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Welcome to our Padlet wall. In this Padlet we will be exploring stock market collapses. You can expect to learn what a stock market collapse is and the factors that contribute to it. We will also be showing you real world examples of stock market collapses that happened in the past, as well as more recent examples that are happening today. You will also learn about strategies that will help you during a collapse. We hope you enjoy our Padlet.

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Since the 1600s, when the stock market was first evolving and coming into what it is today, there have been stock market crashes. Stock market crashes are fairly common and there have been countless crashes throughout history of the stock market. A stock market crash is when the stock market suffers a sudden, steep decline in the value of market prices. They are often caused when the market share prices exceed the actual value of the stock, this is called an over inflated market. When investors realize this, and panic sell the stocks, this often leads into a crash. Crashes of the stock market are often followed by a recession.

I chose to include this video because it is a great introduction into what stock market crashes are and how they happen. This video provides preliminary knowledge that is useful in understanding the rest of the padlet. One piece of information that this video has that is different from others is that it is clear, concise, and tells the watcher exactly what a crash is. The video also gives examples of stock market crashes that will be looked at later on in the padlet including the Great Crash of 1929 and the 2008 Housing Market Collapse, these two events tie into websites one, two, and three.

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Subscribe! http://bitly.com/1iLOHml The United Kingdom recently arrested a man for allegedly causing the stock markets to crash in 2010. We wanted to know, what does it take to crash a stock market? Learn More: 'Flash Crash' Charges Filed http://www.wsj.com/articles/u-k-man-arrested-on-charges-tied-to-may-2010-flash-crash-1429636758 "A trader who operated out of his West London home was arrested by British authorities Tuesday on U.S.

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In 2018 many people began to heavily invest into the cannabis market, this was because Canada became the first industrialized nation to legalize cannabis. As a result, the cannabis market quickly grew. In early 2019 signs started to appear that indicated that the cannabis market was about to burst. What followed was a quick decline of marijuana stocks that still being felt today. An example of this is Horizons Marijuana Life Sciences which has lost half of its market value since March of this year. Experts say that this decline is likely due to external factors like the lack of retail locations and the government over-regulation of cannabis.

I chose to include this video because it shows a more recent example of a stock market crash in an industry that many people today are interested in. The video also explores how the market became overvalued and knowledge gained from this video could also be applied to other stocks. One piece of information that this video has that other do not is that it shows the viewers the potential of the cannabis market from the point of view of a chief corporate officer in the industry. This video also ties in nicely into the fourth website of this padlet which further explores the cannabis market and other factors that affected its growth.

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Cannabis stocks continue to tumble | Power & Politics

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In the stock market, downturns are normal. Many investors who do not follow the financial news are often scared of downturns in the market. This is because of the added pressure of increased interest rates and inflation. These two variables along with investing algorithms and program trading are causing volatility in the market.  Two major factors for swings in the market are investors impulse buying and impulse selling stocks. To combat this, veteran investors are looking into investing in lower risk stocks that have lower fluctuations and steady growth. Experts believe that a market correction is on its way. A market correction is when the market drops by at least ten percent after a yearlong high.

I chose to include this video because it shows the difference between new investors who do not follow the financial news and veteran investors who have experience in trading. This video also eases some of the panic new investors will have when seeing a decline in stock prices. One piece of information that I found useful in this video that is different than other videos is the explanation of a market correction. This video also transitions nicely into the next video. This video ties in nicely with the next video, video four, because it shows how swings and corrections in the market are fairly normal and how they differ from stock market crashes.

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Stock market volatility highlights realities of investment

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When dealing with a stock market drop it is important to maintain good quality companies when investing. It is also important to invest in stocks that have low volatility, meaning they do not rise and fall quickly and have steady growth. New investors need to be patient with the volatility of the market and realize that swings in the market are normal. Investors also need to realize that market corrections do occur, and this does not necessarily mean that we are heading into a bear market. If investors do not realize this and start to mass impulse sell their stocks, this could will huge market fluctuations. To combat impulse selling investors could use strategies like stop loss orders.

I chose to include this video because it is great at conveying what an investor should do if a drop in the market occurs. The video also explains some strategies that are integral in preserving your initial investment as well as going into the type of mindset that an investor should have so that they invest in a way that is safer. One piece of information that this video has that different than other videos is the introduction of strategies like stop loss orders. This video could also be used as a guide for what to do if a stock market crash occurs.

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In October of 1929 there was a stock market crash, this crash was so severe that it was called the Great Crash of 1929. The Great Crash was then followed by the Great Depression which was one of the most severe economic downturns in history. The Great Crash first started on October 24, 1929. On this day the New York Stock Exchange experienced record declines with 12.8 million shares sold, this day became known as Black Thursday. This event was also felt in the Toronto markets as well and caused forced selling in Montreal. On October 29, 1929, also known as Black Tuesday, the markets continued to decline eventually reaching 16.4 million shares sold. This in turn caused 500 000 and 330 000 shares to be sold in Montreal and Toronto respectively.

I chose to include this website because it gives more context into one of the most disastrous events that the financial market’s history and because it also sheds a light onto how this event affected Canada’s economy and stock market as well as the impact it had on Canadian politics. This video also ties back into the first video where it was stated that a recession usually follows a market crash. One piece of information that I found useful in this website that was different from other websites was how the trading in the New York Stock Exchange affected the Canadian market.

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The wheat glut of 1928 threw the Winnipeg Grain Exchange into a spiral, triggering a depression in Canada's economy.

It began to take shape on 24 October 1929, Black Thursday. "Stock Speculators Shaken in Wild Day of Panic," shouted the front page of the next day's Toronto . The New York Stock Exchange, the accompanying stories reported, had experienced massive declines in wild trading, with a record 12.8 million shares sold. Thousands of accounts were wiped out before leading bankers and industrialists intervened to halt the slump. The dread extended to the Toronto markets, the Globe declared, and "rocked" share prices there. In Montréal, forced selling ran rampant, and practically every stock finished the day down.

"The biggest crash ever recorded," lamented the famed British economist John Maynard Keynes, whose own investments were entirely gone by the end of the year ( see Keynesian Economics).

Tuesday, 29 October - or Black Tuesday - was worse still. On Wall Street, 16.4 million shares were sold, almost 4 million more than Black Thursday's unprecedented totals. The New York Times industrial average plummeted, eliminating a strong year's gains, and the investment giant Goldman Sachs Trading Corporation was reduced to 58 per cent of its worth the night before.

Credit: Library and Archives Canada/C-020594.\r\n

In Toronto and Montréal, liquidation records were set. Horrified investors clogged the financial districts, while employees in the exchanges and the brokerage houses worked themselves to near-collapse in an attempt to corral the paperwork. The Canadian Annual Review of Public Affairs reckoned that "never before the 1929 crash had amounts that ran into billions of dollars been lost on the Canadian Stock Exchanges in so brief a period of time." In Montréal, some 500,000 shares were sold (5 times the usual amount); in Toronto, 330,000 were sold (13 times the usual).

"The singular feature of the great crash of 1929 was that the worst continued to worsen," wrote Canadian-born economist John Kenneth Galbraith in his seminal book The Great Crash 1929 (1954). The markets jumped back to life, but briefly. The setbacks returned and they persisted.

From the peak of the bull market in 1929 to mid-1930, the 50 most active Canadian stocks diminished on average to well under half their market value. Shareholders in International Nickel and Imperial Oil lost more than $500 million each, those in Canadian Pacific Railway over $60 million.

Standard Oil of New Jersey's John D. Rockefeller, the Bill Gates of his day, was caught up in the turmoil. On 13 November 1929, yet another disastrous day for the markets, he put his family's money behind a guarantee that his enterprise's shares would not fall below 50. In early 1932, the price was 20.

Historians and economists debate the importance of the Great Crash. Some claim that it brought on the Great Depression that blighted the 1930s across the industrialized world; others scarcely mention it in their narratives of the decade-long economic ordeal, an international phenomenon with many origins and explanations.

The economic downturn seemed moderate enough when Conservative leader R.B. Bennett hit the election trail in 1930. But Bennett was able to use it to good effect to defeat William Lyon Mackenzie King's Liberals, who'd been in power for nearly a decade and were reluctant to acknowledge the crisis brewing in Canada.

Six months after the election, Prime Minister Bennett realized that the country was in a severe economic depression. The low point came in 1933, when national output and exports - crucial then as now to the Canadian economy ( see Economic Indicators) - were down a third from late 1920s levels. Farms of the West were in crisis ( see Drought). Nearly a third of the workforce was unemployed.

The rich and well-stuffed Bennett was the butt of cruel jokes and the symbol of everything Canadians loathed. Though he tried to turn the tide, establishing the Bank of Canada and presenting his New Deal for social service reform in 1935, it was too little too late. In the next election, Canadians ousted Bennett.

The economy struggled back, yet very slowly, and a late 1930s recession interrupted the upward trend ( see Business Cycles). In 1939, there were still hundreds of thousands of Canadians on what passed for financial relief, with monthly rates for a family of five varying from $60 in Calgary to $19 in Halifax. This was before the rise of the welfare state in the ensuing decades.

Year upon year of economic woe set peoples against one another in a global depression that left few markets unscathed. In response, governments heaped on the tariffs, wanting to protect themselves and punish others ( see Protectionism). Democracies turned in on themselves, selfish and frightened. Capitalism had apparently failed, and its opponents were in fashion. Territory-hungry dictatorships flourished ( see Fascism). In this respect, the Second World War was a child of the Great Depression. Then, in a twist of fate, the economic prosperity of war ended Canada's Depression.

( See also Economic History.)

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The wheat glut of 1928 threw the Winnipeg Grain Exchange into a spiral, triggering a depression in Canada's economy. It began to take shape on 24 October 1929, Black Thursday. "Stock Speculators Shaken in Wild Day of Panic," shouted the front page of the next day's Toronto .

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The Great Crash of 1929 came at a time of economic heath; this was because the auto industry was going strong and the unemployment rates were at a low. At this time there were no indications that there was going to be a stock market crash. Eventually, when the markets started falling, investors began to panic, and thus impulse selling started to occur. This combined with the fact the trading was being done at unparalleled levels made the fall even greater. Today steps have been taken to prevent falls and crashes such as this. But even so, a crash could still occur. An example of this is if a conflict breaks out in the middle east it could destabilize the market and cause a fall.

I chose to include this website because it takes a closer look at why the Great Crash of 1929 happened as well as the parallels and differences with today’s market. One piece of information that I found useful that other sites did not have is the reason the fall was so severe and the numerous factors that came into play. This website also is a great continuation of the first website in that it gives us some of the theories of exactly why the Great Crash of 1929 happened and some of the lessons that were leaned by the stock market from that event.

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Phew. The dangerous month is safely behind us, so it finally feels less risky to talk about stock market panics without being accused of helping to precipitate another October crash.

For mysterious reasons October really is crash month, though in most years markets do perfectly well during the month, and most analysis shows that September is the worst overall month for stocks. But October's ominous reputation comes well earned.

The bear market that stretched from 2007 to 2009 began in October, though the initial one-day decline was moderate. The Panic of 1907, a three-week plunge in markets that fell by half, certainly began in October. Indisputably, 1987's Black Monday, the largest one-day percentage market drop and one that seemed to come out of the blue, was an October phenomenon.

Historically, the Great Crash of 1929 remains the apocalyptic touchstone of October market crashes not just for its suddenness and unexpectedness but because of what came after, namely the crumbling of the financial system that led to the Great Depression.

Run for the exits

Of course getting October out of the way is no proof against sudden market plunges. A list of global market panics shows sharp market declines can come in any month, especially when there is an external cause that shocks investors into running for the exits.

One of the most disturbing parallels between now and the time of the Great Crash is that it came in what seemed like a period of economic health. Unemployment had declined. The auto industry, a key driver of the North American economy, was still going strong.

"There was no reason for expecting disaster," wrote Canadian economist John Kenneth Galbraith in his 1954 history of the time, The Great Crash 1929. "A depression, serious or otherwise, could not be foreseen when the market fell."

In his book, which I remember gobbling up in my youth, Galbraith was contradicting the conventional view that the stock market was reacting to a slowdown in the economy.

Growing nervousness

That's not to say that as the markets rose to dizzying heights there wasn't plenty of fear that they would eventually have to come down again. But greed had won out and there was no special reason a crash should happen on those particular days.

In a recently published extract titled What We Talk about When We Talk about Stock Market Crashes from his most recent book, Yale economist Robert Shiller, who has noted similarities between current markets and those of the 1920s, observes that the market conflagration did not have an obvious spark.

"Economists still puzzle over the stock market crash of Oct. 28, 1929, a date on which no sudden important news occurred other than the crash itself," writes Shiller.

One interesting explanation proposed for the sudden crash was technology. Shiller himself has described the Trans-Lux Movie Ticker, a newfangled method of projecting changing share prices that brought awareness of rising stocks to the masses.

But according to Joe Janes from the University of Washington, the real trigger for the crash was that during the initial day of declines on Oct. 24, unprecedented trade volumes due to the increased popularity of stocks meant the ticker could not keep up.

Janes says it was well known the technology was not up the task, but when markets were rising no one really cared.

"When it started to fall, and the ticker fell behind, and then when it became clear that things were getting worse fast, it was the not knowing - and moreover not knowing what you didn't know - that helped to fuel the panic," says Janes in his podcast Stock Market Ticker Tape, 1929.

Pulling the trigger

Certainly there are plenty of reasons technology could once again help destabilize the stock market. Already the proliferation of online discount trading has shown ordinary traders they have trouble exiting when markets fall suddenly.

Automated trading that contributed to the Flash Crash of 2010 where markets fell 1,000 points in minutes and the market lost $1 trillion in value before bouncing back, could have a much worse effect if traders had been fearing a wider crash. Certainly the growth of trading by artificial intelligence means people aren't really sure how the AIs will react in the next sharp market decline.

Another lesson from 1929 that may not have been learned is the growth of investment trusts, tradable collections of stocks that turned out not to be liquid when traders decided they wanted out. While modern exchange traded funds are not the same thing, the democratizing of share holding through ETFs that faced selling pressure on a market panic could compound market disruptions, as nervousness grows.

Of course those are just structural reasons for a market decline. If traders decide they are flying too close to the sun, external shocks could initiate a tumble. For example, a new and sudden outbreak of conflict in the Middle East, while good for Canadian oil producers, could destabilize markets.

An attack on demonstrators in Hong Kong could have an effect similar to the Tiananmen Square crisis of 1989 that caused a sharp slide in Chinese GDP growth. With China's new global clout any shock to its economy would likely have a worldwide impact on markets.

As Edward Yardeni, chief economist and investment strategist at Yardeni Research, has said, "Crashes usually happen when people are not expecting them."

The trouble is of course that one of the other lessons of 1929 is that even after many wise people have suggested the market has risen too high, what Galbraith called "the mass escape into make-believe" can continue to carry it much higher.

Follow Don on Twitter @don_pittis

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The Great Crash of 1929 is a reminder that market declines can come as a surprise: Don Pittis | CBC News

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Phew. The dangerous month is safely behind us, so it finally feels less risky to talk about stock market panics without being accused of helping to precipitate another October crash. For mysterious reasons October really is crash month, though in most years markets do perfectly well during the month, and most analysis shows that September is the worst overall month for stocks.

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In 2007 the Global Financial Crisis had begun, this forced Canada’s as well as the United States’ economy into a recession. It is widely accepted that the Global financial crisis was due to the collapse of the United States’ Housing Market. In the beginning of 2008, the stocks for oil was continuing to surge despite the crisis, at this time Canada’s economy was barely affected. However, during the middle of 2008 the oil market finally collapsed. This sent Canada’s economy into a spiral and eventually resulted in a recession in October of 2008. The factors that contributed to Canada’s recovery were the depreciation of the Canadian dollar and the resurgence of the oil market. By 2009 Canada had finally gotten out of the recession.

I chose to include this website because it shows a more recent example of a recession and because it sheds a light onto why Canada was affected by the US housing market collapse. One piece of information that this website had that was different than others was that if revealed how Canada’s economy recovered after the recession and that it was due to the oil market recovering and the depreciation of the Canadian dollar. This website also ties into the third video and the fourth video in that the lessons that were taught in those videos could have been applied to this event.

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The global financial crisis that began in 2007 dragged much of the world economy into recession, and Canada was not spared. Although the effects on Canada were milder than on the United States and in Europe, the Canadian recession of 2008-09 was still severe enough to generate sharp declines in output and employment and to require significant responses by Canadian policy-makers.

Origins

While its underlying causes are varied and still subject for debate, it is widely acknowledged that the global financial crisis was triggered by the surge and collapse of United States housing prices during the 2000s.

US Housing Market

The US economy had gone into recession in 2001, and the US Federal Reserve - the country's central banking system - reduced interest rates as a counter-cyclical measure ( see Monetary Policy). Lower interest rates made it easier for households to carry larger amounts of mortgage debt, and so the demand for US housing increased. The resulting increase in prices stimulated residential construction activity, and the resulting increase in employment and output in the housing sector was an important factor in the recovery in the US economy.

A contributing factor behind the surge in housing investment was a massive inflow of foreign investment into the United States, notably from China: by 2006, the US current account deficit reached 6 per cent of GDP ( see Balance of Payments). Much of this foreign capital was subsequently channeled into the US housing sector, offering larger pools of savings for households seeking mortgage financing.

The housing market is well-known for its cycle of booms and busts, and it became apparent in the mid-2000s that US housing prices showed many of the signs characteristic of a "bubble." Asset-price bubbles occur when investors make purchases based on the expectation of being able to sell the asset later at a higher price, and not on the inherent qualities of the asset itself.

US housing prices finally peaked in early 2006. Activity in the housing sector slowed, and the US economy began to undertake a transition of investment and employment to other sectors. This transition was not seamless, however, and the United States fell into recession in December 2007.

Financial Crisis

Initial concerns were focused on how declining housing prices affected household wealth: lower levels of wealth are generally associated with lower levels of spending. On its own, the wealth shock was generally viewed as manageable: estimates for the losses were less than those suffered during the dot-com stock market crash of a few years earlier. But the more fundamental problem proved to be structural weaknesses in the financial systems of the United States and other countries. (Canada was an exception, as noted below.)

One contributor was the deterioration in the mortgage underwriting standard: an increasing share of loans was made to high-risk borrowers. When housing prices eventually fell, these "sub-prime" mortgages were more likely to go into default.

The increased securitization of mortgage assets, and most notably the development of Collateralized Debt Obligations (CDOs), amplified the underlying risk. A CDO gave its owner a claim on the flow of mortgage payments made by households. CDOs that offered higher-priority claims were considered to be safe assets, and traded at a premium. The development of CDO and related instruments provided a further incentive to offer sub-prime loans: purchasers of CDOs had little way of verifying the quality of the underlying mortgages upon which the assets were based.

When US housing prices fell, many homeowners found themselves underwater: their mortgage debts exceeded the value of their homes and went into default. It soon became apparent to financial institutions and other investors that many of the supposedly "safe" mortgage-based assets were worth much less than their book values. Financial market liquidity dried up as institutions became less willing to make loans, out of fear that the counterparties might go bankrupt in the near term. These fears came to a head with the collapse of Lehman Brothers, the fourth-largest US investment bank, in September 2008.

DID YOU KNOW?

Liquidity describes the ease with which an asset can be converted to cash. Liquid assets are easiest to convert to cash and lose little to no value when converted because they are valued by a broad market, such as currencies and commodities. Illiquid assets, such as real estate and collectibles, are harder to convert to cash because the market in which they are sold has fewer buyers. Illiquid assets may have a reduced value when quickly converted to cash.

Transmission to Canada

Oil prices continued to surge during the first months of 2008, and the Canadian economy was at first little affected by the US recession: employment and output continued to expand. But the US financial crisis in the fall of 2008 affected global financial markets, and Canada was not exempt from its effects. The collapse of the prices of oil and other Canadian commodity exports compounded the effects of the financial crisis, and the Canadian economy fell into recession in October 2008 ( see Commodity Trading).

Canadian Policy Responses to the Recession of 2008-09

Stabilization of Financial Markets

The immediate priority of policy-makers in the United States and other countries was dealing with banks and other financial institutions that had suddenly become insolvent. Financial institutions play a key intermediary role in the economy, and governments acted to minimize the disruptions caused by bank failures. Banks that were sufficiently large were considered "too big to fail," and had to be bailed out. Indeed, the fact that banks were aware that they were too big to fail produced a moral hazard problem: the belief in an eventual rescue by governments encouraged large banks to engage in risky behaviour.

Canadian policy-makers were spared this problem. Though all of the "Big Six" chartered banks - National Bank of Canada, Royal Bank of Canada, Bank of Montreal, Canadian Imperial Bank of Commerce, Bank of Nova Scotia and Toronto-Dominion Bank - were considered "too big to fail," Canada's regulatory regime prevented them from engaging in the sort of risky behavior observed elsewhere ( see Bank Act). In particular, Canada's banks were obliged to maintain lower debt-to-equity ratios than most of their counterparts abroad. Higher debt-to-equity ratios offer the possibility of higher profits rates, but highly leveraged banks are also more vulnerable to negative shocks to the value of their assets. After the 1985 collapse of Northland Bank and Canadian Commercial Bank, Canadian regulations were further tightened ( see Estey Commission). Partly because of this stronger regulatory environment, Canada's banks were not in danger of insolvency in the crisis.

Instead, the immediate priority of Canadian policy-makers was to restore stability and liquidity to financial markets ( see Stock and Bond Markets). While Canadian investors and financial institutions were not as exposed to the sort of losses seen in the United States, Canadian holdings of asset-backed commercial paper dropped sharply in value. (The term commercial paper describes short-term, unsecured loans that companies issue in order to finance their accounts and inventories. They are usually sold at a discount but pay out at full value.) In order to avoid the sort of "fire sale" price collapses observed elsewhere, Canadian authorities persuaded investors to accept and write off short-term losses. In addition, measures such as the Insured Mortgage Purchase Program (IMPP) allowed banks to exchange illiquid mortgage assets for bonds issued by the Canadian Mortgage and Housing Corporation (CMHC). Since CMHC debt is backed by the federal government, these assets were more readily accepted as collateral for short-term lending. This exchange did not affect the government's risk exposure to the mortgage market: only mortgages that were already insured by the government were eligible for the IMPP.

Monetary Policy

The failure of Lehman Brothers made it clear that the scale of the financial crisis would soon affect the real economy. On 8 October 2008, the Bank of Canada - in concert with other leading central banks - reduced its target for the overnight rate from 3 per cent to 2.5 per cent ( see Interest Rates in Canada). This action was followed by a series of rate cuts until the Bank's policy rate was reduced to its lower bound of 0.25 per cent on 21 April 2009. (The Bank allows a 0.25 per cent deviation above or below its target rate, so a target of 0.25 per cent implies a lower bound of 0 per cent; see Bank Rate.)

Since the Bank of Canada could not reduce its policy rate any further, it felt obliged to make use of "unconventional" monetary policy instruments. Other central banks, including those in the United States and United Kingdom, had also reached the lower bound of their policy rates and began to use unconventional monetary policy tools. The reduction of the interest rate to its lower bound in Canada was accompanied with a "conditional commitment" to maintain the Bank's policy rate at its lower bound until the middle of 2010. This was the extent of Canada's experience of unconventional monetary policy instruments; unlike in the US and the UK, the Bank of Canada did not see fit to engage in quantitative easing.

DID YOU KNOW?

The term quantitative easing describes the unconventional monetary policy whereby a central bank buys government securities, or other securities, in order to lower interest rates and increase the money supply.

Fiscal Policy

The Conservative government of Stephen Harper remained in power with an increased minority after the federal election of 14 October 2008. During the campaign, the Conservatives promised to keep the federal budget in balance, and its fiscal update of 27 November outlined measures to restrain spending in order to avoid going into deficit. Subsequent economic and political developments - including an attempt by opposition parties to form a coalition government - forced the Conservatives to back away from this position. The Harper government introduced a budget on 27 January 2009 that included a two-year stimulus program, mainly on infrastructure spending ( see Fiscal Policy).

Auto Sector Bailout

The North American auto sector was troubled and in decline even before 2008, and the recession pushed General Motors (GM) and Chrysler into bankruptcy (Ford was able to withstand the crisis). Chrysler was eventually purchased by the Italian automaker Fiat and was able to continue operations.

GM, on the other hand, had no such saviour, and it was "too big to fail." The risk of a catastrophic collapse of GM's network of suppliers and associated industries forced governments in the United States and Canada to take an equity stake in GM. This injection of capital gave GM time to restructure and continue its operations. The federal government and the government of Ontario sold the last of their GM holdings in 2015.

Factors Contributing to Recovery

The efforts of Canadian policy-makers were not the only - or even the most important - factors driving the eventual recovery from recession. The Canadian dollar had been trading near par with the US dollar in mid-2008, but it depreciated sharply as the crisis deepened. By March 2009, the Canadian dollar had depreciated by more than 20 per cent, to less than US$0.80. This depreciation encouraged Canadian exports ( see Exchange Rates).

A more decisive factor was the continued strength of the Chinese economy during the global financial crisis, which supported a recovery in the price of oil and other resource commodities. Oil prices rebounded from a trough of US$30 per barrel in December 2008 to more than US$60 per barrel in May 2009.

Turning Point and Recovery

The US recession was severe enough to draw comparisons with the Great Depression of the 1930s, but the Canadian recession of 2008-09 was milder than the downturns of 1981-82 and 1990-92. The main Canadian business cycle indicators rebounded in the spring and early summer of 2009 ( see Economic Indicators). Monthly GDP attained its trough that May, and the unemployment rate peaked in June. Monthly GDP recovered its pre-crisis peak in October 2010, and employment losses were absorbed in January 2011. US employment did not recover its pre-crisis peak until May 2014.

Aftermath and Legacy

Recovery was slower in the United States and in Europe, and the sluggish growth of the world economy acted as a drag on Canadian economic growth after 2011. The Bank of Canada and other central banks were obliged to maintain their policy interest rates at low levels, as inflation remained weak. It was not until 2017 - almost 10 years after the United States moved into recession - that Canada and the US began to return to pre-crisis monetary policy stances.

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The global financial crisis that began in 2007 dragged much of the world economy into recession, and Canada was not spared. Although the effects on Canada were milder than on the United States and in Europe, the Canadian recession of 2008-09 was still severe enough to generate sharp declines in output and employment and to require significant responses by Canadian policy-makers.

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Today Canada’s Cannabis industry is plummeting, and the Cannabis market may be facing a crash. This crash is likely the result of government over-regulation and other external factors such as the lack of retail locations. The value of cannabis stocks are down across the board with Canopy grown down 71 percent, Aurora Cannabis down 76 percent, Cronos down 71 percent, Tilray down 87 percent, OrganiGram down 74 percent, Hexo down 78 percent, and CannTrust being down 92 percent. Ideas are floating around that this is due to a market over-correction because of how quickly the Cannabis Market has grown since cannabis first became legalized. Another theory is that the current market simply cannot compete with the black-market. This is because the prices for the black-market are exponentially cheaper than that of the legal market due to government over-regulation.

I chose this website because it shows the various factors that are causing the fall of the Cannabis market as well as how the market became overvalued. One piece of information that this website had that differed from others was that this website stated how the black-market for cannabis played a role in the fall of the market, and how the product on that was being supplied on the back-market was so much cheaper than that of the legal market. This website also ties into video two, however this video takes a closer look at many more factors that contributed to the crash. The lessons that were taught in the third and fourth videos could also be applied to this crash.

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Weed Me's growing facility in Pickering, Ont., is so crammed with cannabis plants that a row of pots have to be cranked out of the way before people can walk between them.

The growing rooms are perfectly clean and brilliantly lit, and of course, the building is filled with the overwhelming smell of weed.

Are there people in Pickering, east of Toronto, who might want to buy legal cannabis grown in their community by their neighbours? Well, so far, Weed Me hasn't had the chance to find out.

As things stand, if recreational consumers in Pickering want to consume weed grown at the Weed Me facility in their city, they'll have to get on a plane, fly to British Columbia or Saskatchewan and buy it there.

"Often, my friends ask how they can get my product," Weed Me founder Terry Kulaga explains. "At the moment, they have to get a script from a doctor and sign up as a patient, and then we can sell directly to them. Otherwise, we sell our product quite literally all the way on the other side of the nation."

The first year or so of legal cannabis in Canada has been a bumpy ride. There is a growing legal industry where there wasn't one before, but there have also been collapsing share values and mass layoffs. People involved in Canada's cannabis industry say some of the issues just come with the territory of companies pressured to get too big too fast and the fact that legal weed still costs a lot more than the competing grey-market product.

But over and over again, members of the cannabis industry say their main problem is a painful lack of retail stores in high-population provinces like Quebec and Ontario.

Pickering, for example, not only doesn't have a store but has no prospect of one in the near future, and Weed Me isn't allowed to sell directly from its facility.

"The access to the consumer is really limited in Ontario," Kulaga says. "All I can say is I hope that they ramp up their efforts to create brick-and-mortar stores. We're definitely ready to service the market locally. Right now, we do sell nationwide, and it would be nice to be able to sell in our own backyard, so to speak."

Lack of stores hobbles industry

No province has dealt with legalization quite the same way, and that extends to the number of retail stores. While the number varies dramatically - arguably New Brunswick has too many - some big provinces still have far too few, which has an outsized effect on the nation's cannabis economy.

"You have to make it easy for people to get the actual product," says David Soberman, a professor of marketing at the University of Toronto.

Last week, Tweed CEO Mark Zekulin blamed Ontario's lack of retail stores for much of the company's disappointing share performance.

"At the risk of oversimplifying, the inability of the Ontario government to license retail stores right off the bat has resulted in half of the expected market in Canada simply not existing," he charged.

Why would a lack of stores matter all that much? Most provinces, on the first day of legalization, opened online cannabis sales sites where it isn't all that much harder to buy legal weed than it would be to buy a book or a pair of socks online.

But one of the surprises of legalization is that it's really hard to get Canadians to buy cannabis online. In New Brunswick, where every town of any size has had a cannabis store for over a year, just over one per cent of cannabis sales are online.

For better or worse, it seems Canadians want to see and smell cannabis before buying it, and talk to the people who are selling it.

And there's a lingering uneasiness about the unavoidable data trail that an online purchase leaves. In December, the federal privacy commissioner urged cannabis buyers to use cash if at all possible.

"Some countries may deny entry to individuals if they know they have purchased cannabis, even lawfully," the statement cautioned.

Alberta's 301 stores give it Canada's lowest ratio of people to stores, at one to 14,000, and Ontario has by far the highest, at one to 590,000. (If Ontario had opened cannabis stores at the same rate as Alberta, there would now be about 1,000, roughly three for every two full-service liquor stores.)

But Quebec isn't all that well served, at least so far, at one to 300,000. And though B.C. has started to expand its store network, its 88 stores still only give it one to 54,000.

Cannabis stocks have plummeted

Cannabis companies can't have impressed those who bought their stock in the leadup to legalization:

Canopy Growth: $67.74 in Sep 2018, $19.40 now

Aurora: $13.71 in October of 2018, $3.30 now

Cronos: $29.15 in March of 2019, $8.27 now

Tilray: $148.30 in October of 2018, $19.74 now

OrganiGram: $10.72 in May of 2019, $2.84 now

Hexo: $10.48 in April of 2019, $2.35 now

CannTrust: $13.90 in October 2018, $1.08 now

"I think one of the things that's pretty certain across the board for the legal cannabis industry is the results have not been as strong as people thought they would be," Soberman says. "And this is also reflected in the price of many of the cannabis stocks."

Part of the problem is just inevitable growing pains of a new industry (or a new industry in its legal form) pressed to get vast quantities of flower out of the greenhouse, dried, cured, packaged and on to a truck as fast as possible.

"There's definitely been some growing too big too fast, perhaps," Kulaga reflects. "I think that you need to perfect your operations on a smaller scale and then scale. Starting super big is difficult to do. And there's no real previous model to follow in this industry, so when you're writing the book as you go, you've got to do it conservatively."

Legal cannabis prices must fall, observers say

Soberman and Kulaga call for a carrot-and-stick approach to the illegal market (which can be called the black market, grey market or legacy market, depending on your politics.)

First, at least some legal weed needs to be priced more competitively, despite a dollar a gram in excise taxes.

"We know legal pot is priced at approximately 10 dollars per gram, but the price in the black market for [a] similar quantity of cannabis is about six dollars - five, six dollars," Soberman says. "So one of the real issues for people, especially people that have been using pot for a while, is what's the motivation for them to switch? First of all, they can't find it. And second of all, they have to pay a lot more for it."

Kulaga would like to see more police effort put in to curbing the illegal market.

"The enforcement has to actually go out and shut down some of these illegal operations," he says.

It's a question that divides the legal cannabis community, which includes many people who were in one way or another involved with it under prohibition.

Last week, the Cannabis Council of Canada, an industry group, published a statement urging governments to "... prioritize the closure and removal of both illegal brick-and-mortar stores and actively seek out and shut down illegal online cannabis dispensaries."

Aurora, a member of the council, issued a statement that said the company "... recognize(d) the importance and value of the cannabis movement and the people who advocated for better drug policy that led to legalization" and that the letter " did not represent the intended message."

On the other hand, it's challenging to run a business in a highly taxed, highly regulated industry against competitors selling a similar product who are neither taxed nor regulated.

For example, California's legal cannabis industry has had a disappointing launch in part because the state has both high cannabis taxes and also a well-entrenched, tolerated network of grey-market stores.

Kulaga says some grey-market stores operate so openly that customers aren't aware they're buying from an illegal source - and, in principle, breaking the law themselves.

"People approach me on a regular basis saying, 'Oh, I got some product,' and they ... more often than not obtained it from an illegal source and they don't even realize that that's the case. So that needs to change."

About a month after legalization, 18 per cent of cannabis buyers in Ontario told pollsters they had bought from government-run stores and another 12 per cent from licensed, privately run stores. Neither category existed at the time, which leaves us to conclude they thought that stores operating so openly must be legal.

'I'm not sure I see a very bright light at the end of the tunnel'

Between high taxes and competition from the illegal market, it's possible that legal cannabis may never be a very profitable industry, Soberman cautions.

On one hand, he predicts more retail stores will open over time, which will lead to more people buying from the legal market.

"The second thing is I think you're going to see a drop in prices because the prices in the black market and the cost of making your own cannabis isn't going to change," he says. "And so, if the legal producers of pot really want to grow their business, they're probably going to have to be a little bit more competitive with their pricing.

"But all of that says that the market's not going to be nearly as profitable as people thought it was. Not only that, there are multiple firms competing for business in the legal pot market, and they're all trying to beat each other. So these are the reasons why I've said I'm not sure I see a very bright light at the end of the tunnel."

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What ails Canada's legal cannabis industry? Lack of stores, mostly

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Weed Me's growing facility in Pickering, Ont., is so crammed with cannabis plants that a row of pots have to be cranked out of the way before people can walk between them. The growing rooms are perfectly clean and brilliantly lit, and of course, the building is filled with the overwhelming smell of weed.

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This Image shows the Great Stock market Crash of 1929 from the perspective of the Dow Jones and the recession that followed. In this graph you can see the initial 48 percent drop in the market as well as the first and second banking crises, the gold drain, and how the market started to recover. Under the graph you can see the volumes that were being traded at the time of the crash and how there were an unprecedented amount of trades happening.

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This image shows how the stocks for Aurora Cannabis (ACB), Canopy Growth (CGC), Cronos Group (CRON), and Tilray (TLRY) have crashed since February 8th of 2019 to October 11th of 2019. This graph also compares these 4 major stocks to the S&P 500.

I chose to include this Image because it shows exactly how the Cannabis Market has fallen and how it compares to the S&P 500. This image also ties into the fourth website as well as the second video. One piece of information that this Image has that differs from others is the investigation that was launched by the CDC due to the lung injuries that were happening at that time and how that affected the value of the cannabis stocks.

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GNED 1119 Assignment 2 Reflective Questions Manthan Naik and Anthony Nwosu