Stock Market Crash Lucian Pop Travis Smith The Causes of the 1929 Stock Market Crashed The dust-bowl Stocks were over-priced Massive fraud and illegal activity Margin buying The Federal Reserve Policy Dust Bowl
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The Grapes of Wrath accurately describes conditions during the dust bowl for many families in the 1920’s.
The dust bowl ruined farmers crops for years giving them nothing to eat and no money to pay the bank with. This caused runs on the bank.
The PE ratio also known as the price-to-earnings ratio, is a ratio that compares price to earnings telling you basically how much time it will take for the company to earn the money that its currently trading for.
Having privileged knowledge of future stock activity.
Over-inflating stock prices to make your company look more attractive to investors.
When earnings are released the stock falls drastically and many investors loose a great deal of money.
If a margin call comes in that means that you owe on the money you lost from trading on the margin and you then must sell your stocks for a loss.
When the market is down you usually just wait it out, but if a margin call comes in it forces you to sell stocks at a bad time and you loose large amounts of money or can go bankrupt.
In the years leading up to the 1929 crash, the stock market went up everyday and margin buying was a good idea but there is always a risk of a crash and loosing everything to make an extra 6%.