![]() ![]() So, when the value got close to that level, investors started panic buying. It is common knowledge that the Dow Jones Index could not go below 500 points. Another market panic is what led to the market swiftly moving back to its original value. This led to a panic sell-off of shares, creating a downward spiral that cut stock values by 20 billion dollars. Due to their current mood, they assumed the price had fallen further. So, investors had to predict the price of a stock 45 minutes in advance. This market panic was then exaggerated by the central office running late in updating stock prices. ![]() On May 28, 1962, the stock market had been declining for six months. Brooks describes the events that unraveled during the flash crash of 1962 to highlight that fluctuations are often due to arbitrary factors. But, those who had simply held their investments for those three days would likely have had a portfolio with similar worth. The three days of this crash sent stock market investors into chaos. The Flash Crash of 1962 is an example of how the behavior of investors is heavily influenced by their mood. “We may see another speculative buildup followed by another crash, and so on until God makes people less greedy.” – John Brooks ![]()
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