What goes up, must come down, and sometimes it comes down hard. For as long as there have been financial markets, there have been bowel-clenching days where it seems like every asset is deep in the red. Arguably, just as bad are those periods of pronounced malaise where there are few, if any, signature bad days, yet it seems like the markets are just leaking every week. Let us look at some of the worst times that Wall Street has seen. (For ways you can invest in these unpredictable times, read How To Retain Your Sanity In A Volatile Market.)

TUTORIAL: Market Crashes

Curiously, some of the worst days in the history of Wall Street had no clear cause. Oh true, there were concerns about valuations and global economic conditions, but nothing has really ever adequately explained why there have been some particularly terrible days on Wall Street.

October 1929
Near the end of 1929, the bull market that epitomized the Roaring 20s came to an ugly halt. Although the market seemed to cave in on Oct. 24, 1929 as it opened down about 11%, a variety of confidence-boosting measures fueled a rally, of sorts, and limited the damage to a little more than 6%. What followed, though, became infamous in financial market history. On Monday Oct. 28 the market fell almost 13% and then almost another 12% the next day. The rout was on; the Depression soon followed and the market lost 89% of its value, before bottoming in July 1932.

Black Monday, 1987
On October 19, 1987 the markets closed with the Dow Jones index down 22.6%, an incredible rout that shook the market. As was the case in 1929, there were concerns about valuations and global economic developments, but the actual crash was shocking to all involved. While portfolio insurance and program trading have since been blamed for exacerbating the decline, there was a very real fear at the time that the crash could topple the U.S. into another depression.

The Flash Crash
On May 6, 2010 the market started off having another bad day, amidst the worries about the Greek financial crisis and the potential follow-on effects throughout Europe. Without warning, though, a bad day turned into a rout and the Dow was suddenly down as much as 9% intraday in less than an hour and many well known stocks, like Procter & Gamble (NYSE:PG) and Apple (Nasdaq:AAPL), momentarily had absurd bid prices. Reading the regulators' reports since the Flash Crash, it's clear that nobody, as yet, knows exactly what caused this breathtaking intraday panic. (Could history repeat itself? check out The Crash Of 1929 - Could It Happen Again?)

Crashes are typically a short-term nightmare. In the case of the 1987 crash, for instance, the next day saw the first ever, triple-digit increase in the stock market. More worrying are the long-term routs; the extended periods of time where the market loses a third, half, or even more of its value, over a period of months or years. While crashes can be terrifying, routs grind on investor psyche and not only destroy value, but often chase investors away from the market for good.

Bubbles Bursting
In the case of the Nifty 50 and the late 1990s tech bubble, the end did not come in a couple of bad days. Rather, the markets bled off the inflated valuations of those stocks over a long stretch of time. In the case of the tech bubble, the Nasdaq lost about 75% of its value from early 2000 to mid-2002 and has never surpassed 3,000 since. While there was one notable bad day (April 14, 2000 when the Dow dropped almost 6% and the Nasdaq fell 10%) amidst the rout, it was a grim period, where investors lost money month after month and Wall Street faced massive layoffs, as investment banking disappeared and the rules governing sell-side research, changed significantly.

Credit Crisis
By almost any standard, the market environment since 2007 has been full of angst and fear. There have definitely been rallies; 2007 was a good year, the market rebounded sharply in 2009 and 2010 was positive. There have also been quite a few scary periods along the way and the latest downdraft, not to mention ongoing financial problems in the U.S. and Europe, shows that it's not over yet.

September of 2008 was a terrifying time in the markets. Lehman collapsed on Sept. 15, sending the market down over 4%, and suddenly nobody knew what was going on. Supposedly "once in a billion year" events were happening every day and nobody knew which entities the government would support, and which would be allowed to fail. As bad as Sept. 15 was, the market fell a further 778 points exactly two weeks later.

The markets were no better in October, as banks continued to fail and nobody knew exactly what was going to happen with Fannie and Freddie, or whether the commercial paper markets would fail outright. In fact, October of 2008 played host to three of the all-time worst days for the Dow Jones: The market plunged 18% in a week between Oct. 6 and Oct. 13, with a 688 point drop on Oct. 9, fell another 8% on Oct. 15 and another 5.7% on Oct. 22. Another 7.7% drop was waiting around the corner on Dec. 1, and it's not over yet; August of 2011 saw the market fall 4.3% on Aug. 4 and another 5.6% on Aug. 8. (To help you identify a credit crisis, read 5 Signs Of A Credit Crisis.)

Other Days Of Infamy
Those are, by far, not the only bad or scary times in the market. Amidst the Asian financial crisis of 1997, the Dow fell over 7% on Oct. 27 and there were real fears of a serious global recession. The Russian financial crisis and collapse of Long Term Capital Management (LTCM) followed closely behind in 1998, with the LTCM failure proving, yet again, that even very smart people can lose very large sums in the market.

Last, and by no means least, was Sept. 11, 2001. The market dropped 7% on this day, but clearly the impact was far more significant than just a bad day in the market. Many financial workers watched it all unfold at work on CNBC, and knew people who worked for the financial firms that called the World Trade Center home. It was a day of intense fear, uncertainty, anger and sadness, and one that stands completely apart from other bad days in the market.

The Bottom Line
If there is any certainty in the markets, it is that there will be terrible days, frightening declines and stretches of just horrible and demoralizing performance. The good news is that the markets have always rebounded and will continue to do so, as long as companies can produce positive economic returns from their business. Still, with bad days being such a part of the fabric of investing, investors have to make their peace with them and be prepared to endure them, as part of a long-term investing strategy. (For more on the direction of the market, see Where's The Market Headed Now?)