Financial markets across the globe have crashed repeatedly throughout history and a market crash is a nightmare for any potential investor. There are certain causes that lead to a market crash, including a high rise in stock prices over a considerable span of time. Economic optimism is the prime reason, as a consistent rise in stock prices lead towards crash.
A sudden crash can be the cause of agony, anxiety and frustration. All through stock market history, financial analysts and investment advisory service providers have failed to provide effective speculation regarding market crashes. Financial market crash may be due to certain specific economic reasons.
According to investorwords.com, a crash is defined as “a precipitous drop in market prices or economic conditions.” (http://www.investorwords.com/1190/crash.html) This definition clarifies the sudden drop of a market crash and explains why many investors have been turned away from stock trading.
An abrupt fall in share prices can create panic among the investors, and confused investors tend to sell almost all of their shares. Shareholder’s psychology changes and this leads towards confusion and chaos.
Stocks, securities and bonds are sold at random rates. To avoid the catastrophic effects of financial market crash, it is wise to keep an eye on the financial market trends.
The major causes of stock market crash are as follows:
A drastic shift in price
An alteration in earnings
Changes in dividend
Thus, a persistent boom in the financial market can collapse and result in a sudden crash. In addition to depending upon the advice of financial specialists, it is a good idea to keep an eye on the prevailing market trends.
The major financial markets crashes are as follows :
|Year & Date||Name|
|2006||Great Arabian Crash|
|2005-(till date)||Iranian stock market crisis|
|October 2002||Stock market downturn of 2002|
|September 2001||post-9/11 crash|
|March 2000||Dot-com bubble crash|
|1998||Russian financial crisis|
|1992||Asian financial crisis of 1997|
|October 13, 1989||Black Wednesday|
|October 19, 1987||Friday the 13th mini-crash|
|October 29, 1929||Black Tuesday|
|October 28, 1929||Black Monday|
|October 24, 1929||Black Thursday|
|1929||Stock Market Crash of 1929|
|May 9, 1873||Der Krach|
|September 24, 1869||Black Friday|
|May 10, 1837||Panic of 1837|
|1819||Panic of 1819|
Many investors stopped stock trading after being affected due to a financial market crash.
Last Updated on : 26th June 2013