The Stock Market Crash (2)
The stock market crash of 1929 was one of the most devastating events in American history. Historians often cite the stock market crash of 1929 as the beginning of the Great Depression because it marked not only the end of one of the nation’s greatest bull markets but also the end of widespread optimism and confidence in the U.S. economy. Knowing what their stock market prediction is based on can help you understand if it is going to be useful for you. The great stock market crash of October 1929 brought the economic prosperity of the 1920s to a symbolic end. Likewise, the Japanese Nikkei bear market of the 1990s occurred over several years without any notable crashes.
While my response to the attendees’ question was a bit long-winded, the gist of it is that if you are concerned about a market crash that meets or exceeds 2008, the VIX is the indicator you want to follow. As with any sort of index, different VIX levels tell us different things about the market – that’s how we are going to determine when to be invested and when not to be. Markets were spooked by the Hatry Case in late September, which caused the British stock market to drop. A select group of journalists from The Wall Street Journal decide which companies are part of the most influential index in the world market.
In 1995, Rosario Mantegna and Gene Stanley analyzed a million records of the S&P 500 market index, calculating the returns over a five year period.26 Their conclusion was that stock market returns are more volatile than a Gaussian distribution but less volatile than a Lévy flight.
This mass hysteria and negative sentiment on the stock market fuels a craze of selling which keeps on driving stock prices down, thus causing the stock index to suffer. He stock-market crash of 1929 is perhaps the most memorable crash in the history of the stock market. However, a stock market crash is often sudden and dramatic occurring over several days.
But using a model based on those assumptions, you can develop a method for stock market prediction that is better than flipping a coin. A stock split is required if the market value of a share has grown too large, rendering the marketability insufficient. One of the consequences of the 1987 Crash was the introduction of the circuit breaker or trading curb on the NYSE. Shorting the stock means that you are selling a stock in the hopes that that stock will go down, and when it does go down you can buy that stock and pocket the difference. All market economies oscillate, with 4-7 year business cycles, with longer cycles of construction and commodity production, and with fifty-or-so-year long waves that bring, among other things, major financial panics.