Individuals wear different colour clothing to express their style, feelings, and personality. When we experience joyful events we tend to choose bright-coloured clothes (yellow, red, orange, etc.), as opposed to when we go through difficult stages in our life, when we incline towards darker or muted colours clothing (black, beige, grey). Experts use the same pattern when describing memorable economic events, except they associate just one colour (black) to represent periods of great difficulty such as crashes or significant falls.
A stable market is characterised by small falls or increases. However, over the course of history, there were a number of times when the market experienced significant falls which caused great economic distress. These events are also known as black days, to accentuate the gravity of the fall. The most memorable days were: the Black Friday (1869), the Black Tuesday (1929) and the Black Monday (1987).
On September 24,1869, financier Jay Gould and railway magnate James Fisk attempted to corner the gold market which is the equivalent to manipulating the market price in order to gain more profit. Their attempt was successful as gold prices plummeted as the government figured out Gould and Fisk's scheme and injected $4million worth of gold on the market which resulted in mass panic with the civilian population. Black Friday had a great influence on the U.S economy, as well as hurting the reputation of the president at that time.
The ‘’Roaring 20’s’’ was a period of economic prosperity characterised by mass consumerism which ended with one of the biggest stock market crashes in US history, known as the Wall Street Crash of 1929. The crash was caused by multiple factors such as overinflated shares, high interest rates, panic selling and growing back loans. On October 29, 1929, the stock market lost 14 billion dollars. Following the Black Tuesday, the country entered the longest and greatest economic recession in modern history, known as the Great Depression.
The biggest fall of the market over the course of a day happened on October 19, 1987, when the Dow Jones Industrial Average dropped by 22%. The crisis started in Hong Kong and spread across the globe. The fall was caused by tensions in the Middle East and the introduction of program trading which involved computers making automated trades. After this incident, stricter regulations and rules were implemented in order to prevent something similar from happening again in the future.
Each of these events had a massive impact on the stability of the worldwide economy, as well as frightening investors and causing them to panic-sell their shares which ultimately made them lose all of their money. They are characterised as ‘’Black days’’ to illustrate the colossal losses and great effects they had on the world at that time. Even though living during an economic crash as an investor is a living nightmare, we should all remember that the market will recover someday. By staying informed and learning about these historic occurrences, we will know how to handle a crisis that might happen in the future.
Bibliography: https://ewminteractive.com/black-days-market-history
Comments