Are we heading for another stock market crash?

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first time one of my questions made it onto best questions on the front page

Not really, although there is always that possibility. Although America is struggling the other economies are staying relatively stable.

Congratulations on your question getting on the Front Page though!

The usual - stock market crashes - for a day or 2 .... the Government panics ...sticks up interest rates Petrol prices..etc etc... by day 3 the markets have stabilised - the traders are rich again... and Joe public is f'cked again.

i hope so ... so the buy to let numptys cop a load of shi**

The possibility is always there...much like "will I have an accident driving to work?". There are more and more cars on the road every day...driven by more and more people from other countries, more and more US-born kids have cars and access to cars, etc....so statistically a "greater number of, and likelihood of" getting into an accident.

So, in comparison...the stock market is hitting all-time highs. There are more and more people investing in the US stock market...from overseas and "normal" Americans. Add into that mix that the phsychology of the American investor has changed significantly...and we are ripe for dramatic swings in our domestic, and global for that matter, stock markets.

To explain a bit more, in as simple "everyday language" as I can...

It wasn't that long ago in history, especially in US history, that very few "average American" people invested in the stock market.....typically, professional money managers (there were a lot fewer of them too...i.e. Pension funds, etc) and high-net-worth people (think: Kennedy-esque). Then came the 1) mutual funds 2) "self-directed" retirement plans (401k, SEP IRA, etc etc) and 3) the internet...which lead to the technological advances which now enable people easy access to buy and sell "nearly instantaniously" if they wish (see amateur investors: emotion-based trading...vs. "buy and hold" for years or decades investing).

So, a 387 point swing like yesterday in the stock market is more and more likely...if for no other reason...the stock market that not so long ago was 5,000 points... is now 13,000+/-....and a nearly 400 point day is only equal to a +/- 3% event. The large number sounds scary...but in "context" it isn't that big of an event.

Big "wakeup call": Many investors, and the many "traders" and amateur "do-it-myself" an save a few bucks folks...tend to forget...the Dow Jones...is only 30 stocks...out of nearly +/- 4,000!!! The Nasdaq...about 100...out of about 4,000!!! They are simply set up as "indexes", or averages, of a small and select group of stocks...and certainly NOT indicative of the overall market, its many different sectors, and/or the "specific" stocks within a sector that may be the "shining star" within otherwise nasty sector (or vice versa..."the dog" in a otherwise wonderful sector).

Can we have a crash? Yes, of course...international lending rates are "jumping"...there is terrorism in the world...etc etc etc. However, we also have a historically low unemployment rate, relatively low taxes, consistent earnings growth, a consumer who cries about spending $10/week more for gas than before...but continues to buy more Gucci and Luis Vuitton etc products than ever before, etc etc etc.

Just keep in mind....never too many eggs in one basket.

Than includes...not "all your savings in the stock market"...not all your net worth in your house... NEVER buy "collectible" gold coins... don't get "hooked in" buy the BS about "you can trade the stock market and truly "get rich quick" all by yourself" (if that were the case we'd have a lot more multi-millionaire "non-professional traders" than we do now...can you name 10? out of 300 million Americans?...no? didn't think so.)

Stock market-wise: Invest smart...if you don't have much money...buy mutual funds...a little every month...never too much too fast...and move them around when the "fundamentals" of the stock market or our economy changes...not because you're trying to gamble with the markets each day/week. If you have stocks..."protect" yourself, ideally with options...lock in gains...leave "up-side" open and limit downside risks, etc etc...not so hard if you know how.) If you don't have the time to do this stuff...find an honest professional who has your best interest in mind (very few of them)...ideally someone your friends/family know...so the "advisor" has some "meat in the game"...as in their reputation with the "other people" as well as you. (that could help)

If you were just asking this question, for the sake of asking a "hot topic".....well, I hope this at least may have helped others.

No. We are heading for a buying opportunity.

By its` very nature, the stock market goes up and down all the time.The secret is (if you want to stay solvent), buy when prices are down and sell when they are high. A few types of commodities may `drop` but I do not believe there will be a crash.

No-one can tell you the answer to your question, but if you have a big exposure and are feeling nervous, one way to soothe your nerves would be to use derivatives, such as options, to insure yourself against a big fall.

For every UPs there will be a DOWN

Some-one said unemployment is low.

Is it ?
It's currently at 5.4%.
Most unemployment is now hidden in this country as most unemployed are unably to get Job Seekers allowance and therefore either don't register or try incapacity benefit if they are able.

The big crashes I remember were in 1987 and 2000-2003. In 1987-1988 I was at university. I did an essay in 1988 regarding the impact of the "big bang" on the stock market crash in October 1987.

The "big bang" was a change in the way that stocks and shares were traded. Effectively it became all electronic overnight, and the days of jobbers and brokers waving contracts on the stock exchange became obsolete.

My conclusion at the time was that the crash was exaggerated by the effect of programmed dealing which caused large sell offs when the fall began. In other words people were selling in order to stop losses. This was automatic, and could not be blocked by brokers too busy to take your phone call.

The crash from 2000-2003 was a more painful, drawn out process, in which many large companies around the world became small companies. Worldcom, Enron, and many new technology companies had their value almost completely wiped over that period. Some insurers lost enormous value in their shares, the most notable in the UK were Prudential, RSA and Zurich. (listed in Switzerland) Of course this might have had something to do with September 11 2001, but the coincident timing of the uncovering of fraud at Enron in October 2001 makes me very suspicious of accountants.

Currently, the FTSE-100 is almost back at the level it was in the year 2000. This is not sufficient in itself to suggest over value. One must compare earnings, assets, and how that translates into likely future dividends and earning growth.

Lack of demand can cause a crash. Jittery investors, looking to transfer money into safe havens away from equities. The money will not be piling into property. Prime commercial property already appears to be on the down slide.

If there is a crash where will all the un-invested money go?

Legal and General recently bought back a significant amount of its own shares. This is a sign that Legal and General cannot find anywhere to put excess capital other than paying off it's equity debtors.

If value is difficult to find money will be used to repay debts. Gearing will fall, and consequently money supply in the business economy will contract.

A correction to the market prices may be about to occur, however I do not think it will be uniform across all shares and sectors. Some will be hit harder than others.

Generally, in theses circumstances the safe havens in equities are energy providers, water suppliers, and supermarkets.

When a crash occurs, people lose sight of value. This is when you pile money in when you find cheap stock!

NB. The FTSE-100 is down 12% from its recent high at 16 August 2007. A 25% fall would take it to about 5050. A 50% fall would take it to 3400, which is around the level it was in 2003 when war began in Iraq. I suspect it may fall to this level unless the troops are withdrawn soon!

If a crash is likely it will be in Asia. With the building boom there, I wonder how much of it is speculative, unless a real genuine demand is being met for housing in the booming cities.

Yes....but this nothing...worse to come...property price crash

Yes the bricks are starting to cascade down. It will make 1929 seem like a boom time gold rush. A financial blizzard is beginning now. You heard it on hear first.Sell Sell Sell.

Stupid americans. Can't lend money to people who CAN pay their mortgages off.

Not yet. Or not from this current problem.

in 1975 when oil prices went up the stock market crashed again on black Wednesday and a big fall 2003. it takes one crisis only and it can crash, that is why so many pension providers have gone almost to the edge of disaster, yes it will rise again but never at the speed it can fall

We are heading for the ultimate crash of capitalism. Fool if you were sucked into it.

No crash is a Crash if the time can rebuild it. It is a correction and an opprtunities to buy for the investment (not to trade).
Black night is as important as a sunny days. So dont panic. Every dip is an opprtunities. Buy value stocks and hold for long term horizon. you will be wealthy. Good Luck.

I don't think so, as already mentioned it is just a correction. The main concern should be that this may signify a similar correction in the housing market.

yes we are an the main cause of it is humanities greed an cravings for more all the time what happend to the old ways an wants of humans like if you couldent afford it you did without like i do without the stock market etc because as i see it its only another money making scam because when it crashes only the small an poor investers lose everything

It's bad news if you're wanting to sell or have shares but will be good if you're looking to buy. Personally I think things will get worse before they get better, so I'd hang on in there for a few more days and see what'll happen, there have been alot of red on the lists and further drops today, it's all because of lenders tightening the borrowing strategy and interest rates going up which has led to this. This will put more people into deeper debt or inability to pay and encourage/increase Iva's, bankruptcies and house repossessions. This is all due to irresponsible lenders! They were keen to throw money at borrowers at any cost now they realise their mistakes and have put a halt to it, or so they would have us believe, they will tweek the figures to lend money to slightly at risk borrowers at a higher rate of course and then when interests rates rise, people can't pay back. So then they shut the stable doors after the horse had bolted! So to speak. We are following the American route to stop bankcrupties and make people pay back at 0% interest instead. This will stop people borrowing for at least 7 years and probably leave lenders twiddling their thumbs waiting for borrowers to return. Wish people wouldn't borrow then their would be no debt or greedy lenders to contend with. My motto is don't buy if you haven't the money to pay for it. It's ok having one debt ie a mortgage, but people have too many irons in the fire these days and borrow to pay for the borrrowing. - bad route. Sorry for the rant!

By their very nature, the timing of stock market "crashes" cannot be anticipated. However, every time the market corrects, there is a chance of a crash. That's why people pull back. They are now faced with the real possibility of a crash.

We are, indeed, in trouble. We are facing a classic liquidity crisis with a Fed that wants to re-establish discipline in the markets. The banking system is not as threatened as the "fund" system. We have many hedge funds, mutual funds, pension funds, etc. that invested poorly in credit instruments that they thought were less risky than they actually are. They will lose money.

But will these losses lead to a crash. For a true crash, we need a real banking crisis. No one should be willing or able to lend money. Bernanke seems well on his way to insuring that, so I put the probability of a crash higher than its been in decades. Nonetheless that probability remains low.

SO, nibble but don't overextend.

Good luck.

All my Professional Experiance says that we are not though however i personally think we are. however i think we could see a dramatic rise with the ftse 100 no honestly just watch i also prdict the pound to fall dramatically the next few months will tell and they will be interesting

That may or may not happen. Best thing to do is to be prepare for it anyways.

I'm sure it is heading for a stock market crash and also a housing crash. All the prices have gone up and housing prices are unimaginable but the jobs are going out and we get a annual incrase of 3%. In another 10 years US unemployment rate would be wrost. I think other countries would get richer and US would get poor. Countries like China and India is taking all of US jobs and money which we will never get it back. When they learn the lesson it will be too late to correct it and it will be like 1930 crash and every damn country in the world would laugh at US. Fed needs to do something to stop right now the mess. I think soon banks are going to announce that they have no money to lend and may file bankruptcy and that is the end of the story.

There is that possibility. It is better not to think of it as a crash but as a buying opportunity.

YES!!

Just like the stock market crash from 2000-2003. People kept buying thinking the market would go back up. Many of those stocks never went up to the 2000 level ever again.

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