# Prof. Xavier Gabaix's research on market crashes was featured

1 Faculty News October 19, 2013 ![Wall Street Journal logo](/sites/default/files/styles/246w/public/assets/images/wsjlogo.jpg?itok=5Qt0z3WX)>

Excerpt from [The Wall Street Journal](http://online.wsj.com/news/articles/SB10001424052702304384104579141371918517210) -- "[Mr. Gabaix](http://www.stern.nyu.edu/faculty/bio/xavier-gabaix) and fellow researchers have developed a theory that predicts, over long periods, how many daily price drops of various magnitudes will occur over long periods. For example, their theory forecasts that a 20% daily drop in the market will occur, on average, once every 100 years, a 15% plunge once every 50 years and a 10% drop once every 13 years. Mr. Gabaix says that the theory has been found to be quite accurate when tested against U.S. stock-market history back to the early part of the last century, as well as against the stock markets of Japan and Hong Kong."

[Read more](http://online.wsj.com/news/articles/SB10001424052702304384104579141371918517210)