Dotcom Bubble (2000)
The dotcom bubble, which peaked in March 2000, was characterized by skyrocketing internet stocks. The Nasdaq index surged from 745 to 5048 points between 1995 and 2000. However, the bubble burst led to an 80% decline in the Nasdaq and a 50% drop in the S&P 500, causing numerous tech companies to collapse and the U.S. economy to enter a recession.
S&P 500 Flash Crash (2010)
On May 6, 2010, the S&P 500 experienced a sudden drop of 6% in just seven minutes, known as a flash crash. Unlike typical crashes triggered by major news, this event was caused by Navinder Singh Sarao’s illegal “spoofing” trades. The market quickly recovered within 10-15 minutes, highlighting the volatility and susceptibility of the markets to such disruptions.
EURCHF Flash Crash (2015)
On January 15, 2015, the Swiss National Bank unexpectedly removed the 1.20 peg against the euro, causing the EURCHF to plummet to 0.68 in some instances. This event led to significant losses for brokers and traders alike, with some firms even going bankrupt. The market took three years to stabilize.
Yen Flash Crash (2019)
In early January 2019, the Japanese Yen experienced a flash crash against the Australian Dollar, among other currencies. The reasons behind this crash are debated, though some speculate it was linked to an Apple sales report. The incident highlights how market reactions can be swift and sometimes not immediately understood.
Gamestop Short Squeeze (2021)
In January 2021, retail investors, coordinated through the Reddit community WallStreetBets, initiated a short squeeze on Gamestop’s stock. This surge in buying pushed the stock price from around $35 to nearly $500, causing hedge funds with short positions to incur substantial losses. The event raised questions about market manipulation and the role of retail investors.
Volkswagen Short Squeeze (2008)
During the financial crisis of 2008, Volkswagen’s stock price unexpectedly soared by 400% in two days, briefly making it the world’s largest company by market capitalization. This squeeze was driven by Porsche’s announcement to increase its stake in Volkswagen, catching many hedge funds off guard and leading to a massive short squeeze.
These events underscore the unpredictable nature of financial markets and the impact of unexpected news, technological flaws, and coordinated market activities.
