Play the Market

1. Play the Market From High St. to Bay St.

3. The Setup You will each have 1000$ to invest in a Canadian company, you will have six to choose from You must invest all your money in one company. After each round you will calculate your new total based on the current stock price Whoever has the most money at the end will win a prize

4. Initial Buys You will have to go to one of the brokers in the room and tell them what company you want to invest in They will give you a stock certificate for that company You must calculate how many shares you have using the first round opening stock price The market will then open After each round you will have to calculate your new totals If you would like you can sell all your stocks to the broker and invest in a new company but you must invest all your money

5. The Companies The Canadian Pacific Railway Belmore Bay Mining Company Canadian Wheat Board Stelco Imperial Oil The Powell River Company

6. Current Stock Prices CPR – 20$ per share Belmore Bay Mining– 10$ Wheat Board – 20$ Stelco – 20$ Imperial Oil – 20$ Powell River – 5$

7. 1920 CPR – Extends track into Saskatchewan – (+5$) Belmore Bay– New Coal Reserve Found – (+5$) Wheat Board – Bad Crop Year – (-5$) Stelco – Major contract acquired – (+10$) Imperial Oil – New Oil Well Discovered – (+5$) Powell River Co. – New International Orders – (+10$)

8. New Prices CPR - 25$ Mining – 15$ Wheat – 15$ Stelco – 30$ Imperial Oil – 25$ Powell River – 15$

9. 1926 CPR – Company acquires new locomotive – (+5) Mining – Company establishes new drill site – (+5) Wheat – Big crop – (+10) Stelco – Death of President Harding curbs sales to American businesses – (-5) Imperial Oil – CPR’s New Locomotive Much Faster, Orders Filled Sooner – (+5) Powell River – Chemical Pulping Mastered– (+15)

10. New Prices CPR – 30$ Mining – 20$ Wheat – 25$ Stelco – 25$ Imperial Oil – 30$ Powell River – 30$

11. 1928 CPR – Mechanical Problems with Several New Locomotives– (-5$) Mining – Workers strike, work ceases – (-5$) Wheat – Horrible wheat crop of 1928 – (-15$) Stelco – Price of oil increased (for ships) – (-5$) Imperial Oil – Increase of oil price– (+10$) Powell River – Price of Oil Curbs Sales – (-5$)

12. New Prices CPR – 25$ Mining – 15$ Wheat – 10$ Stelco – 20$ Imperial Oil – 40$ Powell River – 25$

13. 1929 CPR – Stocks Plummet as Canadian Federal Reserve Pulls Funding – (-15$) Mining – Railway to transport goods comes to a halt – (-10$) Wheat – After last years poor crop the price of wheat drops – (-5$) Stelco – Canadian sales plummet, but huge European order – (+10$) Imperial Oil – CPR, and Powell River no longer purchasing Oil – (-20$) Powell River – Small company cannot survive lost investments, goes bankrupt – (-25$)

14. New Prices CPR – 10$ - 500 Mining – 5$ - 500 Wheat – 5$ - 250 Stelco – 30$ - 1500 Imperial Oil – 20$ - 1000 Powell River – 0$ - 0

15. The Winner Is?

16. Cash Out Cash in your stocks to see how much money you have made or lost? What did you notice about the stocks? What kind of things influenced the stock prices?

17. The Bull and the Bear Black Tuesday

18. Learning Goals By the end of this lesson I will know what forces contributed to the Great Depression. By the end of this lesson I will know how market forces work and what impact they have on stock holders, stock brokers, banks and the market. By the end of this lesson I will recognize how political and social events can have a serious influence on the economy.

19. Prosperity Cycle

20. Depression Cycle

21. The Façade The “boom” “Roaring” 20’s Dancing, drinking and dating! Easy to borrow money and even easier to spend it

22. The Reality • Stock prices had reached an never before seen high • Many at the time thought that it had no ceiling – after all it was the “Roaring Twenties” • Many of the stocks were being purchased “on margin” • People were borrowing money to invest in companies • No regulations on panic selling or margin buying

23. Canada • Wheat Crop Crash of 1928 • All your eggs in one basket • Heavy reliance on only a few primary industries • Timber, steel, wheat, etc. • Overproduction • Too much of the exportable goods • Got the message too late… • Two birds…one stone • When the U.S. economy started to fail they stopped buying Canadian exports…bad news for us! • This was made worse by America’s protectionist market

24. The Climb Throughout 1929 the market ebbed and flowed Reached a record high in September With 50$ you borrow another 300 and invest in a company with an average return of 1600$ only seven months later. By October there was increased anxiety about the market, with chaotic patterns of buying and selling. The bigger they are, the harder they fall

25. The Fall October 4th– the TSE (Toronto Stock Exchange) reported 200 million in losses. October 21st – NYSE reports substantial losses from stock sales

26. Black Thursday Eventually the bank stopped answering and the brokers began dumping their holdings When people saw the brokers selling they panicked and began selling as well. Angry mobs gathered outside the TSE, NYSE, Winnepeg, Chicago, etc. Ticker tapes were unable to keep up with the action

27. Black Tuesday Tuesday, October 29, 1929 Monday morning the TSE was losing one million dollars a minute. Whatever stocks were left were immediately sold for shockingly low prices Even the Prime Minister was wiped out. The day is characterized by suicides, angry mobs, and lost fortunes.

30. The Aftermath Crash was bad…aftermath was worse. As stores, factories and banks went out of business many people lost their jobs. Unemployment skyrocketed to 30% The 1930’s poised to be an unstable, reserved and tumultuous decade. The depression will put unprecedented economic pressures on Canada. In other parts of the world the depression hits even harder.