Stock Market Crash (1929)• Students will understand the

causes and importance of the Stock Market Crash – Crash marks the beginning of

the Great Depression because people lost so much money (but is not the cause of the Great Depression)

• Stock Market- place where people buy STOCK (part ownership) in a company with the hope of making money (as a company become successful) when the stock is sold

Stock Market in 1920’s- prices rose steadily, more people wanted in on the action

• Speculation- more people bought stock and prices became inflated (price of stock was more than value)– Buying on Margin- investor

puts down 10% of purchase and borrows 90%

• Why would a person want to borrow so much money?

• How does the money get paid back?

• How does Buying on Margin help raise prices?

Stock Market Crash- Oct. 24, 1929 prices drop, people start selling stocks, Oct 29 (Black Tues.)

prices plummet (16 mil. Shares dumped)• What happened

1) Saturation- too many investors, prices artificially rose

2) Decline in Prices- brokers called in “Margins” (loans), investors can’t pay back loans

3) Massive Selling- brokers sell stock to pay back loans– Brokers selling, no buyers, prices

start to drop (Oct. 24)

4) Panic- EVERYONE starts selling, no one buying (Oct.29)

5) Crash- loans due, people lose everything

Impact of the Stock Market Crash• Investors- lose stocks,

savings, value• Stockbrokers- house,

career, $• Banks- go out of

business (loaned money to stockbrokers that can’t pay back)

• People- an money deposited in banks was loaned to stockbrokers (savings lost!)

Stock Market Activity- every student is to invest $10k in 5 stocks

• Stock Close $ Shares

• Advice– Buying ( $ / Close = Shares)– Selling ( Shares * New Close = $ (higher/ profits)– Buy Low, Sell High (look at 52 week H/L)– More shares= More earned or lost (higher price

means fewer shares, lower price= fewer shares)– Pick companies w. Names (familiar companies)