Three Big Market Crashes That Shaped Modern Investing

Financial markets have a long memory. Every so often, confidence grows too fast, leverage stretches too far, or an unexpected shock pulls the floor away. The chart you shared captures three of the most important drawdowns of the last 25 years: the Dot-Com crash, the 2008 Global Financial Crisis, and the 2020 COVID crash. Each had a different cause, but all left permanent fingerprints on how markets behave today.

1. The Dot-Com Crash (2000–2002): When the Internet Became a Bubble

The late 1990s were fueled by a powerful idea: the internet would change everything. That idea was correct. The timing and pricing were not.

Investors rushed into any company with “.com” in its name, often without profits, revenue, or even a workable business model. Valuations floated on optimism rather than cash flow. Traditional metrics were dismissed as outdated. Venture capital poured in. IPOs exploded.

When reality arrived, it arrived quietly at first. Earnings disappointed. Capital dried up. Then the selling accelerated.

Between 2000 and 2002:

• The Nasdaq lost nearly 80% from peak to trough
  
  

• Thousands of internet companies disappeared
  
  

• Household wealth was severely damaged, especially among retail investors
  
  

As the graphic shows, the market slid steadily rather than collapsing overnight. This was not panic, but disillusionment. The key lesson was simple and brutal: technology can change the world, but valuation still matters.

2. The 2008 Global Financial Crisis: Leverage Turns Toxic

If the Dot-Com crash was about dreams, the 2008 crisis was about debt.

In the years leading up to 2008, the global financial system became deeply entangled with housing. Mortgages were bundled, sliced, re-packaged, and sold as “safe” assets. Credit rating agencies stamped approval. Banks increased leverage. Risk was hidden, not eliminated.

When US housing prices began to fall, the structure cracked. Lehman Brothers collapsed. Interbank trust evaporated. Liquidity vanished almost overnight.

In 2008–2009:

• Global stock markets fell more than 50%
  
  

• Major financial institutions failed or were rescued
  
  

• Governments and central banks intervened on an unprecedented scale
  
  

On your chart, this appears as a deep, sharp trough around 2008–2009. Unlike the Dot-Com era, this crisis attacked the core of the financial system itself.

The long-term impact was profound:

• Ultra-low interest rates became the norm
  
  

• Quantitative easing entered the financial playbook
  
  

• Regulation of banks increased worldwide
  
  

Markets survived, but the rules changed.

3. The 2020 COVID Crash: Panic, Then Rocket Fuel

The COVID crash stands apart because of its speed.

In early 2020, markets were near all-time highs. Then a non-financial shock hit: a global pandemic. Borders closed. Economies froze. Supply chains snapped. Fear spread faster than the virus itself.

In just weeks:

• Major indices dropped over 30%
  
  

• Volatility reached levels unseen since 2008
  
  

• Liquidity stress appeared across asset classes
  
  

On the chart, the COVID crash looks like a sudden vertical wound rather than a long bleed. But what followed was equally historic.

Governments and central banks responded with extraordinary force:

• Massive fiscal stimulus
  
  

• Emergency interest-rate cuts
  
  

• Unlimited asset-purchase programs
  
  

The result was one of the fastest recoveries in market history, followed by a powerful bull run. The lesson here was new and controversial: in a crisis, policy response can matter more than fundamentals, at least in the short to medium term.