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JLeslie's avatar

If we shut down the stock market temporarily what would happen?

Asked by JLeslie (58949points) 2 months ago from iPhone

Would it help or hurt?

Observing members: 0 Composing members: 0

7 Answers

Tropical_Willie's avatar

They do shut the market down with “circuit breaker”, when it is is in free fall. If you’re talking about a week or more then I don’t see an advantage when it re-opened it would still be jumpy. Maybe that would cause more people to panic sell when it re-opened. I think it would hurt.

Yes I have money invested in the stock market.

JLeslie's avatar

I mean two or three weeks, not 15 minutes, or at the end of a day.

Tropical_Willie's avatar

Panic selling when it re-opens. People get money and need money that is tied up in stocks. Bank collapses in the depression were panic withdrawals

RedDeerGuy1's avatar

For every seller their must be a buyer.

Tropical_Willie's avatar

The buyer may offer only 50% of what is was worth in February. Panic seller will snap up the cash and run; loosing half of the stock value. If you don’t sell you don’t lose money.

josie's avatar

People who need cash that is tied up in the market will not be able to get to it.
That would be bad for many at the moment.
It’s why the CARE act has a provision to allow early withdrawl from 401K or IRA without penalty.

zenvelo's avatar

The market would tank when it re-opened. It is one of the reasons the market is never closed four days in a row, because people (and the system) need liquidity.

And why would you close it? That would kill the economy while it was on its knees.

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