- One group panics, fearful that markets are going to crash further, and starts to sell their stocks ...
On 24 Aug 2015, China experienced its “Black Monday” – in reference to the infamous 1987 global market crash. The Shanghai Composite fell 8.5% in one single day spreading panic around markets worldwide. Japan’s Nikkei and Hong Kong’s Hang Seng fell 5.9% and 5.2% respectively.
The sell-off continued when the European markets opened. The UK (-4.7%), Germany (-4.7%), France (-5.3%) and Italy (-6%) all saw their markets drop markedly. Finally, the Dow Jones Industrial fell 3.94% — its worst day in four years.
The U.S. and regional markets stabilized yesterday (25 Aug 2015) but the sell-off continued in China with the Shanghai Composite falling a further 7.6%.
When markets crash, there are two groups of people that react differently to the situation at hand: