Main reason the stock market crashed

Main reason the stock market crashed

Posted: goTravel Date: 09.06.2017

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Asked on June 9, at Posted on June 9, at I assume that you are asking about the stock market crash of If so, there were a number of major causes. These things led to a huge bubble in the stock market where prices went up much more than they should have. Then a few indicators went down and some people started to worry. That started a panic in which people tried to get out of the market. All the selling caused the crash.

Posted on June 10, at Actually, the only margin required at the time of the crash was five per cent.

main reason the stock market crashed

Industry in general had entered a period of extended expansion and the common belief was that the stock market would follow industry. There was also the common belief that the economy had entered a period of permanent growth; no downturn would ever happen again.

In , the market entered a period known as the Great Bull Market. People who knew nothing about the market were investing wildly buying large amounts of stock on margin.

When the stock paid off, they raised their bets by purchasing even larger amounts on margin. There is a famous story that J. Morgan was offered a "hot tip" on a stock by a shoe shine boy. Morgan immediately called his broker and removed all his investments; he commented that when shoe shine boys were investing in the market, it was time to get out fast. By the beginning of , it was obvious to financial experts that the situation had become unrealistic; however the wild profits that were being earned in a short time prevented any type correction.

Has the Stock Market Crash of Begun? -- The Motley Fool

The market was rising on nothing but pure speculation. When it finally reached the point that investors had no confidence in its continued rise, it collapsed suddenly.

Posted on October 22, at 8: This meant that there was a mountain of 'pretend' money being supported by only a small pile of real money.

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Posted on June 12, at 7: Easy Credit- business borrowed money, prices dropped, lenders demanded repayment, companies went broke. Economic ties- USA was Canada's biggest trading market, their market crashed, orders for our products dropped, thousands unemployed.

What caused the stock market crash? I | Khan Academy

Protective Tariffs- countries imposed to protect their industries, exporting countries had fewer markets. We invite you to become a part of our community.

For ad-free eNotes, start a free trial. Excessive faith in the market. People were not buying stocks because they thought some particular company had good prospects. Instead, they were simply buying on the idea that all stocks would go up forever. People were buying stock using borrowed money. They were only required to put down This allowed for higher stock prices. Read the Rest of this Answer for Free Please view an ad from one of our sponsors to see the rest of this answer. Get Answer For ad-free eNotes, start a free trial.

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