How do you prevent a stock market from crashing?

Question

If there's a lot of panic, and distrust in stocks, and you know it's going to crash...what do you do??

sorry
i mean, what should the GOVERNMENT do?

Answer 1

Put all Harshad Mehtas behind bars, stop natural disasters, kick Left front's *** and make sure that India produces at least 1 Dhirubhai Ambani every year.

Answer 2

First of all, don't be so worried by all the stock market gurus on TV forcasting a crash. It's a fact that economists have predicted 10 out of the last 2 recessions!

But if you feel strongly that the market is headed south, here's what you do: let it go down, hold onto your investments, and buy more on the way down. What you do while buying when the market is low is you are able to purchase more shares for the money you invest than you would when the prices were higher. If you're putting your money in a diversified mutual fund or etf, like VTI for example, then today you'd be paying about $147 a share. If you were investing $1000 at a time, then you'd be able to only buy 6 shares with today's price. But if it dropped to $100, then you could buy 10 shares. When the price goes back up (in the long run, the market will be higher), then you make more money because you own more shares.

But........if you're a short term trader and you think we're headed lower, buy some SDS and short the market at your own risk!!!!

Answer 3

There's not much you can do to prevent a downward trend except improve the economy. Tweaking interest rates, and other measures can all help with that. But the economy runs in cycles and while it may have a downward trend for a while, it will eventually go back up.

The only way to keep it from crashing - which I would define as a sharp downward trend within a very short space of time - is to halt trading if the market drops by more than a certain percentage of a period of time. One of the main problems with the stock market is it's not a real indicator of economic performance. The performance of the stock market is largely a reaction to economic news.

Answer 4

Keep lowering interest rates apparently...seemed to have worked for Greenspan for the most part, and what a precedent he has set for Bernanke. No but really, there really isn't a lot the government can do, except MAYBE infuse more government spending. But it's really a hard question to even fathom. I mean, it's like saying "gee I just know tomorrow I'm going to have a complete nervous breakdown".

All in all, just remember the phrase just delaying the pain. If it truly is inevitable, there isn't anything that can be done to stop it. Just delay it at best. The government can also try to talk and spin out of it. Really talking people into spending and staying put and not pulling out. The stock market is so much emotion driven, it's almost really an exercise in psychology.

Answer 5

You can not prevent a stock market from crashing. There are just too many variables and nstitutional participants. Any number of things can trigger a sharp decline including bad earnings, extremely bad economic news, bad news stories afffecting the US and the world, program trading,negative trends in consumer confidence,rising interest rates,etc. If you have an idea a crash may come, the only thing you can do is switch monies to money market funds or cash equivalents and wait out a severe decline

Answer 6

they could have raised margin criteria from 10% to 60%, hence severly proscribing the rampant hypothesis (with borrowed money) in stocks. yet even then, they could have prevented the inventory marketplace crash from degenerating into the finished melancholy, in the adventure that that they had finished some issues. among those might want to were a million) assure economic employer deposits, 2) reducing rates of pastime, 3) deficit spending. And congress may have finished their area, by ability of no longer PASSING Smoot-Hawley commerce bill. the authorities, by ability of their movements became the inventory marketplace crash (from a severe recession) into the finished melancholy.

Answer 7

Do what the Federal Reserve Bank did during the last mortgage bank crash. Print more money and bail them out. Of course that inflates money and makes the dollar worthless, but they don't care, we just have to work more to buy less.

Answer 8

Print more money.
Easy .
Yah you will have inflation maybe stagflation
but the rich will be able to keep their lifestyle intact.

Answer 9

Put your money in safe investments.

Answer 10

no one can prevent