The Dow fell 119.48 yesterday or 1.2% and many are talking about a correction in the markets that may be underway. After a run up of over 50% since the market lows in March, a pull back is natural. That, however, hardly compares to the events that began 80 years ago on October 28-29.
Before the Great Crash of 1929, the roaring twenties was a time of growing wealth... and speculation. From its low of 63 in August 1921 to its peak on September 3, 1929 at 381.17, the Dow had gained over 500%.
By the spring of 1929, the warning signs began to emerge and volatility was rapidly rising with daily swings that ranged as high as plus or minus 5%. Each time the Dow dropped, it recovered, at least until the fall of that year when it began to slide downward. After falling 8% over the 2 days from October 23-24, the market crashed on October 28 and 29, falling 13.5% and another 11.7%, or 23.6% over the two-day period and helping to lead the country to the Great Depression. After an initial 48% rally back from its low of 199 in November, the Dow proceeded to lose ~90% of its September high, closing at 41.22 on July 8, 1932. It took until late 1954 to reach its pre-crash levels.