“A booming stock market refers to a bull market which is when there is an increase in commercial activity. This means that the economy is looking great right? GDP is up and the stocks are rising in price making investors happy. What happens when the stocks start reaching their plateau or the stocks reach their cap? The economy will eventually slow down and the stock market will drop as well. The stock market is kind of like a roller coaster. It goes up slowly or rapidly and it can just as easily come crashing down. The one thing that we do know is that no matter how steady and great the market looks, at some point, it will turn. The problem with that is we are never 100% certain when or how drastic these changes will occur. When stockholders start losing a bunch of money, this means investing is also at a loss. The whole economy then becomes affected like a domino effect.”
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