Stock prices can go up or down very rapidly. It is sometimes hard to know what is causing these price swings. In the most fundamental sense, supply and demand are the biggest factors driving stocks. If more people want to buy a stock than sell it, the price will go up.
If there is a lot of selling pressure, the stock will go down. This is often a result of fear or disappointment in company results or economic events.
There are also longer-term factors that influence the market. For example, the financial crisis of 2007 to 2009 caused major changes in markets around the world and took years to recover from. These factors can include a sudden increase in interest rates, a large decrease in the value of a currency, changes in trade policy, a war or other conflict between countries, natural disasters, and more.
Many people are also invested in the stock market through their pension and retirement plans. So, when the market moves in a way that makes some people nervous, it can have a real impact on everyone’s lives. There have been famous crashes like Black Monday in 1929 and the Great Recession of 2008-9 that affected millions of people and led to loss of wealth on a massive scale. But, there are many ways to protect your portfolio from these types of crashes. One of the best ways is to diversify your investments and learn how to manage your risk.