The Causes And Effects Of The Stock Crashes

1647 words - 7 pages

The causes and effects of the stock crashes

Almost 75 years and almost 20 years ago, there were huge crashes in New York. These crashes caused an uproar throughout the nation. Number of people died, billions of dollars lost and damaged lots of lives. Those crashes had been called most severe of the 20th century. Those crashes are symbolized as Black Days. Well, you might think that those crashes could be car crashes or plane crashes or train crashes. You might also think that if nation could have lost billions of dollars and lots of lives, those could be car or plane or train crashes. But as you thought, those were not car or plane or train crashes 75 and 20 years ago. The reasons were different than what you are thinking.

The main reasons to lost billions of dollars, lost precious lives and lots of damages to the nation were the Stock Market Crashes. On Thursday October 24, 1929 and on Monday October 19, 1987, there was a crash of stock prices on New York stock Exchange. It was a huge crash of stock prices in a single day. Billions of dollars and a number of precious lives were lost. But what we particularly think about Stock Crashes and how does it affect to common lives. The stock markets crashes and its affects are interrelated. The term stock crash came in to English Dictionary around 200 years ago. There was a first stock market crash in the history of economy and in early industrialization era, in the year 1878. It occurred in Wall Street and followed by huge opposition of stock system.

But, if we define stock crash, it is a devaluation of stocks or shares of different industries since their price on the vary day. The devaluation of stocks may goes down from 1% to 50 %. It depends on the time and the parameters. And also we need to know what is the stock market. The Stock Market is a place of commerce where people can come and buy or sell parts of companies called "stocks" or "shares". For example, if you wanted to buy 30 shares of "Hevini Enterprise’s stock for $5.00 a share, you spend $150.00. Then you sell 20 shares to your friend Joe at $20.00 a share. That means that you make a net income of $250. This is the reason that the Stock Market is so popular with investors. This is how investors make their money. A stock is a certificate of a share of ownership in a business corporation, entitling it's owner to dividends, that is, a share of the profits, and to a vote in that firm. But, there are a number of parameters, which can trigger the stock crashes, such as illegal activities, government policies, trade and budget deficits. The main affects of the stock crashes were the general investors, who have faith in their stock markets, economical system and financial solidarity; and the growing economy, which tried to be stabilized after bloodiest world war I. The 1920s began with the closing of the bloodiest war the world had ever witnessed. The nation was tired and in trouble, adjusting to peacetime living....

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