Web Statistics 1987 stock market crash coming

Wednesday, 17 October 2012

1987 stock market crash coming

1987 stock market crash coming?

If you are old enough to remember the 1987 stock market crash do you remember waking up to the newspaper and reading this?...

1987 stock market crash
1987 stock market crash

the 1987 stock market crash was a horrific event and wiped out many people who were in the market.

Although most have forgotten about 1987 stock market crash, subconsciously it is still in the back of most minds and we can be quickly reminded of its "Atrocities".

Even though the 1987 stock market crash wreaked havoc for many, there is a likely prospect of this happening again. Yes! That is a daunting prospect, as at current levels the dow jones would go back to 3,000 points in one trading session.  

Due to these1987 stock market crash events, stock exchanges have put in place circuit breakers (which occur automatically) and suspend trading  to avoid such catastrophes, but we are still kidding ourselves if we think these types of events are not going to happen.

Also recent studies seem to suggest that history repeats itself on the market. This fascinating study has proved that the frequencies of large market movements tend to happen on anniversaries of previous major market events. That is why many analysts are focusing on OCT 19th this year, as it marks the 25th anniversary to the 1987 stock market crash where the DOW JONES plunged 22%.

There is a saying amongst traders that is "History does not repeat, but it tends to RHYME on the market" That is another reason that a 1987 stock market crash could be well on its way, not an event exactly like the 1987 stock market crash, but maybe something similar or in tune.

Studies that predict longer term market cycles have proved that every 104 years, the market sees a sudden single-session drop of over 20%. The worse thing about this is they can occur anytime, and you always have to be prepared for it as best you can.

1987 stock market crash events are always inevitable because major players, and larger investors who dominate the market can cause a panicked chain of events, and even with circuit breakers and other protections put in place to keep investors from harm, they are normally not enough. 

Banks, Mutual funds, and institutional investors have warned many investors over the years about these risks that always lay hiding and waiting on the market. However the market is a casino game based on fear and greed. The average investor only cares about making money without seeing the risks of major market events like the 1987 stock market crash. Greed right now is rife as investors are trying to make up for the money they lost in the 2008 crisis. And that could have devastating consequences.

In 2012 regulators are trying to formulate reforms and implement their own ideas that will decrease the chances of seeing larger 24 hour movements on the market. But realistically nothing can stop these events, and the reforms themselves have been criticized as lulling investors into a false sense of security.

A 1987 stock market crash is coming, it is not a matter of IF, but WHEN!


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