We have been witnesses to some of the worst stock market crashes ever known. Driven by panic and external economic factors, a stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. The results are significant losses of paper wealth. Usually occurring after a prolonged period of rising stock prices and excessive economic optimism, these events are almost as old as the stock market itself. In fact, there has been hundreds of stock market crashes over the past decades! Today, we will take a look at some of the worst ones. From the Wall Street Crash of 1929 to the Eurozone Crisis, these are 25 Of The Worst Stock Market Crashes in History.
Kipper und Wipper
One of the oldest stock market crashes in human history, Kipper und Wipper was a financial crisis caused by debased (fraudulent) foreign coins minted in the Holy Roman Empire from 1621-1623, done to raise funds at the start of the Thirty Years’ War. The name refers to the use of tipping scales to identify not-yet-debased coins, which were then taken out of circulation, melted, mixed with baser metals such as lead, copper or tin, and re-issued.
Tulip Mania Bubble
The Tulip Mania Bubble was a period in the Netherlands during which contracts for bulbs of tulips reached extraordinarily high prices and suddenly collapsed. At the peak of the tulip mania, in March 1637, some single tulip bulbs were sold for more than 10 times the annual income of a skilled craftsman. The term “tulip mania” is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.
Bengal Bubble of 1769
The Bengal Bubble of 1769 was caused by the increasing overvaluation of the East India Company stock between 1757 and 1769. Eventually, this resulted in the Great East Indian Crash of 1769. The bubble and crash occurred in the wake of the conquest of Bengal by the East India Company that acquired increasing powers in Bengal through the installation of the puppet regime of Mir Jafar. This control included control of the tax collection rights for the province from the weak and declining Mughal Empire.
Panic of 1792
Panic of 1792 was a financial credit crisis that occurred in March and April 1792, precipitated by the expansion of credit by the newly formed Bank of the United States as well as by rampant speculation on the part of William Duer, Alexander Macomb, and other prominent bankers. The bankers attempted to drive up prices of US debt securities and bank stocks, but when they defaulted on loans, prices fell, causing a bank run. Simultaneous tightening of credit by the Bank of the United States served to heighten the initial panic.
Caused by the efforts of two speculators, Jay Gould and his partner James Fisk to corner the gold market on the New York Gold Exchange, the Black Friday was a gold panic that occurred on September 24, 1869. On that day, the conspiracy was revealed, sending the stock market into a free-fall. The scandal took place during the Presidency of Ulysses S. Grant whose policy was to sell weekly Treasury gold to pay off the national debt, stabilize the dollar, and boost the economy.
Panic of 1873
The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879, and even longer in some countries. In Britain, for example, it started two decades of stagnation known as the “Long Depression” that weakened the country’s economic leadership. The Panic of 1873 was known as the “Great Depression” until the worldwide economic depression in the early 1930s set a new standard.
One of the worst stock market crashes in the history of Brazil, the Encilhamento was a major economic bubble that boomed in the late 1880s and early 1890s. Then Finance Ministers adopted a policy of unrestricted credit for industrial investments, backed by an abundant issuance of money in order to encourage Brazil’s industrialization. This policy of economic incentives created unbridled speculation, increased inflation, and encouraged fraudulent initial public offerings and takeovers.
Panic of 1893
The Panic of 1893 was a serious economic depression in the US that began in 1893 and ended in 1897. The depression deeply affected every sector of the economy and produced political upheaval that led to the 1896 realigning election and the Presidency of William McKinley. As a result of the panic, stock prices declined drastically, 500 banks closed, 15,000 businesses failed, and numerous farms ceased operation. The unemployment rate hit 25% in Pennsylvania, 35% in New York and 43% in Michigan.
Wall Street Crash of 1929
Also known as the Great Crash, the Wall Street Crash of 1929 began on October 24, 1929 and it was the most devastating stock market crash in US history in terms of full extent and duration of its aftereffects. The crash followed the London Stock Exchange’s crash of September 1929 and it contributed to the following 10-year Great Depression that affected all Western industrialized countries. Overall, prosperity and unregulated business had led to a very active and volatile stock market, which – combined with lack of clear banking practices to protect investments – eventually caused the crash.
Recession of 1937 - 1938
Triggered by an economic recession within the Great Depression and doubts about the effectiveness of Franklin D. Roosevelt’s New Deal policy, the Recession of 1937–1938 was an economic downturn that occurred during the Great Depression in the US. During this 13-month economic crisis, industrial production declined by almost 30% and production of durable goods fell even faster. Unemployment jumped from 14.3% in 1937 to 19% in 1938.
Souk Al-Manakh Stock Market Crash
The Souk Al-Manakh stock market crash was the crash of Kuwait’s unofficial stock market, the Souk Al-Manakh, in 1982. The stock market specialized in highly speculative and unregulated non-Kuwaiti companies, and – at its peak – its market capitalization was the third highest in the world (behind only the US and Japan). The crash had a devastating effect of Kuwait´s economy, it was one of causes of the ongoing Iran-Iraq War and it also pushed the entire Gulf region into a deep recession.
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Black Monday of 1987
The Black Monday of 1987 refers to Monday, October 19, 1987 when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the US after other markets had already declined by a significant margin. In Australia and New Zealand, the 1987 crash is also referred to as “Black Tuesday” because of the time zone difference. Possible causes for the decline included program trading, overvaluation, illiquidity and market psychology.
Friday the 13th Mini-Crash
The Friday the 13th mini-crash was a stock market crash that occurred on Friday, October 13, 1989. It was apparently caused by a reaction to a news story of the breakdown of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company of United Airlines. When the UAL deal fell through, it helped trigger the collapse of the junk bond market. The deal unraveled because the Association of Flight Attendants pulled out of the deal when management, in negotiations over an Employee Stock Ownership Plan designed to fund the leveraged buyout, refused to agree to terms.
Japanese Asset Price Bubble
Lasting from 1986 to 1991, the Japanese Asset Price Bubble was an economic bubble in Japan in which real estate and stock market prices were greatly inflated. The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. The bursting of the bubble significantly contributed to what is now know as the Lost Decade – a 10-year collapse of the Japanese economy.
1997 Asian Financial Crisis
The 1997 Asian Financial Crisis began in Thailand in July 1997 but soon spread into other Southeast Asian countries. During the crisis, foreign investors deserted emerging Asian shares fueled by hot money, which eventually resulted in major crashes in several Asian countries including Thailand, Indonesia, South Korea, Hong Long, Laos, Philippines, Malaysia, Vietnam, China, Singapore etc. The crisis reached the climax on October 27, 1997 in a mini-crash marked by one of the biggest Dow Jones Industrial Average point losses in history.
1998 Russian Financial Crisis
Also called the Ruble Crisis or the Russian Flu, the Russian Financial Crisis was a major financial crisis that hit Russia on 17 August 1998. It resulted in the Russian government and the Russian Central Bank devaluing the ruble and defaulting on its debt. The crisis had severe impacts on the economy of Russia as well as of many neighboring countries. Russian inflation in 1998 reached 84% and welfare costs grew considerably. Many Russian banks, including some of the largest such Inkombank and Oneximbank closed as a result of the crisis.
Effects of the September 11 Attacks
The economic effects arising from the September 11 attacks were initial shock causing global stock markets to drop sharply. The attacks themselves resulted in approximately $40 billion in insurance losses, making it one of the largest insured events ever. The New York Stock Exchange was evacuated after the attacks and it remained closed for several following days, as well as nearly all banks and financial institutions on the Wall Street. The attacks also had devastating effects on US airlines and aviation and tourism.
Stock Market Downturn of 2002
After recovering from lows reached following the September 11 attacks, indices slid steadily starting in March 2002, with dramatic declines in July and September leading to lows last reached in 1997 and 1998. This downturn, that hit stock markets in the US and Canada and later also most Europe and Asia, can be viewed as part of a larger bear market or correction that began in 2000 after a bull market had led to unusually high stock valuations.
Financial Crisis of 2007 – 2008
Also known as the Global Financial Crisis, the Financial Crisis of 2007 – 2008 is considered to have been the worst financial crisis since the Great Depression of the 1930s. It began in 2007 with a crisis in the subprime mortgage market in the US, and developed into a full-blown international banking crisis in 2008. Massive bail-outs of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world’s financial system. The crisis was followed by a global economic downturn known as the Great Recession and a crisis in the banking system in Europe known as the Eurozone Crisis.
Also known as the European Debt Crisis, the Eurozone Crisis is a multi-year debt crisis that has been taking place in the EU since the end of 2009. Several Eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other Eurozone countries, the European Central Bank or the International Monetary Fund. The crisis had significant adverse economic effects and labor market effects and was blamed for subdued economic growth, not only for the Eurozone, but for the entire EU.
2010 Flash Crash
The 2010 Flash Crash was a trillion-dollar stock market crash that occurred on the US stock market on May 6, 2010. The crash started at 2:32 p.m. EDT and lasted for just about 36 minutes. Stock indexes, such as the S&P 500, Dow Jones Industrial Average and Nasdaq Composite, collapsed and rebounded very rapidly during the crash. The Dow Jones Industrial Average had its biggest intraday point drop on that day and the event is often described as one of the most turbulent periods in the history of financial markets.
August 2011 Stock Markets Fall
The August 2011 Stock Markets Fall was a sharp drop in stock prices in August 2011 in stock exchanges across the US, Middle East, Europe and Asia. The crash was caused by fears of contagion of the European sovereign debt crisis to Spain and Italy, as well as concerns over France’s current AAA rating, concerns over the slow economic growth of the US and its credit rating being downgraded. Severe volatility of stock market indexes continued for the rest of the year.
Chinese Stock Market Turbulence
The Chinese Stock Market Turbulence began with the popping of the stock market bubble on 12 June 2015 and ended in early February 2016. During the crisis, Chinese most important stock markets such as the Shanghai Stock Market fell dramatically as thousands of companies filed for a trading halt in an attempt to prevent further losses. The turbulence is believed to have been a part of China´s shifting from a focus on manufacturing to service industries. After the last turbulence, as of January 2017, the Shanghai Composite Index has been stable.
2015-2016 Stock Market Selloff
Instigated by global financial events, the 2015–16 Stock Market Selloff began in the US on August 18, 2015, when the Dow Jones Industrial Average fell 33 points and gathered downward momentum over several days. On August 24, world stock markets were down substantially, wiping out all gains made in 2015, with interlinked drops in commodities such as oil, which hit a six-year price low, copper, and most of Asian currencies (with the exception of the Japanese Yen) losing value against the USD.
Aftermath of the UK´s Referendum
After the UK voted to leave the EU on June 23, 2016, the country experienced major political and economic upsets, with spillover effects across the rest of the EU and the wider world. World markets tumbled and investors lost more than the equivalent of 2 trillion USD on 24 June 2016, making this day the worst single day drop in history according to data from S&P Global. The losses were extended to a combined total of the equivalent of 3 trillion dollars by additional selling on 27 June 2016.