My wife, Susie, and I were walking on the beach this weekend and the subject of "Black Monday" came up. All of a sudden I was thinking back to what had happened to cause such a precipitous drop in the stock market. Whatever it was I remember feeling good about the fact that we all went through, learned from it, recovered, and actually things were much better for an extended period of time because of it.
Looking back to Friday, October 16, 1987, the Dow Jones Industrial Average dropped just over 100 points. That is considered just a sneeze today, however, consider that the Average stood at about 2,200 at that time. A 100 plus point drop was significant enough so that everywhere we went that weekend, people were talking about it.
I remember thinking at the time, although it was a big drop - about 4.5%, when Monday morning came, things would get back on an even keel, and "the market" would begin its climb back. Well needless to say I was wrong, really wrong. It seems that not only everywhere my wife and I had been over the weekend everyone was talking about the market, everywhere everyone went, they and everyone else was also talking about the market.
Monday morning arrived none too soon for me and all of the optimistic stock brokers. After all, the first 100 point gain on Wall Street had been in August of 1982. The first return and close back over 1,000 had come near the same time (the market had closed above 1,000 in the mid 1970's and had not closed above it again because of a prolonged recession). We, as stock brokers all knew that everything would be O.K. and "the market" would rebound.
Well that is NOT what happened. The market opened, and in less than an hour it was down another 100 points. That was the beginning of a crushing day on Wall Street. By the end of the day the Dow had lost 508 points. That day, October 19, 1987, became known as "Black Monday". People invested in the stock market saw their portfolio value drop over 25% between Friday' and Monday's trading.
Some changes in regulations were made as a result of "Black Monday". These were changes made to prevent that from ever happening again. But to look where we are today, one must wonder, what happened?
Back then, it didn't take long for the market to regain momentum and close above 2,000 again. It did take the overall economy a period of time to stabilize. New regulations boosted confidence in the "system" and as a result there was more order in the financial markets. From then until now is much different.
There has been dramatically increasing greed on Wall Street, and regulations have been loosened. Also, we have a dollar which has lost value and real estate values which dropped off more than a year ago haven't even started to rise. In addition, we have foreclosures at all time highs. On top of all of this, we are now handed a $700,000,000,000.00 bail out which we are told we must accept in order to keep the economy rolling. In essence it seems its a tab that the general public is being handed to cover the cost of corporate America's excesses and failures as well as regulator's loose handling of the economy for an extended period of time.
We are already in a recession no matter what the Federal Government says. I foresee the economy falling deeper and wider into the recession. Deeper meaning more bank failures, more lost jobs, more foreclosures, more time before real estate prices begin to rise, and your purchasing power steadily declining with the reduced value of the dollar. Wider meaning that eventually this recession will be very broad in scope as far as the number of people's lives it touches.
In closing I have two questions. First, have you seen this coming for a long time? And even more importantly, what are you doing now, right now today, to secure your and your family's financial tomorrow? - 15224
Looking back to Friday, October 16, 1987, the Dow Jones Industrial Average dropped just over 100 points. That is considered just a sneeze today, however, consider that the Average stood at about 2,200 at that time. A 100 plus point drop was significant enough so that everywhere we went that weekend, people were talking about it.
I remember thinking at the time, although it was a big drop - about 4.5%, when Monday morning came, things would get back on an even keel, and "the market" would begin its climb back. Well needless to say I was wrong, really wrong. It seems that not only everywhere my wife and I had been over the weekend everyone was talking about the market, everywhere everyone went, they and everyone else was also talking about the market.
Monday morning arrived none too soon for me and all of the optimistic stock brokers. After all, the first 100 point gain on Wall Street had been in August of 1982. The first return and close back over 1,000 had come near the same time (the market had closed above 1,000 in the mid 1970's and had not closed above it again because of a prolonged recession). We, as stock brokers all knew that everything would be O.K. and "the market" would rebound.
Well that is NOT what happened. The market opened, and in less than an hour it was down another 100 points. That was the beginning of a crushing day on Wall Street. By the end of the day the Dow had lost 508 points. That day, October 19, 1987, became known as "Black Monday". People invested in the stock market saw their portfolio value drop over 25% between Friday' and Monday's trading.
Some changes in regulations were made as a result of "Black Monday". These were changes made to prevent that from ever happening again. But to look where we are today, one must wonder, what happened?
Back then, it didn't take long for the market to regain momentum and close above 2,000 again. It did take the overall economy a period of time to stabilize. New regulations boosted confidence in the "system" and as a result there was more order in the financial markets. From then until now is much different.
There has been dramatically increasing greed on Wall Street, and regulations have been loosened. Also, we have a dollar which has lost value and real estate values which dropped off more than a year ago haven't even started to rise. In addition, we have foreclosures at all time highs. On top of all of this, we are now handed a $700,000,000,000.00 bail out which we are told we must accept in order to keep the economy rolling. In essence it seems its a tab that the general public is being handed to cover the cost of corporate America's excesses and failures as well as regulator's loose handling of the economy for an extended period of time.
We are already in a recession no matter what the Federal Government says. I foresee the economy falling deeper and wider into the recession. Deeper meaning more bank failures, more lost jobs, more foreclosures, more time before real estate prices begin to rise, and your purchasing power steadily declining with the reduced value of the dollar. Wider meaning that eventually this recession will be very broad in scope as far as the number of people's lives it touches.
In closing I have two questions. First, have you seen this coming for a long time? And even more importantly, what are you doing now, right now today, to secure your and your family's financial tomorrow? - 15224
About the Author:
George L. Kenney has a BA in Economics and career of twenty five years in financial services. He is now a successful internet marketing professional, with a passion for helping others realize their dreams. He will help you learn how to leverage your time, money, and technology to put you on the fast track to success. To find out more about his team and the Marketing Mentors Program Click Here
