What is a stock market crash? Understanding its causes and consequences can help investors prepare for a sudden, severe drop in share prices
The stock market is constantly moving, prices of individual equities rising and falling throughout the trading day. Whenever the majority of them — or a representative group of them, called a stock market index — takes an especially large dive, a panicked cry often arises:
“The stock market has crashed!”Stock market crashes are certainly scary: Hundreds of investments decline their value, investors lose thousands of dollars — on paper, anyway.
But what causes them? And what are the after-effects?