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Stock Market Crash of 1929

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Katie Wah

on 8 February 2013

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Transcript of Stock Market Crash of 1929

by: Amajesty Aubrey and Katie Wah 1920's Buying on Margin
Brings Signs of Trouble Summer Boom Black Thursday Black Monday
Black Tuesday - a time of optomism, enthusiasm and confidence - With stock prices rising, people began to buy on margin - During the months of June, July, and August, market prices rose to their highest levels to date, making many nearly forget about the mini crash in March. - Thursday morning (October 24, 1929), stock prices plummeted, shocking everybody. - Monday: That morning, as the prices again began to plummet, people began selling all their stocks to try to get out of the market. Stock Market Crash of 1929 - With different, new inventions (e.i. airplanes/ radio) anything seemed possible http://www.flickr.com/photos/msulibrary/3234218681/ - with the stock market booming, people truly believed they could become rich from buying socks - but with everyone wanting to buy stocks and prices rising, not everyone had enough money to do so. http://www.flickr.com/photos/mariostratu/3368609998/ - Buying on Market: the buyer of a stock only pays 10 - 20% of that stock and borrows the rest from a broker - it is very risky; if the price of the stock falls lower than the original loan amount, the broker makes a "margin call" making the investor pay the loan immediately. -With people blindly assuming that stock prices were continually going to rise, they ignored the enormous risk they were taking. - On March 25th, 1929 the stock market suffered a mini crash causing many margin calls to be issued. - Over the next several months, many warnings of a great crash were announced, but because of the flourishing economy, they were ignored. - Economist Irving Fisher even stated, "stock prices have reached what looks like a permanently high plateau." - September 3, 1929: the stock market reached its peak. The Dow Jones Industrial Average was at 381.17. - After two days, the market began to slowly drop. http://thewe.cc/contents/more/archive/us_debt.html - Throughout the months of September and October, market prices began to fluctuate. - October 24, 1929 - - People everywhere, watched the ticker as the prices of their stocks decreased greatly. - As rumors of suicides spread, aggrevated people assembled outside of the New York Stock Exchange on Wall Street, in disbelief of what was happening. http://www.cleveland.com/pdq/index.ssf/2011/10/one_epic_fail_deserves_some_ot.html - The panic then diminished in the afternoon. - Assuming that the market would go back up, many bankers began to invest large sums into the market. Seeing this, many investors became convinced to stop selling. - By the end of the day, the recovery was astonishing, and people were buying and selling stocks, at what seemed to be great prices. - That day, 12.9 millions stocks were
sold. - October 28 / 29, 1929 - - But when some banks decided to keep lending money, the panic stopped. - Tuesday: known as the "Worst Day in Stock Market History" With so many orders to sell, the ticker fell behind greatly. http://lbbspending.blogspot.com/2012/09/black-tuesday-in-north-finchley.html - Throughout the day, there was more buying than selling of stocks, and the prices collapsed. - Bankers were trying to convince investors to sell, rather than buy to
simulate the economy. - 16.4 million shares of stock were sold on Black Tuesday. Bibliography - Blumenthal, Karen. Six Days in October: The Stock Market Crash of 1929. New York, NY: Atheneum for Young Readers, 2002. Print. - Rosenburg, Jennifer. "The Stock Market Crash of 1929 (Page 2)." About.com 20th Century History. About.com, 2013. Web. 04 Feb. 2013. <http://history1900s.about.com/od/1920s/a/stockcrash1929_2.htm>. Summary of the great depression.
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