1. OR THE 1920s NEW PATHWAY TO WEALTH
STOCK MARKET OR
THE 1920s NEW PATHWAY TO WEALTH

2. WHAT IS STOCK?
When you buy stock you purchase a piece of a company – think Apple or Wal-Mart
Companies sell stock to raise operating capital (money)
You buy stocks that you think will go up in value so that when you sell you make $$$
Companies that do well become worth more so the price of stocks goes up

3. UNIQUE NEEDS OF THE 20s
Rapid expansion of technology fuels the need for new streams of capital
Must find ways to lure new investors
Old way says you must buy in 100 lots (100 shares at a time)
Example: 100 $1.00= $100.00
Stock rises to $1.50 per share
Sell 100 $1.50= $150.00
Total profit $ $100.00= $50.00
That’s a 50% gain on your money!

4. Continued If the stock rises to $1.50 per share:
Sell 100 $1.50= $150.00
Total profit $ $100.00= $50.00
That’s a 50% gain on your money!
The problem- not many people have a spare $ to invest (if they want to eat)

5. The solution: MARGIN BUYING
A way to open the Stock Market to millions of new investors (kind of like consumer credit in reverse)
Margin Buying allows you to buy stock for a % of the real cost.
Millions of average Americans now can make big bucks in the market

6. How It Works
Stock can now be purchased on a 10% margin- what does this mean?
A Stock lists for $1.00 and you must buy 100 shares at a time. $1 X 100= $100.00
But wait, Margin buying allows you to pay only .10 cents on the dollar, SO .10X100=$10.00
But what about the other $90.00?

7. Margins Continued
The buyer (you) still owes the $90.00 but you don’t have to pay it until you SELL the stock.
Stock goes up to $1.50
$1.50X100=$ $90(margin call)=$60
You invested $10 and made $60, that’s 600% profit. WOW!
Can you figure out how to get rich yet?

8. Big Money Time Take the $60 you just made and invest it
$1.00 per share ON MARGIN means I can buy 600 shares
SELL at $1.50 X 600=$ $540.00=$360
Re-invest $360X .10=3600. Sell
1.50 = 5400 = $1800 X .10 = 18000shares
18000 X 1.5=$27,000!

9. YOU STARTED OUT WITH $10!
Now you can see why we had less than 150 millionaires in the U.S. in 1920, but had 25,000 by 1928
With this kind of wealth building, what could go wrong?

10. What Went Wrong During the 20s the stock market grew and grew.
No government oversight or regulations
Money to grow the economy was flowing in….or was it?

11. You Do The Math
At its peak, the value of the stock market was about 150 billion dollars…
How much money really existed within the market
Remember, many people were buying on a 10% margin.
October 29, 1929, BLACK TUESDAY!

12. THE CRASH
A decision was made by many large investors to pull out of the market.
This was because they believed that it was a hollow market…they were right.
Suddenly the value of most stocks fell by 1/3 or more. Panic selling begins but there are no buyers
Remember, there are no rules in place

13. MARGIN CALLS! REMEMBER, WHEN YOU BUY ON MARGIN YOU OWE THE DIFFERENCE!
18,000 shares at .10 a share = $1800 but you owe $16,200 when you sell
Your stocks value is now
.25 X = $4500 you still owe $11,500