Can someone tell me how the credit crisis caused collapsing share prices. include a few examples if possible. And if you know, can you tell me why this happened.|||Basically, consumer confidence is down. In a credit crisis, consumers have less money to spend. Therefore, not as many people are going to invest.
If people sell their shares, this means that the value of a share will go down. Nobody will want to hold on to a share that is losing value. They will lose money from it. Therefore, speculators perceive that shares will be sold in this crisis, and they will do so accordingly.
In a way, people's expectations about what is happening in the market can actually become real because after all, it is the consumers that make decisions about how to save and spend their money.|||Fear and fund redemptions are driving down stock prices.
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