Crash Course: The Scariest Days in Stock Market History

11 snips

Jun 18, 2025

Explore the spine-chilling days that rocked the stock market, revealing how fear influences investors. Discover the harrowing details of Black Monday and the collapse of Lehman Brothers, which reshaped financial landscapes. Dive into flash crashes like the notorious May 2010 plunge and learn about the mechanics of circuit breakers designed to halt trading during turmoil. Uncover market psychology’s impact on investors' risk aversion and the evolution of safety measures. The journey showcases the resilience required to weather economic storms.

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INSIGHT

Crash Clustering and Recovery

Market crashes often cluster with several bad days close together as markets digest information slowly.
Extreme downturns are rare but usually paired with huge upward moves, so selling early misses gains.

ANECDOTE

Black Monday 1987 Crash

Black Monday 1987 saw the Dow drop 22.6% in one day, a record one-day fall in US history.
This occurred after a strong rally and was unexplained at the time, causing widespread panic.

INSIGHT

Portfolio Insurance Amplified Crash

The 1987 crash was worsened by portfolio insurance which caused automatic selling, amplifying market declines without human intervention.
Differences in settlement times across markets added to forced liquidations and market instability.

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Stock markets tend to go up over time — but every so often, they fall off a cliff. Some crashes are brief and recover quickly, while others shake the financial world to its core. But what can we learn from the scariest days in stock market history?

And in today’s Dumb Question of the Week: What is a circuit breaker?

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