The Investors had confidence that the U.S. stock market will not have a crash. The investor’s confidence is one of the driving forces of the share market. But the confidence is decreasing as there is no improvement in the stock market. Proof is given from the chart published by various professional organisations. The stock prices may be determined with respect to the demands of supply and the economy. The prices are increasing, which gave rise to such a situation. The analysis showed the possibility of the stock market crash. The buoyancy, which the stock market of U.S. will not face a crash was steady until 2004 from 1989, proving positive for the individual and institutional investors. In the year 2003 December, 92.52% of the stockholders believed in rise. This belief increased by January 2004 to 95.52%. There was a high confidence prevailing among the investors in 2006. The confidence level faced a bottomed decrease just before the subprime crisis, and the condition got worst as the crisis increased. The confidence level was low just before the crisis and strengthened by 2008.
In the year 2000, the stock market reached a peak, and this proved to be a major turning point as the confidence level decreased to 71.91% by July 2001. By March 2002, the confidence level raised to 76.65%, giving a consolidation to the investors. But this did not withstand the fall between 2002 and 2006. The decline in the stock market bottomed in late 2002 after the terrorist attack in 2001. The crash confidence reached its lowest point of 20.79% in the month of November, 2002 for the institutional investor and 28.95% for individual investors. The individual and the institutional investors are confident about the crash. Due to the fall in the economic condition, the assurance level is decreasing. The students and the faculty of Yale School of Management have done research on the stock market from October 1989 to 2015. The outcome of the research gives the evidence for the stock market crash.
The research speaks about the belief of the stockholders and the decrease in the confidence in the last few months. The index report offers proof for the crash. The study showed that the confidence level has reached its all time low for all the investors, at the beginning of 2009. This was just a few months after the Lehman crisis which resulted in a strong depression and fear. The stock market crash confidence started to decrease from this day. But after certain months of little improvement that was noticed in the stock market, the investors had confidence that the stock market will not face any crash or crisis. Recently the research shows a chance that the crash can take place. The report showed the index decreasing since May 2014. The report shows that 41% of institutional and 39% of individual investor’s confidence that no crash will take place for next six months. But as the months passed by, the confidence level of the investors collapsed and by December, relatively more people believed in the crash.
The percentage of non-believers that the crash would not take place decreased to one-third. The Yale’s research gives the proof for this situation showing a decline in the confidence rate in the second half of 2014. But with an optimist view, we can notice that the record of 2009 coincided with the current market. Hence, this can prove to be a contrarian indicator. The crash in the stock market confidence reached its all-time low in early 2009 and gained a recovery starting in 2009.