How do stock market crashes occur?

Stock market crashes occur when there is a sudden drop in the value of stocks. This can happen for a variety of reasons, including economic factors such as recessions, inflation, or changes in interest rates. In addition, news events such as corporate scandals or political turmoil can also cause panic among investors, leading to a sell-off of stocks. Finally, the actions of large institutional investors or automated trading algorithms can amplify the impact of smaller market movements, leading to a cascade of selling and a rapid decline in stock prices. Ultimately, the exact causes of a stock market crash can be complex and difficult to predict, but they often involve a combination of economic, political, and psychological factors.

This mind map was published on 18 April 2023 and has been viewed 100 times.