<p>A stock market crash is a sudden, dramatic drop in the value of stocks listed on a stock market, often resulting in a temporary or permanent loss of investor confidence.</p>

<h2>How It Works</h2>
<p>A crash occurs when a significant number of investors sell their shares simultaneously, causing prices to plummet. This can be triggered by various factors, such as:</p>
<ul>
  <li><strong>Economic indicators</strong>: Negative economic data can signal a potential downturn, prompting investors to sell.</li>
  <li><strong>Company-specific news</strong>: Poor earnings reports or scandals can lead to a sell-off of a company's shares, which can spread to other stocks.</li>
  <li><strong>Market sentiment</strong>: If investors become overly optimistic (bullish) or pessimistic (bearish), it can drive prices up or down rapidly.</li>
  <li><strong>Systematic risks</strong>: Events like natural disasters, political instability, or global pandemics can disrupt markets and cause widespread selling.</li>
</ul>
<p>During a crash, panic selling can lead to a self-reinforcing cycle, where falling prices cause more investors to sell, driving prices down further.</p>

<h2>Why It Matters</h2>
<p>Stock market crashes matter because they can have significant economic and social impacts. For instance, the 1929 stock market crash:</p>
<ul>
  <li>Triggered the Great Depression, a period of severe economic decline that lasted for a decade.</li>
  <li>Led to a loss of confidence in financial institutions, causing many banks to fail.</li>
  <li>Had profound social and political consequences, contributing to the rise of extremist movements and changing the course of history.</li>
</ul>
<p>Today, regulators and governments closely monitor financial markets to prevent and mitigate the effects of crashes. However, they remain an inherent risk of investing in stocks.</p>