Signs the stock market is about to crash


    Signs the stock market is about to crash

  • 1 The slope of the index becomes so vertical

    Right before the stock market crashes the stock market usually climbs very high in a very short period of time that the slope of the curve almost becomes vertical.

  • 2 Everyone talking about the stock market

    Usually before the stock market crashes almost every person, including those who have never thought about investing, starts investing and talking about the stock market. When you start hearing about the stock market everywhere you go, know that a bubble might be so close.

  • 3 Stocks go so high in a very short period of time

    when stocks go so high in a very short period of time without corrections or breath taking, it could be a sign of a coming stock market crash (See also psychological factors affecting the stock market).

  • 4 When everyone becomes overly optimistic

    When you start hearing extremely optimistic new prices and people's expectations become too high, know that the stock market is probably about to crash.

  • 5 When stocks trade at multiples of their value

    When stocks trade at multiples of their normal price to book ratio or price to earnings ratio then know that the market might be about to collapse (See why stock prices don't reflect the business value).

  • 6 When stocks keep rising with disregard to the performance of underlying companies

    When the stock prices keep going up even if the underlying companies aren't doing that well, the market might be overvalued and a crash might be on the way.

  • 7 When people become irrational

    When you hear that someone is buying a stock today to make a 20 percent return in a week, and when that truly happens for some people, then know that there is a market bubble.

  • 8 When nobody talks about a crash

    Crashes happen when everyone is so optimistic that no one even mentions a crash. When most people become greedy then it's time to be afraid.

  • 9 When new highs are reached everyday

    Right before a crash, stocks keep rising fast that new highs are seen everyday. This sign, combined with others, can indicate a coming crash (See how to select winning stocks).