The table below shows that, markets can fall steeply, and also recover quickly. Bubbles - Inflation and Deflation Stockmarket bubbles occur when stocks rise in price, regardless of fundamental factors such as earnings. Consequently, valuations are pushed to excessively high levels. While bubbles are comparatively abnormal, they have occurred relatively frequently - for example, the gold bubble of the late 1970s, energy stocks in the early 1980s and, more recently, technology stocks. Looking much further back in time, there was the Great South Sea Bubble of the 18th century, and 'tulip mania' a century earlier in the Netherlands.
Bubbles have three stages.
First, there is a shift in market psychology, driven by a new idea. Next, the share prices of existing companies rise until their valuations reach speculative heights. Then IPOs are floated to soak up capital. Before long, we see IPOs that represent little more than a set of ideas and people in a prospectus. Soon after this, the bubble bursts.