1929 Stock Market Crash
• What IS the Stock Market?
• Post WWI Economic Prosperity
• 1920s Stock Market Activity
• Legacy of WWI
• Public Perception
Relevant Economic Terms
• MARKET:
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• MARKET: a place where a buyer and a seller agree on a price and a quantity to be exchanged.
Relevant Economic Terms
• STOCK:
Relevant Economic Terms
• STOCK: (also known as an equity or a share) is a portion of the ownership of a corporation. A share in a corporation gives the owner of the stock a stake in the company and its profits. If a corporation has issued 100 shares of stock in total, then each stock represents a 1% ownership in the company.
Relevant Economic Terms
• STOCK MARKET:
Relevant Economic Terms
• STOCK MARKET: a market where the item being sold and bought I stock in a company.
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• SPECULATION:
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• SPECULATION: buying as many shares of stock as possible believing they could be sold later at a higher price.
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• SPECULATOR:
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• SPECULATOR: someone who enters a market to buy shares and then resell them at a higher price with the sole goal of making a profit.
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• MARGIN BUYING:
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• MARGIN BUYING: the purchase of stocks or securities with a small down payment while financing the rest with a broker loan.
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• BULL MARKET:
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• BULL MARKET: occurs when almost all stock prices are rising. Investment prices rise faster than their historical average.
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• BEAR MARKET:
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• BEAR MARKET: occurs when almost all stock prices are falling.
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• DISCOUNT RATE:
Relevant Economic Terms
• DISCOUNT RATE: the interest level charged by the Federal Reserve for money it loans to member banks. Since its establishment in 1913, the Federal Reserve’s ability to manipulate the discount rate had given the “Fed” a powerful influence in the US economy.
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• WELFARE STATE:
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• WELFARE STATE: a nation that provides for the basic needs of its citizens, including such provisions as old-age pensions, unemployment compensation, child-care facilities, education, and other social problems.
Why did Americans Invest?
• Rising Stock Dividends
• Increase in personal savings
• Relatively easy money policy
• Companies invested their over-production profits into new production
• Lack of stock market regulation
• Psychology of Consumption
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