Next comes a period of depression, when we have low prices, low wages, hard times, tight money, and many commercial failures. Many people who lost all their money during the speculation period, become thrifty and economize during the period of depression, and start in to save again. Nearly everybody is pessimistic during this period. Trading on the Stock Exchange is irregular and as a rule very light. This is the time to get stock bargains, but the general public as a rule doesn't take advantage of it. People are scared and think prices will go still lower. The big interests accumulate stocks during this period, and sell them during the period of prosperity. CHAPTER XII. THE MONEY MARKET AND STOCK PRICES Perhaps no other one thing influences the movement of stock prices so much, in a large way, as money conditions. It is impossible to have a big bull market without plenty of money. During a bull market nearly all stocks are bought on margin, which is explained in Chapter XVI. This makes it necessary for brokers to borrow large sums of money. When money is tight, it is impossible to get enough to carry on a large movement in stocks. You will see, therefore, that the Federal Reserve Bank has it in its power to regulate the stock market to some extent. In 1919 speculation was carried very much further than it should have been, but undoubtedly it would have been much worse had the Federal Reserve Bank not raised interest rates and urged member banks to withdraw money from Wall Street. While there was considerable criticism of that action, it certainly was a good thing for the entire country. In a period of depression, the banks accumulate money, and there always is an abundance of money at the beginning of a bull market. During a period of prosperity the banks' reserves decrease and their loans increase. When you see these reserves go down to a very low point, it is usually time for you to sell your stocks. CHAPTER XIII. MINOR MOVEMENTS IN PRICES Within the major movements of stock prices, there always are several minor movements, which are caused by various influences. One of the important causes is the technical condition of the market. Another cause might be called a psychological one. When stocks are moving up steadily in a bull market, people closely connected with the market expect a reaction and watch for it. The newspapers predict it. Consequently, there is sufficient let-up in buying to allow the pressure of selling by the bears to bring it about. However, the desire to buy during reactions is so general, many people rush in to buy and this buying, in addition to the covering by the shorts, puts the market up again; and if conditions are favorable for a bull market, prices will go up much higher than they were before. In like manner, we have rallies in bear markets. Of course the professional bears sell during these rallies, with the expectation of buying later at a cheaper price.