The Dow Jones fell by 88 between late August 1929 and late may 1932

Between June 1, 2007 and March 9, 2009, the stock market unscrewed in France of 60, from 6.168,15 to 2.519,29 French CAC 40 index. As and extent that globalized world sank into crisis from the summer 2007, and that the stock market fell in 2008-2009, the scholars, back in time of crisis for purposes of comparison, finally stopped on the period 1927-1932. (The Dow Jones fell by 88 between late August 1929 and late may, 1932).

Several factors differentiate between these two busts and not only their magnitude. Certainly, it is the year 1987, which holds the record of amplitude of decrease in daily with the famous meeting of October 19 where the DJIA index plunges 25.6, with a fall of a large scale on all awards of the world! But among the ten most drops daily on 28.322 sessions of scholarship of the period of almost 115 years between 1896 and 2009, six occur in 1929-1932 (but also the five largest increases), the seven months the lower ten focus on the same period. Between 1929 and 1933, it count 89 exceptional sessions (45 cuts and 44 hikes of at least 5) on 154 total between 1896 and 2009. No months or daily meeting is listed in this sad list on some two years and a half since June 1, 2007.

These variations reflect a volatility which has probably never been as high between 1929 and 1932, although the volatility of the time measuring instruments are perfectly reliable.

Another notable difference: market infrastructure that are deeply modernized. Galbraith, in his booklet of 1955 on the crisis of 1929, demonstrates the many consequences of difficult to treat an unusual number of orders in 1929, with the means and the Organization of the time. The teletype passes the quotes with a delay: October 21, 1929, the last course is passed 1: 40 pm after the close of the market. Manual processing of orders is an important source of malfunctions: "After the closing, a broker found a large basket full of orders not executed", says Galbraith. Differences between 1929 and 2009 are considerable, including means of communication of information, but also in rating techniques and meeting of supply and demand of securities, and in regulations and the safety of the trades and trading practices finally.

The microstructure of financial markets at the time resulted in a liquidity of organizational nature that became quickly structural. Exchanged capital spend 500 million dollars per day to just 10 million, representing a decrease of 98 (beyond thus the fall in prices), while that ranges displayed by specialists on the floor of the New York Stock Exchange, i.e. the difference of course to which they are consideration of final investors, the purchase and sale, from less than 1 in August 1929, 6 in October 1929, and 12 beginning 1932 (it is on the spreads of credit occurs such tension in 2007-2009).

Liquidity had dried up markets, because it was a stock market crisis, as the bank liquidity dried between 2008-2009 insofar as it is a credit crisis. It is thus organized markets showed an exceptional ability to absorb shocks and the outstanding transaction volumes during the crisis of 2007-2009, which had been unable to market organized of the time, and most of the financial markets of private in 2008 - 2009.

Since the current rebound, the same commentators struggling to find new comparisons to wonder about its durability. But stock market history does not recur. Note only the points of departure (by construction) of March 2000 and August 1929, on a hand, and the points of arrival on the other hand, subscript, may 1938 and October 2009 coincide exactly. And that today negative annual real profitability of an investment in shares from 1997 is the counterpart of a stock last quarter of 20th century resplendent.