The term “global market crash” refers to periods of sharp stock-market decline that trigger economic turbulence. Examples include the stock-market crash of 1929, which sparked the Great Depression; Black Monday in 1987; and the 2008 financial crisis, which triggered a global recession and led to widespread bank failures. These crashes are often triggered by an inflated asset bubble that bursts, or by sudden policy changes that shake investor confidence and cause panic selling. They may also be caused by high-frequency trading or other technical factors that distort markets.
These events can wreak havoc on the world economy and send waves of fear through investor communities. They can depress stock prices, lead to economic uncertainty and slow growth, and exacerbate existing political tensions in emerging countries.
Moreover, these events can make people feel anxious about their ability to provide for themselves and their families or maintain their lifestyles in the face of future downturns. They can even elicit symptoms similar to post-traumatic stress disorder, such as obsessive and intrusive thoughts, difficulty concentrating and sleeping, and loss of appetite.
A recent study that analysed the comprehensive medical records of millions of American investors found that antidepressant prescriptions spiked notably when local stock-market returns fell significantly, and they increased even more dramatically when markets crashed hardest. This suggests that investor anxiety is deeply linked to declines in their personal investments, even if their jobs, wages, and the wider economy remain stable. Interestingly, this study also found that the covid downturn of March 2020 is actually the least painful of the 19 bear markets since 1870, because it was followed by a very fast recovery.