Essay, Research Paper: The Stock Market Crash

The stock market is very much like legalized gambling. Anybody can place bets by buying and selling stocks. In the stock market the goal is to buy a stock at the lowest price possible and when it is at its highest price possible,to sell it. Stock is purchased and sold through stockbrokers who in turn tell individuals on the stock market floor to buy or sell a stock, much like an auction. When stocks are being bought more than they are being sold, their prices go up, and when a majority of stocks are in an upward trend it is called a bull market. Vice versa, when the majority of stocks are in a downward trend it is called a bear market. In 1929 there had been a bull market for some time, and it seemed like it would never stop. In October of that year, the market came to an abrupt halt. The market didn t crash for just one reason either, in fact there were quite a few.
The first reason that had helped contribute to the stock market crash of 1929 was the mass marketing of stocks and bonds. The stocks and bonds were being open to anybody, big or small. For the first time, anyone could invest in the stock market.
Since everyone was now investing, a bull market, which is an upward trend in stock prices, was created. Everyone from hair stylists to butchers were in the market. The stocks kept going up because more and more people were investing their money. Now that there were so many unaware investors the big investors were manipulating the market a lot easier.
In the 1920 s there were not any regulations on the market like there are now. Today there are so many regulations on the market, that it is nearly impossible to pull off any scams. Anything could be done at that time, and the people knew it too. They didn t seem to care though. They saw the market as a gamble and they were always looking for next time. Maybe next time they would pick the right stock and sell it at the right time.
Big investors were completely controlling and manipulating the market. There were secret pools where the investors would all put their money together, and buy a certain stock. They would then payoff the media to give that stock publicity. The media would then write favorable articles on the products or comment on how much the stock was undervalued. Since most of the investors were eager to make a quick buck, they would all jump on that stock. The price of the stock would keep rising until the big investors decided they wanted to get out and collect their money. When the big investors did sell that stock, its price would decrease dramatically. The ordinary investor would lose all of his money, while the large investor gained a large sum.
Stock speculation was a major way to get wealthy. People would see others that were prosperous from playing the market. There were many people who would put all of their money on a stock, and hope it went up. This was how fortunes were made. Jobs were being quit so that investors could devote all of their time to the market. Stocks were being bought and sold rapidly, which also helped inflate them, creating prices that were higher than what the stocks were actually worth. Everyone was trying to get rich quick. Fortunes were both made and lost through speculation.
Since the greed of the speculators for money was so strong, they were buying stock on margin to try and make quicker and larger profits. In short, this meant that they were purchasing stocks with other peoples money. All that the investors had to do was put down 10 percent of their money to buy the stocks. This would work if their stock went up, but if the stock that they had purchased had gone down they would be in great debt. The speculators would have no way to pay off their loans, and wouldn t have any hope.
The most important reason for the crash was the fear and greed that was within the people of the period. Everyone had put his or her money into the market in hope of making some back. These people were happy when they first started to make some minimal gains. Soon that happiness would fade away, and the people would want to make just a little more. They would make that little bit and be satisfied for a short period of time. This process would go around in circles and the people would just want more and more. They were never satisfied. To keep making their money, the investors would be extremely nervous and on edge about the companies that they had invested in. At any little sign of trouble the people would panic and sell, driving the price of their stock way down. This course of action would also act inversely. If there was a hint of a stock rising, everyone and their uncle would be buying it. This would completely inflate the price of the stock, and it wouldn t be worth nearly as much as it was selling for. Through the peoples fear and greed the stock market was very volatile.
The crash of 1929 marked an end to a great time of prosperity. No longer were peoples lives going to be worried free. The crash helped spur the greatest economic depression in United States history. Instead of worrying about how much money they were going to make on the market, people were soon going to be worried about if they were going to have enough money to feed themselves. The stock market, much like gambling, has and always will make and break fortunes.