Have you ever heard about the 1929 stock market crash? In 1929 before the crash 381 was the most used number on Wall Street. 318 was the price of 1 share of the Dow Jones Industrial Average (DJ30), and it was the highest it has ever been at that time, little did they know it won't last long. DJ30 is one of the main indexes to track the US economy.

The stock market looked invincible, for 9 years straight it was in a constant bull market (uptrend) and many new inexperienced people joined the stock market. The reason? It's simple, people thought they thought it was free money.

Stockbrokers at the bank offered loans for investors to buy a stock, this was also called "Buying on the margin". Since they thought the stock market was a sure profit, they sold their valuables, mortgaged their houses, or sold their cars in order to invest. But there is this thing called "Margin call", which is when a stock goes down in value, the broker who lends the money to the investor can ask the investor to immediately repay a minimum amount of the loan, if they can't, they have to sell the stock to cover the loan.

All this instability caused America to have tons of "bad loans". Then the Federal Reserve Bank of New York raised lending rates to slow down buying on margin. Banks in Europe matched this rate. This sent many nations that didn't fully recover from WWI into recession. This, paired with analysts valuing the stock market as overvalued triggered panic. The stock market was holding up, until the 27th of October 1929, also called Black Thursday.

People panicked and sold everything as soon as possible. Big banks tried to calm the situation and reverse the trend by buying massive amounts of shares to make people believe again, this helped for the day.

Then the margin calls began. People had to sell their shares in order to pay for the margin calls. This resulted in Black Monday, where DJ30 lost 13% of its value, and this continued even the next day, Black Tuesday, resulting in DJ30 losing 23% of its value in just 2 days.

This bear market (downtrend) continued until 1932, we call this time the Great Depression, but that's a whole nother story.

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