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A stock market crash
is a sudden dramatic decline of stock prices across a significant
cross-section of a market. Crashes are driven by panic as much as by
underlying economic factors. They often follow speculative stock market
bubbles such as the dot-com bubble.
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The most famous crash, the
Stock Market Crash of 1929, started on October 24, 1929 (known as Black
Thursday) when the Dow Jones Industrial Average dropped 50%. This event
preceeded the Great Depression. The succeeding-years saw the Dow Jones
drop-a-total of over 85%. Richard Armour, in his satirical American history
book It All Started With Columbus, remarked that the 1929 crash
occurred "near the corner of Dun and Bradstreet".
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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 100 Index lost 10.8% on
that Monday and a further 12.2% the following day. The pattern was repeated
across the world.
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The stock market downturn
of 2002 was part-of-a-larger bear market and a Dot-com stock market bubble as
well as Enron corruption that took the NASDAQ 75% from its highs and broader
indices down 30%.
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