By , ,
Published May 20, 2015
At the time, you'd have thought the world had just ended: The Dow (search) lost a tenth of its value in one day — soon, it would be halved.
People stopped buying. Businesses stopped hiring. Everyone started worrying. One publication wrote of the end of an era.
Seventy-five years ago Friday, Americans were scared and they had every right to be.
The stock market had crashed.
The roaring twenties had stopped roaring.
And, though the presidential election was still more than three years away, Herbert Hoover's (search) fate was sealed that day because he chose to do nothing that day. After all, he figured, it was just the market hit that day — not the economy. There would be no tax cuts, no rebates, no anything. And so, what likely could have been an economic hiccup turned into something far worse: a depression.
It would eventually usher in the era of big government here and launch the career of a fellow named Adolph Hitler over there.
Seventy-five years ago today authorities failed to appreciate the magnitude of what looked like just a market loss that day. Not realizing then what we should all know now: Investors matter and a good investment climate matters more.
After the 1987 stock market crash, the Federal Reserve (search) cut interest rates. After the Sept. 11 terror attacks, the president cut taxes. That's why we came back from the '87 crash and why we had such a brief and shallow recession after 9/11.
Suddenly, people had more money to spend and, both times, they spent it.
Each experience was bad. But looking back at the alternative 75 years ago today, history tells us it could have been worse... a lot worse.
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https://www.foxnews.com/story/learning-from-loss