What actually constitutes a stock market "crash"?

[mb1]

What is a stock market crash exactly? Is it able to be quantified?
Or is it based on time, on how many sell off sessions there are?

 

[nioka]

Re: What actually constitutes as a Stock Market Crash?

What is a stock market crash exactly? ?

When people start jumping out of windows and the banks shut their doors. When you can't find a buyer at any price. This drawback is just a hiccup.

 

[CanOz]

What is a stock market crash exactly? Is it able to be quantified?
Or is it based on time, on how many sell off sessions there are?

It seems the nedia like the word 'crash' already....

http://www.abc.net.au/news/stories/2007/08/10/2001292.htm

Cheers,

 

[Awesomandy]

Re: What actually constitutes as a Stock Market Crash?

When people start jumping out of windows and the banks shut their doors. When you can't find a buyer at any price. This drawback is just a hiccup.

This is already true for those who are (were) heavily exposed to the sub prime markets. Some people now have nowhere to live, and funds are suspending redemptions, since they can't have NAVs released because the funds cannot find a buyer for their holdings at any price.

 

[tech/a]

10% is seen as a change in trend by some economists.

A crash would to me constitute

(1) a Fall of at least this in a single week.
OR
(2) a Fall of 20%+ off all time highs in a matter of months (3).

Anything else over a period would be a bear market OR Correction.

Just my personal take.

 

[ZacR]

When the banking elite feel like playing puppet master and pulling on the strings of the market for whatever purpose they have at the time...
Or technically, I agree with Tech/a - when all time highs fall by 20% or more, ie: 1987

 

[Aussiejeff]

Looking at the historical chart for the XAO, I would say the "87 Crash" could be clearly defined as a "Crash". Almost 50% of the XAO's value over a very short time. In fact on a percentage basis, all those other pullbacks you can see throughout the 90's and noughty's were generally of a higher magnitude than at present.

So, even a further pullback of around 400 pts to say 5,500 would only bring the XAO back to it's recent 5 year trend line.

A BIG pullback down to around 5,000 pts would bring it back to somewhere near it's 25 year trend line.

So, no real sweat - yet.....

Of course, the media would have you believe otherwise. For them, the sky has fallen when more than 2% is shed! These are very happy days for a medium that can thrive and profit massively from spreading "doom and gloom". The headline news stories regarding the market on telly tonight are going to be almost too much to take!

However, the actual history of the XAO through many periods of "doom and gloom" and where it has ended up recently would suggest otherwise....

Cheers,

AJ

 

[questionall_42]

What is a stock market crash exactly? Is it able to be quantified?
Or is it based on time, on how many sell off sessions there are?

You tell a crash by the charts that are being posted on online stock forums: the longer time period the chart, the bigger crash.

Aussiejeff - a 27 year chart is a record for this crash/correction. Always nice to be placated in the short term doom by appreciating long term trends.

 

[numbercruncher]

Clear support to be found at 3500 on that chart

 

[Lucky]

Re: What actually constitutes as a Stock Market Crash?

When you can't find a buyer at any price. This drawback is just a hiccup.

Would BNP Paribas be an example of this by any chance, having suspended withdrawals from a "few of their funds" that are exposed to the US mortgage market crisis that seems to be unfolding at present? From what I've been reading there are currently no buyers - there is no market for their funds.

http://www.nytimes.com/2007/08/10/business/worldbusiness/09cnd-eurobank.html?hp

The news that the ECB has pumped almost 100 Billion Euros into the system to create liquidity makes me wonder how serious the situation is and what next week could hold for the markets.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money//2007/08/10/ccom110.xml

 

[hangseng]

10% is seen as a change in trend by some economists.

A crash would to me constitute

(1) a Fall of at least this in a single week.
OR
(2) a Fall of 20%+ off all time highs in a matter of months (3).

Anything else over a period would be a bear market OR Correction.

Just my personal take.

I agree tech

Look at the 87 chart and you will see clearly the difference between a crash and a correction in a visual way. Technically is easier, blood all over the floor as opposed to "oh damn" statements. This is not a crash, it is a much needed fundamental correction.

 

[theasxgorilla]

If you want to compare with October 1987 you're probably going to need to use a log scaled chart. Am I the only person who finds no meaning from market commentators when they say, "the market dropped xyz number of points today". Tell me percentages. They never say, house prices went up $30,000.

To even come close to matching '87 we'd need to see 4150 sometime in the next 4-6 weeks. That is a crash...and its called a crash because I bet not a single person involved with the sharemarket right now can picture what that might be like. To be just like '87 we'd have to reach 3250 in 4-6 weeks. You're talking about 20-30 trading days to wipe out 50% of the market capitalisation of the 500 largest companies in Australia. Got your popcorn and fizzy drink?