The Stock Market Crash

The stock market has long befuddled Americans because of its complexity and uncertainty. There have been strategies on how to attack the stock market, however, about 80% of people still lose money. A strategy to combat this is to diversify your assets to avoid having your investment crash if a company fails. This is, however, becoming an increasing issue due to 10% of the market index consisting of just 3 companies and 50% being comprised of only 50 companies. These companies became so large due to mergers and expanding their companies into areas where they were able to beat out the competition because they sell products at a lower price due to lower input costs. Smaller companies were not able to keep pace with the large corporations that come into their areas and were put out of business. This concentration of stocks in a small number of companies is both good and bad for the economy. The concentration of capital in a small number of stocks is actually extremely problematic. This is due to if one of these stocks were to plummet, the entire system would crash. Investors like to diversify their investments to avoid such a scenario, but since the smaller companies keep merging with larger corporations, it is becoming increasingly difficult. If one of these stocks were to crash, it would …show more content…
Since a company crashing could alter the market so drastically, other companies would be incentivized to ensure that the company does not crash. This causes a safety net in these stocks and allows people to invest in them and make money while at the same time continuing to grow these companies. Moreover, the companies are then able to continue the cycle by buying out smaller businesses. The stock market would then advance from an uncertainty for most people to at least knowing that a select few companies are all but guaranteed to