What caused the stock market crash?

The term "stock market crash" can refer to a sudden and significant drop in stock prices across a major cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes can be due to a variety of reasons, and here are some of the common causes:

1. Economic Factors: Economic downturns or recessions often lead to stock market crashes. High inflation rates, rising interest rates, weak employment numbers, and low consumer spending can all contribute to a market decline.

2. Overvaluation: When stocks are overpriced relative to their actual value (based on earnings and growth indicators), a market correction may occur, which can sometimes result in a crash.

3. Panic Selling: When investors fear that stock prices will fall, they may start selling their stocks en masse. This herd behavior can cause a crash as more and more investors sell.

4. Speculation: Excessive speculative activity where investors are buying stocks with borrowed money or investing in risky assets can lead to bubbles. When these bubbles burst, it can lead to a crash.

5. Regulatory Changes: Sudden changes in government policy or regulations that affect business can prompt a market crash.

6. Geopolitical Events: Wars, terrorism, and political instability can also cause investor panic and lead to a market crash.

It's worth noting that while some stock market crashes are due to identifiable singular events or changes, often a combination of factors trigger a downturn that escalates into a crash. A famous historical example is the stock market crash of 1929, which marked the beginning of the Great Depression. Here, a combination of overvaluation, speculation, and a lack of regulation in the financial markets were significant contributors.