Learn what to do before and after stock market crash and how to take benefit of market crashes.
Stock Market Crash is of Two Types:
1. Sudden Bad News Overnight Market Crash
2. Good or Bad News and Long Time Market Crash or Up Move
I hope the way I have named it, the meaning is quite clear and obvious. The first one is any Terror Attack e.g. 9/11 attacks, Natural Calamity e.g. Tsunami or Major Earth Quake, Financial Corruption in a Big Company, e.g. Lehman Brothers Company Bankruptcy crashed stock markets all over the world for more than one year, and brought one of the biggest financial crisis & recession period in the whole world for 1 and half years.
Here is the link for more details on Lehman Brothers Company Bankruptcy: https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers
On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman’s bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide.
Lehman’s demise also made it the largest victim of the U.S. subprime mortgage-induced financial crisis that swept through global financial markets in 2008. Lehman’s collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time.
Source: http://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp
Another example is from India which I think many generations will remember – The Satyam Crash. Read this: Satyam’s fall: From Rs 542 per share to Rs 58
Read Full story of the Satyam Crash: http://www.financialexpress.com/india-news/satyam-computer-the-rise-and-fall-of-ramalinga-raju/62281/
The Lehman Brothers & Satyam Crash falls in the first and the second category both. Overnight the markets will crash and keep the crash continuing for a long time.
But natural calamity and terror attacks fall under the first category. Stock markets will open big gap down and then from next day onward start to recover.
News like some party election win like recently in UP, and good performance by major companies may push up or down 200-300 points the stock markets and they markets will stabilize. These fall under the first category.
The first category id not a big issue and can be managed with well planned hedged strategies, but the second one is where lot of planning is required.
Continue reading on stock market crash more on how to be well prepared for stock market crash.
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