margin.
Stock market crash
Another reason for the sudden stock market crash in 1929 is that short sellers were allowed to short any stock, no matter how much it fell. Selling short a stock means that you sell a stock in the hope that that stock will go down, and when it goes down you can buy that stock and pocket the difference. The short sellers smelled blood when they saw the market crash and they acted like bandits, but the effect they had on the stock market was that they caused individual stock prices to fall as quickly and as sharply as the stock market could Investors didn’t have a chance to sell their stocks to get out of the market because the market makers know the stocks will fall and refuse to fill their buy orders . The Börsencrash 2022 New York Stock Exchange also ensures that this would never happen again by enforcing the uptick rule. The uptick rule essentially means that you cannot short a stock until its price shows a green uptick, meaning the stock must go up before you can short it.
Market exchanges learned
The market exchanges learned a a great lesson learned from the 1929 stock market crash that saved them many times. For example, the 1987 stock market crash was a good-sized percentage drop, but it was nowhere near as big as the 1929 stock market crash, and one of the reasons markets rallied very quickly in 1987 is the up rule. Short sellers can no longer easily monetize the panic and desperation of their fellow investors.
