A stock market crash is a dramatic and sudden decline in the stock market. It is typically characterized by a large drop in stock prices over a short period of time, often accompanied by high levels of volatility and volume. A stock market crash can be caused by a variety of factors, such as a recession, a financial crisis, or a natural disaster.
A stock market correction is a decline in the stock market that is less severe than a crash. It is typically characterized by a decline of 10% or more from a recent high, but it does not necessarily signxal a bear market or a broader economic downturn. A stock market correction can be caused by a variety of factors, such as a slowdown in economic growth, an increase in interest rates, or a decline in corporate earnings.
Here is an example of a stock market crash:
The stock market crash of 1929, also known as the Great Crash, was a dramatic decline in stock prices that occurred in the United States in October 1929. The crash was triggered by a variety of factors, including overvaluation of stocks, speculation, and economic downturn. The Dow Jones Industrial Average, another US stock market index, dropped by more than 25% in a single day, and the decline continued over the following weeks and months. The crash was a major contributor to the Great Depression, a severe economic downturn that lasted for more than a decade.
Here is another example of a stock market correction:
The stock market correction of 2018 was a decline in stock prices that occurred in the United States in late 2018. The correction was triggered by a variety of factors, including concerns about trade tensions, rising interest rates, and slowing economic growth. The Dow Jones Industrial Average(DOW), a stock market index, dropped by more than 10% from its recent high, but it did not reach the 20% decline that is typically seen as the threshold for a bear market. The correction was relatively short-lived, and the stock market subsequently recovered and reached new highs in the following years.
It is important to note that stock market crashes and corrections can be difficult to predict, and it is important for investors to carefully consider their investment strategies and risk tolerance in both bull and bear markets.
Get full access to all training courses.