Stock Markets Exposed
How does a stock market crash?
what causes the stock market to crash? what are the sequence events that lead up to one? and how does it affect people?
Public Comments
- There are many Factors effecting To this market, News & factors bad for market it will start to crash Factors like Inflation, Index average Stocks(Reliance, Infosys, etc), IIP Data, F&O expire date lots of Factors For more information Sharing by Members & Analysis Join This Group: http://groups.yahoo.com/group/intradaycalls/
- Several years ago Alan Greenspan stated the market was too high due to "irrantional exuberance." While there are many factors that feed into a stock market collapse, in my opinion when a stock market rises based solely on trader speculation, and not sound economics, then the stage is set for a collapse. In the current market environment, much of the irrational exuberance was based on easy credit and incredibly high real estate values. Everybody thought prices could just contnue to move up. When the job market evaporated and people could no longer pay for their outrageously high mortgages, the house of cards fell into itself. Tis is not to say people are not making money in the market today. In fact, many traders believe volatile times like this are the best times to create fortunes. The trick is learning how to trade today's market.
- Like the other guy said, it's when an economic "bubble" bursts, but it's when the big money sees this and sees earnnigs for these underlying companies deteriorating, they start to sell, then waves of selling occur as well, and with such a large supply being dumped on a market where demand has dried up, prices are affected and move downwards....fast! So the next wave of investors heading for the exits push those low prices even lower, and this continues until the paper has completely changed ownership, and there's no more sellers, just buyers left and usually, most of the new ownership is by the professional traders/investors. And it's a crazy process because in these "crashes" there's always a damaged economy underneath all of it, and the pros don't know how to value future earnings until things are "getting worse at a slower rate" so to speak so how low the market prices have to go to find buyers ALL depends on what the forseeable future looks like. -Hope it helped some
- I admire the attempt of a couple other posts trying to address this question, however you have asked a very deep and extensive question. I could answer this but it would probable take a couple hours or so of writing and research (links to support), covering lots of data from even prior to the 1920's and thereafter. The impact of market crashes can lead to a loss of jobs, slowing economy, loss of wealth, and more government regulation. I have covered much of this question throughout my post history, so I will refer you to review my post history (add me to view). In short I have included several links that make some effort to address this question. I would not rely exclusively on any one of these links, some are better than others, but again the question is very broad to address here. The following addresses the 1929 and 1987 crashes. http://en.wikipedia.org/wiki/Stock_market_crash http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 http://www.pbs.org/fmc/timeline/estockmktcrash.htm http://en.wikipedia.org/wiki/Black_Monday_(1987) http://www.federalreserve.gov/Pubs/feds/2007/200713/200713pap.pdf
