Share or Stock market is a place where people share trades. Share or Stock is the very small amount of company’s capital. The share’s value depends on the number of people who want to buy or sell it. If number of buyers is more, value of share will rise. The value of share will diminish, if number of seller is more than the number of buyers. Only Public Limited Companies trade their share in the share market. A broker or bank helps you for trading share on a share market and they will charge for this.
Share market helps you to make money but it also having risks. Trading in stock market is same as gambling; first moment you earn and in the next you have nothing. It is like a roller coaster, sometime go high and sometime down. Share market crash is one of the risks, it causes because of sudden and dramatic decline in the stock value of a particular section of the share market and it leads to the great depression. A lot of factor is responsible for this including domestic and international conditions. Some major Share market crashes are listed here.
Wall Street Crash of 1929 (Black Tuesday)
It is also known as Black Tuesday and is the most remarkable crash in the history of the United State of America. It lasted only for 4 days but it provided the 10 years long depression for United State. Unemployment rose by 25 percent, growth of economy fell by 50 percent. Dow Jones marked at 41.22 from 381.2 and took 25 years to reach its higher level. There were many causes behind the Black Tuesday of 1929. Overvalued stock is one of the foremost reasons, according to analyst the shares were very much priced and price – earnings ratios were quite high. Banking structure and Federal policies were also responsible.
Stock Market Crash of 1987 (Black Monday)
It is also known as Black Monday and it is the one of the largest one day decline in world’s share market history. The Dow Jones declined by $500 billion value or 22.7 percent. It began in Hong Kong, then speeded to Europe and after that it affected United State of America. Analyst thinks program trading is one of the major causes of the crash. It is a computer program assisted method to trade markets that is used to automate the trading. This trading system uses price of particular stock as a checkpoint to buy or sell it automatically, so there are two parts of program trading, one is automate sell programme and other is the automate buy programme and this automate sell programme worked overtime on October 1987 which leads to the market crash.
Share Market Crash of 2008-09
There are many reasons behind the stock crisis in 2008-2009.It didn’t occur in one day. No one can forget this great commotion in their life time. On 29th September 2008 when the stock exchange closes for that day there was $1.2 trillion disappearing from the market which resulted as temporary closing of stock markets. The main reason was the subprime loans. These subprime loans are easily accessible for home loans to help every person of America to get own home. But this was the high risk for the stock crisis of 2008-2009. Another cause is that the excessive real asset market went its highest point. The excessive market was financed with debt and its reduction of accelerated ruin of equity and capital started. Lehman Brothers, a 158 year old global financial services firm’s stock price reduced from $33.83 to $0.21 which repeated with every stock market and declared bankruptcy for this stock market crisis of 2008-2009.