Stock market crash

From Wikinfo

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 was in 1929, when the Dow dropped 50%, preceded the Great Depression. The succeeding years saw the Dow 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 Industrial Average 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 sell.

See also: Financial markets, Stock market, Accountancy scandals, Great Depression

External link

• Every Market Collapse is Different, Opinion in the New York Times, Nicolas F. Brady, August 11, 2002

References

• Adapted from the Wikipedia article, "Stock market crash" http://www.wikipedia.org/wiki/Stock_market_crash August 14, 2003