Who Buys During a Crash?

[slumlord 10]

When a stock market is crashing and stock prices are falling and everyone is selling all day who are the people doing all the corresponding buying all day? Why on earth would anyone buy during a stock market crash and how come liquidity doesn't just cease?

[enochbenjamin 10]

When a stock market is crashing and stock prices are falling and everyone is selling all day who are the people doing all the corresponding buying all day? Why on earth would anyone buy during a stock market crash and how come liquidity doesn't just cease?

 

Somebody needs to take profits. Sell high, buy low. Plus there is some sorta rule about market makers having to take trades or else the market just won't go.

[ckait 10]

I was buying all day and loving it.

[rxs0005 10]

this was a great day to short some of the over bought stocks like AAPL and overly hit secotr like the banks

[DugDug 10]

"Why on earth would anyone buy during a stock market crash and how come liquidity doesn't just cease?"

 

In answer to your question - buyers include - market makers, long volatility option traders, short covers, bargin hunters, old orders, new orders, fools, smart people, value investors, people averaging in..... you name it.

 

And really when you think about it - without hindsight ......

How do you know its a crash?

 

also when you think about it - the liquidity does not necessarily dry up (though it can) its just that people will choose to exchange at price levels that are lower.

[shrike 10]

I think,principally the same who are selling :cheers:

[thalestrader 14]

When a stock market is crashing and stock prices are falling and everyone is selling all day who are the people doing all the corresponding buying all day?

 

Bernanke? Geithner?

 

Best Wishes,

 

Thales