The Stock Market : Better Understanding

The Stock Market is a complicated thing to get a hold of understanding and I found it really interesting how we elaborated on how a single crash could lead to a almost decade long depression that devastated that nations and took years for it to recover to its former glory. While we tend to focus on the money we have to understand what it is and how it became known as a cause of the Great Depression.

What is Stock?
Stocks, being the shares being a part of a corporation being a part in giving the money to give means to support the corporation. What it really is, is corporations raising operating money which allows them to continue there operation in the factories they run. Its like being apart of a company and not really having to be there because your apart of the company financially. This is risky because you wouldn't know exactly what you were getting into and how it could be a benefit to you unless you buy the stock. Buying the stock meant having an influence on the decisions the company made. That's why people tended to buy more stock because the more you had the greater the influence you would have over the company, because they did not want to loose the person they were getting their money from. This was the the idea of "getting rich quick".

Risks? 

Buying Stock was indeed a major risk. As an article on the causes of the Great Depression said, "Theoretically the price of a stock is determined by the overall worth and health of the corporation. However, stock prices often go up and down rather unpredictably." This caused fear in people when buying stock because it was like a gamble that could be calculated but could also change dramatically. When buying stock most argue that they would only buy stock in order to get easy money and become rich like the billionaires in the increasing economy but they fail to see the negative side of what could happen when a stock is at a loss and the price of a stock goes up while the market goes down. For example, General Motors stock when the market begins to lower because less and less people spend their money  on the product; their car/ automobiles, the prices in stock begin to increase cause the person who owns the stock begin to loss and the only way to less it is by playing a "who's a bigger fool game" but since the stock is low the only way one could sell is by selling it for less than its original value and somewhat tricking another of how it could benefit them for the future. But either way for the one who owns it if there stock goes down as the market goes down for the corporation it would mean a loss in benefit them and a loss of money.  /

Cause for Depression ?

    After the WW1 as the economy recovered, people began to question whether they should continue what they were doing and wait for riches to come or do it them selves they become optimistic hoping to become billionaire like many were. This cause people in the 1920's to look towards the Stock market in investments. Soon people began all over to invest more and more in the stock market and buy more stocks to increase the wealth. Hoping to become rich leading to an increasing number of people wanting to buy stock but not having the money to do so. Margin this is credit. The banks borrowing of money to people leading out money with interest. Stocks prices being decreased by Margin making it easier to buy stocks and more and more people buy stock and the increase in stock market. This lead to a tremendous amounts of debts people put themselves in always borrowing money. Like said in the slides "by 1928 credit inventory was $200 million when outstanding loans were &8 billion"
This causing the Crash of the Stock Market on October 29, 1929 peoples money began to disappear with the banks not being able to pay them back with all their borrowing and going out of business loosing the dinero of all the people who had money deposited. No more money --- >the economy falls. 

Overall, people relied on the Stock Market did give people an opportunity to become rich and earn money but was it really a solution for the long run? Peoples optimistic opinions got the best of them and caused them to blind themselves form the signs and risks of the Stock Market. Its a very tricky and as a reslut of this regulations were put especially on Margin because to many people were going into major debt problems that could not be payed off.  This Depression was a clear awaking of the outcomes that the Stock market can have the the carefulness it needs to be dealt with. 

Sources : Causes of the Great Depression