Could Another Stock Market Crash Like 1929 Happen Again?

The idea of a stock market crash on the scale of 1929 feels distant. Almost historical fiction. But it's not.

When you zoom out, the patterns that led to the stock market crash of 1929 start to look familiar. So the real question isn't just what happened back then. It's: Will the stock market crash again, and could it look similar?

In this month's Bugle Notes episode, managing partners Michael Bennicelli, Chad Smith, and Stephen Weitzel examine the book 1929 by Andrew Ross Sorkin to see what parallels can be drawn.

What Caused the 1929 Stock Market Crash?

The late 1920s weren’t gloomy. They were electric.

New technologies like radio connected people in ways they’d never experienced. Cars rolled off assembly lines. Credit expanded rapidly, letting consumers (and investors) buy things they couldn’t previously afford. Sound familiar?

Here’s where things get interesting.

• The economy was strong

• Innovation was booming

• Confidence was everywhere

And then something shifted.

Optimism turned into overconfidence. Then into speculation.

People borrowed heavily to invest in the newest hyped company. Buying stocks on margin became common, with investors putting down as little as 10% and borrowing the rest.

That’s leverage. And leverage cuts both ways. Short-term gains feel amplified. So do losses.

When Markets Stop Making Sense

In 1929, speculation became a cultural phenomenon. People quit jobs to watch stock tickers. Brokerage desks showed up in hotels. Even average investors jumped in (often with borrowed money).

This is where things tend to break. Because we believe markets don’t crash when things look bad, they crash when expectations get too high.

A key dynamic from 1929 still applies today: The longer markets rise uninterrupted, the harder it becomes to recognize risk. That’s human nature.

This Isn’t Just History

As we’ve said, the 1920s had:

• A new transformative technology (radio)

• Explosive credit growth

• Widespread speculation

• A belief that “this time is different”

Today?

• Artificial intelligence is reshaping industries

• Capital is flowing heavily into a handful of dominant companies

• Market concentration is near historic highs

• And many investors assume the winners will just keep winning

Different era. Same psychology.

Key Differences Between 1929 and Today

Before we go too far, it’s important to acknowledge that today’s market is not the same as it was in 1929.

There are meaningful safeguards in place now that didn’t exist back then. For example:

• The banking system is far more stable and regulated

• The FDIC protects deposits (which didn’t exist in 1929)

• The Federal Reserve plays a more active role during crises

• Information moves instantly, not days or weeks later

Back then, there were over 30,000 fragmented banks, and many were vulnerable to collapse. Today, the system is more consolidated and resilient.

That reduces the odds of a 90% market collapse like 1929, but it doesn’t eliminate risk.

The Similarities Between 1929 and Today

Even with those differences, several parallels stand out.

1. Strong Economy, High Expectations

Leading into the 1929 crash, economic data looked solid. Industrial production was rising. Consumer demand was strong.

Today, we’ve seen similar trends: job growth, wage gains, and strong corporate earnings in key sectors.

Yet markets price the future, not the present. And when expectations get stretched, even good news can disappoint.

2. Market Concentration

In 1929, a handful of high-profile companies drove excitement.

Today, a small group of large-cap tech and AI companies dominate market returns.

This creates a fragile setup. If leadership cracks, the broader market often follows.

3. Leverage in Different Forms

Margin borrowing was obvious in 1929.

Today, leverage is more complex:

• Corporate debt

• Derivatives

• Private market structures

• Institutional strategies

Different tools with the same effect. When too much leverage builds up, small shocks can turn into larger ones.

4. “This Time Is Different” Thinking

Every cycle has its story. In the 1920s, it was industrial growth and modern finance. In the late 1990s, it was the internet. In the mid-2000s, it was housing.

Now it’s AI, automation, and exponential growth projections.

The narrative changes. The behavior doesn’t.

Here’s What Most Investors Miss

Markets don’t need bad news to fall. They just need reality to fall short of expectations.

Right now, many valuations reflect near-perfect outcomes. If growth slows, even slightly, prices can adjust quickly. That’s how stock market crashing episodes often begin.

So Will the Stock Market Crash Again?

Short answer: yes. But not necessarily like 1929.

Crashes are inevitable because:

• Human behavior doesn’t change

• Cycles of greed and fear repeat

• Excess always builds somewhere

Even the highly intelligent, experienced leaders in the 1920s got caught up in the moment and failed to recognize the shift until it was too late.

What You Can Do to Prepare Yourself

You don’t need to predict the next stock market crash to prepare for it. But we believe you do need a financial plan.

That might include:

• Evaluating how concentrated your portfolio is

• Understanding how much risk you’re actually taking

• Stress-testing your investments against different scenarios

• Avoiding emotional decision-making during volatile periods

  
  

If you’re wondering how exposed your portfolio might be, or what you should do differently before the next downturn, this is exactly where a second set of eyes helps.

At Reveille, we use a rules-based investment discipline designed to reduce risk and remove emotion from decision-making during volatile markets.

If you want clarity on where you stand, reach out to a Reveille advisor in our Georgia or Florida offices. Have a conversation and get a plan in place.

Because we believe the next crash isn’t a matter of if. It’s a matter of when.

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Any opinions are those of Reveille Wealth Management and not necessarily Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Cover image from the National Archives Catalogue: https://catalog.archives.gov/id/12573100

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