Question to old timers(those who traded back in 1987)

[chump]

People look too closely for straight parallels with the past instead of just trading what is in front of them. I've been guilty in the past as well.
Whilst events that are superficially similar invite such a response it should be evident that the outcomes are dependant upon how such events are managed,just like your trade. As such, exact parallels do not exist except as can be accounted for on a random basis.
At the moment what we can see is we are now dealing with a bigger range than we have had for some years hence the volatility whilst everybody guesses at what they can't yet see. We're in a range on dailies and above ,nothing more.Arguably we may be sideways ,but even that is a stretch at this point
What we are also seeing is straight linism. Whilst markets do make V turns (straight lines) most don't and long trends typically take months to years to make a confirmed turn which is far longer than the average attention span can tolerate without jumping to conclusions.

 

[Hook Shot]

Better late than never....

not a large sample indeed

I got something else for you:

(1) Stock Market Crash of 1929 - The Dow falls a total of 23% for October 28 and 29;

(2) October 13 and 16, 1989 - The Dow plunges 190.50 points, or 6.9% on October 13

(3) Black Monday, October 19, 1987 and October 20 - The Dow suffers the biggest percentage loss in recorded stock market history on October 19 and initially continues its plunge on the 20th.

(4) October 27, 1997 mini-crash ("Asian flu")

October is a treacherous month, wouldn't you say

Yep October can be treacherous.... and often a month when lows are made - as you know .... However, for the events you mentioned markets probably trended down through Sept to get to their destination in October...So even if no big event occurs in Sept .... it can often serve as a conduit ...perhaps to bigger things.. in Oct.

Sort of an hors d'oeuvre maybe....or a warm up band before the main act :cheesy:

 

[grantx]

Hook Shot,

“...a warm up band before the main act”.

We may also get an encore.

Grant.

 

[black bear]

Someone call me? Wake up at the back, there!

I know one thing. I unloaded most of my shares back then, including Next , which is more than double the price today.

You are right, but it's all a cycle. Now the wealth is going to be taken from the weak, by the powerful .That means that anyone who has so much wealth that he is accummulating continuously, both private individuals and banks, are looking for the assets available for a song being sold by those who must have income. Today, the UK, I hear, is in the trillion pound debt range. That is going to come home to roost. It has got out of hand and now governments do not know how to handle this situation. They just hope that it does not happen on their watch, liking passing a hot potato.

Split

bang on Split, they should teach the cycle in schools, then teach it some more, that trillion pound debt will have to be serviced and some real pain lies down the road, does any one have any opinions on the stength of the US and UK to cope with a real down tern, Service only economy, I for one have never been able to get my head round it, just seems like some mad attemt to spend a pound or doller twice.

Develbis,
Hey isnt that a quality spray gun you can keep for life !

 

[Hook Shot]

Is there something about SEVEN ?

Not really .... but 87,97 were interesting years here we have another ending in 7. I accept that's not a large enough sample size but...hey

Markets have made new all time highs ... there's a bit of worry around at the moment so ...I just thought I'd dig a bit deeper... maybe there's nothing in it who knows ?

1977 -was not a good year for the stockmarket. Dow was down around 19% that year.... i believe

 

[Rhody Trader]

This chart has been making its way around the trading desks for the last week or so.

Certainly, one can see some similarities in the price action, but it's an illusion. The price ranges aren't comparable that way. To see what's really been going on I created the following chart.

This chart removes the difference in price scale and starts both years at a base of 100 for direct comparability. When you look at them this way you see that 2007 is nowhere close to what 1987 was like.

Additionally, as a colleague wrote on Friday, the PE on the S&P then was about 23 and now is more like 16. The CRB Index made a new high in 1987 while this time arround it actually peaked a year ago. Probably biggest off all, in 1987 rates were on the rise while right now we're seeing them move lower.

I personally think most important of all is that in 1987 stocks couldn't possible ever go down - just like in 2000. These days there's a lot more worry and basically no rabid buying.

 

[BARLI]

Allen Greenspan said this year reminds him of 1987... it sounds like you work for some prop firm

 

[Splitlink]

If anyone is shorting the index, because of the way things look, they could be waiting a long time. On the other hand they may well be doing the right thing. I stay away from opinions given by the economists, media and what have you and go from one day to another and try not to get overexposed to any one thing.

It's not easy, but getting too trusting of the experts is a dangerous game, too.

 

[Rhody Trader]

Allen Greenspan said this year reminds him of 1987... it sounds like you work for some prop firm

Well, I don't. In my day job I'm a market analyst for a 3rd party operation - meaning I don't work for an investment bank, broker, or any other firm with a direct stake in the markets. Nor do I have any personal positions which would be impacted by where the stock market goes.

Not that prop firms necessarily even trade stocks.

 

[Jack o'Clubs]

Here's another view supporting a last burst of euphoria from here, and again drawing analogies with previous cycles:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/11/ccinv111.xml

Well written and interesting, although clearly MS does have a vested interest!

 

[BARLI]

why do you guys think Gold goes up every day?

 

[Rhody Trader]

why do you guys think Gold goes up every day?

Because the Dollar is getting weaker. Gold (and oil) is priced in Dollars. A weaker Dollar means that if Gold even just holds its value relative to other currencies, it rises in Dollar terms.

 

[BARLI]

guys, it looks like its either DOLLAR or STOCK MARKET for Bernanke to decide... What you think he'll choose to support? americans get poorer when Dollar gets weaker, so who knows

 

[SAINT]

Some interesting facts on here guys B )

I agree Split, that one should stay away from media and analysts etc. At the end of the day, it's just educated guessing. I think there's a tendency also, of people to look at things beyond their timeframe because they want to short the top and buy it back at the bottom to prove that they are a super trader/market wizard.

Buying weakness all year would've been very profitable, likewise selling strength after the feb/late july panics. Don't waste too much of your valuable time trying to second
guess or outwit Bernanke/Boe & co.