The following table shows the eight biggest declines in the S&P over the past 40 years, and how gold and silver responded to each. Recovery time and future stock market performance: This analysis also calculates how long it might take for end-of-year 2008 401(k) balances to recover to their beginning-of-year 2008 levels, before the sharp stock market declines. The Fed created money to be poured into the stock market (front-running the market,” as Richard Fisher, one of the Fed’s board members said).
It is important to remember that this was a time of massive general deflation when all prices declined, so it is not surprising that the market also shared this phenomenon. That’s right; after periods in which the market rises, the market experiences a massive crash. We used data from the Health and Retirement Study that was fielded in February 2008 through February 2009. Their move led to a slight increase in stock price on Saturday, October 26. But over the weekend many investors lost faith in the stocks and decided to sell their shares. Although the workings of the New York Stock Exchange can be quite complex, one simple principle governs the price of stock. This is our most important identifying assumption in analyzing the effect of the stock market crash.
We estimate the effect of the crash on the population average of expected returns, the population average of the uncertainty about returns (subjective standard deviation), and the cross-sectional heterogeneity in expected returns (an indicator of disagreement).
However, the one-day crash of Black Monday , October 19, 1987, when the Dow Jones Industrial Average fell 22.6%, was worse in percentage terms than any single day of the 1929 crash (although the combined 25% decline of October 28-29, 1929 was larger than October 19, 1987, and remains the worst two-day decline ever).
As stocks climbed in price, many Americans believed that they could amass a tremendous fortune, even if they owned only one or two shares of stock. Due to the high amount of loans that were taken out for stock market purchases, banks quickly tried to collect the debts on the loans. OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008.