The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 29

A Clear Warning

Most folks think the 1929 crash kaplunked with absolutely no advance warning. Not so! The European stock markets sounded a clear warning—one that any contemporary observer could have noted—but few heard it. You can see the warning on this graph, which shows stock price indexes for New York, London, Berlin, and Paris. The events surrounding October 1929 and the precipitous fall of stock prices in New York are well known. But were you aware that:

• The world had other major equity exchanges then?
• London, Paris, and Berlin all suffered major declines too?
• London and Berlin hit their highs in 1928 (point A), a year before the New York crash, and were in an obvious downward trend all the way up until New York's big demise?
• Even Paris had lost its momentum early in 1929 and was moving down through most of the year while New York kept rising?

Another interesting fact is that in 1929 prices in London fell even more than in New York—something few casual observers know. But an American, seeing the early decline in major European markets, had a clear warning that New York was out of whack. As it turned out, and as it usually turns out, no one country was immune from global economic events. It is uncanny how often events happen in parallel around the world—and how it has been that way long before “modern communications systems.” The big October crash took place simultaneously throughout the Western nations—all within days of each other (point B). But to Europeans the ...