Additionally,many choose to invest via the index method. In this method,one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000).The principal aim of this strategy is to maximize diversification,minimize taxes from too frequent trading,and ride the general trend of the stock market (which,in the US,has average nearly 10%/year,compounded annually,since World War Ⅱ).
A stock market crash is often defined as a sharp dip in sharp prices of equities listed on the stock exchanges. In parallel with various economic factors,a reason for stock market crashes is also due to panic. Often,stock market crashes end up with speculative economic bubbles.
There have been famous stock market crashes that have ended in loss of billions of dollars and wealth destruction on a massive scale. An increasing number of people are involved in the stock market,especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market. There have been a number of famous stock market crashed like the Wall Street Crash 1929,the stock market crash of 1973-1974,the Black Monday of 1987,the Dot-com bubble of 2000. But those stock markets crashes did not begin in 1929,or 1987. They actually started years or months before the crash really hit hard.