« Make a $25, 10% return instantly. | Main | What To Tip »
The Ten Biggest Stock Market Crashes of All Time
By JD Bluefield | April 17, 2008
If you thought this first quarter was bad, a reader sent in this article on the Ten biggest stock market crashes of all times.
10 ) Wall Street 1901-03 -46%
Cause: The market was spooked by the assassination of President McKinley in 1901, coupled with a severe drought later the same year.9 ) Wall Street 1919-21 -46%
There were fears that the new automobile sector was becoming overheated and that car ownership had reached saturation point.8 ) Wall Street 1906-07 -48%
Markets took fright after President Theodore Roosevelt had threatened to rein in the monopolies that flourished in various industrial sectors, notably railways.7 ) Wall Street 1937-38 -49%
This share price fall was [triggered] by an economic recession and doubts about the effectiveness of Franklin D Roosevelt’s New Deal policy.6 ) London 2000-2003 -52%
The UK took sixth place in the table with a 52 per cent market fall between 2000 and 2003 as investors suffered the consequences of the collapse of the technoogy bubble5 ) Hong Kong 1997-98 -64%
The Hong Kong stock market’s heavy fall in 1997-1998 came as investors deserted emerging Asian shares, including a very overheated Hong Kong stock market4 ) London 1973-74 -73%
Next came the UK stock market’s 73 per cent drop in 1973 and 1974. set against the backdrop of a dramatic rise in oil prices, the miners’ strike and the downfall of the Heath government.3 ) Japan 1990-2003 -79%
In third place, with a 79 per cent decline, was the Japanese stock market, which suffered a protracted slide in price from 1990 to 2003 as a share and property price bubble burst and turned into a deflationary nightmare.2 ) US Nasdaq 2000-2002 -82%
The second biggest collapse came from the technology-rich US Nasdaq index, which fell by 82 per cent following the bursting of the dot.com bubble in 20001 ) Wall Street 1929-32 -89%
The Wall Street Crash heads the list, with the US stock market falling by 89 per cent between 1929 and 1932. The bursting of the speculative bubble led to further selling as people who had borrowed money to buy shares had to cash them in in a hurry when their loans [were] called in.
Source: MoneyCentral
So where does the US fit in? My biggest worry is not the last Tech bust, I’m not invested in Tech so I could care less. I’m looking at #3 and #1, Japan’s Banking/Asset Collapse and The Great Depression, respectively. Both carry many similarities faced by the US today.
Japan’s Banking/Asset Collapse: Japan had literally taken the chains off of their lending practices and allowed banks free lending, just like the US. It led to ridiculous housing prices and an over inflated stock market. What bothers me the most is this graphic I found in Wikipedia on the US housing bubble.
As for The Great Depression, ask anyone what caused it and I can guarantee that more than 90% of people will shrug their shoulders. If you read around you’ll find that some of the main causes were debt from cheap lending, trade deficits and the failure of banks. Sound familiar? Once widespread news of these bank failures occurred, people ran in droves to withdraw their money from the bank. Of course banks don’t carry enough money for all of their deposits on hand (they lend it out in the form of mortgages and loans for a profit), thus the banks went bankrupt. American Nobel Laureate economist, Milton Friedman argued that had the Federal Reserve stepped in to offer loans to keep more of these banks afloat, the The Great Depression would have been just another recessions, albeit a larger than normal one.
This is why the Federal Government is now “bailing-out” major banks and pushing the merger of others. This is why President Bush is pushing a housing bailout bill. They’re trying to prevent the economy from spinning out.
3 Responses to “The Ten Biggest Stock Market Crashes of All Time”
Comments
You must be logged in to post a comment.
April 17th, 2008 at 10:32 am
People don’t even know of Bear Sterns, how JP Morgan lead a rescue or how the Feds are involved. People don’t even see a bubble let alone hear it burst.
April 21st, 2008 at 1:25 pm
I don’t get why the government has to bail out banks and people that have borrowed/lent more than they can afford. I seen the reports on the news that all these people no more money and there so poor thing that the family cant afford to live in there 5 bedroom house anymore. They don’t show that maybe the guy was working part time at McDonalds cooking fries and bought a house just cause some dumb bank was willing to give him a bigger loan than he could afford. I bet the same kind guy cashes in those $10,000 checks you get in the mail (you know, that ones when you cash turns into a loan). It’s there own fault and they should learn a lesson from it.
Instead of bailing out these people the government should put the money into shelters like the one in Waianae and put those people in there. Then the people that bought the $.5 mill homes will learn the lesson that hey maybe just cause the bank like give me money doesn’t mean I should take it without thinking about how I going pay it back. Also when the bank forecloses there house the smart people that didn’t take the stupid kind loans and were saving money to buy one house will finally be able to afford it. Thats the people that deserve to have a house.
When I was looking to buy a house, the bank wanted to give me a loan for almost half a mill. At first I thought WOW I can buy a big house but when I calculated everything out…. Yeah I will have a big house but I not going be able to afford any furniture, cannot go out, and got to eat cup noodle for breakfast lunch and dinner. And if anything too, me or my wife we wouldn’t be able to afford the house. So I settled for a town house instead. But looking back I should have went go for broke and bought the 0.5 million dollar house so I can be the poor guy on the news and the government can bail me out too.
September 25th, 2008 at 5:00 pm
[…] zguduit istoria sistemului financiar si economic american. De atunci s-au inregistrat o multime de crize, mai mult sau mai putin intense. Teoretic, Federal Reserve ar fi trebuit sa invete din ele si, pe […]