Question

The following are the years that the big market crashes happened since 1900 in US stock market .

1929-1932

1987

2000-2002

2007-2009

2020

What are the economic and political background, triggers, and fundamental reasons of each market crash.

no word limit

Answer 1

Answer)

1. 1929-1932-Crash of 1929,one of the biggest stock market crash was almost a decade later of first world war with America trying to build and expand after world war,there was a change in presidency in 1929 with Herbert Hoover becoming the president,overall there was economic growth and political stability which comes with such growth,the crash was a result of over speculation where agriculture industry and farmers were suffering while there was a rapid growth in industrilization,add to that ever available and increasing credit and over optimization lead to the crash,in terms of trigger extreme over speculation would be the main cause where a lot of Americans were investing with hope of share prices never falling creating a bubble which eventually burst in a terrible way for investors and average retailers alike,later analysis showed that there was advances in production in different sectors leading to so much optimism that warnings were seen as opportunity to buy more and more leading to more borrowing and more buying and when crash happened everyone including banks who had lended were trapped,crash intensified in coming months and took till a lot of time to start recovering.
2. 1987-There was economic boom coupled with declining unemployment and rising stock market,year before elections was not marked with any unstability and markets were looking to extend gains,however a crash is going to take place speculation started to take place based on high valuation of market along with such a long gain run or bull run for markets,combined with tax benefits reducing on mergers along with increasing deficits and system based trading lead to this crash,trigger would be the anticipation turning into reality,consider this, crash happened on monday but mutual funds had allowed redemption of shares on weekend too and there were a lot of redemption requests leading to inevitable monday crash.
3. 2000-2002-Dot com crash was a result of bubble in technological stocks resulted from widespread usage of net,prior to crash there was huge gains in these stocks coupled with stable political and economical period which led to initiatives such as tax reliefs on capital gains,low interest rate that led to huge returns,however the bubble burst was seen when technology stocks started to get affected a lot more by bad news such as Japan recession,followed by warnings about these stocks leading to volatile price drops,combined with bad news about Microsoft there was mayhem in this sector which lasted till 2002.
4. 2007-2009-Another period of booming economy,political stability and stocks on a bull run and then came one of the biggest financial crisis owing to housing mortgage bubble caused by extremely careless lending by banks which made them vulnerable to huge losses,as people started defaulting,this sector collapsed triggering massive crisis across the world,crash was triggered by lehman bank,one of the largest and oldest bank's bankruptcy and soon the world was grappled with this crisis.
5. 2020-One of the recent crisis happened with stock markets around the world at all time high,US markets booming and stability in major parts of the world but then a pandemic in form of Corona virus happened starting from China quickly escalating to every part of the world with US along with Europe and Asia facing its brunt,leading to lockdowns and closure of economies around the world leading to massive stock market crashes around the world as people feared for their lives as well as economy.

Answer is complete.Thank you!