A lot of us have experienced so many market crashes in our countries but it looks like that of the United States have been notable seeing that it is a world power and majority of the countries in the world uses the US Dollars for international trades and transactions. This means that when there is a market crash which leads to a recession in the US, it often affects every other part of the world.
Market crash isn’t something that just happens from it blues, it takes several prior actions to make this a crash occur in the market. Crashes aren’t market corrections and unlike market correction, a crash can go down to about 70% of the stock worth. In the United States, there have been several market crashes and this crashes are things I am going to be discussing in this post the series of market crashes that have occurred in the United State from the 1907 (The Panic) crash, 1929 (The Great Depression), 1987 (Black Monday), 2008 (The Financial crises), and 2020 (The Great Lockdown).
The Panic (1907)
Before 1907, companies were allowed to own other companies which led to what is known as a corporation today and this was good for business and corporations like standard oil were doing great but became monopoly owning over ¾ of the industry and this made Theodore Roosevelt go after companies too big and becoming monopolies. Soon a lot of people started investing in corporation but lost their trust when Augustus Heinze and Charles Morse failed to buy United Copper stocks to manipulate the market. United Copper was seen as a large corporation and banks were lending money to them but when they were discovered to be involved in market manipulation fraud, the people became skeptical about corporations and banks started losing money. This crash went for up to 6 Weeks causing up to 50% loss in stock price. This caused a recession which didn’t end until 1909 when the market regained its position.
The Great Depression (1929)
This is by all-time seen as one of the biggest market crash in the history of the United States and in the history of the world as it was accompanied by famine in the US. The great depression started after the “Black Tuesday” market crash with over 12% of the stock market crashing down. Coupled with the fact that the banks failed, people were withdrawing their money.
The Black Monday (1987)
On 19th October 1987, there was a market crash where portfolios lost over 20% in one day. Although, this crash didn’t cause a long time loss of money but it did caused loss of money. In 1989, the market got back up to it place and things were back to normal. A lot of people believed that portfolio insurance was a great factor to the market crash.
The Financial Crises (2008)
This is regarded as a crises caused by the real estate industry and the bank as people collected mortgages for real estates without any knowledge in how the businesses operated. The bank kept on giving mortgages to people who did not have collateral on the basis that houses always appreciated. Soon a lot of people collected mortgage loans and didn’t use it for homes and when it was time to pay, they didn’t have money to pay.
The Great lockdown (2020)
This market crash was a result of a pandemic caused by Covid-19. The market reacted on the 20th of February 2020. This was as an effect of a complete lockdown of all economic activities in countries. This has caused a current recession and economic activities are just gradually beginning.