2. What is a bull market and what role did it play in the stock market crash?
Access Topic 13: Prosperity and Depression, Lesson 1: Harding and Coolidge in American History. Read Economic Growth Under President Coolidge.
A bull market is a financial market where prices are rising or are expected to rise. It is characterized by investor optimism and confidence in the economy, leading to increased buying and higher stock prices.
During the 1920s, the stock market experienced a prolonged period of a bull market which contributed to the economic prosperity of the time. However, this period of economic prosperity was largely fueled by speculation and excessive buying of stocks on margin (buying stocks with borrowed money). This led to inflated stock prices that were not supported by the underlying value of the companies.
When the stock market crashed in 1929, it was largely due to the bursting of this speculative bubble. As stock prices started to decline, panic selling ensued leading to a rapid and severe drop in stock prices. This marked the beginning of the Great Depression which was characterized by a severe economic downturn, high unemployment, and widespread poverty.
Overall, the bull market played a role in the stock market crash by creating an unsustainable economic environment based on speculation and inflated stock prices.