Stock market crash - Definition

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 in 1929, (known as Black Thursday) when the Dow Jones Industrial Average dropped 50%, preceded the Great Depression. The succeeding years saw the Dow Jones 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 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 persist.

See also

• Financial markets
• Stock market
• Accountancy scandals
• Great Depression
• Behavioral finance
• Stock market bubble
• List of stock market crashes

External links

• Stock Market Crash! (http://www.stock-market-crash.net) — Learn about history's worst stock market crashes.