Top 5 Stock Market Bubbles | History of Biggest 5 stock market crash
A stock market bubble is a period when asset prices are inflated by excessive enthusiasm and speculative buying, which becomes disconnected from the true underlying value. This speculative enthusiasm often leads to overvaluation, creating a situation where prices become unstable. The bubble eventually burst, causing a rapid decline in prices and financial losses for investors who bought at the peak of the bubble.
1. Tulipmania (1637) .
Bulletin: Often considered the first leap of speculation, Tulipmania occurred in the Dutch Republic in the 1630s, when demand for tulip bulbs, especially rare ones, increased, driving up prices As the crisis worsened some bulbs sold for more than house value. Fueled by speculation, investors were buying bulbs in the hope that prices would continue to rise.
Crash: In February 1937, the bubble burst when prices suddenly fell. Investors rushed to sell, sparking panic and plummeting prices. Many people were left without a useful lamp, causing widespread economic devastation and a brief financial crisis in the Netherlands.
2. South Sea Lump (1720) .
Bulletin: The South Sea Company was founded in Britain solely to secure the trade in South America. Investors were lured by the promise of higher profits, and share prices rose as speculation grew. Company’s stock became the most sought-after commodity, leading to an increase in investments.
Decline: By 1920, the company’s profits had clearly increased. The share price collapse led to huge investor losses and a lot of anger. This has led to major changes in financial policy and a loss of confidence in the companies involved.
3. The 1929 Great Depression .
Bulletin: The 1920s saw a period of economic expansion and speculative investment known as the "Thunder Twenties." Many Americans invested heavily, often using borrowed money, and stock prices rose. Their belief in inflation led to a culture of rampant speculation and easy credit.
Crash: The market crash began in October 1929 for too long, ending on Black Tuesday (October 29). The Dow Jones Industrial Average plummeted, wiping out billions in market debt. This crash activates the Great Depression, especially over a decade of high unemployment and recession.
4. The Dot-Com Machine (1995-2000).
Bubble: The rise of the Internet in the nineties led to a surge in technology start-ups, many of which went public with strong or lucrative commercial projects Crash: The bubble burst in March 2000, causing the Nasdaq index to collapse. Many tech companies collapsed, losing tens of millions of dollars in investor money. Next is by determining the value of tech investments and dramatic choice in the working capital panorama.
5. Real Estate (2007-2008) .
Bubble: Housing prices surged in the mid-2000s, fueled by low interest rates, clean credit and easy credit. Many people viewed real estate as a true investment, basically speculatively buying and staying on house prices.Crash: The bubble burst in 2006 when home prices began to decline. The subsequent rise in mortgage defaults and foreclosures triggered the 2008 financial crisis. Major financial institutions collapsed or required bailouts, leading to a severe global economic downturn.
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