The Stock Market Freefall From A Bankruptcy Perspective
The irrational exuberance (borrowed from Alan Greenspan) with respect to the continued increase in the stock market has led many investors to purchase even more securities on margin. The recent freefall will trigger substantial margin calls, which in turn will require additional selling of securities at a loss, and in many instances it will create a cash crisis for the investor whether large or small. In past economic downturns involving the stock market, this has led to a substantial number of unexpected bankruptcy proceedings.
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