Understanding The Dangers Of A Stock Market Crash (2)

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This content is available through Read Online (Free) program, which relies on page scans. In 1963, Benoît Mandelbrot proposed that instead of following a strict random walk, stock price variations executed a Lévy flight.25 A Lévy flight is a random walk which is occasionally disrupted by large movements. The market continued to decline in value, leaving investors who had purchased stock on credit financially destroyed. This did little more than temporarily stem the tide, however, because from Black Thursday to October 29, 1929 ( Black Tuesday ), stocks still lost more than $26 billion of value and more than 30 million shares traded. When word spread that banks’ assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings.

When this was inevitably followed by a 12.8{606b15cb8282e5ec3580d0e72c193589ece6551be175750a8e347f0d91362e12} drop in the Dow Jones Industrial Average, the stock market indices created by the editor of the Wall …

Understanding The Dangers Of A Stock Market Crash (2)

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This content is available through Read Online (Free) program, which relies on page scans. In 1963, Benoît Mandelbrot proposed that instead of following a strict random walk, stock price variations executed a Lévy flight.25 A Lévy flight is a random walk which is occasionally disrupted by large movements. The market continued to decline in value, leaving investors who had purchased stock on credit financially destroyed. This did little more than temporarily stem the tide, however, because from Black Thursday to October 29, 1929 ( Black Tuesday ), stocks still lost more than $26 billion of value and more than 30 million shares traded. When word spread that banks’ assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings.

When this was inevitably followed by a 12.8{606b15cb8282e5ec3580d0e72c193589ece6551be175750a8e347f0d91362e12} drop in the Dow Jones Industrial Average, the stock market indices created by the editor of the Wall …

Understanding The Dangers Of A Stock Market Crash

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Definition: The stock market crash of 1929 was the worst crash in U.S. history. Between 1920 – 1930 and 1990 – 2000 there have been huge amount of stock splits that impacted the price-earnings ratio positively. Even by assuming that the average price of a stock on NYSE is only $10 per share it will give us more the 1.3 trillion of negative money flow (out of the market). Over the four days of the stock market crash , the Dow dropped 25{606b15cb8282e5ec3580d0e72c193589ece6551be175750a8e347f0d91362e12}, losing $30 billion in market value. Short-term vs. long-term: While much of the focus has been on market fluctuations in the last year, investing for retirement security is (or should be) a long-term proposition. The market is made up of minds of many men and when you put all these men together, everyone has their own views and outlook which could mislead your initial thought process.

The …