What Happens When A Stock Market Crashes?
A stock market crash can be summed up as a situation where share prices of stock listed on the stock exchanges plummet. Despite the fact that there are many economic variables that will cause a stock market crash, two main reasons for stock market crashes are also the investing public’s loss of confidence in the economy and mass panic.
Many times, the effects of stock market crashes can be awful for a country’s economy. There have been infamous stock market crashes that resulted in the loss of billions of dollars, and as more and more people become involved in the stock market, crashes have touched more lives recently.
One of the most notorious stock market crashes started on October 24, 1929 and would be known as Black Thursday. The Dow Jones Industrial lost fifty percent during this stock market crash, kicking off the beginning of the Great Depression. Another famous crash happened on October 19, 1987, also known as Black Monday. The crash started in Hong Kong but quickly blazed around the world.
By the close of October, stock markets in Hong Kong had fallen 45.5%, the United States had fallen 22.68%, and Australia, Spain, the United Kingdom and Canada suffered from huge problems additionally. In stock market history, this marked the largest one day percentage fall – the Dow Jones fell by 22.6% in one day.
Nothing could seem to explain the crash in 1987. The main events and news at the time could not predict the disaster and any obvious reasons for the collapse could not be identified. This crash created many questions about the theories and assumptions of modern economics. After the crash, computer systems were upgraded in the stock exchanges to handle larger trading volumes more efficiently. The New York Stock Exchange also introduced the concept of a circuit breaker, which halts trading if the Dow declines a prescribed number of points for a prescribed amount of time.
Mallory Megan works for Rapid Recovery Solution and writes articles on credit collection agencies.
Tags: financial collection agency, financial debt recovery, how to collect debt, international debt collection, stock market crash, stocks and bonds
