A stock market crash is defined as sudden steep decline in stocks prices on the stock market. The extreme rise in the Dow Jones in the period 1920 – 1929 and especially between 1927 – 1929, was primarily caused because the expected value of the shares of companies that are in the acceleration phase of their existence, was increasing enormously.
But despite the government’s efforts to prevent another stock market crash, in theory, a free market society isn’t supposed to have any intervention in its economy. The Dow Jones Industrial Average (DJIA) Index is the oldest stock index in the United States. Taking into the account that we had extremely high volume surges during the recent crash we may expect very strong up-trend. For example, if the current year is 2008 and a journal has a 5 year moving wall, articles from the year 2002 are available. A commission was established called the Pecora Commission which would research the reasons for the crash. Another reason that the stock market crash so suddenly in 1929 is that short sellers were allowed to do short any stock no matter how hard it was going down. That reveals that we see slow change in the sentiment on the stock market and we could be in the beginning of the new uptrend.
However, not all was lost: a rally that started when Richard Whitey, then head of the New York Stock Exchange, calmly began buying shares of U.S. Steel and other companies. To sum up, if you want to be profitable in the market, you must adapt fast to changes because the market is so dynamic. To put it simply, the Stock Market is really people, humans who are either a buyer or seller and controlled by emotions. The conventional assumption that stock markets behave according to a random Gaussian or normal distribution is incorrect.
Unfortunately for the economy, so many Americans invested money in the stock market that stocks became inflated in price. Now that we are nearing the end of the year, prognosticators will be all over the airwaves talking about their stock market prediction. As a rule, after a huge amount of money is taken out of the market (when SBV declines) we see a rebound (investors start to invest again).
The uptick rule is essentially means that you cannot short a stock until there is a green uptick in its price, which means the stock has to go up before you can short it. On December 31, 1927, two years before the stock market crash in October 1929, for the first time a number of companies split their shares. Recovery time and future stock market performance: This analysis also calculates how long it might take for end-of-year 2008 401(k) balances to recover to their beginning-of-year 2008 levels, before the sharp stock market declines. In 2007 and 2008, the American economy found itself once again teetering on the edge of another economic slide. A crash happens when no-one wants to buy stock, and the shares become almost worthless.