The editor and publisher of the Gloom, Boom & Doom Report said Monday on CNBC’s Trading Nation ” that stocks are likely to endure a gut-wrenching drop that would rival the greatest crashes in stock market history. On July 9, 2015, the New York Stock Exchange went down for four hours in midday trading , starting around 11:30 a.m. Investors were already reeling from China’s stock market meltdown and the Greek debt crisis, and the outage just heightened the sense of chaos in the market.
Despite fears of a repeat of the 1930s Depression, the market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday October 22. It took only two years for the Dow to recover completely; by September 1989, the market had regained all of the value it had lost in the 1987 crash.
Using survey data on households’ subjective probability beliefs about the one-year-ahead return on the Dow Jones stock market index, we estimated the effect of the stock market crash on the population average of expected returns, the population average of the uncertainty about returns (subjective standard deviation) and heterogeneity in expected returns.
However, the one-day crash of Black Monday , October 19, 1987, when the Dow Jones Industrial Average fell 22.6%, was worse in percentage terms than any single day of the 1929 crash (although the combined 25% decline of October 28-29, 1929 was larger than October 19, 1987, and remains the worst two-day decline ever).
But still, here we are again, panicking: Fearing that 2016 will repeat 1929, fearing that Wall Street and Main Street, tens of millions of Americans, plus the Fed, the SEC, Washington politicians in both parties will refuse to prepare for the Crash of 2016.Tags: business, congress, history, library, month, reference, services