A Stock Market Crash

Many people are frightened by the stock market because of the stories about past market crashes. Yes, those crashes did happen, but the fear surrounding them is more hype than substance.

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Your fear that the market will collapse as it has done in the past is best dismissed by learning that the probability of another crash is infinitesimal and that the damage caused by previous crashes was not as bad as the public’s perception of them.
On October 29, 1929, the Dow, a measurement of the stock market as a whole, fell 30 points to close at 230.07. This represented a drop of almost 13 percent in the whole market. The loss of market value was roughly $14 billion, a staggering sum even now. This meant that $14 billion of the total amount invested into the market by people and by entities such as pension funds was simply gone. The severe ramifications of this event affected even those people who had not actually invested in the market. The subsequent depression, while not directly a result of the stock market crash, further entrenched the idea that investment in the stock market would later reduce the investor to selling apples on a street corner while wearing a barrel. Finally, the stories and depictions of grown men throwing themselves off roofs and crying at their desks assured the general masses that stock investments could only cause heartache.



Taken From : 10 Minute Guide to Investing in Stocks

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