Speculation in the 1920s refers to the practice of buying assets, particularly stocks, with the hope that their prices would increase rapidly, allowing investors to sell at a profit. This period, particularly in the United States, was marked by a booming economy and a burgeoning stock market, leading many individuals to invest heavily in stocks, often with money they did not have—using margin trading.
During the Roaring Twenties, the stock market saw unprecedented growth, attracting not just wealthy investors but also average citizens who were eager to get in on the action. Unfortunately, this speculative frenzy was often driven by hype and the belief that stock prices could only go up, leading to unsustainable valuations.
The overconfidence and reckless behavior culminated in the stock market crash of 1929, which marked the end of the decade’s economic expansion and led to the Great Depression. The speculative bubble burst as stock prices plummeted, and many investors faced substantial losses, leading to widespread financial hardship. The lesson learned was the importance of cautious investing and the dangers of speculation driven solely by optimism.