RSS
Where Were You On October 19, 1987?
Author: Ravi Prakash (info)
Website: http://www.optionstradinglessons.com/
Posted: October 8th, 2007 at 7:58 am EST
Post your thoughts about this article. Click here!
I had just quit my Import/Export job and was determined to get into banking. I joined Chase Manhattan Bank - Private Banking that year in Hong Kong . Talk about a rude and quick lesson in Stock Market crashes. On that Monday the Market fell 22.6% around $500 billion vanished in a single day. It was the largest percentage drop in the history of the Market. I remember some of us staying up late following the US Stock Market on a pre-Internet Reuters black box which disseminated financial information across the world to trader’s desks. The 80’s was a special decade for the financial markets. New products like Junk Bonds were big. Hostile take-over’s were getting popular and stock prices became more volatile than ever before. Someone once told me how his father who was a broker in the 1950-60s used to get all excited when a stock price moved more than 10-15 cents in a single day. The 1980’s changed all that and it was labeled the decade of excesses by many. Now in retrospect, having lived through the late 90’s and into 2000, the markets and movements of the 80’s seem tame. If the 80’s was about greed and excesses then the late 90’s and 2000 was in a category by itself. Young 20 and 30 year olds were becoming billionaires over night. What is your perspective on how these eras compare? Please do email me with your experience from 1987. I will post it on this web site.
I am sure many are wondering if this 20th anniversary of the crash of 1987 will repeat itself in 2007? Nobody really knows for sure, but I do not think we will see a repeat. One thing I still sense in the Market is an element of fear. That is always a healthy sign. In 1987 people would get stock tips from taxi drivers in Hong Kong. In today’s market, I have yet to receive a stock tip from someone not well versed in finance. In case you were still in school in 1987, I recommend you pick up a copy of the movie “Wall Street”. It did a decent job of capturing the finance world of the 1980’s. Chase actually gave us all free tickets to go and see “Wall Street”. Yes, “greed is good” — within reason.
Last week I called for new highs by the end of this year, not envisioning it would happen in one week. This week saw the DOW and the S&P 500 move to new highs. The NASDAQ was no slouch either. During all this movement, I have been keeping an eye on the VIX as usual. I see the VIX moving down a little more before it gets over sold. That can only mean sometime later this month the major indices will give back some of their gains. Earning season will move into a high gear next week and pick up more steam later this month. It will control the Market direction for now. I think the bar for earnings is not high so many firms should do well. Overall I see the Market remaining positive.
The Friday jobs report was perfect and the Market was happy. What I cannot understand is how the previous months -4,000 jobs became +89,000. Magicians at work, I suspect it is the same group of people who manage the CPI and PPI numbers which I do not buy anymore. I do feel that they should never have stopped publishing the M3 statistics. But then again like the executive and legislative branch they do not really work for us tax payers.
Finally I have to mention something I read about credit card firms. I read that credit card firms recently have stopped or have slowed down their marketing to credit worthy citizens, but instead have turned their focus to people who are currently having a rough time with their mortgage payments. I would have thought that when times were tough credit card firms would want more people to actually pay their bills, after all cash is king, not the other way around. I have so much more to learn.
Post your thoughts about this article. Click here!
Authors, Investing, Options, Ravi Prakash, Stock Market, Trading
Know someone who would like this article?
EMail This Post
No comments yet
Leave a Reply
|
StockWeblog.com Weekly Update Newsletter
|