Long Bull Market

Herbert Hoover

Definition and Summary of the Long Bull Market
Summary and Definition: The Long Bull Market of the 1920s was fueled by the prosperity and economic boom enjoyed in the Roaring Twenties that led to Consumerism in America, easy credit and increased debt. Stock Brokers encouraged the practice of buying stocks "on margin" meaning buying stocks with loaned money. The collapse of the Long Bull Market led to debt and ruin for millions of Americans and contributed to the period known in US history known as the Great Depression.

Long Bull Market
Herbert Hoover was the 31st American President who served in office from March 4, 1929 to March 4, 1933. One of the important events during his presidency was the Long Bull Market.

   
  

1920s Trading Floor - New York Stock Exchange

1920s Trading Floor
New York Stock Exchange
 

Long Bull Market Facts: Fast Fact Sheet
Fast, fun facts and Frequently Asked Questions (FAQ's) about the Long Bull Market.

What is the Stock Market? The Stock Market was established as a system for selling and buying the shares of companies.

What is a Bull Market? A Bull Market is a long period of rising stock prices.

Where was the Long Bull Market? The Long Bull Market and the potential profits encouraged people to invest in stock leading to heavy speculation on the Stock Exchange.

Long Bull Market - "Buying On Margin": Buying stocks "on margin" essentially meant buying stocks with loaned money.

Long Bull Market for kids
The following fact sheet provides details of the reasons for the Long Bull Market together with explanations of 'Buying on Margin', the profits and losses due to speculation on the Stock Market and the meaning and definition of the 'Margin Call'. The collapse of the Long Bull Market led to the
1929 Wall Street Crash and the Great Depression.

Long Bull Market Facts for kids
The following fact sheet contains interesting facts and information on Long Bull Market for kids.

Facts about the Long Bull Market for kids

Long Bull Market Fact 1: 1920s Economic Boom: The 1920s Economic Boom saw increases in sales, productivity and wages. There was a rising demand for new consumer products leading to massive profits for businesses and corporations. This encouraged growth and led to the economic boom and the rise in stock market investments and the rise of Consumerism and easy credit in America.

Long Bull Market Fact 2: Prosperity: Personal taxes and corporation taxes had been significantly reduced thanks to the Mellon Plan. It was a period of great prosperity for many Americans - and they believed it would never end.

Long Bull Market Fact 3: Consumerism and Easy Credit: Consumerism increased in America during the Roaring Twenties as a result of technical advances and innovative inventions and ideas in the areas of manufacturing communication and transportation. Americans moved from the traditional avoidance of debt to the concept by buying goods on credit installments. Americans who were once "thrifty and prudent" adopted the philosophy of "Live now, pay later".

Long Bull Market Fact 4: Gambling on the Stock Market: Ordinary Americans started to gamble on the Stock Market in the 1920s hoping to make a fortune overnight. It was made easy due to the system of 'Buying on Margin'. Buying stocks "on margin" essentially meant buying stocks with loaned money. 

Long Bull Market Fact 5: Margin Definition: A margin is the deposit of an amount of money to given to a broker as security for a transaction. Buying on margin was not regulated in the 1920's, so the brokers could choose the margins they were willing to give.

Long Bull Market Fact 6: Speculation:  In the 1920's speculating on the stock market seemed a 'safe bet' - a foolproof way to get rich quick. Stock prices kept rising in the 1920s and the stock market soared. People didn't care what companies they were investing in or whether the company had good future prospects - they were betting that the stock market would continue to rise.

Long Bull Market Fact 7: Stock Prices: Stock prices steadily increased in the 1920s as millions of new investors bid the prices of stock up without taking into account a companies profits, its earnings or it future potential.

Long Bull Market Fact 8: "Buying On Margin": A buyer would typically borrow money from their broker in order to pay for the stock. For example, a buyer might put down 10% of the cost of stock, but borrow the other 90% from the broker.

Long Bull Market Fact 9: Example:  An example of Buying on Margin is as follows:

● With a deposit of $1,000 an investor could buy $10,000 worth of stocks
● The remaining $9,000 would come as a loan from a stockbroker
● The stockbroker earned both a commission on the sale and interest on the loan
● The broker held the stock as collateral.

Long Bull Market Fact 10: Profit:  The way people made money was as follows:

● An investor who had borrowed money to buy $10,000 worth of stocks had only to wait a short time for the stocks to rise to $11,000 in value
● The investor would then sell the stock, repay the loan, and make $1,000 in profit

Long Bull Market Fact 11: Loss:  The system was great as long as stock prices were rising - the problem came when stock prices began to fall. Buying stocks was a gamble - speculation that investment in stocks would lead to gain but many ignored the risk of loss.

● If the price of stock rose, the investor made a profit
● ● Value of stock to $11,000, with a 10% increase, the investor made a $1,000 profit
● If the price of stock fell, the investor made a loss

Long Bull Market Fact 12: Margin Debt: Ordinary Americans made their use of stock market leverage through margin debt in order to make an investment in the Stock market. Margin debt carried an interest rate, and the amount of margin debt changed daily as the value of the underlying securities changed. Margin debt allowed investors to make investments with their brokers' money.

Long Bull Market Fact 13: A Margin Call: The problem came if the price of stock fell and the 'Margin Call' came into effect.

● The stock broker could issue a 'margin call' to protect the loan
● A margin call demanded that the investor repaid all of the loan all at once
● If stock prices fell investors had to sell quickly or they might not be able to repay their loans

Continued...

Facts about the Long Bull Market for kids

Facts about the Long Bull Market for kids
The following fact sheet continues with facts about Long Bull Market for kids.

Facts about the Long Bull Market for kids

Long Bull Market Fact 14: 1929 Market Prices: The prolonged Bull Market of the 1920's saw stock prices rocket from an average of $50 per share in 1922 climbing to a massive $350 per share in 1929. Stock prices began to rise sharply in 1926 - 1927. The high point for the 1929 market was August 1929 at $350.

Long Bull Market Fact 15: Buy, Buy, Buy: It is not surprising that the prolonged Bull Market of the 1920's saw more investors wishing to buy stocks than were willing to sell, which led to the continuing rise in share prices as investors competed to obtain available equity.

Long Bull Market Fact 16: Investors: By 1929 about 10% of US households, between 3 to 4 million Americans, had invested in the stock market. Banks had also invested depositor's money into the stock market.

Long Bull Market Fact 17: The End of the Bull Market: By the summer of 1929 the stock market was running out of new investors. The Bull Market only lasted as long as investors were putting new money into it.

Long Bull Market Fact 18: Sell, Sell, Sell: By September 1929 experienced, professional investors realized that the economy was contracting and the risk in the 1929 market. They began to sell off their stocks and share prices began to slowly fall. Other smaller investors, worried about paying off their loans, also started to sell and stock prices fell further. So started the selling spiral.

Long Bull Market Fact 19: Large-scale Margin Calls: On Monday, October 21, 1929 stockbrokers began to make large-scale margin calls and panic started to set in.

Long Bull Market Fact 20: Black Thursday: On October 24, 1929, nicknamed Black Thursday, a record 12,894,650 shares were traded on the Stock Market.

Long Bull Market Fact 21: Fight-Back Friday: Leading bankers and Investment companies desperately tried to stabilize the market by buying up blocks of stock, that produced a moderate rally on Friday October 25, 1929 .

Long Bull Market Fact 22: Free Fall: Their attempts failed and on Monday, October 28, 1929 the stock market went into free fall.

Long Bull Market Fact 23: Black Tuesday and the Great Crash: On Tuesday, October 29, 1929 stock prices completely collapsed. 16,410,030 shares were traded on the New York Stock Exchange (NYSE) in a single day and between $10-$15 billion had been lost due to the plummeting share prices. Margin buyers had to sell and there was then panic-selling of all stocks.

Long Bull Market Fact 24: Bull Market to Bear Market: The Long Bull Market was replaced by a Bear Market. More people were looking to sell than buy and, as a result, share prices continued to drop during the Wall Street panic. By mid-November, 1929 a staggering $30 billion had been lost on the stock market and theories of the Boom and Bust Cycle were proved.

Long Bull Market Fact 25: The Great Depression: The collapse of the Long Bull Market contributed to the devastating period in American history known as the Great Depression.

Facts about the Long Bull Market for kids

Facts about Long Bull Market
For visitors interested in the history of finance in the 1920s refer to the following articles:

Long Bull Market - President Herbert Hoover Video
The article on the Long Bull Market provides detailed facts and a summary of one of the important events during his presidential term in office. The following Herbert Hoover video will give you additional important facts and dates about the political events experienced by the 31st American President whose presidency spanned from March 4, 1929 to March 4, 1933.

Long Bull Market

Interesting Facts about Long Bull Market for kids and schools
Summary of the Long Bull Market in US history
The Long Bull Market, selling and buying stocks
Herbert Hoover from March 4, 1929 to March 4, 1933
Fast, fun facts about the Long Bull Market and Margin Call
Foreign & Domestic policies of President Herbert Hoover
Herbert Hoover Presidency and Long Bull Market for schools, homework, kids and children

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