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CYCLE OF THE MARKET
START START
OF OF
BULL BEAR
MARKET MARKET
WEAK
AND
PESSIMISTIC
MARKET
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PHASE I-SMART MONEY
BUYING
• MONEY IS UNDERVALUED AND
IS A BARGAIN.
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PHASE II-RETAIL INVESTORS
BUYING
• BULL MARKET EVENTS UNFOLD.
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PHASE III-SMART MONEY
SELLING
• STOCKS DOUBLE AND TRIPLE.
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PHASE IV-BEAR MARKET
• MARKET IS OVERBROUGHT.
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PHASE V-CRASH AND RISE
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INVESTMENT STRATEGIES
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LIST OF 10 WORST STOCK MARKET CRASHES
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CAUSES OF THE GREAT
DEPRESSION
PART 1
OVERSPECULATION
• ROARING 20’S US INDUSTRY BOOMED,STOCKS VALUE WENT UP
• LAKHS OF PEOPLE BECAME RICH
• GET RICH QUICK SYNDROME
• MARGIN BUYING A RISKY TECHNIQUE INVOLVING THE PURCHASE OF STOCKS BY
BORROWING MONEY FROM A BROKER, USING THE SHARES THEMSELVES AS COLLATERAL
• MILLIONS MORTGAGED THEIR HOMES,INVESTED THEIR LIFE
SAVINGS,PURCHASED STOCKS ON MARGIN
UNEVEN DISTRIBUTION OF WEALTH
• MANY POOR AND VERY FEW RICH
• WAGES NOT KEEPING UP WITH INFLATION
• ALMOST 60% OF THE FAMILIES WERE BELOW THE POVERTY LINE AND
COULD NOT AFFORD CONSUMER GOODS
• MANY BOUGHT GOODS ON LOANS
• THE RICHER PEOPLE OWNED ALL THE GOODS THEY WANTED
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CAUSES OF THE GREAT
DEPRESSION
PART 2
EASY MONEY(CREDIT)
• INTEREST RATES ON LOANS TOO LOW TOO MUCH BORROWING
• INTEREST RATES ON SAVINGS TOO LOW TOO MUCH SPENDING
INFLATION OVERPRODUCTION
• BANKS OVER-EXTENDED
OVERPRODUCTION-AGRICULTURAL AND INDUSTRIAL GOODS
• BY 1929, US COMPANIES WAS RUNNING OUT OF CUSTOMERS
• PEOPLE OWNED THE NEEDED GOODS
• BETTER TECHNOLOGY
• GOOD GROWING CONDITIONS
• EXCESS OF SUPPLY OVER DEMAND OF PRODUCTS
• LED TO LOWER PRICES OR UNSOLD GOODS
• RESULTED IN LOSS FOR MANY COMPANIES
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CAUSES OF THE GREAT
DEPRESSION
PART 3
LOSS OF CONFIDENCE
• BY 1929, MANY INVESTORS REALISED THAT A CRISIS WAS LOOMING
AND SOLD THEIR SHARES
• LED TO THE LOSS OF CONFIDENCE-THE MAIN THING THAT HAD KEPT
THE SHARES RISING
• CONFIDENCE DIPPED AND NO-ONE WOULD BUY SHARES
1929 STOCK MARKET CRASH
• STOCK PRICES DECLINED IN THE AUTUMN OF 1929
• MASS SELLING OF STOCKS
• BY THE LAST WEEK OF OCTOBER,STOCKS HAD DROPPED BY ALMOST 50%
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EFFECTS OF THE GREAT
DEPRESSION
PART 1
• WIDESPREAD AND PAINFUL
• MORE THAN 85000 BUSINESSES FAILED
• FACTORIES AND MINES CLOSED
• BUSINESSES CUT PRODUCTION AND LOWER WAGES
• LAKHS OF INDIVIDUAL INVESTORS RUINED
• CONSUMER BUYING CAME TO A STANDSTILL
• ALMOST 14 MILLION WERE JOBLESS
• POVERTY AND PANIC PREVAILED
• VALUE OF ASSESTS DECLINED
• PEOPLE TAKE ALL THEIR MONEY OUT OF BANKS
1.they lost their savings,
2.banks failed and many closed,
3.bussinesses can’t borrow money
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EFFECTS OF THE GREAT
DEPRESSION
PART 2
• CAUSED WORLD WIDE DEPRESSION
• US’s INTIMATE RELATIONSHIP WITH OTHER WESTERN COUNTRIES
CAUSED SERIOUS ECONOMIC TROUBLES OVERSEAS
• WORLD WAR I LEFT EUROPE WITH LARGE WAR DEBTS AND US WAS A
MAJOR FINANCER AND CREDITOR OF POST WAR EUROPE . AS US STOCK
MARKET SLUMPED, INVESTMENTS TO EUROPE DRIED UP
• INDIRECT CAUSE FOR THE WORLD WAR II ( RISE OF ADOLF HITLER AND
FORMATION OF NAZI GERMANY )
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RESOURCES
• www.wikipedia.com
• www.stock-market-crashes.com
• www.wisegeek.com
• www.investorwords.com
• www.istockphotos.com
• STOCK MARKET AND CRASHES by RATCHANA
VASUDEV
• THE TIMES OF INDIA
• THE HINDU
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