Fondos.Net - Past Stock Prices

Past Stock Prices

Phrases like “past performance is not necessarily a guide to future performance” is somewhat common on advertizing material concerning investment products. As an investment medium, the stocks can produce excellent growth as well as consistent and regular income. Taken over a medium or longer term, the earnings from the appreciation of share prices has been better than had the same funds been deposited in banks, credit unions or mutual funds but of course, security is not as good.
Nevertheless there have been some spectacular reversals in the stock markets over the years including the three big ones, 1929, 1987 and 2002 together with a few minor and short-lived downturns. The “Wall Street Crash” was the name given to the fall in stock prices of October 1929. By 3rd September, the indices had reached all time highs but they wasn’t able sustain them. On 24th October, share prices began to fall and on 29th October they fell through the floor. The result was that business was now unable to raise funds, over a hundred thousand companies were forced to close creating massive unemployment - the Great Depression had started. It took until 1954 for the indices to recover to the levels they’d reached in September 1929 but at least over most of that period, the rise was steady and the markets had become a little more predictable. It was said it would never happen again but never is a long time and it did happen again, in October 1987. This time, it happened even more dramatically and the fall was even faster although by nothing like as much. By now, the world had become a much smaller place - with 20th century communications and computerized trading, the news of the initial dip spread like warmed Maple Syrup over hot cakes and the numbers just dived.
There was no apparent reason either. President Reagan was seen on Television, looking bemused, his hands spread in disbelief and shaking his head - his comment “There’s no reason, the economy’s fine”. He was justified in saying that too. There was no crisis in any area of the economy - unemployment wasn’t a problem (unlike in Europe where it had been a major problem for some years), inflation was under control and general economic activity was in growth. Investors and are fickle though and somewhere, somebody got spooked and the result was like dropping a rock into a pool of water - the rings spread out and all round the world.
The major difference between this crash and 1929 was that it didn’t initiate a depression and people didn’t commit suicide over it. The recovery started almost immediately and continued until the Cisco inspired fall in 2002. Since then the markets have been generally bearish with the odd blip from time to time. Life itself is unpredictable and stock prices are just a part of life. Stock prices rise and fall, often for no apparent reason. Prices of individual stocks can be predicted but only roughly. Good company news and bad company news, take over rumors, ex-dividend days, buyback schemes have all had influence on prices in the past and they always will.

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