FAQ
What was the worst stock market crash in history?
The Wall Street Crash of 1929 was the most devastating. The Dow fell 89 percent from its peak, and the market did not recover for 25 years. The crash triggered the Great Depression, with unemployment reaching 25 percent. Black Monday in October 1987 saw a larger one day percentage decline of 22.6 percent, but the market recovered within two years.
What was the largest IPO in history?
Saudi Aramco in December 2019 raised 25.6 billion dollars. Alibaba in 2014 raised 25 billion. Visa in 2008 raised 17.9 billion during the financial crisis. The Aramco IPO valued the company at 1.7 trillion, making it the most valuable publicly traded company at the time.
What causes financial bubbles?
Bubbles typically form when easy money, genuine innovation, and herd behavior combine. Tulip Mania, Railway Mania, the dot com bubble, and the housing bubble all followed this pattern. Low interest rates, leverage, and the belief that prices can only rise create the conditions. Bubbles burst when new buyers dry up and leverage unwinds.
What was hyperinflation?
The worst hyperinflation in history hit Hungary in 1946, with prices doubling every 15 hours. Zimbabwe in 2008 and Weimar Germany in 1923 are other extreme examples. Hyperinflation destroys savings, pensions, and the middle class. It is caused by governments printing money to cover deficits while economic output collapses.
How did index funds start?
John Bogle launched the first index fund at Vanguard in 1976. The fund tracked the S&P 500 and was mocked as Bogle folly. By 2024, passive index funds managed over 15 trillion globally, surpassing active funds. Bogle proved that low cost broad market indexing beats most active management over long periods.
What was the flash crash of 2010?
On May 6, 2010, the Dow plunged nearly 1,000 points in minutes, then recovered within the hour. High frequency trading algorithms amplified the selling. Some stocks traded at pennies while others traded at thousands of dollars. A British trader was later arrested for contributing through spoofing algorithms.
How does quantitative easing work?
Central banks buy government bonds and other securities, injecting money into the banking system. This lowers interest rates and increases the money supply. The Fed used QE after 2008 and during COVID 19. Critics argue QE inflates asset prices and inequality. Supporters argue it prevents depressions.