1. The Stock Market Understand the risks Describe how stocks are traded
Identify how stock performance is measured
Explain the causes and effects of the stock market crash in 1929

2. Buying Stock Shares – owning a portion of a company
- corporations raise money for starting, running and expanding; equities
Two ways shareholders profit
- Dividends-corps pay out profits;usually 4 times a year
- Capital Gains-to sell a stock more than he paid for it; sells less than he paid for it-Capital loss

3. Types of Stock
Income stock -pays dividends at regular times during the year
Growth stock -pays few or no dividends;reinvests in business for long term gains
Common stock -voting owner; vote on board members, splitting stocks-(when 1 share is split into 2, -if a stock is too expensive a comp. may split; stock split)
Preferred stock - no voting power but receive dividends first

4. Risks of Buying
A firm may earn lower profits and receive no dividends and stock value goes down
- If you sell (Capital loss)
Stocks are a risk, the higher the risk the bigger the dividend or capital gain
A savings account or bond earns interest (money paid for lending) over time and are safe
Day traders – try to make money by minute to minute trades in hopes to make profits

5. How stocks are Traded
Stockbrokers – link buyers and sellers; give advice to buy or sell
- Companies don’t sell stock
- Work for Brokerage Firms (business that specializes in trading stocks)
- they make profit from commissions and fees on each transaction

6. Stock Exchanges -markets for buying and selling stock
NYSE- New York Stock Exchange – U.S. largest and most powerful
- started in 1792
- handles stock and bonds for blue chip companies (comp that continue to profit)
Nasdaq – American market for trades made electronically; started in 1971
Dow Jones Industrial – represents 30 large companies; food, entertainment, and tech industries -
S & P 500 (Standard and Poor) – tracks price changes of 500 different stocks to measure overall stock market performance
Bull Market – stock market rises steadily over time
Bear Market – stock market falls steadily over time

7. The Great Crash of 1929
1929 – Economy in excellent shape and the stock market was the main indicator
Market was soaring –( billion by billion) total market value
Small number companies and families owned much of the nations wealth
Ordinary debt by consumers
Producers making more goods than people could by (surplus) causing prices to fall (deflation)
Debt from speculation-people borrowed money to invest speculating a high return – some used entire savings
Buying on the margin – pay a small portion and borrow from brokerage firms – 5 million in 1928 to 850 million in 1929
In Sept – stock market began to fall 381 by the Dow to 360 in one day
Banks wanted loans repaid and people started to panic and sell off stocks to quick for the market to handle
Too late – peoples shares turned into a fraction of what they paid for it