Stock market is considered an extremely risky place because the prices waiver without warning, and it is very likely to crash. However, stock market has crashed before several times and then regained or worked its way up. This has been a cycle for the markets where it reaches an all time low and then starts getting better. Sometimes, a few unavoidable circumstances also can play a role in making the stock market crash unexpectedly. For example, take the Enron scandal in 2002. This type of scenario comes as a blow to several investors. A stock market crashes when the market is experiencing a downturn and majority of the investors are affected by this downturn.
Whenever the market is at its peak several investors start investing and buying stocks. This type of market is dominated by the bulls. In this type of market everyone makes profits. On another extreme, the stock prices can start falling drastically and this causes panic and people start selling their stocks frantically. This type of selling can cause the stock market to crash. Also, this type of market is dominated by the bears.
There are several reasons why a stock market crashes. One is sudden economical changes or political conditions. Then, it can also crash when too many investors are selling the stocks or a sudden change in the dynamics of the world markets.
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