DISASTERS AND THEIR INFLUENCE ON THE INVESTORS BEHAVIOUR ON THE WORLD STOCK MARKETS

A terrorist attack, tropical storms, earthquakes and many other kinds of catastrophes are the headlines of yesterday's, today's and tomorrow's newspapers. The frightening regularity of such disasters beyond our control has exposed our vulnerability to adversity. Individual investors, in particular, gravitate toward the worst-possible scenario, believing that any unprecedented risk will bring economic growth to a crashing halt. Unanticipated state of affairs sends stock prices plunging as panicking investors order to sell, sell and sell. But do these risks mean we should completely avoid the stock market and keep our money under our mattresses? And if not, how can we mitigate our financial outfall as the market crashes in the aftermath of another disaster? In my following report I have shown three disasters as the example, which are: the earthquake in Japan (17 January1995); the terrorist attack in New York (11 September 2001) the Katrina Hurricane (August 2005).