14 Black Swan Events that Shook The World
Today we are talking about the deadly events that caused major drops in the stock markets in the last 40 years.
Black Swan events.
Now according to Investopedia:
“Black swan events are typically random and unexpected events”
I’ve heard different definitions on what a Black-Swan event is.
The best one I’ve heard is this one.
“A Black-Swan is where an external event causes a market, share, currency pair or any other instrument to move 10 standard deviations from the mean.”
To simplify this further, here’s what it says.
A Black-Swan is where an outside event causes the share or currency price to move 10 times higher or lower than it moves on an average day.
These events generally hit the stock markets locally and globally. And hard!
And if you’re holding a share or CFD in the wrong direction, you could blow a big portion of your portfolio.
I want to talk about the different Black Swans that have shook the world.
Let’s start with:
#1: The Black Monday crash of 1987 (When I was born on the 22nd of July)
This is where the Dow Jones Industrial Average dropped by 22.6% in one day, on October 19th, 1987.
#2: The Asian Financial Crisis of 1997
I wasn’t trading then but there were major declines in the stock markets of many Asian countries, including South Korea, Thailand, and Indonesia.
#3: The Russian Financial Crisis of 1998
Another large decline in the Russian stock market and a devaluation of the Russian ruble.
#4: The Dot-com bubble burst in 2000
We then saw technology stocks experienced a major decline, and the NASDAQ composite index lost 78% of its value between March 2000 and October 2002. Many people lost huge amounts of money by having too much confidence in the boom of the internet era, which lead to a major bubble.
We saw technology stocks experienced a major decline, and the NASDAQ composite index lost 78% of its value between March 2000 and October 2002.
#5: The Enron scandal of 2001
Where the energy company’s fraudulent accounting practices were exposed, causing a significant decline in the stock market.
#6: The 9/11 terrorist attacks on September 11th, 2001
Where the world felt unsafe with the terrorist attacks.
This had a huge impact on the stock market and the economy as a whole.
#7: The Global Financial Crisis of 2008
We saw the stock market experienced a major decline, and many banks and financial institutions failed.
The housing market crash of 2007-2008, which was a significant contributing factor to the Global Financial Crisis of 2008.
In 2008, we saw stocks and indices crash over 10% in just one day.
#8: The 2010 Flash Crash
The Dow Jones Industrial Average, once again, dropped by 9% in just a matter of minutes on May 6th, 2010.
#9: The European Debt Crisis of 2011
Where many European countries struggled with high levels of debt and the stock market experienced significant declines.
#10: The Oil Price Crash of 2014 (I lost a large portion of money with the gaps in oil stocks this day!)
where the price of oil dropped by more than 50% between June 2014 and January 2015, causing significant declines in the stock market.
#11: The Brexit vote of 2016
Where the UK voted to leave the European Union, causing a significant decline in the stock market.
#12: The COVID-19 pandemic of 2020
There were major disruptions to the global economy and stock market, with many indices experiencing significant declines.
#13: The 2020 GameStop short squeeze
Where a group of retail investors coordinated on Reddit to drive up the stock price of GameStop, causing a significant disruption in the stock market.
#14: 2022 The Great Inflation and Crypto Winter
Last year we saw stock markets plummet as US and UK inflation sky rocketed to levels we’ve not seen in the last 40 years.
And with the crash of Bitcoin over 40% along with many large crypto currencies crashing 80% to even 99%. And with the downfall of Luna and FTX, this set a major precedent and ripple effect into the crypto space – where investors FLED.
WATCH OUT FOR THE DEADLY BIRD!
These are some (not all) of the most memorable Black Swans we’ve had in the last few decades.
If you get in or hold onto a trade during these Black Swan events, it could cause your portfolio to crash in a very short term.
So rather get out of ALL your trading positions when a Black-Swan hits, to keep safe.
This is only the tip of the ice-berg on how these events can impact your portfolio.
The biggest Black Swan is still to come and so it’s better to prepare for them for when they do.
Trade well, live free.
(Founder, MATI Trader)
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