decide to buy business shares, analyze the fundamental statement, and use the stock market crash as an advantage to buy the undervalued stocks.
understand the 3 stock market crash, compare three stock market crashes to find which one is common in all and protect yourself at all times
the stock market crash of 1929
1929 the stock market crash happened during World War 1 and it’s also called the Wall Street Crash of 1929. the market crashed from October 24 Thursday to October 29 Tuesday.
however, in the year 1929, the Dow Jones industry average gained more than 20% quickly between June and September. the highest peak of Dow Jones at 381.17 on 3rd September.
when Dow Jones crashed on 24th October, it suddenly lost 11% of its market value in one day. which brings strong panic and depression among investors.
moreover lot of investors start to sell the stock of Dow Jones rapidly without quitting. which caused 2,294 banks to be down nearly 1.72 billion dollars in deposits.
after the stock market crash of 1929, there was the largest increase in Dow Jones in mid-1930 but during a crash, there were no investors ready to buy.
the stock market crash of 1987
the market crash on Monday 19th October 1987, in which Dow Jones Industrial lost 22.6% in the US market.
In the same month of October, 23 major market declines are happening 20% to 40% all over the world such as in Malaysia, Mexico, New Zealand, Hong Kong, Australia, and Singapore.
the total world loss of the stock market is 1.7 trillion United States dollars. when the New York Stock Exchange opened on Monday 19th October, there are lot of imbalance between sellers and buyers.
however, having more sell orders than buying orders pressures the price to go down. so causes of this imbalance in sell and buy orders which opened 95 stocks in S&P 500 very late.
so during a crash, most of the investors start to sell the stock rapidly with high panic. before the stock market crash, the Dow Jones industrial average already peaked in August 1987 at 2,722 points.
so the majority of the speculators lose a lot of money during crashes. no investor loves to buy stocks.
the stock market crash of 2008
furthermore, in 2008, the stock market crash started to happen on 29th September 2008 but on Monday 1 October to 10th October 2008 Dow Jones industry average within a week would decline down 18.3% from its market value.
however, if you take a closer look at Dow Jones, you can see the 17-month bear market which started on 9th October 2007 and to 9th March 2009.
when comparing S&P 500 it has lost 50% of its market value. so it brings the most continuous panic and depression among investors.
additionally, most investors panicked and started to sell rapidly during an economic recession. the total stock market lost more than a hundred billion dollars during the crash.
after 17 months of the continuous bearish market until March 2009. you can see the increase in the Dow Jones industrial average, but during the crash, no investor is willing to buy.
conclusion
particularly you can see above the three stock market crashes in different periods but here you can able to see the one thing in common in all stock market crashes. where most of the investors are not willing to buy any stocks during the stock market crash.
moreover, when comparing Warren Buffett instead of other investors, Warren Buffett waits for a long time to buy stocks at a very cheap price.
he selects a particular company, analyzes fundamental statements, and decides to buy that business at a very cheap price. but buying at a cheap price doesn’t happen every time. It happens very rarely.
so if a stock goes under the value Buffett buys, then again stock goes down Buffett buys again until it goes above the stock value. so you have a wonderful opportunity during a crash to buy the best stocks.