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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 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. They often follow Stock market bubble. 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
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