• Economic boom created optimism about economy
• Many believed that economic growth and profits would continue indefinitely
• Businesses seemed strong, wages were rising and Republican policies seemed successful
• Confidence reflected in stock market boom
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Shares
• As businesses soared, investors were attracted to buy shares of companies that were doing well.
• By 1927, the number of share trades had risen to ~577 million.
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Buying on the margin
• The stock market became more accessible, because people could buy shares using credit
• Speculators could buy shares
on the margin. (They could make a small down payment (usually 10%) and borrow the rest to buy shares.)
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Buying on the margin contd.
• Investors were speculating that the prices of shares would rise. When this happened, people could pay back the rest of the debt from the large profits that they made.
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Card 5
Card 5
5 of 5
Other cards in this set
Card 2
Front
Shares
Back
• As businesses soared, investors were attracted to buy shares of companies that were doing well.
• By 1927, the number of share trades had risen to ~577 million.
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