The Stock Market Crash.

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Presentation transcript:

The Stock Market Crash

The Stock Market Crash There were many causes of the Great Depression, most notably the Stock Market Crash of 1929. Let’s examine the causes of the crash:

The Stock Market Crash Rich investors would come together to secretly invest in a stock They buy a large amount of one stock Price increases The average Joe sees this and invests also, driving the price up Once the price hits its peak, the rich investors dump the stock and prices plummet

The Stock Market Crash Buying On Margin: Let’s pretend you go to a casino and decide to play blackjack. You bet $100

The Stock Market Crash Your first card:

The Stock Market Crash This is great!!! Because “blackjack (21)” pays 3-2 you turn to your buddy and ask to borrow another $100 in hopes of hitting a 10.

The Stock Market Crash Now your bet is: $200

The Stock Market Crash Your second card:

The Stock Market Crash AWESOME!!! Your original bet: $200

The Stock Market Crash You win (at 3-2 odds): $500

The Stock Market Crash Pay back your buddy $100 and put your original $100 in your pocket and your profit is $300 (300% return)

The Stock Market Crash But what happens if you lose:

The Stock Market Crash Your cards: Dealer’s cards:

The Stock Market Crash Now you lose your bet: $200 But…

The Stock Market Crash You also owe your friend $100 Your total loss = $300 Your original investment = $100