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Warren Buffett

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Stock Market Crash

 

A stock market crash is a investing term used to describe fast and sharp decrease of all or almost all stock prices on the exchange. However, there is no exact definition how long and how strong market fall should be, to fairly call it stock market crash, but it is usual sudden short-period market declines call a crash. If the main stock market indices are falling 10% or more for few days in a row (or with one day pause) and looses 20-30% in several days, it would be fair to call it market crash. 

 

Not necessary, but usually stock market crashes are happening during bear market. The mostly known stock market crashes in investment history are Black Monday (1987), market crash of 1929, Iceland market crash in 2008, 9/11 stock market crash, dot-com crash in 2000.

 

Stock market crashes aren’t pleasant for any investor, but is especially dangerous for those who are buying on margin because if stock market crash is sharp then such investor don’t have time to react. Ant the margin calls have additional impact to make crash stronger. 

 

The reality of our days is that stock markets build up value slowly little by little building confidence of investor, but any bad news may impact a sudden stock market crash and after that value is recovered again little by little. 

 

 






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