Market crashes can be terrifying events, but they’re not as common as you might think. In fact, they happen about once every decade. Nevertheless, when they do occur, they’re often very severe.

According to Breakingviews, these market downturns, ranked according to peak-to-trough declines of stock markets, include Black Monday (i = 2), the Iraq conflict in the early 1990s (i=3), the dotcom collapse (i=4), the Global Financial Crisis of 2007-2008 (i=7), the 2015 Chinese stock market turbulence (i = 10), the 2018 cryptocurrency sell off (i = 12) and the 2020 Covid-19 pandemic (i=13).

Most of these crashes occurred because of excessive speculation. For example, the 1929 crash was caused by the collapse of a speculative bubble in general, while the dotcom and GFC crises were due to excessive investment in internet companies and property investments. Other causes included political instability, such as wars or referendum votes that reshaped perceptions of an economy’s competitiveness, and structural uncertainty.

For instance, when the US housing market peaked in 2006, demand dried up. This led to a slowdown in the global economy and a credit crisis. Policy responses prevented a full-blown depression, but many people lost their jobs and wealth. In the aftermath, governments increased spending to support economic growth, guaranteed deposits and bank bonds, and bought ownership stakes in distressed financial firms. These measures helped reduce the severity of the downturn, but it took nine years for most economies to recover to pre-crisis levels.