Presentation on theme: "Stock Market Crash (1929) Students will understand the causes and importance of the Stock Market Crash –Crash marks the beginning of the Great Depression."— Presentation transcript:
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 1920s- 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 cant 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 cant 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)