Some get involved with derivatives in other ways, producing even more apparent wealth along with apparent security. That's when all the apparent wealth disappears. It's a chain reaction. Collateral is gone so margin calls get generated. More chain reaction.
Funny things happen.
Some positions are short positions or hedge positions. So when the bust finally runs it's course a few lucky people who were in the right musical chair at the time have all the original money that was used to buy the stocks and the others go bust. Wondering where it all went. That's how guys like Rockeller and J. P. Morgan got their fortunes just before what was The Great Depression for everyone else. The Fed can and will move to drop interest rates to provide liquidity to meet the demands for cash that occur in a stock market panic.