Infamous Black Swan Events in the Recent Past

Iphone, Stocks, Market, Shares, Crash, Recession


In the world of finance and investing, a ‘black swan event’ is an unplanned and unpredictable event that has far-reaching and often disastrous consequences. The fact that no one knows when a black swan event might happen is often what makes them so catastrophic.

The phrase ‘black swan event’ was coined by former Wall Street trader and essayist Nassim Nicholas Taleb, who discussed the theory in his 2001 book, Fooled by Randomness. Taleb outlines three main traits of black swan events:

  1. They are so rare that the possibility of one occurring is unknown.
  2. When they do occur, their effects are catastrophic and widespread.
  3. They may seem predictable after the fact as we create explanations, but hindsight is 20/20.

Continue reading to learn about three of the most well-known black swan events of the last several decades.

Stock Market Crash of 1987

Originating in the U.S. in October of 1987, this sharp drop in stock prices affected stock markets globally. The Dow Jones Industrial Average dropped over 22% on Monday, October 19th, also dubbed “Black Monday”. This occurred due to a large-scale selling of stocks on this day after a steady decrease in stock value over the previous five days. 

Some believe that the implementation of technology and automatic trading systems into the stock market increased the volatility during this time, as investors could immediately buy or sell stocks within seconds and were not “checked and balanced” by going through another person or advisor.

The Dotcom Bubble Crash

As the internet grew in popularity in the 1980s and 1990s, so did investments in equity markets. Numerous internet-based companies were created and investments were at an all-time high in the year 2000. Eventually, the bubble burst. Due to failing companies, overvaluations, and other factors, investor confidence fell and The Nasdaq index suffered over a 75% fall from March of 2000 to October of 2002.

The internet was new, and so was the market surrounding it. This made the crash more unpredictable and led to a slower recovery afterward. This black swan event was responsible for the failure of many companies and the loss of around a trillion dollars worth of stock value. 

The Crash Following 9/11

This is a quintessential black swan event, as there is no argument that the 9/11 attacks were unpredictable and catastrophic. The markets were already suffering from the Dotcom Crash when the Twin Towers of New York’s World Trade Center were attacked in 2001. 

These attacks were not only devastating for more obvious reasons, but they also quickly led to the closure of the NYSE and Nasdaq. The U.S. stock market finally opened six days later on September 17th, making it the longest shutdown since 1933. Within the first week of trading, stocks plummeted and just under $1.5 trillion was lost in stock market value.

2008 Financial Crisis

One of the most famous financial crises of the recent past occurred in 2008. This black swan event is often synonymous with ‘the 2008 housing crisis’, because many attributed the crash to the unsustainable housing market that was created due to risky lending. Things got worse when a global investment bank, Lehman Brothers, filed for bankruptcy in the midst of the housing market collapse.

This recession caused people to lose their jobs, their homes, and their investments. The perfect storm was created, and trillions of dollars were wiped out in the global equity markets. People across the world were affected, and several governments began revising regulations to manage how much risk financial institutions could take on.


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