I heard that the housing market being low in sales and with the forclousure market crashing, it is affecting investors so much that they are moving money out of equities (stocks) and investing more in safer investments. Thats why the stock market has been down so much in the past week.

How does this happen? I was reading about it, but I didn't really understand. Are investors pulling out their stocks from big lenders? How exactly does it affect the stock market? I need help understanding it in normal terms that make sense.

Please advise, thank you!!

It's purely psychological. The "housing market" is really the "real estate" market which accounts for a lot of money. There is also a lot of related industries which is affected if the real estate market goes down. First is the home builders or construction industry (contractors), then there is the materials suppliers, then the mortgage industry which makes loans to buyers and then there's the real estate agents, title companies, escrow companies, home insurance companies, furniture companies - all their jobs hang on how well the housing market is doing. They were in fear for the past 2 years when the housing or real estate market peaked and began sliding down. Investors in the stock market finally decided that there is too much fear and decided to sell their stocks. Selling causes the stock market to drop.

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This video lays out the underlying reasons behind the market crash. very telling

Also note this is not just a normal market correction, this is the begining of the collapse of our monetary system.

WAKE UP

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http://www.alphatrends.net

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Zapata George teaches you more about the stock market in 5 minutes than you will learn in 10 years. The first in a series of lessons on investing from one of the best in the business.

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Please anwer all if possible:

What are stocks?
How do they work?
What is the stock market?
What are all the companies that i find market doing in the market?

Please, if you can, tell me all there is about stocks, the stock market, etc.

Here's a couple excerpts from Investopedia:

[About Stocks]
"A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings. In other words, a shareholder is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to 10% of the company's assets."

[About the Stock Market]
"The market in which shares are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, it is one of the most vital areas of a market economy as it provides companies with access to capital and investors with a slice of ownership in the company and the potential of gains based on the company's future performance."

Go to the Source link for a ton of more info.

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What was the PE of the stock market before and after the stock market crash of 1929? What I'm really wondering, was that stock market really a "bubble" crashing?

No, the P/E ratio didn't really collapse - but profits collapsed as well. See http://www.econ.yale.edu/~shiller/data/stock%20data%20annual%201871-2003.htm for historical data.

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http://www.alphatrends.net

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http://www.technicalanalysisbook.com

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http://www.alphatrends.net

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One of the reasons I asked was also because I'm still a rookie at investing and wanted to hear some opinions. I'm as green as can be when it comes to stock market investing, and I understand people lost lots of money, but is the drop really a reason to be nervous? I understand it's a sign there might be a change in the lending market, but is this a reason to be nervous about investing in the stock market or to start trading all your stocks? I mean it's not like the America is an unstable country. It's no reason to start pulling all of your money out of the stock market, right? This is a proven market that should stabilize itself in a while, no? Is this just an opportunity to buy cheap stocks?

Chime in on the stock market plunge?

There certainly is reason to believe that stocks might get cheaper still. America is not so stable as you might have imagined. It is fueled by debt. Now that debt has become shall we say unstable, the fuel supply might be facing an interruption. This might just be the beginning. On the plus side most corporations are fairly healthy and stock valuations are not out of line with reality. But none of that will really matter all that much if people stop spending, which there are indications that they are.

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