By Pierce Braun ’20
As the New York Stock exchange seems to be reaching record high after record high, the choice of whether to buy or sell is clear: SELL.
Looking back to October of 1929, similar the Dow Jones industrial average was reaching the highest it had ever been, but what followed that feat in late October is why the crash of 1929 may just happen again.
The Dow Jones industrial average dropped 12 and 13 percent respectively in a matter of two days (Black Monday and Black Tuesday).
The inflation of the United States Dollar since 2006 has had a cumulative rate of over 20% and looking back between 1917 and 1929 the cumulative rate of inflation was was also over 20% which obviously brings up the point of if the Great Depression may not be thought of as a one time thing.
A great way to spot if a market is capable of crashing is to see if stocks are becoming much more volatile. Utility stocks such as Westar Energy and Northwest Natural Gas have seen exceptional price increases since 2008, but the flash crash in early February showed them to be overwhelmingly volatile.
This flash crash actually lost over $1 trillion in market cap throughout February.
Granted, there are always two ways to look at the market’s potential, and quite honestly I thought it was gonna crash two years ago, but it seems clearly imminent.
The next crash depends completely on how much longer the market will keep going, if it falls now, the drop will not be as severe as if the market were to drop 6 months from now.
The market cannot go up forever, and the combination of the inflation rates trending so closely to the crash of 1929, even the most inexperienced investor can see the worries of staying in the market at times like these.
The moral is to sell, don’t ever risk ten dollars merely to make a dollar.