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Unformatted text preview: is by selling shares in
the company, that is, by issuing stock in the
company. Once they issue shares in the company to the public, the company is no longer
solely family owned. Now many of the public own part of it too.
EXAMPLE: People who work on Wall Street often use
their own “language.” For “translations” of
some of that language, see Exhibit 16-3 on
page 436. 16 (428-459) EMC Chap 16 11/18/05 9:33 AM ? Was the
the Culprit? O n Thursday, October 24,
1929, the New York Times
ran a headline that read “Prices of
Stocks Crash in Heavy Liquidation.”
Elsewhere in the Times a headline
read “Many Accounts
Wiped Out.” These
headlines referred to
the stock market crash
called the Great Crash)
that began on that
October day in 1929
and continued on
October 28 and 29.
In some historical
accounts and in the
minds of many members of the public, the
stock market crash in
1929 was what caused
the Great Depression that followed.
However, this cause-and-effect
assumption is not true, and it points
out the post hoc ergo propter hoc
logical fallacy. Post hoc ergo propter
hoc is Latin for “After this, therefore
as a result of this.” Stated differently,
it means “That which comes before
another must be its cause.” For
example, if X comes before Y, then X
is the cause of Y. This statement is
not necessarily true.
Think of some simple examples.
The teacher gives you a test before Page 435 it rains, but the teacher’s giving you
a test does not cause the rain.
Similarly, just because the stock
market crash came before the many
years of the Great Depression does
not necessarily mean that the stock
market crash caused the Great
Depression. In fact, most economists believe that both the stock
market crash and the Great Depression (with such things as rising
unemployment and falling incomes)
were effects of the same causes. In other words, the same factors
caused both the stock market crash
and the Great Depression.
However, the stock market crash
did change the psychological mindset of the people living in...
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- Winter '14