Many believed that the stock market would continue to rise and was a worthwhile risk and borrowed money to purchase stock, believing the stock value would continue to rise which would be enough to repay the debt while also realizing a profit. Unfortunately, speculating that the stocks would continue to rise opened up another option of being able to purchase stocks and only giving the stockbroker 10% - 20% of the stock value (Pettinger, 2012). Assuming the stock would continue to increase in value, when the stock was sold, the proceeds would be used to pay the remaining 80% - 90% due to the stock company and the balance would be the buyers, either to repay a loan or put in his pocket. Too many people were able to borrow money and purchase stocks short and when the value of the stocks started to rapidly decline, there were not enough buyers of a lower valued stock and the market crashed, October 29, 1929, eventually losing 37% of its value by the end of the month (Tindall &
Many believed that the stock market would continue to rise and was a worthwhile risk and borrowed money to purchase stock, believing the stock value would continue to rise which would be enough to repay the debt while also realizing a profit. Unfortunately, speculating that the stocks would continue to rise opened up another option of being able to purchase stocks and only giving the stockbroker 10% - 20% of the stock value (Pettinger, 2012). Assuming the stock would continue to increase in value, when the stock was sold, the proceeds would be used to pay the remaining 80% - 90% due to the stock company and the balance would be the buyers, either to repay a loan or put in his pocket. Too many people were able to borrow money and purchase stocks short and when the value of the stocks started to rapidly decline, there were not enough buyers of a lower valued stock and the market crashed, October 29, 1929, eventually losing 37% of its value by the end of the month (Tindall &