There is a proverb that says, “those who do not want to learn from history are doomed to repeat it.” This proverb holds for many things, including the stock market. Today, we will take a look at some of the most famous stock market crashes throughout history.
The Black Monday Crash of 1987
The Black Monday crash was one of the biggest one-day markets crash in history. The Dow stock index almost doubled from the previous year until the fall of 1987 when the stock market began to drop. It was a drop that came out of nowhere; investment managers had to use a new tool known as “portfolio insurance” to protect their investments from further losses. Surprisingly, the drop only lasted one day. By the end of that day, the Dow lost over 22 percent of its value.
The Tech bubble crash of 2000
The 1990s were a period of speedy technological development, and investors were excited about the growth threw money into any company that had “. Com.” In March 2000, large tech companies began selling orders on their tech stocks, causing a panic that led to a 10 percent drop within a few weeks. By 2001, the majority of the tech companies – no longer propped up, causing investors to lose hundreds and millions of dollars.
The Housing Market Crash of 2008
As the name suggests, the real estate market led to the 2008 collapse. Although, the stock market and the real estate market are two entirely different markets, the failure of one led to the collapse of the other. The 2008 collapse was triggered by the extensive use of mortgage-backed securities, which were sold by financial institutions to investors, pension funds and banks. With fewer homeowners able to meet their mortgage loan obligations, sending financial organizations into bankruptcy. The Dow fell almost 34%, and it wasn’t until early 2009 that it began to climb again.