1. The Great Depression

2. Pre-Crash Market Conditions
In the 1920s, a middle class was born, a large amount of people had disposable income so they could enjoy the finer things in life. Better clothes, better cars, the occasional baseball game, opera or show.
Basically, the economy was very healthy in the 1920s.

3. The Bull Market
When people in the 1920s had disposable income, the stock market became more and more tempting. Because the majority of Americans believed that you were guaranteed to make money if you put money into the stock market. Some people put their entire life savings into the stock market…wouldn’t you if you thought you were GUARANTEED to make money.
This concept is called “The Bull Market”

4. The Stock Market
The stock market is simply a central location where investors buy and sell stocks.
If you purchase a company’s stock, you are essentially buying “in” to the company. You are giving the company capitol (money) to do with whatever they please.
You are “betting”on that company to do well in the future. The better the company does, the more money you will make on your initial investment (bet).

5. Example
On December 12, 1980 Apple stock became available. One share of stock cost $ Over time, Apple has done very well for its self. The Macintosh Computer, I-Mac, I-Phone, etc…One share of stock as of 10/23/07 is worth $ Hypothetically, if you bought one share in 1980, you would have made $ If you bought 1000 shares, you would have made $16,313,000.

6. Unequal Distribution of Wealth, Credit and buying on margin
9% of the American public controlled 75% of nation’s wealth.
Because companies wanted the industrial boom to continue, they wanted consumers to purchase their goods. Credit was created so consumers could purchase items NOW and pay for them LATER…with interest of course.
People quickly found themselves in debt for the first time. Because in the past, they were only able to buy things they could afford.
Buying on margin is borrowing money from a broker in order to buy stocks. Many people thought it would be dumb not to do it…remember the bull market!! People considered this “free money”.