Market Crash

There is no official definition, but a crash usually means a fall much faster and sharper than an ordinary correction or bear market. Crashes are often driven by panic selling, as falling prices trigger further selling.

Well-known examples include the Wall Street Crash of 1929, which preceded the Great Depression; Black Monday on 19 October 1987, when the US stock market fell more than 20% in a single day; the falls during the 2008 financial crisis; and the rapid decline in March 2020 at the start of the COVID-19 pandemic.

Crashes can be triggered by economic shocks, the bursting of speculative bubbles, financial crises or sudden events. Leverage and forced selling, such as margin calls, can make them worse.

Exchanges use circuit breakers to pause trading during sharp falls, giving investors time to absorb information. Markets have historically recovered from crashes, though sometimes only after many years. Investors who sell in panic often lock in losses and miss part of the recovery, which is why diversification and a long-term plan matter.