If 10% of stock holders sell their stock holdings, what happens to these stock holdings? If someone is willing to buy the holdings, then another stock holder will end up owning the stock holdings. But if nobody is willing to buy the holdings, then what happens? (This would be the case that leads to a big stock market crash?)
If no one wants to buy it then it won’t get sold. The stock market works by sellers stating an asking price and buyers stating a bidding price. When a seller can’t find a buyer for the price he wants he can A) lower his price or B) hold on to it. When a buyer can’t find a seller with the price he wants he can A) raise his price or B) don’t buy anything. A crash begins when sellers are forced to lower their price to sell (they may be facing a margin call and have no other choice). Likewise the opposite can happen to buyers. For the crash to be sustained, the market would have to lose a significant amount of value over a several day/week period with no immediate signs of recovery (i.e. the value of the stocks really is low).
A crash cannot happen if the stock does not change hands, of course, the market won’t rise either.
If no one wants to buy it then it won’t get sold. The stock market works by sellers stating an asking price and buyers stating a bidding price. When a seller can’t find a buyer for the price he wants he can A) lower his price or B) hold on to it. When a buyer can’t find a seller with the price he wants he can A) raise his price or B) don’t buy anything. A crash begins when sellers are forced to lower their price to sell (they may be facing a margin call and have no other choice). Likewise the opposite can happen to buyers. For the crash to be sustained, the market would have to lose a significant amount of value over a several day/week period with no immediate signs of recovery (i.e. the value of the stocks really is low).
A crash cannot happen if the stock does not change hands, of course, the market won’t rise either.
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