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Antonio Guevara

Professor Nelson

ENGL 1302

10 September 2021

Stock Market Crashing

Introduction

The Stock Market has existed from 1817 to present day. It is used by investors to make

big profits by owning shares of a company. In a market crash a lot of money is lost and the crash

can be caused by a government shutdown, economic crisis, or a global catastrophe such a

pandemic or a world war. But, not all investors gain from it some of them lose a lot of their

money. There has been numerous Stock Market crashes meaning that in the crashes investors

lose millions of their profits. For example, the most recent crash was in March of last year when

COVID-19 hit the United States and then eventually the rest of the planet. The market is a big

part of the U.S. economy since it reflects how well our economy is. Some situations are

questioned as to why the market did crash.

Explanation of the Experiment

For this paper an experiment will be conducted as to why the Stock Market crashes and

how much profit is lost because in some instances the market technically doesn’t crash but a

good amounts of stocks do lose a lot of money. This experiment is going to compare each Stock

Market Crash and how much is lost during the event. Some people get confused when the market

crashes because there are days where a lot of stocks lose a lot but that doesn’t mean it crashed

entirely some days are bad for stocks and some days are good. The research will be on different

crashes, what caused it to crash, and how much was lost during that crash. Some factors that
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might influence a stock market crash is a global pandemic, government shutdown, or an

economic depression.

Whales in the Market

Whales to investors are considered to be the people that have a lot of shares in a

company. Basically, the whales sort of control how stocks move. If whales sell their shares in a

stock to secure their profits then the stock will go down drastically since the market cap

decreased. The market cap of a stock is how much money is invested in it. There are some days

that a lot of whales sell their shares in different stocks and that is what makes the market crash

since there is so much selling going on.

Over-hyped/Meme/Reddit Based Stocks

Over-hyped stocks are stocks that a lot of people start talking about and start hyping it up

and in result of that the price of the specific stock goes up a lot. As stated in the article, “Reddit

is an online content-sharing platform organized around communities of interest (subreddits)

which are moderated by volunteer users. Members post content, comment on posts, and up or

downvote posts.” (Literat & van den Berg, 3). Also, on the app Reddit there is a group called

“Wall Street Bets” and on that group people post what stock to hype up so people can make big

profits from it. Reddit stocks are always very risky to invest in because the way they go up or

down is solely based on the Reddit posts. Most people usually invest in those stocks just so they

can make quick profits from it. The meme stock of the year is Dogecoin. Dogecoin at the

beginning of 2021 was less than a penny. At its highest peak it was at a whopping .81 cents.

Once it hit .81 cents it all went downhill from there since all of the investors sold their shares in

order to secure their profits. Two breakout stocks that blew up on Reddit were AMC and
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GameStop. Before GameStop gained a lot of popularity on the market it was at $3 per share and

then the next day it sky-rocketed up to $70. Then later on in the same week it went all the way up

to $300. Once it hit $300 it started to go down a little bit since investors started selling their

shares to secure the profits that they have gained. AMC on the other hand was only at $2 per

share then the next day went up to $16 and then in the same week it went up again to $70. Then

the investors started selling their shares which caused the stock to go down in price. These types

of stocks can cause a crash since there is so much inflation in the market. There is also evidence

in an article that Reddit did influence the rise of the GameStop and AMC stocks. The article

states, “Fueled by newsboards and social media sites, mainly on Reddit and r/wallstreetbets-and

later r/superstonk,-retail investors focused on GameStop shares in a so-called short squeeze as

GameStop was massively shorted, in particular by a number of large hedge funds.”(Klein, 1).

World Crises

There have been many crises that has happened around the world. For example, the 9/11

attacks changed American history and security. But as said implied in the paper, “Stock markets

reacted strongly to the World Trade Center attacks both in Europe and in the United States.”

(Maillet & Michel, 1). So in that situation the stock market stayed strong and did not crash. But,

when COVID-19 hit the United States in 2020 everything went downhill. On March 13, 2020 the

United States was put on a Nationwide Lockdown and it affected everybody especially investors,

companies, and businesses. The market hit an all-time low on the day of lockdown. As stated in

an article about how COVID has affected markets, “The COVID-19 pandemic had a significant

impact on the socio-economic life of most countries in the world. The virus has the potential to

influence in a destructive way individuals, businesses, industries and entire economies.”

(Buszko, Orzeszko, Stawarz, 1). COVID-19 prevented businesses and companies to lose a lot of
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money since they had to close down and nobody could go to work anymore. But, thankfully time

has passed and we have some what recovered from the pandemic but it is not over yet. The

markets are close to normal now since everything has re-opened in the country.

Conclusion

In conclusion the results in each article were surprising. It was shocking to find that the

9/11 attacks barely affected the Stock Markets and it stayed strong with little change like nothing

happened. With the meme/Reddit/over-hyped stocks nothing really happened to the market with

those stocks. The rise of the stocks only affected those certain stocks. But, then we have the

global pandemic COVID-19. COVID affected the Stock Market drastically and it took a long

time to recover all the profits investors had made. So out of all the things that can happen to the

market COVID-19 made the biggest impact. This is solely because the pandemic hit the planet at

an alarming rate and all the nations were not expecting it. More could have been done to prevent

the spread of COVID-19 but countries acted too late. The markets have not yet fully recovered

because the pandemic is still a global threat to the human race.

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Works Cited

Literat, Ioana, and Sarah Van den Berg. “Buy Memes Low, Sell Memes High:

Vernacular Criticism and Collective Negotiations of Value on Reddit’s Memeeconomy.”

Information, Communication & Society, vol. 22, no. 2, 2019, pp. 232–249.,

doi:10.1080/1369118X.2017.1366540.

Maillet, Bertrand B, and Thierry L Michel. “The Impact of the 9/11 Events on the

American and French Stock Markets.” Review of International Economics, vol. 13, no. 3,

2005, pp. 597–611., doi:10.1111/j.1467-9396.2005.00525.x.

Buszko M, et al. “Covid-19 Pandemic and Stability of Stock Market-A Sectoral

Approach.” Plos One, vol. 16, no. 5, 2021, p. 0250938.,

doi:10.1371/journal.pone.0250938.

Klein, Tony. “A Note on Gamestop, Short Squeezes, and Autodidactic Herding: An

Evolution in Financial Literacy?” Finance Research Letters, 2021,

doi:10.1016/j.frl.2021.102229.
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