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Tom Brown wrote a new post, What’s With Stock Market Crashes, Anyway?, on the site Global Finance News 1 hour, 55 minutes ago
It seems that we are always just recovering for a stock market crash or preparing for the next crash to come along. And despite the fact that there is nothing we, as individuals, can do about it – or perhaps because of our helplessness – we are fascinated by the whole affair.
A search for “stock market crash” on Amazon.com reveals 10,596 results, mostly books, but DVDs and miscellaneous items, too. People are buying this stuff. A similar search on YouTube reveals 224,000 results. People are watching this stuff. We won’t review all 224,000 for you today, partly because two have been highlighted already by FinanceDocumentaries.com.
The first is a video about the 1929 stock market crash – the “Great Crash” that led to the Great Depression. This was a classic “bubble”, where too many people had borrowed too much money to buy too many shares at well above their actual value. Sooner or later, the bubble was bound to burst, and people were in big trouble, because stocks people owned were suddenly worth only a fraction of the loans people had taken out to buy them with.
Something had to burst the Roaring 20s bubble.
This video sets the stage for the crash very well, a bit of insight into what it was like: “The guy who’s shinin’ shoes is in the stock market. The grocery clerk is in the stock market. The school teacher’s in the stock market. The teller at the bank is in the stock market. Everybody’s in the stock market.”
Ladies Home Journal reported that now everybody ought to be rich. Of course, that is a ridiculous notion, because, except when people become more efficient at producing things, “rich” is a very relative term. One person becoming richer means another becomes poorer. Everybody getting rich really means that everybody owes a lot of money, and sooner or later the banker will come knocking at the door.
The banker knocked for over four years – and that was just the crash. The Great Depression that followed lasted a decade. In fact, there was a second crash in 1937, which lasted a year. It was triggered by a recession within the Great depression, just when it looked like the economy was on the mend.
This PBS documentary video shows the desperation and poverty, but also places it in context. America, and much of the developed world had been rapidly growing in industrial power. New technology was making life easier and seemed like a futuristic paradise to people whose parents and grandparents had seen very little technological change since they were born.
During the Great Depression, industrialization actually worked against prosperity. Assembly lines killed jobs. Oh, we know now that new jobs opened up eventually, but at the time, there was massive unemployment. With such demand for jobs, companies could pay low wages to those who did work, and employees dared not complain about anything, lest someone else be given their job.
Those were not the only two stock market crashes in history. There were crashes before, such as in 1901 and again in 1907.
There have been crashes since, such as in 1987 and 1989, and again in 1991. The “Black Monday” 1987 crash was captured on this video. The drop was nearly double the previous record, and had everybody terrified of what had happened 58 years earlier. The video notes that people were not flinging themselves out of windows in 1987, as they were in 1929. Whether that had anything to do with how modern windows don’t open or not, the video does not speculate.
What strikes the viewer as a little tasteless is how many people gathered outside the stock exchange as groupies. “We wanted to see a piece of the action, I guess” one lady says. And they still do, based on the number of books and DVDs and videos on Amazon and YouTube. Armchair financial analysts will enjoy this video, which reviews aspects such as bond markets and mutual funds being cashed in, and what part they played in the puzzle.
Could a crash happen today? Of course it could. In fact, in 2008 the subprime loans crisis caused a crash and a two-year recession. Some people say that we have still not fully recovered from it – not the deepest depression, but quite a wide recession. In 2010. on May 6, the Dow Jones took its biggest ever one-day dive, dropping nearly 1,000 points before it partially recovered. And just over a year later, markets around the world dropped in near freefall once again.
The moral of this story? That could be debated. But two things most people will agree on is to be careful about overextending your debt, and diversify your assets. After that, your guess is as good as the next person’s.
If you enjoyed this article head on over to http://www.financedocumentaries.com/ for more interesting Finance Documentaries
Terrence Stoker wrote a new post, Sort out your finances before your mid thirties, on the site Money Think 2 days, 8 hours ago
For the first few years of a new career, saving for the future might not seem like a matter of urgency. However, this is the best time to pay attention to your “life finances”, like a retirement plan, medical aid […]
constantitempurchasingpoweraccounting wrote a new post, Completely stupid Bitcoin statements, on the site Capital Maintenance in Units of Constant Purchasing Power™ 2 days, 17 hours ago
Completely wrong bitcoin statements
Completely wrong Bitcoin statements
It is completely wrong for The Economist to state that Chronic deflation may keep Bitcoin from displacing its fiat rivals.
Deflation is impossible in Bitcoin. It is impossible in a non-monetary item. A bitcoin is a variable real value non-monetary item.Deflation is a sustained decrease in the general price level over time.
Deflation means the real value of a monetary item increases while its nominal value stays the same over time as a result of a fall in the general price level.A monetary item can only be affected by inflation when its real value decreases as a result of a sustained increase in the general price level over time. The nominal value of the monetary item (US Dollar, Euro, Yuan, Yen, etc.) stays the same over time.
All statements linking Bitcoin to inflation or deflation are completely wrong.
Nicolaas Smith Copyright (c) 2005-2014 Nicolaas J Smith. All rights reserved. No reproduction without permission.
mikearnill wrote a new post, 8 Degrees You Didn’t Think You Could Get Online, on the site Finance Tips 3 days, 6 hours ago
With 7.1 million college students taking at least one online class in 2013, the rates of online college enrollment are climbing. But it’s not just business and computer information majors benefiting from online […]
Ivan Dimitrijevic wrote a new post, 6 mistakes not to make when starting a business, on the site Business & Lifestyle Blog 1 week ago
First of all, congratulations on starting a business, it takes a lot of courage for such a bold move. This could be a beginning of a great period in your life. It surely will be a busy and hard working period, so […]
Tom Brown wrote a new post, Frank Lonardelli: Selecting the Right Real Estate Investment Size, on the site Global Finance News 1 week ago
Entering commercial real estate development, and more specifically, working to build my commercial investment firm, Arlington Street Investments, has to be one of my most challenging and at the same time most enjoyable things I’ve done in my professional career thus far. I came into commercial real estate development from the residential real estate industry, and in 2000, when I moved to Calgary, I established the commercial real estate development firm, Arlington Street Investments. I established it with the intention of executing a very specific investment goal, a goal that in fact characterizes Arlington Street’s entire investment philosophy – that is to find and purchase commercial properties that may be positioned for an increase in value and then take advantage of this opportunity through development, redevelopment and/or repositioning of that property.
This is an investment philosophy that I happily ascribe my name, Frank Lonardelli, to and I’m happy to say that my company has been able to execute this investment strategy successfully since 2000. I’d like to think that a major reason why we’ve been able to execute this strategy is because of our fundamentally sound property selection and investment process. And one of the components in our asset selection process that I think we’ve been particularly successful with is choosing the right investment size.
Clearly, even in a mid-size city such as Calgary, there are many commercial properties for a development firm to purchase and invest in. But, it’s equally clear that not every property will demonstrate a return on investment and even those properties with value-added potential may not be a perfect fit for a given development firm. Besides location, besides the potential a property has for offering an increase in value, another fundamentally important aspect that must be considered in any asset selection is the size of the property investment.
When speaking about investment size, we are not only speaking about the total cost of the investment, including any redevelopment cost, we are also speaking about the actual physical size and square footage of the property. And based on my experience with forming and building Arlington Street Investments, both these parameters have to fall in line with the capacities of the real estate development company that is executing on the plan.
I know when Arlington Street was first formed and when we were making our first asset purchases, my project team and I wanted to make sure that our asset selections made sense with where we were as a company. That means that, as a young commercial development firm, at that time we didn’t want to select an asset that was too large and potentially too costly for fear of overextending ourselves financially, never mind, operationally. We also didn’t think it would be advantageous for the growth of our company to tie too many of our assets into one single project. Many development companies fall into the trap of “over optimism” and although the idea of optimism is truly subjective, one must think rationally and practically about its ability to perform and performance. This is something I would highly encourage any developer to consider as the consequences could be dire when that over “optimism” slams up against reality.
Now that Arlington Street Investments has grown and now that we’ve achieved a fair amount of success in the Calgary market, we’re at a point where purchasing and developing larger properties is within our comfort zone and, indeed, introducing into our asset portfolio larger, more expansive commercial projects is the current focus of my project team. However, the point is that this took time (over a decade in fact) and I really feel that if we had taken on a property asset that was out of step with our development as a firm, it could have seriously hindered our growth. With my name, Frank Lonardelli, proudly and firmly attached to the success of Arlington Street Investments, that’s not something I would have let happen, nor would I want my very capable team members to be exposed to any potential downside that we could have mitigated.
The reality is that finding and selecting commercial properties that are congruous with the capacity and development of the real estate development company is a delicate and involved process. But, this is one other reason why talented project teams full of capable professionals are so absolutely vital to any commercial real estate development firm.
constantitempurchasingpoweraccounting wrote a new post, IASB agrees with silly idea that capital maintenance is only required during high inflation , on the site Capital Maintenance in Units of Constant Purchasing Power™ 1 week ago
IASB agrees with silly idea that capital maintenance is only required during high inflation
IASB still clueless about capital maintenance
The IASB now officially agrees with the silly idea that capital […]
constantitempurchasingpoweraccounting wrote a new post, Difference between inflation and the stable measuring unit assumption, on the site Capital Maintenance in Units of Constant Purchasing Power™ 1 week ago
Difference between inflation and the stable measuring unit assumption
Almost no-one understands the difference between the inflation and the stable measuring unit assumption.
Inflation is a […]
joys joy wrote a new post, Diesel to Be the Top Worldwide Transportation Oil, on the site News 1 week ago
Presently, the bulk of cars in the transportation industry are run by gasoline. However, a report issued recently has identified that by 2020 about 70% of cars will be consuming diesel. Diesel is likely to exceed […]
constantitempurchasingpoweraccounting wrote a new post, HCA is like shooting yourself in both feet, on the site Capital Maintenance in Units of Constant Purchasing Power™ 1 week, 1 day ago
HCA is like shooting yourself in both feet
Under Historical Cost Accounting you apply the stable measuring unit assumption. That´s a double whammy to the maintenance of real value: (a) you do not maintain the […]
richardo fuse wrote a new post, Improve your business by organizing an effective and useful conference., on the site Richardo's financial view 1 week, 2 days ago
Before organizing a conference you need to know the reason of having the conference, the people who are going to attend it, what they want, the ways to reach these people and what is more important to them. […]
Ivan Dimitrijevic wrote a new post, 6 amazing beaches that Barcelona offers, on the site Business & Lifestyle Blog 1 week, 3 days ago
Barcelona has so much to offer that most people often forget about its amazing coastline filled with beautiful beaches. Here are some of Barcelona’s beaches that are absolutely worth visiting.
Terrence Stoker wrote a new post, The efficiency of smart, on the site Money Think 1 week, 6 days ago
The idea of smart technology may seem redundant in terms of its definition: We would hope that technology, by definition, would be smart. We certainly don’t want “dumb” technology. However, by smart we mean […]
constantitempurchasingpoweraccounting wrote a new post, What backs the US Dollar?, on the site Capital Maintenance in Units of Constant Purchasing Power™ 1 week, 6 days ago
What backs the US Dollar?
The US Dollar is backed by all the underlying value systems in the US economy as well as all the global value systems the US government controls.
Some of the underlying values […]
Ivan Dimitrijevic wrote a new post, How to choose a present that won’t end up in a box somewhere, on the site Business & Lifestyle Blog 2 weeks ago
The art of gift giving has somewhat lost its depth in recent years. People of the modern age mostly have a utilitarian take on things when it comes to choosing an appropriate gift. Either that, or they get caught […]
Staff Training wrote a new post, When personal views affect business, on the site Staff Training 2 weeks, 2 days ago
How important are your personal views when it comes to your business? The short answer is: very.
While you might think that your personal opinions and views are entirely detached from your business and how it […]
Terrence Stoker wrote a new post, The South African property market and the global context, on the site Money Think 2 weeks, 3 days ago
Home loans have come to define lives: in terms of managing the loan, of paying it off; and in terms of comfort, in the knowledge that you actually (almost) own property.
Managing home loans and considering how […]
Harry Golden wrote a new post, What You Must Absolutely Know About Bridging Finance?, on the site Finance News & Updates 2 weeks, 4 days ago
You are trying to buy a property and find yourself in need of finance to complete the transaction. You know you don’t need a long-term loan but simply need some extra cash to help you in your pressing need. […]
constantitempurchasingpoweraccounting wrote a new post, Quantitative easing, on the site Capital Maintenance in Units of Constant Purchasing Power™ 2 weeks, 6 days ago
Quantitative easing is the creation of new money by the central bank in the form of loans to commercial banks that does not result in an increase in inflation. A central bank increases […]
Staff Training wrote a new post, Do you and your body speak the same language?, on the site Staff Training 2 weeks, 6 days ago
They say it’s not what you say, but HOW you say it that matters. That might be the case, but what if your body language says something different altogether?
When communicating with our employees and […]
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