What exactly does it mean when the stock market crashes, in layman’s terms?
(I know basically what a stock is- a buisness or company divided into shares of the profit, which are sold in the stock market. But what does it mean when the stock market crashes? What exactly is the “Dow” and why do people want it up and not down? I need this in simple terms please- its not for a school thing, im just trying to understand how this works. Thank You!)
Answer:
A crash occurs when sellers cannot find any buyers at any price. There is no one willing to buy ownership of shares of a company you own no matter how far you drop the price to sell. A crash is a huge drop in price. The Dow is an average of thirty major stocks’ prices. They want to make money, so they want it to go up. If it goes down, then if they sell they will lose money. Buyers would like it to go down before they buy.
Posted: July 26th, 2010 under US Stock Market.
Tags: Stock market, stock market crashes