Cover story
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The Great Depression
Andrew Hardy, co-
head of research at
MGIM, says the seeds of
the crash between 1929
and 1932 were sown in
the prior boom years
as the global economy
rebounded from the
impact of WW1 and the
Spanish flu pandemic.
US GDP increased by
43 per cent in real terms
in the 1920s, propelling
the Dow Jones up by five
times from its low in 1921
to the market peak in
September 1929.
“The global economy
saw a productivity surge
from technological
developments,
including electrification
and the use of motor
cars,” he explains.
“This drove rapid
corporate earnings
growth and supported
a significant expansion
of consumer credit,
causing a speculative
boom in the market.”
Hardy says there wasn’t
a single factor that called
an end to the bull market,
but the ensuing crash
was rapid, with the Dow
Jones falling 48 per cent
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