The mathematical description of stock market movements has been a subject of intense interest. The conventional assumption has been that stock markets behave according to a random log-normal distribution. Among others, mathematician Benoît Mandelbrot suggested as early as 1963 that the statistics prove this assumption incorrect. Mandelbrot observed that large movements in prices (i.e. crashes) are much more common than would be predicted from a log-normal distribution. Mandelbrot and others suggested that the nature of market moves is generally much better explained using non-linear analysis and concepts of chaos theory. This has been expressed in non-mathematical terms by George Soros in his discussions of what he calls reflexivity of markets and their non-linear movement. George Soros said in late October 1987, 'Mr. Robert Prechter's reversal proved to be the crack that started the avalanche'.
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Thirty-two percent of Americans who were invested in the stock market during at least one of the last five financial downturns pulled some or all of their money out of the market. That’s according to a NerdWallet-commissioned survey, which was conducted online by The Harris Poll of more than 2,000 U.S. adults, among whom over 700 were invested in the stock market during at least one of the past five financial downturns, in June 2018. The survey also found that 28% of Americans would not keep their money in the stock market if there were a crash today.
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What about corporate America? According to a New York Times survey of business leaders, almost half of the respondents believe that the U.S. could face a recession by the end of 2019. And if not in 2019, then in 2020. (Source: “A jarring new survey shows CEOs think a recession could strike as soon as year-end 2019,” Business Insider, December 17, 2018.)