Is the stock market going to crash I have no idea but it has definitely happened before let’s take a look at the biggest crashes in u.s stock market history and make sure you read until the end to learn about the time the stock market crashed nearly 90 percent let’s start with black Monday in 1987?
BIGGEST Stock Market CRASHES in History
On October 19th the dow jones industrial average plunged 22 percent in a single day which is the biggest single-day decline in history by the start of November nearly every index in the market was down more than 20 percent no one was safe but what caused this well nothing in particular rather it was a series events like a growing u.s trade deficit the growth of algorithm-based computer trading and growing tensions in the middle east the significant rapid drop on black Monday was likely due to computer algorithms deciding to pile on to the sell-off crashing the market.
Dot-com bubble of 1999 in 2000 the Nasdaq composite the index that tracks tech companies had surged nearly 400 since 1995. It peaked at 5048 points on March 10, 2001. by October the index was down nearly 77 this crash wasn’t as quick as black Monday but it was just as significant as the popping of the dot-com bubble refers to the overvaluing of internet and technology stocks that occurred in the years prior as investors came to terms with the realities that these companies might not be all they’re cracked up to be their values plummeted.
It took the Nasdaq 15 years to reach the peak it had hit in march 2001 again the financial crisis of 2008 was also pretty sizable this crash was due to increasingly liberal lending guidelines increasing the number of subprime loans that made up the mortgage market held in securities known as mortgage-backed securities.
If that sounded like word soup I have a video explaining the 2008 financial crisis for dummies linked right here essentially home debt ballooned people couldn’t pay their mortgage and the entire mortgage market collapsed in march 2007 bear Stearns an investment bank went bankrupt this was a warning sign but the market kept growing to hit a peak in October of 2007 by September 2008 through the market was down more than 20 percent by march 6 2009.
The market was down a total of 54 the 2008 crisis was essentially the slow collapse of the entire u.s financial system it took four years for the dow to rebuild from the crash this next crash is one that you might remember the coronavirus crash of 2020.
During February 2020 the market crumbled 12 percent on March 12th the dow tumbled by 9.99 the single biggest drop since Black Monday in 1987. On March 16th it tumbled another 12.9 beatings the record set just four days earlier but what makes the coronavirus crash unique is that the market recovered nearly instantaneously it was already back up to its previous peak by may of 2020.
But why did this happen well basically because the federal reserve essentially decided to print money endlessly propping up the u.s economy alongside congress’s stimulus packages.
The stock market crash of 1929
It’s the worst crash in stock market history and it kick-started the great depression in 1921 the dow rose from 63 points to 381 points by 1929 basically 600 percent in less than a decade on september 3rd 1929 it started dropping on october 28th and 29th the market crumbled 12 and 13.
Each day respectively by November the dow was down more than 50 percent this continued until the summer of 1932 when the market was down to just 41 points 89 off its high set in 1929 it would take until 1954 for the market to regain its value.
The crash of 1929 was due to excessive leverage many investors and businesses were using debt to buy stocks meaning that the market was propped up by cheap debt but when the market started going down no one could pay off that debt and thus the market crashed and that’s the history of the largest crashes in u.s stock market history.