How did the stock market work?

Learning objective – to be able to understand how the stock market worked in America. I can describe some of the key features of the US stock market. Grade D I can explain using specific vocabulary how the US stock market worked. Grade B I can explain why more people in America invested money in the stock market during the 1920s. Grade A

Starter – Guess the number of people who brought shares in In 1920, 4 million people owned shares. By 1928, over ……. million people owned shares.

Starter – Guess the number of people who brought shares in In 1920, 4 million people owned shares. By 1928, over 24 million people owned shares.

President Herbert Hoover in 1928 said ……. The poor man is vanishing from among us. With hard work and good fortune anyone can make money – look at what’s happening in the stock market

What is the stock market? The stock market was where shares of companies were sold. There were a number of stock markets across America. The largest one was the New York Stock Market situated on Wall Street.

How did the stock market work? To set up a company you need money for wages, premises and so on. Money is usually acquired through investors giving a company money in return for a share of the business. A shareholder makes money by – - Receiving a share of the profits – called a dividend – per year. - Selling the shares at a profit at a stock market. BEWARE – this only happens if the business is doing well.

What was ‘playing on the stock market’? ‘Playing the stock market’ became a national craze where millions of people brought shares in all sorts of companies and sold them at a profit – then brought more shares to make even more money. In 1920, 4 million people owned shares. By 1928, over 24 million people owned shares. Everybody seemed to be an investor.

What was ‘buying on the margin’? Buying on the margin was the practice of buying a share by paying a deposit of 10% of the share’s value paying the remainder later, usually when the shares are sold at a profit.

Tasks Complete the tasks on the worksheet as fully as you can. Extension question Write a one page summary answering the question – why did people invest in the American Stock Market during the 1920s?

Plenary This word cloud summarises what we have learned today. Which three words are the most important in summarising the lesson. Explain your selection.