1. 13 Steps to a Stock Market Crash & The Economic Snowball Effect
The Crash
13 Steps to a Stock Market Crash
&
The Economic Snowball Effect

2. Stock Market Crash Stock prices climbed throughout the 1920s
highest peak occurred in Sept. 1929
In October, the market slowly declined
Thurs., Oct. 24 = 13 million shares sold
Tues., Oct. 29 (Black Tuesday) = 16.4 million shares sold
Over the 2 days, $30 billion lost by investors
13 Steps to a Stock Market Crash:
1. confidence in market
2. speculation for quick profits
3. easy to buy on margin
4. speculation drives prices above real value
5. see problems & sell out of fear
6. prices fall
7. more worried buyers sell
8. average stock price drops more
9. fear
10. panic
11. race to sell (1st to sell will make more money before price drops too far)
12. prices plunge
13. market crashes

3. Economic Snowball Effect
You deposit money into the bank
Bank invests your money
Bank makes $ & pays its bills
investments fail
People withdraw $ before lost by bank – banks can’t pay bills – your deposited $ is lost
Banks call in loans – you have no money to pay debts/loans
Banks fail & close - business who gave you credit loses $
People are poor & can ‘t spend $ - businesses fail
People laid off & wages cut
More people poor & have no money to spend
More businesses lose $ & fail
More lay-offs & wage cuts
Little $ to spend on international goods & countries have high import taxes to protect business—decreased international trade

4. Eventually more than 13 million are unemployed (25% of population)
Most people are hurt indirectly by the crash (bank failures, business closures, wage cuts, etc., not because of lost investments)
Worldwide depression!