The late 1980s was a great time for parachute hair bands and pants. For most decades, it was also great for stock markets around the world.
The 19 largest markets worldwide averaged 296% return from August 1982 to August 1987, according to government data. The Dow Jones Industrial Average DJIA,
exploded from 776 to 2,722 in years, with a 44% increase through the first eight months of 1987 alone.
But, on October 19, 1987, it became ugly in a hurry.
Unsurprisingly financial developments, including a growing US trade deficit, “portfolio insurance,” high equity valuation and, perhaps most importantly, the rise of computer trading, have shattered the stock market with toxic that combination led to one of the worst trading days. in History. The Dow and the S&P SPX,
both lost more than 20% in a single session.
This Monday marks the 33rd anniversary of “Black Monday” and at least one Reddit investor is marking the occasion by posting on this chart the similarities between price action then and now.
The Reddit member behind the post, bigbear0083, clarified that he was not making predictions but said there were many components that could potentially cause a downturn, such as another wave of coronavirus, swollen tests, the election, chaos, massive weather events, etc.
Top reply: “Didn’t you mention this Friday at 2:55 pm?”
Investors have proven to be ready to pull the trigger on sales this year, with the Dow dropping more than 11% back in March – this is the worst trading day since this deadly day in 1987.
“The biggest issue is not the coronavirus, it is the emerging liquidity crisis,” Kent Engelke, chief market strategist at Capitol Securities Management, explained to MarketWatch at the time. “Frank is scary. It really destroys your market confidence. ”
As for trading action on Friday, stocks snatched a three-session skid to end a choppy week, though the pandemic and the election continued to provoke uncertainty. More than half a dozen states, including Ohio and Michigan, reported record numbers of new coronavirus cases Thursday, pushing the U.S. single-day total above 60,000 for the first time in of two months.