The late 1980s were a great time for hair bands and parachute pants. For most of the decade, it has also been great for stock markets around the world.
According to government figures, the world’s 19 largest markets returned an average of 296% from August 1982 to August 1987. Industrial average DJIA Dow Jones,
in those years it exploded from 776 to 2722, including a surge of 44% in the first eight months of 1987 alone.
But, on October 19, 1987, haste became ugly.
Troubled financial events, including a widening US trade deficit, portfolio insurance, high equity valuations and, perhaps most importantly, the growth of computer trading, have hit the stock market with a toxic combination that has led to one of the worst trading days in history. Dow and S&P SPX,
both lost more than 20% in one session.
This Monday marks the 33rd anniversary of Black Monday, and at least one investor on Reddit is celebrating the event by posting a chart of similarities between price actions then and now.
Reddit member for the post, bigbear0083, made it clear that he did not make predictions, but said that there are many ingredients that can cause a decline, such as another wave of coronavirus, inflated estimates, elections, riots, massive weather events and more.
The best answer is, “Could you remember this Friday at 2:55 p.m.?”
Investors have already proven their willingness to put pressure on the sales market this year, when the Dow fell more than 11% in March – the worst trading day since that fateful day in 1987.
“The biggest problem is not the coronavirus, but the emerging liquidity crisis,” Kent Engelke, chief market strategist at Capitol Securities Management, told MarketWatch at the time. “It simply came to our notice then. It really destroys your confidence in the market. “
As for trading on Friday, the stock recorded a three-session skid to end the volatile week, even if the pandemic and elections continue to cause uncertainty. More than half a dozen states, including Ohio and Michigan, reported a record number of new coronavirus cases on Thursday, bringing the total in one day in the United States to more than 60,000 for the first time in two months.