Many investment experts have suspicions that a major crash in the stock, real estate and bond markets is upon us. The Dow Jones jumped more than 300 points on Tuesday to finish above 21,000. This is a record, but if you dig deeper you will find that things aren't as good as they seem. Some of the smartest brains on Wall Street believe that a major fall is upon us.
Five reasons to be afraid of a possible stock market crash
- The increase in stock prices is largely artificial. Stock prices are rising because companies are using their own money to buy back their own stocks.
- Over the last 7 years, the increase in stock and real estate prices have been driven by the Federal Reserve's printing of money. They are keeping interest rates low, which encourages borrowing.
- Economic activity and the number of jobs are actually declining. In some industries, massive cutbacks are taking place.
- There are similarities between today's market and 1987. In 1987, the Dow lost 30% of its value in a crash
- Some investors have quietly cashed out of the market or parts of it. Warren Buffett sold all of his Exxon Mobil stock last year and got rid of $900 million worth of Walmart stock this year.
- Based on this information do you think that another stock market crash is upon us? Why or why not?
- What do you think could be done to prevent another stock market crash?
My opinion:
I think based on this information, another stock market crash is very possible in the near future. Some of the reasons are similar to reasons why the stock market has crashed before. Also, the fact that stock prices are artificial and that investors are secretly selling all their stock should say something about what could possibly happen. I think that based on these reasons that people should look into selling their stock in case the stock market does crash. They could not have interest rates so low so that borrowing is not encouraged then the stock prices would not be so increased.
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Replies
Great job Kara!
I think that, from this information, it's likely that another stock market crash will happen, especially since businesses are buying their own stock back and making the high stock artificial. I think if people in general start spending their money more wisely and if business quit using artificial methods of raising their stock, this crash might be prevented.
I agree. I think that businesses are mostly leading us into this potential crash because they are causing the stock market prices to be artificial. That was one of the major causes of the crash of 1939 which is why I believe that it could very easily happen again because of this.
I think that it is possible, but I don't think anytime very soon.I think that if we get smarter, and use money more wisely, then this could be prevented. I also think that if we were to spread to word that this could happen, it could be prevented.
Well based on all the information that is available I do think that a crash could be very soon. Considering that large companies are buying back their stock they obviously are not using their money wisely and are just leading us into a crash. I do think that people could easily manage their money in a more wise way, but we would have to spread the word about this conspiracy and see if people will be willing to help prevent this.