A stock market crash is a rapid and often unanticipated drop in stock prices. A stock market crash can be a side effect of a major catastrophic event, economic crisis, or the collapse of a long-term speculative bubble. Reactionary public panic about a stock market crash can also be a major contributor to it, inducing panic selling that depresses prices even further.
Famous stock market crashes include those during the 1929 Great Depression, Black Monday of 1987, the 2001 dotcom bubble burst, the 2008 financial crisis, and during the 2020 COVID-19 pandemic.
KEY TAKEAWAYS
- A stock market crash is an abrupt drop in stock prices, which may trigger a prolonged bear market or signal economic trouble ahead.
- Market crashes can be made worse be fear in the market and herd behavior among panicked investors to sell.
- Several measures have been put in place to prevent stock market crashes, including circuit breakers and