Since February 2013, the broad market has three circuit breakers tied to the performance of the S&P 500 index. If it loses 7%, 13%, or 20% of its value compared to the previous days close, trading halts for a period of time. If anything can be considered a stock market crash, it's hitting these circuit breakers.Remember, Black Monday (October 19, 1987) saw the DJIA lose 22.6% in a single day.


India as we know is importer of Crude oil(Petrol, diesel). One of biggest country that supply crude to India is Iran . United States had put a lot of sanctions on Iran owing which India is facing difficulty in procuring crude from Iran. Since the demand of crude is intact and supply has been reduced globally , the price of brent crude has sky rocketed touching 80$ per barrel.
Finally, don't think you can avoid market crashes by getting out of stocks before one. That's "market timing," and it rarely works. Index-fund pioneer John Bogle has quipped, "Sure, it'd be great to get out of stocks at the high and jump back in at the low... [but] in 55 years in the business, I not only have never met anybody who knew how to do it, I've never met anybody who had met anybody who knew how to do it."
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If the market went down, is it because one company changed its business model or its forecasts? Because a mutual fund changed its strategy? Because a glitch triggered a wave of selling? Because yesterday it went up a lot and people decided to take their profits and invest elsewhere? Because one large investor decided to cash out on high valuations? Because another round of stock options for Facebook employees matured, and they sold? On the whole, we can't say why the market went down today is due to a single reason.
A bull market -- just like the one the U.S. stock market has experienced since 2009 -- happens when investors are optimistic about the markets and the economy, and when demand outpaces supply, thus driving up share prices. As bull markets peter out -- they can last anywhere from two years to nine years -- all it takes is a significant market event to create a crisis of confidence among investors and draw more sellers into the market. This can create a stock market crash that leads to a bear market.
Market crashes are far more common in our imagination than in reality. This is because they are vivid and scary events. Given our evolution, we are wired to worry about these sorts of vivid events. While, this may have been useful in helping us avoid getting eaten by tigers, it's less useful for rational, disciplined stock market investing. By thinking this topic through now, hopefully you're a little better prepared when the next crash hits.
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