What sort companies did people of that era believe to be smart investments and how did an average person transfer their money to Wall Street in exchange for stock?
Whilst it is difficult to say lets just say you wanted to invest prudently and went for a version of a index fund using the Dow Jones Industrial Average. This would give you a list of 30 companies to invest in. These would include
General Electric which still remains one of the largest corperations in the world.
American Telephone and Telegraph Company or as it is known today AT & T
US Steel
Texas Company or Texaco
These are some of the ones that still exist till this day
Now there are a bunch of companies on that list that would not last until today and many of the companies are now defunct. For example
Studebaker Cars
American Locomotive Company
Baldwin Locomotive.
In summary a prudent investor at the time would invest in a portfolio made up of a lot of Locomotive Companies as well as some Car manufacturers with the rest a mixture of traditional utilities and some oil manufacturers as well. You also might invest in other large companies of the day like DuPont and Western Union.
Now how would you invest. Much like today you would need a brokerage firm. In the 1920s they looked much like this
Now since news traveled a lot slower in those days you would be at a huge disadvantage to the new york stock traders by the time you even found out that the crash of 1929 had happened it would be too late. If you had invested in the Dow Jones Industrial average like I mentioned earlier you would have lost 13% of your money on the first day of the crash and then you would lose another 12% on the second day. Now this is all if you were prudent but in all likelihood if you listened to everyone around you making easy money then you would have brought even more stock on margin in which case your loses would be much greater.