What was the cause of it?
The causes of the Stock Market Crash were the result of many different things. According to this “The 1929 Stock market crash was a result of various economic imbalances and structural failings” (Pettinger). During the 1920’s not many were really thinking of possible negative outcomes that their actions could possibly have. “Investors were able to speculate wildly and buy stocks on Margin or using barrowed money…rampant speculation led to erroneously high stock prices” (Cause of the Depression). People started to notice that others were making it big with investing in the stocks. Something else was “the strength of the economy people felt the stock market was a one way bet” (Pettinger). At this point many wanted to join but some couldn’t afford the full costs of the stock market. So they would by stocks on margin. “Buying stocks on margin means that the buyer would put down some of his own money, but the rest he would borrow from a broker” (Rosenberg). Buying on margin went on but was not controlled by the government but by brokers who only really cared about themselves (Bierman). Margin is similar to credit in a way “meaning you only had to pay 10 or 20% of the value of the share… meaning you were borrowing 80 to 90% of the value of the shares” (Causes of the Depression). In short buying on margin was a risky gamble. Should the price in the stock start to lower than what their loan amount was then “the broker would likely issue a “margin call”, which means that the buyer must come up with the cash to pay back his loan immediately” (Rosenberg). A major problem according to Pettinger was that people were so focused on how the stocks prices were rising and believing that it would continue and in turn make them much more money. The thing was that in reality “Prices were not being driven by economic fundamentals but the optimism/ exuberance of investors” (Pettinger). So for a while the stock markets were built on very shaky grounds and were destined to come crumbing down. People not really understanding continued to use barrowed money to get in the investments. “So, when the stock market began to falter in the months before the October 29 crash, the speculative investors could not make their margin calls (Cause of the Depression). As a result things went down and down quickly people soon became so panicked that they tried to sell their shares. The result ended up being the crash of 1929. With the peoples reckless actions and impulsive thinking were willing to bet it all but unfortunantly they didn’t know when to stop and lost everything because of it.
The causes of the Stock Market Crash were the result of many different things. According to this “The 1929 Stock market crash was a result of various economic imbalances and structural failings” (Pettinger). During the 1920’s not many were really thinking of possible negative outcomes that their actions could possibly have. “Investors were able to speculate wildly and buy stocks on Margin or using barrowed money…rampant speculation led to erroneously high stock prices” (Cause of the Depression). People started to notice that others were making it big with investing in the stocks. Something else was “the strength of the economy people felt the stock market was a one way bet” (Pettinger). At this point many wanted to join but some couldn’t afford the full costs of the stock market. So they would by stocks on margin. “Buying stocks on margin means that the buyer would put down some of his own money, but the rest he would borrow from a broker” (Rosenberg). Buying on margin went on but was not controlled by the government but by brokers who only really cared about themselves (Bierman). Margin is similar to credit in a way “meaning you only had to pay 10 or 20% of the value of the share… meaning you were borrowing 80 to 90% of the value of the shares” (Causes of the Depression). In short buying on margin was a risky gamble. Should the price in the stock start to lower than what their loan amount was then “the broker would likely issue a “margin call”, which means that the buyer must come up with the cash to pay back his loan immediately” (Rosenberg). A major problem according to Pettinger was that people were so focused on how the stocks prices were rising and believing that it would continue and in turn make them much more money. The thing was that in reality “Prices were not being driven by economic fundamentals but the optimism/ exuberance of investors” (Pettinger). So for a while the stock markets were built on very shaky grounds and were destined to come crumbing down. People not really understanding continued to use barrowed money to get in the investments. “So, when the stock market began to falter in the months before the October 29 crash, the speculative investors could not make their margin calls (Cause of the Depression). As a result things went down and down quickly people soon became so panicked that they tried to sell their shares. The result ended up being the crash of 1929. With the peoples reckless actions and impulsive thinking were willing to bet it all but unfortunantly they didn’t know when to stop and lost everything because of it.