If you know why stock markets crash, you will understand why the markets are real vulnerable now
Peter Oberois
Mar. 15, 2007

Stock markets crash when it encounters something bearish that it cannot imagine. When smart money anticipates the bearish factors, the market experiences slow bear markets with the crowd slowly exiting the arena with big losses they remember for a long time. The smart money has exited the market long before that stage.

Bear markets encounter crashes sometimes when the smart money is also fooled by market actions, sentiment and news factors.

The crash in the market happened last in 1987 when Alan Greenspan all of a sudden raised interest rates like a booster rocket. The smart money did not get the time to exit the market. The distribution was short and the market traded with gaps where the crowd got trapped on the day of the crash.

Right now the same is happening. The stock markets did not anticipate the size of the bubble in US Mortgage prime and subprime loans. The catastrophic bubble burst is not giving smart money time to exit the market.

If you know why stock markets crash, you will understand why the markets are real vulnerable now.

If you know why stock markets crash, you will understand why the markets are real vulnerable now
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