The last year has been a roller-coaster ride for investors and the American Stock Market. The gameStop debacle and the crypto craze have affected investor confidence levels and sent markets to record highs. Yet despite the bull market, there are frequent warnings of overconfidence. For instance, billionaire hedge funder Bill Ackman warned that "hell is coming" with his Covid-19 stock. Ackman later apologized for his comments and said "there is no need to worry."
The stock market is driven by several factors. In 1929, the market broke, and one explanation is the over-priced utilities sector and investment trusts. Many contemporaries pointed to the utility sector as an important force in driving the stock market's decline. Then, in 1929, the Dow Jones Industrial Average soared to its highest point in a decade. However, there were a number of factors that contributed to the crash.
The first reason for the market's drop was the failure of Bear Stearns, a major investment bank. Though this was the first sign of impending doom, the stock market kept on rising and hit a record high of 14,164 points on Oct. 9. By September 2008, major stock indexes had lost 20% of their value. The Dow Jones Interactive Composite Index hit its lowest level on March 6, 2009, and recouped in just four years.
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