The Stock Market Crash of 1929. Bell Ringer  Objective: Students will be able to explain what caused the Stock Market Crash of 1929.  You have probably.

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Presentation transcript:

The Stock Market Crash of 1929

Bell Ringer  Objective: Students will be able to explain what caused the Stock Market Crash of  You have probably heard of the Stock Market Crash of 1929 or at least the Great Depression. Create a KWL chart to tell me what you know so far about the Stock Market Crash of 1929 and the Great Depression, and what you would like to know. What do I know? [K] What do I want to know? [W] What did I learn? [L] This will be our exit ticket

Vocabulary: Stock What it is…

Vocabulary: Stock What it is NOT…

Stock  Definition: The shares of a particular company or corporation.  When you own stock, you literally own a piece/portion of a company.  When the company profits (makes money), stock holders receive a small portion of that profit.  Stock holder=stock owner  Stock market=place where stocks are bought and sold.

Stock  The value of a stock increases or decreases depending on the stability and performance of a company.  High profits: more valuable.  Lower Profits/Instability: less valuable.  The value changes daily/hourly.  ie: If Samsung is getting ready to release a new smart phone, and people have really hyped it up…chances are people will want to buy up Samsung stocks, and prices will rise.  If there is a nationwide recall of Samsung phones…chances are people will want to sell off Samsung stocks, and prices will drop.

Vocabulary: Credit What it is…

Vocabulary: Credit What it is not…

Credit  Definition: Trust given to a customer for future payment for goods purchased. In this case, an individual borrows money with the understanding that they will repay the bank later, with interest.  Interest: Fee for borrowing money.

Stocks, Credit and the Stock Market Crash of 1929  NYSE Was established in 1903  In the 1920s the Stock Market was booming. Americans were purchasing stocks and finding that the stock market=big money.

 During the 1920's more middle-class and lay citizens began investing in the stock market.  Buying on margin=an investor could give his broker only 50% (often) of the value of the stocks he wanted to purchase and the broker would put up the rest of the money.  The investor would then pay interest to the broker  If stocks increased in value=investor kept all of the profit.  When an investor sold he would pay off his debt to the broker  If stocks decreased in value below 50% of the price that they were bought at, there would be a "broker's call" where the investor would have to give more money to the broker or sell the stock and pay off his debt.

 Problem: This guy bought $1000 worth of stocks on a margin. (He paid $500, his investor paid $500).  The value of his stocks dropped from $1000 to $100.  He sells his stocks for $100….and he still owes his investor $400.  A $500 investment becomes a $900 loss.

 Problem: When you put your money in the bank…it doesn’t just sit in a vault somewhere.  The bank makes money by loaning your money to other people and charging interest.  But…when someone borrows money to by $1000 worth of stocks, and the stocks lose all of their value…the money is gone.  Many people borrowed money to buy stocks  stock values began to plummet  bank’s money supply was depleted  the money that Americans had placed in the bank for safe keeping  gone.

October 1929  Newspapers began to publish articles about the dangerous level of stock speculation.  Investors/stock owners became concerned, and began selling their stocks.  When many people try to get rid of their stocks, the price drops.  This hurts the stock market even more.

Black Tuesday, October 29, 1929  The stock market crashed  Triggered the Great Depression  The worst economic collapse in the history of the modern industrial world.  It spread from the United States to the rest of the world  Lasted from the end of 1929 until the early 1940s  Banks failed.  People didn’t have the money to buy “things” so businesses closed.  More than 15 million Americans (one-quarter of the workforce) became unemployed.

 And so began the Great Depression.

Exit Ticket  Objective: Students will be able to explain what caused the Stock Market Crash of  Complete the L from your KWL chart What do I know? [K] What do I want to know? [W] What did I learn? [L] This will be our exit ticket