6.+Stock+Market+Crash

= __Stock Market Crash __ =

 **What is a Stock Market Crash?** The steep fall in the prices of stocks due to widespread financial panic. .

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The 1920's were a time of unbelievable prosperity. The stock market was going through the roof and the United States seemed to have the formula for limitless prosperity. Stocks were seen as extremely safe by most economists, due to the powerful economic boom. However, the same formula that generated all of that profit would also be the cause of **Black Tuesday**. ======

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Investment during the 1920's was based on the unstable basis of margin buying. Investors bought borrowed money from their brokers, who went to banks for that money. When stocks failed and investors needed to default, the money was permanently lost. ======

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Companies who had pioneered these advances, like Radio Corporation of America (RCA) and General Motors, saw their stocks soar. Financial corporations also did well as Wall Street bankers floated mutual fund companies (then known as investment trusts) like the Goldman Sachs Trading Corporation. By the summer of 1929, it was clear that the economy was contracting and the stock market went through a series of unsettling price declines. October 24, also known as **Black Thursday**, was the first in a number of increasingly shocking market drops. This was followed swiftly by **Black Monday** on October 28 and **Black Tuesday on October 29**. ======

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**Black Tuesday** was a day of chaos. Forced to sell their stocks as soon as possible, overextended investors flooded the exchange with sell orders. The glamour stocks of the age saw their values falling. The markets rallied in succeeding months but it would be a false recovery that led unsuspecting investors into the worst economic crisis of modern times. The Dow Jones Industrial Average would lose 89% of its value before finally bottoming out in July 1932. ======



The trade floor of the New York Stock Exchange just after the crash of 1929.