Stock market crash
A stock market crash is a sudden dramatic loss of value of shares of stock in corporations. Crashes often follow speculative stock market bubbles such as the dot-com boom.
The most famous crash in 1929, (known as Black Thursday) when the Dow Jones Industrial Average dropped 50%, preceded the Great Depression. The succeeding years saw the Dow Jones drop a total of over 85%.
There was also a crash or "adjustment" on Monday October 19, 1987, known in financial circles as Black Monday, when the Dow Jones lost 22% of its value in one day, bringing to an end a five-year bull run. The FTSE lost 10.8% on that Monday and a further 12.2% the following day. The pattern was repeated across the world.
The stock market downturn of 2002 was part of a larger bear market that took the NASDAQ 75% from its highs and broader indices down 30%.
Stock market crashes are driven by panic as much as by underlying economic factors. So long as the prospect of further daily drops in the value of stocks persists, a bear market, equity investors can be expected to persist.
See also
- Financial markets
- Stock market
- Accountancy scandals
- Great Depression
- Behavioral finance
- Stock market bubble
- List of stock market crashes
External links
- Stock Market Crash! (http://www.stock-market-crash.net) — Learn about history's worst stock market crashes.
- Every Market Collapse is Different, Opinion in the New York Times, Nicolas F. Brady, August 11, 2002 (http://www.nytimes.com/2002/08/11/opinion/11BRAD.html?todaysheadlines)
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