1929 Stock Market Recovery

The Crash of 1929 teaches lessons about stock market recoveries.

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Wall Street lore and historical charts indicate that it took 25 years to recover from the stock market crash of 1929. However, some modern analysts dispute that view. In fact, the recovery from the low point, though not a steady climb, offered investors opportunities to make money and even recoup their losses from the crash much sooner than the 25-year mark.

Changes in Dow

The Dow Jones industrial average in 1929 did not maintain static membership. Some stocks were taken out of the average, and others were added. When the Dow reached its old peak 25 years later, it did so with different stocks than were in it during the crash. This means a comparison of Dow levels in 1929 and 25 years later is an apples-to-oranges comparison.

Individual Stocks

Some individual stocks recovered in four years, according to website Seeking Alpha. For example, Dow Chemical had recovered to the break-even point by 1933. Honeywell and 3M Recovered by 1936. The average time for stocks to recover was 12 years. While this certainly means some took longer, others took much less time.

Overall Market

Mark Hulbert, writing for "The New York Times," suggests that an investor could have fully recovered from the 1929 crash in four-and-one-half years. He bases his claim on the fact that deflation and inflation haven't been figured in to true stock values from the period, and the fact that dividends paid an average of 14 percent. In addition, he points out that the Dow is not the entire market, and that the broader market had some quick-recovery stocks in it.

Revival vs. Recovery

Though the market did not fully recover in 1930, it did go through a series of rallies and drops as it tried to mount a revival. New York Stock Exchange stocks recovered 73 percent of their losses in 1930. Each rally was met by a disappointing drop, but the market never went back to its 1929 state of chaos and panic.