Could another stock market crash really happen?

Question

What would be the consequences? And how likely is it?

Answer 1

It absolutely can and will happen again.  History always tends to repeat itself, although with slightly different variations.  It is unavoidable because humans are an emotional lot, and that is what drives markets to bubble proportions, and what causes people to over react when the bubble bursts.  The problem is, you can not predict when these things will occur.  Don't try to predict, just try to learn how to ride the wave, and be nimble enough to get out when the tide changes.

The consequences of a crash are always different.  It depends on how the market participants and governments react.  In 1987, the consequences were relatively minor, since the Fed added so much liquidity right away.  A recession did not occur for another three years after the market surpassed its old highs.  

On the other hand, Japan has never gotten it right since their market peaked in 1989.  The Nikkei still trades way below its highs.  They have been slow to change their banking and corporate systems, and their markets have suffered from deflationary pressures for a long time.  

Scott Cole

www.kungfutrader.com

Answer 2

Absolutely. History in the market repeats itself over and over again because human psychology manifested in trading actions, i.e. buying and selling, remain the same.

Market crashes don't just happen over night, history tells us. There is usually extensive selling in the market for weeks and months ahead of the actual 'crash'. Currently, we have been seeing such selling. However, not all periods of selling culminate in such a market crash, and therefore predicting it is purely speculative. Historically, market crashes are not that common, and so I would say unlikely. The consequences depend on where in the cycle it occurs. Some crashes start off a period of extreme financial stress, others occur toward the end and are a sign of capitulation, and a turn in the market in coming months. So, if one were to occur, it would depend where in the market cycle the crash occured to know what consequences it would have.

Answer 3

not only is it likely to happen, it could happen real soon...People are taking major losses on thier stocks, and from what i've heard, the vice president rolled his assets into euro's....... that pretty much sums it up.