Stock market crashes and dynamics of aftershocks

We begin with the intuitive observation that short-term business-as-usual process and bubble rising looks like an accelerated energy before an earthquake. In such a framework, the aftershocks resemble the correction process of the stock market. We investigate the statistical properties of stock returns in the financial markets just after a major market crash. It is found that the aftershocks obey the well-known Gutenberg–Richter simple rule in geophysics. Our empirical observations show that the statistical properties of aftershocks sequences in the crashes of late ʹ90s and early ʹ00s are essentially different from the ones observed a decade earlier.