Reasons for increase in buying/selling shares

Niamh MacElvogue
Mind Map by Niamh MacElvogue, updated more than 1 year ago
Niamh MacElvogue
Created by Niamh MacElvogue about 6 years ago
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Edexcel iGCSE history

Resource summary

Reasons for increase in buying/selling shares
  1. Naivety
    1. Because of the boom poorer people had more money that they spent on shares not really appreciating the risk
    2. Confidence in current economic climate
      1. Increased value of shares e.g. Detroit Edison: August 1928 - $205, October 1929 - $350
      2. Success stories
        1. Easy to borrow money
          1. Investors had borrowed a total of $8.5bn
          2. Speculation
            1. Advice was offered in favour of buying shares with people being promised $80,000 for saving just $15 a week to spend on shares
            2. Low return from bank accounts
              1. annual rate of interest 7% - fairly low
              2. Greed
                1. Up to 25m Americans became involved in the frenzy
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