When the stock market crashes, it means that stock prices across various sectors of the market take a sharp decline. This can happen due to a variety of reasons, such as economic crisis, catastrophic events, or speculative elements that sweep across the market. Here are some things that can happen when the stock market crashes:

• Investors lose money: Investors can lose money if they sell their positions instead of waiting it out for a rise. For example, if an investor buys 1,000 shares in a company for a total of $1,000 and due to a stock market crash, the price of the shares drops 75%, the investors position falls from 1,000 shares worth $1,000 to 1,000 shares worth $250. In this case, if the investor sells the shares, they will realize a loss.

• Margin calls: Those who have purchased stock on margin may be forced to liquidate at a loss due to margin calls.

• Panic selling: During a stock market crash, many investors start selling their shares at once, which can lead to a further decline in stock prices.

• Economic impact: Stock market crashes can have severe effects on the economy and investors’ behavior.

If you are a long-term investor, it is best to do nothing during a stock market crash as the markets volatility means that it will eventually recover. Additionally, it can be an opportunity to buy more stocks for long-term investment as the prices are on the downward threshold.