30 years after Black Monday, could stock market crash again?
It’s been three decades since Black Monday, the most disastrous single day in U.S. stock market history, and investors should be forgiven for wondering if Wall Street learned any lessons from that cataclysmic day.
On Oct. 19, 1987 the Dow Jones Industrial Average DJIA, -0.21% tanked 508 points, a fall of nearly 23%, in a chaotic, daylong selling frenzy that ricocheted around the world. The S&P 500 SPX, -0.24% shed more than 20% of its value. At today’s market heights, a percentage fall of that magnitude would knock more than 5,200 points off the DJIA.
The crash was blamed on a number of factors, but at heart, it was the growing complexity of the market that seemed to overwhelm participants and set the stage for the calamity. Computerized trading, then in its infancy, combined with new hedging strategies that used relatively newfangled stock-index futures contracts were all part of the picture.
Since then, financial markets have been transformed by the march of time and technology and regulatory change.
“It’s a much, much more complex system than it was in 1987. That doesn’t mean it’s better or worse, but it is certainly infinitely more complex,” said Nicholas Colas, co-founder of DataTrek Research.
Among the most profound changes, the stock market has become more fragmented.
‘We don’t know when that day is going to be, it could be tomorrow, or next year, or two or three years from now…but when it happens, it’s going to be really, really ugly. Joseph Saluzzi, co-founder and co-head of trading at Themis Trading
Following 11+ years of trading experience, trading my own accounts as well as for hedge funds and brokerages, I have decided to fulfill my destiny and to personally mentor Forex and Commodities traders. When I released the “Broker Nightmare” (software that hides trades from brokers) 8 years ago, I found an overwhelming number of frustrated people who genuinely wanted to learn how to trade the Forex market, but instead found themselves scammed and misled. Over the years I have also release other trading systems based on my trading strategies, and met a lot of people on my worldwide Forex seminars. We’ve formed a close Forex community and we meet once or twice a year in various locations in Europe.
I wonder how Warren Buffet handles its positions during crashing markets and everyone else using the "Hold" strategy.
We don't need to worry about them :)
When the crash comes get ready to buy!
After you will start the whole world talking about it, it's time :)
Many analysts are forecasting the next bearish move for 2 years now. I'm pretty sure we are at good levels (Monthly/Weekly charts), to see such a healthy bearish move now (current zone) . Would you agree?
Yes I am :)
really informative post
Thank you .. Interesting post
Vlad, do you also trade on precious metals?
Yes Christy, generally I trade all I can profit from :)
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I wonder how Warren Buffet handles its positions during crashing markets and everyone else using the "Hold" strategy.
We don't need to worry about them :)
When the crash comes get ready to buy!
After you will start the whole world talking about it, it's time :)
Many analysts are forecasting the next bearish move for 2 years now. I'm pretty sure we are at good levels (Monthly/Weekly charts), to see such a healthy bearish move now (current zone) . Would you agree?
Yes I am :)
really informative post
Thank you .. Interesting post
Vlad, do you also trade on precious metals?
Yes Christy, generally I trade all I can profit from :)