Political Instability In The 20th Century
Political instability in the 20th century started with the onset of World War 1, which some would call a defining moment of the century one that sowed the seeds not just of the Second World War but of Communism, Nazism, the Holocaust, and the Gulag, among others. Of course all these global events had extreme effect on the volatility of the stock market throughout the century, including the deflation in the 1930s and the inflation of 1970s.
I will start with the 1910s that showed a steady decline in the share prices and triple digit inflation, which triggered a bear market effect that continued throughout the decade due to the onset of World War 1.
The 1920s contained a huge stock market bubble that burst by the end of the decade causing the
market to crash in 1929 and high volatility. That was the start of the Great Depression that lasted through out of the 1930s.
The end 1940s saw the end of the war and the beginning of the stabilization of the world’s capitalist economy. Which caused the 1950s to be one of the best preforming decades in the 20th century, providing often more than 100% returns to investors with the use of Keynesian Policies, the same Keynesian Policies that helped the market stabilize and grow in the 1950s caused inflation and devaluation by countries with weak currencies in the 1960s, that would trigger the undoing of the markets and another bear market in the 1970s.
The 1980s saw the peak of the market in the 20th century until October 19, 1987, Also known as Black Monday. When the market crashed due to the fact that supply of stock far exceeded the demand for stock, among other factors sent investors into panic, causing the Dow Jones Industrial Average to fall 508 points (22.6%). The 1990s wasn’t lucky either as it saw a great upheaval and political instability, causing volatility in the stock market. From the invasion of Kuwait and the American intervention to the financial Crisis in Asia and Mexico and also the Russian debt.
I can observe that volatility if the stock market is somewhat fragile sometimes as it could be offset by either political instability or sometimes just because of panic among investors that cause massive selling of stocks, volatility of equity can also affect the stock market. Among the positive events in the 20th century is the fact that activity in the market focused more on corporate shares rather than corporate and government bonds, also the expansion of the World’s stock market.
References:
I will start with the 1910s that showed a steady decline in the share prices and triple digit inflation, which triggered a bear market effect that continued throughout the decade due to the onset of World War 1.
The 1920s contained a huge stock market bubble that burst by the end of the decade causing the
market to crash in 1929 and high volatility. That was the start of the Great Depression that lasted through out of the 1930s.
The end 1940s saw the end of the war and the beginning of the stabilization of the world’s capitalist economy. Which caused the 1950s to be one of the best preforming decades in the 20th century, providing often more than 100% returns to investors with the use of Keynesian Policies, the same Keynesian Policies that helped the market stabilize and grow in the 1950s caused inflation and devaluation by countries with weak currencies in the 1960s, that would trigger the undoing of the markets and another bear market in the 1970s.
The 1980s saw the peak of the market in the 20th century until October 19, 1987, Also known as Black Monday. When the market crashed due to the fact that supply of stock far exceeded the demand for stock, among other factors sent investors into panic, causing the Dow Jones Industrial Average to fall 508 points (22.6%). The 1990s wasn’t lucky either as it saw a great upheaval and political instability, causing volatility in the stock market. From the invasion of Kuwait and the American intervention to the financial Crisis in Asia and Mexico and also the Russian debt.
I can observe that volatility if the stock market is somewhat fragile sometimes as it could be offset by either political instability or sometimes just because of panic among investors that cause massive selling of stocks, volatility of equity can also affect the stock market. Among the positive events in the 20th century is the fact that activity in the market focused more on corporate shares rather than corporate and government bonds, also the expansion of the World’s stock market.
References: