1920s Trading Floor
New York Stock Exchange
|
Long Bull Market Facts: Fast Fact Sheet
Fast, fun facts and Frequently Asked Questions (FAQ's)
about the Long Bull Market.
What is the Stock Market? The Stock
Market was established as a system for
selling and buying the shares of companies.
What is a Bull Market? A Bull Market is
a long period of rising stock prices.
Where was the Long Bull Market?
The Long Bull Market and the potential
profits encouraged people to invest in
stock leading to heavy speculation on the
Stock Exchange.
Long Bull Market - "Buying On Margin":
Buying stocks "on margin" essentially meant
buying stocks with loaned money.
Long Bull Market for kids
The following fact
sheet provides details of the reasons for the Long Bull Market
together with explanations of 'Buying on Margin', the profits and
losses due to speculation on the Stock Market and the meaning and
definition of the 'Margin Call'. The collapse of the Long Bull
Market led to the
1929 Wall Street Crash and the
Great Depression.
Long Bull Market
Facts for kids
The following fact
sheet contains interesting facts and information on Long Bull Market
for kids.
Facts
about the Long Bull Market for kids
Long Bull Market Fact 1:
1920s Economic Boom:
The 1920s Economic Boom saw increases in sales,
productivity and wages. There was a rising demand for
new consumer products leading to massive profits for
businesses and corporations. This encouraged growth and
led to the economic boom and the rise in stock market
investments and the rise of Consumerism and easy credit
in America.
Long Bull Market Fact
2:
Prosperity: Personal taxes and
corporation taxes had been significantly reduced thanks
to the Mellon Plan. It was a period of great prosperity
for many Americans - and they believed it would never
end.
Long Bull Market Fact
3:
Consumerism and Easy Credit:
Consumerism increased in America during the Roaring
Twenties as a result of technical advances and
innovative inventions and ideas in the areas of
manufacturing communication and transportation.
Americans moved from the traditional avoidance of debt
to the concept by buying goods on credit installments.
Americans who were once "thrifty and prudent" adopted
the philosophy of "Live now, pay later".
Long Bull Market Fact
4: Gambling on the Stock Market:
Ordinary Americans started to gamble on the Stock Market
in the 1920s hoping to make a fortune overnight. It was
made easy due to the system of 'Buying on Margin'.
Buying stocks "on margin" essentially meant buying
stocks with loaned money.
Long Bull Market Fact
5: Margin Definition: A margin is the deposit
of an amount of money to given to a broker as security for a
transaction. Buying on margin was not regulated in the 1920's, so
the brokers could choose the margins they were willing to give.
Long Bull Market Fact
6:
Speculation: In the 1920's
speculating on the stock market seemed a 'safe bet' - a foolproof
way to get rich quick. Stock prices kept rising in the 1920s and the
stock market soared. People didn't care what companies they were
investing in or whether the company had good future prospects - they
were betting that the stock market would continue to rise.
Long Bull Market Fact
7:
Stock Prices: Stock prices steadily
increased in the 1920s as millions of new investors bid
the prices of stock up without taking into account a
companies profits, its earnings or it future potential.
Long Bull Market Fact
8:
"Buying On Margin":
A buyer would typically borrow money from
their broker in order to pay for the stock. For example, a buyer
might put down 10% of the cost of stock, but borrow the other 90%
from the broker.
Long Bull Market Fact
9:
Example: An example of Buying
on Margin is as follows:
● With a deposit of $1,000 an
investor could buy $10,000 worth of stocks
● The remaining $9,000 would
come as a loan from a stockbroker
● The stockbroker earned both a
commission on the sale and interest on the loan
● The broker held the stock as
collateral.
Long Bull Market Fact
10:
Profit: The way people made
money was as follows:
● An investor who had borrowed money to buy
$10,000 worth of stocks had only to wait a short time for the
stocks to rise to $11,000 in value
● The investor would then sell the stock,
repay the loan, and make $1,000 in profit
Long Bull Market Fact
11:
Loss: The system was great as
long as stock prices were rising - the problem came when
stock prices began to fall. Buying stocks was a gamble -
speculation that investment in stocks would lead to gain
but many ignored the risk of loss.
● If the price of stock rose,
the investor made a profit
● ● Value of stock to
$11,000, with a 10% increase, the investor made
a $1,000 profit
● If the price of stock fell,
the investor made a loss
Long Bull Market Fact
12:
Margin Debt:
Ordinary Americans made their use of stock
market leverage through margin debt in order to make an investment
in the Stock market. Margin debt carried an interest rate, and the
amount of margin debt changed daily as the value of the underlying
securities changed. Margin debt allowed investors to make
investments with their brokers' money.
Long Bull Market Fact
13: A Margin Call:
The problem came if the price of stock fell and the
'Margin Call' came into effect.
● The stock broker could issue
a 'margin call' to protect the loan
● A margin call demanded that
the investor repaid all of the loan all at once
● If stock prices fell
investors had to sell quickly or they might not be
able to repay their loans
Continued...
Facts
about the Long Bull Market for kids
Facts
about the Long Bull Market for kids
The following fact
sheet continues with facts about Long Bull Market for kids.
Facts
about the Long Bull Market for kids
Long Bull Market Fact
14: 1929
Market Prices: The prolonged Bull
Market of the 1920's saw stock prices rocket from an
average of $50 per share in 1922 climbing to a massive
$350 per share in 1929. Stock prices began to rise
sharply in 1926 - 1927. The high point for the 1929 market was
August 1929 at $350.
Long Bull Market Fact
15:
Buy, Buy, Buy: It is not surprising
that the prolonged Bull Market of the 1920's saw more
investors wishing to buy stocks than were willing to
sell, which led to the continuing rise in share prices
as investors competed to obtain available equity.
Long Bull Market Fact
16: Investors:
By 1929 about 10% of US households, between 3 to 4
million Americans, had invested in the stock market.
Banks had also invested depositor's money into the stock
market.
Long Bull Market Fact
17: The End of the Bull Market:
By the summer of 1929 the stock
market was running out of new investors. The Bull Market
only lasted as long as investors were putting new money
into it.
Long Bull Market Fact 18:
Sell, Sell, Sell:
By September 1929 experienced, professional
investors realized that the economy was contracting and the risk in the
1929 market. They began to sell off their
stocks and share prices began to slowly fall. Other smaller investors,
worried about paying off their loans, also started to sell and stock
prices fell further. So started the selling spiral.
Long Bull Market Fact 19:
Large-scale Margin Calls:
On Monday, October 21, 1929 stockbrokers began to
make large-scale margin calls and panic started to set in.
Long Bull Market Fact
20: Black Thursday:
On October 24, 1929, nicknamed Black Thursday, a record 12,894,650
shares were traded on the Stock Market.
Long Bull Market Fact
21: Fight-Back Friday: Leading bankers and
Investment companies desperately tried to stabilize the market by
buying up blocks of stock, that produced a moderate rally on Friday
October 25, 1929 .
Long Bull Market Fact
22: Free Fall: Their attempts failed and on
Monday, October 28, 1929 the stock market went into free fall.
Long Bull Market Fact
23: Black Tuesday and the Great Crash: On
Tuesday, October 29, 1929 stock prices completely collapsed.
16,410,030 shares were traded on the New York Stock Exchange (NYSE)
in a single day and between $10-$15 billion had been lost due to the
plummeting share prices. Margin buyers had to sell and there was
then panic-selling of all stocks.
Long Bull Market Fact
24: Bull Market to Bear Market: The Long Bull
Market was replaced by a Bear Market. More people were looking to
sell than buy and, as a result, share prices continued to drop
during the Wall Street panic. By mid-November, 1929 a staggering $30
billion had been lost on the stock market and theories of the Boom
and Bust Cycle were proved.
Long Bull Market Fact
25: The Great Depression: The collapse of the
Long Bull Market contributed to the devastating period in American
history known as the Great Depression.
Facts
about the Long Bull Market for kids
Facts
about
Long Bull Market
For visitors interested in the history of
finance in the 1920s refer to the following articles:
Long Bull Market - President Herbert Hoover Video
The article on the Long Bull Market provides detailed facts and a summary of one of the important events during his presidential term in office. The following
Herbert Hoover video will
give you additional important facts and dates about the political events experienced by the 31st American President whose presidency spanned from March 4, 1929 to March 4, 1933.
Long Bull Market
●
Interesting Facts about Long Bull Market for kids and schools
●
Summary of the Long Bull Market in US history
●
The Long Bull Market, selling and buying stocks
●
Herbert Hoover from March 4, 1929 to March 4, 1933
●
Fast, fun facts about the Long Bull Market and Margin Call
●
Foreign & Domestic
policies of President Herbert Hoover
●
Herbert Hoover Presidency and
Long Bull Market for schools,
homework, kids and children |