The stock market crash on Black Tuesday had immediate repercussions in Europe. Stock that a trader does not actually own may be traded using short selling ; margin buying may be used to purchase stock with borrowed funds; or, derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be required by outright purchase or sales. Regulation of margin requirements (by the Federal Reserve ) was implemented after the Crash of 1929 Before that, speculators typically only needed to put up as little as 10 percent (or even less) of the total investment represented by the stocks purchased.
This ridiculously short time frame turns the game into a lottery, encouraging people to take huge risks with their virtual $50,000, breaking the laws of commonsense investing in the process. In addition, trading futures is treated better tax-wise because the IRS allows 60% of the gains to be taxed as long-term gain even if you hold it for only one minute! Due to my strict discipline and risk management, I never lost money by trading Futures.
If I were to put complete trust in my newfound success, and allow major moves in the wrong direction, thinking that the market always turns around – the day will come that this rule breaks and the market continues to move against me. It not only can happen, but it will happen. Jack Schwager shares critical lessons he learned by interviewing some of the best Futures traders. The worst stock market crashes in U.S. history have come during the month of October.
And the largest percentage crash in the history of the Dow Jones Industrial Average by a very wide margin happened on October 19th, 1987. Just as in 1929, the market was performing fantastic and the continuous wealth increase seemed to be unstoppable. Market commenters said the 10% drop in the Dow Jones was a ‘healthy correction’ and we’re on our way to the next uptrend and Christmas rally. Most people seem to assume that since I run a website called The Economic Collapse Blog” that I must be rooting for a stock market collapse and an economic implosion, but that is not true at all.
Get your update on the Dow Jones Industrial Average, stocks to watch, the biggest stock market news, and today’s best profit plays. Get your update on the Dow futures, stocks to watch, the biggest stock market news, and today’s best profit plays. Following another plunge on what was dubbed Black Monday”, China’s stock markets have now given up all their gains for the year.