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Word On The Street

Stocks hit record highs as Wall Street marks 90 years since the crash of 1929.

Why the rally? What’s next?

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“The market is sending you a very strong message…If the economy was going to hit a really bad patch, these stocks wouldn’t be recovering.”

Andrew Slimmon, managing director at Morgan Stanley Investment Management, says cyclical stocks (shares in companies that depend on consumers having discretionary spending) continue to do well despite concerns about an economic slowdown.
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Something To Consider

You are witnessing history. The stock market rally is one of the greatest rallies in history. It has lasted longer than the stock market boom of the 1990s (although it has returned less in earnings).

The Dow Jones Industrial (stock market index of 30 well-known bellwethers of American business) has quadrupled in the last decade.

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What Happened: 1929

  • One Misconception: Market did not hit bottom on “Black Tuesday” (October 29, 1929). Stocks briefly rebounded but then continued to fall until 1932 and didn’t fully recover until the 1950s.
  • Why Did It Happen: Several reasons incl. over-speculation; investors placing bets on stocks, pushing the market higher despite a slowing economy.
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“Bull markets don’t die of old age. They end in recessions.”

Chief investment officer of wealth management, Kurt Spieler, First National Bank of Omaha. Economic data does not support the threat of recession (for now). One similarity between 1929 and 2019? The end of a decade of growth.
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“For everyone who says the market is great, there are a lot of respected people who say it’s overvalued. That probably means we won’t have another great crash.”

Financial historian Richard Sylla to TIME on comparing the Wall Street crash of 1929 to today. Skylla notes that while both periods were preceded by strong markets, today there is more market skepticism that may prevent the over-speculation of 1929.
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On Monday, stocks rallied in part on optimism over a trade deal with China. Lack of a deal, or what investors perceive as a bad deal, could negatively impact the stock market.

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