Lesson 2.17, two days. Day 1: slides 1 to 9 (Round 6, 1928, the boom). Day 2: slides 10 to 19 (Round 7, October 1929, the crash). Write the round's year and prices on the board before each day from page 2 of Handout 02.14 - The Gilded Age Market Kit.md; the dispatches are on page 3.
Do now (Day 1)
- Round 6. 1928. The prices are on the board: RAIL 70, OIL 70, GAS 40, ELEC 90, STEEL 90, AUTO 60, RADIO 100.
- Write them in your ledger. Work out your total.
- Write one word for how you feel and one thing you want to do right now.
- Do not trade yet.
Teacher notes
3 minutes. Collect the feeling words out loud and write them on the board. That board is the hook.
Every one of those words has cost somebody money
- rich, excited, nervous, greedy, fine
- Today you learn to feel it and still think.
Teacher notes
Image: the board of feeling words, drawn as a word cloud, with a 1920s radio set in the corner.
1928. The boom.
- Radios in ten million homes. Cars fill the roads. Electric lines reach small towns.
- Stock prices have roughly tripled in four years.
- Everyone from shoe shine boys to bankers is buying.
- A boom: prices rising so long that people buy because prices are rising.
Teacher notes
Image: a crowded 1920s street with a ticker tape machine in a broker's window.
Read the Round 6 dispatch from kit page 3 in full, then put its question to the room: prices have gone up for four straight years. Is that a reason to buy, or a reason to worry?
The margin line opens today, and today only
- The broker lends you up to the cash you hold, at today's prices.
- The loan goes on your ledger's margin line.
- Next round the broker wants it back, in cash.
- No cash? You sell shares at next round's prices until it is paid. Not enough shares? The loan takes everything. Total: $0.
Teacher notes
Image: a ledger page with the margin line circled.
Kit page 1. Say it once, clearly. Do not talk anyone out of borrowing.
Your body during a money decision
- Signs of stress: wanting to act right now, not being able to think of anything else, a fast heartbeat.
- Greed feels the same in the body as fear.
- One step before any trade: stop, breathe once, name what you are choosing.
- Two facts: the bank paid 3 percent again and did not move. A price that tripled can fall.
Teacher notes
Image: an outline of a person with a heart, a stomach, and a hand marked; a pause symbol next to it.
HSW 6. c). The health teacher uses the same words this week. 6 minutes for slides 3 to 5.
The decision grid: five steps
- Name the choice. List the options. Weigh each against what matters. Decide. Look back (tomorrow).
- Sell, hold, buy, or buy on margin. All four can be right.
- The rule today and tomorrow: a written decision before any trade.
Teacher notes
Image: five icons in a row: a question mark, a list, a scale, a check mark, a mirror.
Watch me do it
- My ledger: 20 RADIO, bought at 6 in 1911. Worth $2,000 today at 100. Most of my pie.
- Name the choice: what to do with my RADIO, and whether to borrow.
- Weigh: if prices keep rising / if they fall by half / can I pay a loan back / how I feel next round / does it fit my pie.
- Decide: filled in live on the board. One reason with a number.
Teacher notes
Model calmly. Students then fill their own grid. 10 minutes total for the step.
Trading, Round 6
- Trading is open at 1928 prices.
- Borrowing? Write the loan on the margin line first, then add it to cash, then buy. I initial every loan.
- Your grid says what you decided. If you change your mind, write why on the grid first.
- Every trade in the trade log and in the grid's trade box. Then fill the Round 6 holdings table.
Teacher notes
10 minutes. Clipboard: who borrows, who buys RADIO at 100, who moves money to the bank, who holds.
Entry 6 and closure (Day 1)
- What I did. Why (copy your decision from the grid). What happened. My total in dollars.
- My margin loan is $___ (or none).
- How I felt at the start, how I feel now: one sentence each.
- Exit card: one stress sign you noticed today, and one thing you did or could do before a money decision.
Teacher notes
7 minutes for Entry 6, 4 for closure. Flag "needs more" cards for the health teacher. Say nothing about tomorrow.
Do now (Day 2)
- Round 7. October 1929. The prices are on the board: RAIL 45, OIL 50, GAS 32, ELEC 45, STEEL 50, AUTO 30, RADIO 30.
- Write them in your ledger. Work out your total.
- One word for how you feel. One thing you want to do right now.
- Do not trade yet.
Teacher notes
3 minutes. Write today's feeling words next to yesterday's.
The crash
- Thursday, October 24: the market falls so fast the ticker cannot keep up.
- Bankers pool money to stop it. It works for two days.
- Monday, October 28: nearly thirteen percent gone. Tuesday the 29th: nearly twelve percent more.
- Brokers call in their loans. The borrowers sell everything to pay, and their selling pushes prices lower still.
- Radio, the hottest stock of the decade, loses seven tenths of its value in weeks.
Teacher notes
Image: a 1929 ticker tape spilling onto the floor of a broker's office.
Read the Round 7 dispatch from kit page 3 in a flat voice. Then the kit's question: the companies did not change between Round 6 and Round 7. The factories are still there. What changed?
Two facts, and the margin call
- You have not lost anything until you sell. Unless you borrowed.
- The bank did not move. It paid 3 percent again.
- If you have a margin loan: the broker wants it now, in cash. No cash? Sell shares at today's prices until it is paid. Not enough? The loan takes everything and your total is $0.
Teacher notes
6 minutes for slides 11 and 12. Anyone with a loan does the margin call box on the grid now.
Margin calls first, then the grid, then trading
- Every margin loan is settled with me watching before anyone trades: cash paid, or shares sold at Round 7 prices in the trade log.
- Then the grid's Round 7 section: a written decision before any trade. Sell, hold, or buy.
- Then trading opens for four minutes at October 1929 prices.
- Every trade in the log. Then the Round 7 holdings table.
Teacher notes
10 minutes. Clipboard: who sells everything, who holds, who buys, who freezes. Say nothing about Round 8.
Four corners
- SOLD SOME. SOLD EVERYTHING. HELD. BOUGHT MORE.
- Go stand with your corner. One person per corner: why.
- Then: whose total dropped the most from Round 6 to Round 7? Three numbers per corner.
Teacher notes
Image: a classroom drawn from above with four labeled corners.
4 minutes. Write the counts and a few numbers on the board. The margin borrowers are the biggest drops. Do not declare a winner.
Two crashes on our own board: 1893
- Round 3. In February the Philadelphia and Reading Railroad, one of the biggest, went bankrupt.
- By summer about five hundred banks and more than fifteen thousand businesses had failed. About one worker in six had no job.
- On our board: RAIL 45 to 25. ELEC 25 to 10. OIL and GAS barely moved. The bank paid 3 percent.
- Round 4, 1901: RAIL 60. ELEC 40. Whoever sold at the bottom handed that to the buyer.
Teacher notes
Image: our own price table with the Round 3 column circled and the Round 4 column beside it.
Two crashes on our own board: 1929
- Round 7. Brokers called their loans; the borrowers' selling pushed prices lower still.
- On our board: RADIO 100 to 30. ELEC 90 to 45. GAS fell least, 40 to 32. The bank paid 3 percent.
- What happened next: we find out in Round 8.
- The caution: not every company comes back. That is why you spread your money out, instead of making one lucky guess.
Teacher notes
Image: the same price table with the Round 6 and Round 7 columns circled and Round 8 blank.
6 minutes for slides 15 and 16 including the two-crash organizer on the back of the grid.
Entry 7 and the look back
- What I did. Why. What happened. My total in dollars.
- Then the grid, Step 5: my Round 6 decision was a plan / a rush. My Round 7 decision was a plan / a panic. My evidence: a number from the ledger.
- What I would tell a friend looking at the same ledger.
Teacher notes
7 minutes.
A "got it" look back
- "Round 6 was a rush: I bought 3 RADIO at 100 because everyone was. Round 7 was a plan: I held, because 3 shares at 30 is $90 and selling would lock in a $210 loss, and the bank still has my $250."
- Honest, with a number. That is the look back the rubric's 4 asks for.
Teacher notes
Show this only after they have written their own.
Closure (Day 2)
- 3-2-1: 3 things that happened in October 1929, 2 lines on the ledger that held or fell least, 1 sentence: plan or panic, and why.
- Three investors read the "1," from different corners.
- Next class: Round 8. 1932.
Teacher notes
4 minutes. Do not say what 1932 looks like.