How Did The Stock Market Crash On Black Tuesday Essay

594 Words 3 Pages
Black Tuesday
In one day, America’s economy lost billions of dollars. On Black Tuesday, the stock market crashed causing the economy to crash. The crash was caused by a number of reasons. Buying on margin, speculation, and the mass selling of stocks caused the stock market to crash on Black Tuesday. First, buying on margin assisted in the stock market crash on Black Tuesday. One example is when the text showed, “Margin purchases allowed many people to invest heavily in the stock market without using much of their own money” ("Black Tuesday"). The text shows that people spent a lot of money without having money, and if something happened to that money a lot of people would be in debt. Furthermore, this shows that people were not prepared for risks. Another example tells that So much people bought on margin and could not repay their stocks so it ruined the bank ("Black Tuesday"). This text tells that the banks did not have a safe option with loans, and if they lost money
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This is explained by Aaseng, Too many people were selling stock and there were no buyers, so the price of stocks lowered. (Aaseng 54). If everyone was forced into selling their stock then nobody would be buying stock, causing the sellers to lower the price. Everyone would sell their stock for little to nothing, and no one was buying, so they lost their money. One more example of mass selling is, “Stop loss orders piled on top of the mountain of sell orders already burying the stock market created a massive oversupply of stocks on the market. This further fueled the plunge in prices” (Aaseng 55). Selling this much when there were not many buyers made the price so low that the market caused people to lose money by selling. Therefore, so much selling caused an “inflation” in the stock market where there were so many stocks and they were not worth anything. To conclude, this is why mass selling eventually crashed the stock

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