The stock market has seen significant declines this year, with the Nasdaq down 25%, S&P 500 down 20%, and Dow down over 10%, due to high inflation, Fed rate hikes, supply chain issues from Covid and the war in Ukraine, and other geopolitical factors. Historically, market crashes last until their underlying causes are resolved, with the average being 289 days. The 1929 crash lasted from 1929 to 1932 as it was exacerbated by tariffs and trade wars. The current crash may also last months or years until issues with inflation, Covid lockdowns, the Ukraine war, and global energy and commodity markets are remedied.

1. By: www.ProfitableInvestingTips.com

2. The Nasdaq has fallen by a quarter this year.
The S&P 500 is down about 20% and the Dow
by more than 10% by early May 2022.
Inflation is raging and Fed actions to slow it
could easily drive the economy into a
prolonged recession.

3. Add the continued supply chain disruptions
(especially out of China) due to Covid, the war
in Ukraine, and protectionism disrupting
commodity markets. Things are likely to keep
getting worse until the root causes are
remedied. That raises the question: how long
until the markets hit bottom?

4. When to Invest As a Market Crashes

5. Long term investors commonly benefit from
buying good stocks for cheap when a
correction or crash bottoms out. They look at
both intrinsic stock value and the factors
underlying the crash. Once a stock’s market
value drops below its long term value based
on forward looking earnings it is profitable to
purchase it.

6. However, the most profitable purchases are
when an investor can spot when the bottom
is reached. Thus, an appreciation of long
market crashes last and when they turn
around is important for timing one’s
purchases.

7. The 1929 Stock Market Crash Lasted Until
1932

8. The 1920s were a similar decade to the years
after the Financial Crisis. In the 1920s one
could buy stocks for 10% down and in the last
decade interest rates were historically low.
Both times stock prices went steadily up and
profits were easy until they weren’t. The Dow
Jones Industrial Average rose from 63 in
August 1921 to 381 by September 1929.

9. Then on Black Monday, October 28, 1929, the
stock market crashed 13% in one day. The
next week on Black Tuesday the Dow went
down 12% more. Three weeks after the crash
started half the market’s value was gone. But
that was not the end of it. The stock market
continued to fall in fits and starts until the
middle of 1932, nearly three years later when
it hit 41.2 which was 11% of its value before
the crash. (Federal Reserve History)

11. What Factors Decide How Long a Market
Continues to Crash?

12. Since the crash from 1929 to 1932 the market
has fallen into correction or crash territory
twenty-five more times. The average time it
takes is 289 days. The factor that all of these
have in common is that they last so long as
the things that cause them last or are not
remedied. For example, the Covid crash
lasted until the Fed started pouring money
into the economy. The problem today is that
there are three factors driving the crash and
not one.

13. There is still excess money in the economy and
Covid is still a factor in the supply chain.
Specifically, China is using draconian
lockdowns in its zero tolerance approach to
Covid. And Russia’s war on Ukraine has
brought on sanctions, higher prices for oil,
natural gas, agricultural products, and
strategic minerals. This mix of issues will
take longer to remedy because this time
around the Fed is busy raising interest rates
to fight the worst US inflation in 40 years.

14. 1929 vs Now

15. The stock market was overvalued in 1929
largely because one could buy stocks for 10%
down and then pay interest to the broker.
This leveraged system was ripe for a crash
but would have remedied itself after prices
fell far enough. Unfortunately, Congress
passed the Smoot Hawley Tariff which
affected Europe mostly and Europe retaliated
causing a trade war.

16. That brought on the Great Depression which
lasted until the start of World War II a decade
later. Today’s crash would be simple if it only
had to do with excess money supply and
would be fixable by the Fed raising interest
rates and reducing its balance sheet. But
these actions will not cause China to stop
locking down cities like Shanghai with 25
million people or make Putin withdraw his
troops from Ukraine and stop hoarding grain
and fertilizer.

17. Fed actions will not halt Europe’s actions in
finding different suppliers for oil, coal, and
natural gas causing Russia to sell at discounts
to India and other nations. The bottom line is
that the similarities between 1929 and now
lead us to believe that this crash will last until
the root causes are remedied which could
take months or even years!

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investments and investing, visit
www.ProfitableInvestingTips.com.