Major Historical Moments in the US Stock Market

The two major crashes of the US stock market occurred in 1929 and 1987. These two years signified the worst scenarios in the history of the stock market.

The 1929 stock market crash is probably the most famous crash in history and occurred on October 29th. The economy grew so quickly for twenty years straight and was considered to be in a golden age of technology with inventions like the radio, cars, aviation, telephones, and more.

Companies like General Motors, Radio Corporation of America and others watched their stocks soar. The financial corporations were also doing quite well. Bankers began to float mutual fund companies and money seemed like no problem at all. However, the stock market began to experience many unsettling declines in prices which caused the subsequent Black days. During this time period, no one did any trading at all.

When the market crashed all of the stocks plummeted to prices that sickened and frightened the investors. This crash caused a serious financial loss to investors and eventually led to the Great Depression which caused even bigger blows to the portfolios of investors. The Dow Jones finally bottomed out in 1932.

In 1987, the stock market crashed again. However, this crash was felt worldwide and is known as Black Monday. This decline went on for five days and plummeted over 500 points on the Dow Jones. The fear was that another 1930s depression lay ahead. However, the investors and the market rallied together after the crash and immediately began seeing gains of points the very next day.

The crash was worldwide, starting in Hong Kong, spreading to Europe, and finally hitting the United States. Though the market dropped nearly 23 percent in America, Hong Kong saw a drop of 46 percent. But it was New Zealand that got hit the hardest with a catastrophic fall of about 60 percent. Because of the time zone difference, the 1987 crash is known as Black Tuesday in New Zealand, where recovery took several years.

American recovery was quicker, with the Dow Jones Industrial Average actually closing the year 42 points higher, at 1,939, than it opened. However, it would take two years to regain its 1987 high of 2,722 points.

There were some positive outcomes from the 1987 crash however. Prior to 1987, most trading occurred over the phone. But after the crash, market makers stopped answering calls. Because of this, an electronic method of trading was developed.

There were two major times in history when the stock market plummeted. In 1929, when the stock market crashed it led the entire economy of the United States into a Great Depression. Fortunately, the United States did not suffer from a depression in 1987 when the market crashed a second time because this crash was short lived.

As history illustrates, there are definitely some risks involved with investing in the stock market. Fortunately, there are also a lot of fortunes made through investing too. If you want to increase your chances of succeeding in something as big and complicated as the stock market, it may be wise to find an expert to guide your early activities.