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The last big market
collapses (measured with the S&P 500) comparable with the downturn
years between 2000 and 2002, happened during the Seventies. From a high
in December 1968 the stock market value decreased by around 29% until
June 1970. This was followed by around a two-and-a-half year increase
amounting to 57% until January 1973, before the market crashed again,
but even worse, with a decrease of 43% over the following two years,
right up until December 1974. A strong recovery subsequently followed,
again of 57%, which lasted for 21 months up until September 1976. For
the time being, the times of dangerous market collapses seemed to be
over. During the well-documented stock market crash of 1987 the market
declined by 34%. This recovered however very quickly afterwards.
Similarities between the developments during the seventies and the
market collapse following the new millennium are not to be overlooked.
Just as during the nineties, there was a strong boom in the economy
during the Sixties. The market price decline which amounted to 49%
during the period from March 2000 until October 2002, is comparable
with the 43% decline in 1973 and 74.
The biggest stock market crash in 1929 happened however, after stock
prices had risen continuously over a period of eight years. The result
was at first an alarming drop in stock market prices in September
1929 which ended temporarily in November of the same year. After the
decline in share prices recovered towards the end of the year, the
actual downturn began in April 1930 and reached its absolute lowest
point in June 1932. This stock market crash not only created massive
losses of around 85%, but also contributed- along with a few other
factors- to the subsequent global economic crisis.
- From January 1871 to November 1980 monthly average
share prices Cowles Commission and Standard & Poor’s Composite
Stock Price Series [Source: Security Analysis- Benjamin Graham/ David
Dodd]
- From August 1982 exact high and low points of the
Standard & Poor’s 500.
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