Stock Market Crash

Of late, fear psychology has gripped the investors in stocks. The mood of the market has become totally unpredictable; No one knows what will happen in the next second, and what would be the grim news when the market opens the next day. All the investments plans have gone haywire. You have lost confidence in your investment plans. These things happen with a stock market crash.

Investors all over the world, including USA, are stunned and feel cheated! The trusted share-market is paying the unbelievable tantrums. The deeply hurt are the middle-class and the retired people with limited savings. The savings which you thought you had wisely invested in a share portfolio has shrunk dramatically, and in some cases, been wiped out. You have stopped giving advice on investment matters, which you so generously poured out not long ago, to your investor friends. Nothing in the market comes out as per your calculations.

With this crash, the prices of shares sliding day after day, your confidence is shaken. You are constantly worried, how to get back the money that you have lost. Will you ever be able to recover it! Will you ever face the market with the same confidence with which you dealt with it in the recent past? Will you be able to regain the lost balanced mental attitude? Which is that power pulling strings that have totally confused the common investor and immobilized one's capacity to invest further? Is the market crash an unexpected occurrence?

The present crash is definitely not unexpected. They say, the coming events cast their shadows before! In the S& P500 monthly charts, the analysts clearly indicated that all is not going to be well with the stock market. They had predicted a long-term bullish posture in April 2003. They again indicated in November 2007, that the downturn is ahead and to get ready for the bearish market. That was the golden opportunity for the investors who possessed knowledge as to how to deal with the bearish developments.

Those with some knowledge of the behavior of the Exchange would never be able to forget the market crash of the 1929. This is linked to the Great Depression. Within a couple of months, the investors lost half of their money. October 29, 1929 is known as the Black Tuesday. This is the worst day in the history of the U. S. Stock Exchange. A record of 16.4 million shares was traded on that day. The investors lost $100 million within a month.

The investors hoped against hopes that the market conditions would improve. But the subsequent developments crushed the investors beyond redemption. They began to sell their holdings blindly and desperately. The market continued to confuse people week after weeks. The prosperous American economy was in shambles. The poor condition of the economy gave rise to unemployment, poverty, homelessness, adversely affected the education of children resulting in sharp increase in the number of school dropouts, crimes and many other social problems.

In reality, no one can blame the market. It behaves in the way it does, in the given conditions. People and policies make the market; it only complies as per the demands and the results of the Nation's policies. What happens in the Exchange is the consequential action. The majority of the investors, and the brokers, go by the market hype and blindly follow the trends of investments, without making independent research and analysis. The avalanche of yellow journals related to trading in shares and their advice as to how to get rich quickly, remains fresh in the minds of the investors and they hanker after profits. The warning signals are taken lightly and they hope against hopes that something dramatic will happen!

The best investment in the market is that which expects and meets the challenges of the worst possible situations. One should remain alert and know how to cash on the crash!

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