Why You Should Buy In A Stock Market Crash

When potential new investors are asked what they fear the most the answer is emphatically the worry of a stock market crash but it is only a worry if you are on the wrong side of the investment. Read on to find out why you should buy in a stock market crash.

Certainly if you are sitting with a nice portfolio and suddenly there is market crash you are going to feel the effects. But it’s a time with much potential which is why you should buy in a stock market crash. What a great time to add to your portfolio and benefit over the long haul. The modern day stock market crashes rebounds much quicker than the crash of 1929 which is another reason why you should buy in a stock market crash.

The crash of 1987 was a result of overvalued stock and a lack of liquidity. The crash of 2000 was the result of overvalued stock and corporate corruption. Many investors made themselves into millionaires during both of these crashes which is why you should buy in a stock market crash.

You might be surprised to find out that a stock market crash actually begins years before the actual crash. Prior to a crash there is a bull market with everything booming but at the end of every bull market is a bear market where things take a turn for the worst. That’s why you should buy in a stock market crash and then hold until it cycle back to a bull market.

Sometimes the market crashes because of a specific political or economic situation but generally a crash is panic generated by investors with no underlying reason. Smart investors get the checkbook out and start spending for you will definitely seek some nice financial rewards. It’s the reason why you should buy in a stock market crash.

During a stock market crash many loose big but there are also many excellent stock buys to be found. It’s a great time to have some extra cash kicking around even if it just a couple of hundred dollars. Now you know why you should buy in a stock market crash – the rest is up to you – just be ready for that next crash because it will come.

Now that you know why you should buy in a stock market crash you just need to wait for the crash.

A Review Of The Stock Market Crash Of 1929

The great Wall Street Crash just previous to the Great Depression of the 1930s has become a part of North American legend. People speak of the crash, its causes and its consequences, with great authority, although few people actually understand the fundamentals that led to the crash, and fewer still the intricacies involved in it. This article will detail a short review of the crash, analyze some of the myths evolving out of this period in American history, and also answer some questions such as why the crash happened, and if something like it could happen again.

The crash began on October 24, 1929 and the slide continued for three business days, ending on October 29 1929 (as we can see, the crash did not occur in the ‘30s, as many people believe). The first day of the crash is known as Black Thursday, and the last day is called Black Tuesday. The crash began when a rush of nervous spenders panicked and rushed to sell their shares- over 13 million stocks were sold on that first Thursday. In an attempt to halt the slide, several bankers and businessmen gathered and tried to rally the numbers by buying up blue-chip stocks, a tactic that had worked in 1909. This was to prove only a temporary fix, however. Over the weekend, while the stock markets were closed, the media added to the fear of investors as the published the wrap ups to the week. By Monday, a fearful populace, nerves on edge due to the reports, were waiting to liquidate. Again, industrial giants and other businesses tried to halt the panic by demonstrating their faith in the system by buying more stock, but the slide would not stop. The market did not recover its value until almost a quarter of a decade later.

As with any legend, the Wall Street Crash of 1929 carries with it several mythical misconceptions. To start with, the Crash did not lead to the Great Depression. In fact, many financial analysts and historians are still not sure to what degree the Crash even contributed. The economic forecasts were poor before Wall Street fell, and it was poor people who could not even afford to think about stocks that were the most affected by the Depression. For these people, poverty was mostly caused by very poor farming conditions. There was also not the onslaught of suicides that is commonly referred to- a few investors did succumb to depression, but their numbers are generally agreed to have been very small indeed- enough to count on one hand.

What was it that caused this Crash? Because the market had been doing so well, many Americans were investing- many more, in fact, than could afford it. These people were investing on speculation. This means that they were buying stocks with an eye to selling them in the future for a higher profit, and to achieve the capital to invest they borrowed from banks. When prices began to drop, people realized they would not be able to pay their debt, let alone make any money,. They rushed to get out as soon as possible. To prevent panics such as this in the future, buying on speculation is now illegal.