– The Biggest Market Sell-Offs in History (ToTheTick, May 23, 2013):
As stock markets are poised to open or close around the world and we see exactly what damage has been done to the major indexes due to the Chinese fake-data scandals that have come to light coupled with the Federal Reserve’s monetary policy meeting, we are waiting with baited breath: Buy! Buy! Buy! Or: Sell! Sell! Sell! Whichever way we turn, someone is bound to make money somewhere in the world out of all of this. Isn’t that why we are in this business?The Nikkei dropped by 7.3% at the end of the day and Hong Kong’s Hang Seng dipped by 2.5%. Shanghai maintained a moderate fall at just 1.2% (if you believe that data now!). The Asian markets are down. How will the Europeans fare? They are already declining this morning. The CAC 40 is down already 2.32%. The FTSE 100 is down 1.94% so far this morning. The DAX is posting a 2.64%-decrease.
Plus, when the Bureau of Labor Statistics in the US will announce its unemployment figures this morning and tell us what the damage is. The Federal Reserve didn’t manage to allay fears as Ben Bernanke publicly stated that he wouldn’t be pulling the plugs on the stimulus program, but which was later contradicted by the minutes telling the full story that if the recovery shows through, then we will be pulling money out by June. That’s too soon for some. Are we in for another rocky ride? Maybe. You can never tell, really. But, if we look back in history, then we can see the worst stock market crashes that have taken place and why.
Here’s the ranking. Chronological order!
1. Black Tuesday October 29th 1929
The Dow Jones industrial average plummeted by 11% and 16 million shares were traded on one day. That was a record in itself. It took until 1954 for the average to get back to the pre-crash figure. There was a knock-on effect even back then and Canada lost 50% of its value in shares.
2. Black Monday October 19th 1987
Bad news issued on October 14th in the US triggered the stock crash in 1987. The Dow lost 100 points on October 16th and then a further 500 on the 19th. By the time October came to a close, there was a drop in the US of 22.68%. The UK fared even worse with a drop of 26.45%. Hong Kong did worst of all with a loss of 45.5%
3. Mini Crash October 27 1997
This time it was in Asia and international-currency speculation trouble. The Dow declined and triggered a drop in Argentina, Mexico and Brazil (13-15%). European suffered from the knock-on effect and plunged too.
4. September11th 2001
No need to say why and what happened on this fateful day. People bought into traditional safe buys like gold and bonds and fled everything else as global markets took a battering. Oil prices shot through the roof. Tokyo dropped to a 17-year all-time low. European indexes dropped to pre-1998 levels, with the FTSE 100 losing 5.7% with a loss of $98 billion.
5. China February 27th 2007
The Dow Jones lost 416 points in one day and fell 3.3%. Chinese stocks fell like a tonne of bricks and US manufacturing statistics aided and abetted that even more. The FTSE fell 1.85%. Chinese stock lost $140 billion in value.
6. September 29th 2008
The House of Representatives’ failure to bail-out the toxic-mortgage assets of banks ($700 billion) sent markets into turmoil. The Dow lost 429 points (in just 5 minutes flat!).
7. Flash Crash May 6th 2010
The Dow Jones plummeted by 1, 000 points in half an hour. The Nasdaq had to cancel all trade that day as the drop was too big to deal with.
Looking back, it seems like most crashes have taken place in September or October. But, the worst day of the year is officially called ‘Blue Monday’. It is calculated every year and the next one is on January 20th 2014…so maybe! It was calculated by Dr. Cliff Arnall at Cardiff University, based upon weather conditions, lack of sunshine, debt level (after Christmas) and time elapsed because of failed New Year resolutions, amongst other things.
We can see that since 1929, there have been far worse stock market crashes and down-days in history. Some of them are closer than we would like for our own comfort. The world has become a smaller place and we are all living in each other’s pockets. The unemployment figures get published at 8.30 am ET. Then, they will be closely followed by the new home sales. Let’s see what that does to the markets. But, given the present world situation, I doubt if we can hold out for some good news. Just prove me wrong…for once!
The markets are so rigged, and so crooked now, it is impossible to follow them. They no longer reflect the real economy. Over 80% of all trades on the Big Board are high frequency. That means a few individuals controlling hundreds of millions in large funds, buy and sell huge blocks of securities in less than 8 seconds. This isn’t investing, it is skimming, and used to be illegal.
Most trades take wealth out of the market, and put nothing back. I am amazed that no matter how bad the news, the market keeps going up. It is so crooked, that I would recommend everyone get out. An ordinary investor doesn’t have a chance against these people.
Volume has dropped dramatically over the past few years, it has become a shell game of the worst variety. I would not be surprised to see it all tumble down, and I can tell you when it will happen.
I read an article the other day about 401K funds. People are pulling all their money out to buy houses. If enough people do it, the market will crash, because banks don’t even keep 5cents on every dollar they claim as assets on deposit. It would take very little for it all to come tumbling down. If enough people ask for the cash, that will do it.
I don’t know when, in my opinion, it should have happened by now, but it will happen.