The Stock Market Crash of 2008

Week after week investors are hopeful there will be a significant recovery to the stock market. Unfortunately investor's wishes aren't coming true and the stock market continues to meltdown. Everyone is pointing fingers at everyone else blaming the stock market crash on investors that are selling their stocks because they are fearing a recession, other people blame the corporate banks that had to be bailed out by the federal government.

Several banks have declared bankruptcy or have assumed a lot of debt due to the overwhelming amount of foreclosures. It seems that every time the stock market tries to rally, sellers immediately jump in and sell their stock because they want out of the stock market. Media exaggerations of the current economic status has caused more people to panic and pull their money out of the stock market and either hoard it or invest it into CDs, gold, or savings accounts.

One of the biggest factors leading to the stock market crash is the catastrophic interest rates. For 31 months, Greenspan left the interest rates below the rate of inflation, leading to a financial disaster. Government officials that wanted unregulated financial markets are at fault for the current financial disaster, perhaps more than anyone else. An unregulated financial system does not allow money to support productive things like housing, schools, and public infrastructure.

The financial crisis spread to the real economy and the housing market was hit the hardest. Banks started foreclosing on home owners that couldn't afford to pay the new interest rates after the principal term ended. Companies' steady revenue streams started to dwindle and company lay-offs began. Unemployment is on the rise and creditors are tightening their rules and are holding onto whatever assets they still have. The real estate market is much lower than it has been in years, but people can't get loans to purchase the homes because the banks are so far in debt from faulty loans.

Short-term investors are nowhere to be found at the moment because everyone has pulled their money and tucked it safely into long-term, slow-growing investments. The stock market crashed as a result of panic and inflation. Anyone with a 401K or long-term investment is frustrated by the stock market performance and the panic among investors is only continuing to grow.

Right now everyone is losing money. Banks, investors, and the average American are feeling the effects of the stock market crash and bank failures. No one is able to predict the end of the stock market crash, and that is only causing more people to become scared about their investments.

The stock market was already in a bear market, which can last anywhere from a few days to 5 years. Investors were thinking the bear market would end and a bull market would take over again. Unfortunately the bank failures have forced many investors to predict an economic recession that will last until 2010 or longer.

Sadly, the stock market could repeat this same cycle in 2009 if the real estate market doesn't pick up. The stock market collapse can only mean one thing for investors and that is to have patience. Eventually the stock market failure will end and make a turn for the positive again. Sticking to long-term investments will support your investment portfolio and get you through the current economic state that could very likely turn into a recession.

Stocks are at an all-time low, which means this is a prime time for investors. It is wise to approach the stock market with caution. Short-term investing is not a wise idea right now and investors should only consider long-term investments if they know the company will rebound. Right now, the stock market continues to drop on a daily basis, leaving several investors wondering when it will hit the bottom. So far the market hasn't finished in green for awhile and it isn't responding to any government interventions, like the bailout.

The upcoming Presidential election has many investors hopeful for the future as they expect to see a change in the economy. The only thing to remember with the election is that it will not be an overnight fix to the economic woes of the country. It will still take a long time to regain the stock market and build it back up to where it once was. Those investors with patience to hold onto their investment during the economic turmoil will be rewarded in time.

One of the main reasons the market continues to see red is because the second it has a good day, it has a high volume of sell-off the very next day. The sell-offs are coming from investors that are panicking about their investments and they want to cut their losses and get out while they can. The market will always bottom out in times of panic, it is just a matter as to when the panic will cease.

It is important to remember that selling now doesn't necessarily mean people are panicking. People aren't exactly panicking about their funds; they just want a little "insurance" so to speak. They want to invest in stocks, bonds, or mutual funds that will be there to protect them during a recession or during another stock market crash. It is never a bad idea to move from riskier investments to safer ones.

People are accepting their losses in the stock market because they are on paper. People tend to behave irrationally when they have the assets in hand. Several investors have placed their money into gold and other precious metals to support their investment portfolio during hard times. Many people actually keep gold in their homes so they can have easy access to it if they ever need it.

One thing investors need to remember about the stock market crash is that a financial panic will not last forever. Soon investors will understand the great assets that are trading for great values and they will start investing again. Hopefully investors are smart enough to scoop up the good deals, or else the country will slip into another Great Depression. Banks and other financial institutions are doing anything to raise cash. Hedge funds are being pushed by banks right now. Investors are purchasing these hedge funds because they are told they have inherent value. It is easy for a stock market to crash; it is the stock market recovery that takes awhile.

The country could be facing a huge funding crisis soon because the purchases of US Treasuries are at an all-time low. Foreign central banks are beginning to cut back on their purchases of US debt because inflation and unemployment are on the rise. Housing interest rates are at an all-time low, making it ideal for home buyers, however interest rates on everything else are rising sharply. Whenever interest rates tend to rise like this, bankruptcies tend to rise and even more people begin losing their jobs.

Even though some Americans have lack of faith in the government and in the banks, the US Treasuries are still one of the safest places to invest. Foreigners will continue to invest in US Treasuries and Americans will continue to invest in US Treasuries because they are the safest and most desirable financial instrument that is recognized in the global financial system. The investment in stocks and bonds will continue to remain low for the time being, until the economy starts to swing upwards again.

It seems like every business in America is carrying debt and most of them are going bankrupt or having to cut back on several things. Americans are becoming increasingly worried about their jobs, savings, and ultimately their future. The worst thing an investor can do right now is sell. History always has a way of repeating itself and it will do the same thing with the 2008 stock market crash as it did with the 1929 crash and even the 1987 crash, it will rebound.

There are some other things investors can do to get through the stock market crash. The number one thing an investor needs to do is to pay off their debts. Credit cards need to be paid off as quickly as possible as do any loans you may have. Work hard at paying off your mortgage, especially if this is the only debt you have. Those with the least amount of debt won't be hit as hard with the stock market crash. It is always a safe investment to keep a little cash stored away in your home or on you at all times. Several banks are rendered useless during a stock market crash and clients are unable to get their money. Keeping some cash stored away in a safe box will help you get by until you can have access to your bank again. Every financial portfolio needs to include a good number of solid assets like precious metals. Gold bullion coins are a sound investment strategy to protect your family from financial ruin. Right now, gold stocks are even on the rise because gold can be "cashed in" anywhere in the world.