This "forced liquidation" created a downward spiral that couldn't be stopped. In a single day, billions of dollars in wealth vanished. But the damage wasn't contained to Wall Street. From Wall Street to Main Street
A margin call occurs when the value of a stock drops below a certain point. To protect their loan, the broker demands that the investor immediately deposit more cash or sell the stock to cover the debt. buying on margin great depression
The Great Depression taught a brutal lesson about the dangers of unregulated leverage. In the aftermath, the U.S. government passed the , giving the Federal Reserve the power to set margin requirements. Today, investors generally must put down at least 50% of a stock's price, a far cry from the 10% "easy money" of the 1920s. This "forced liquidation" created a downward spiral that
In the 1920s, the stock market wasn't just for the elite; it was a national pastime. To make entry easier, brokers offered "margin loans." Here is how the math worked: From Wall Street to Main Street A margin