"Tonight it's just your money, not your life. Everybody who really loved you a week ago still loves you tonight - and that's a heck of a lot more important than the numbers on a brokerage statement. The robins will sing, the crocuses will bloom, babies will gurgle, and puppies will curl up in your lap and drift happily to sleep even when the stock market goes temporarily insane."
- Louis Rukeyser 10/23/87
Full pithy episode (worth watching - lots of the comments/questions are still relevant today, esp. from John Templeton)
Louis Rukeyser on the 1987 Crash
... and for something lighter, SNL's parody of WSW following Black Monday.
Comments
Don't listen to that bullshit you're young you have time be heavy into stocks...
And be careful not to get suckered into the relief rally...
Parts 2 and 3 of the original broadcast are also worthwhile.
Unsurprisingly, John Templeton provides sage advice.
While I frequently watch the current iteration of WSW, it pales in comparison to Mr. Rukeyser's version.
Pity indeed...
>> Maybe just a reminder that it's all one big manipulated casino....and don't get too greedy...cash is king at times like this... balance in life and in your portfolio
>> Don't listen to that bullshit you're young you have time be heavy into stocks...
>> And be careful not to get suckered into the relief rally...
Except for that last sentence in your first paragraph, this seems to be all complete crap, every word
Else meaningless
Enjoy your day
Baseball fan
Definitely a lesson done somewhat learnt in 1987....my Dad covered me that evening..he took on the role of the central bank...told me whatever your drawdown was today if you're still in the hole one year later, I'll cover you.
I remember my last large flush in the early 2000's...had a serious six figure drawdown... absolutely knew the bubble was going to burst the day I flew into Frisco and drove down to silicon valley...took me no time in traffic when usually it was a parking lot on the freeway...many of the little cafes in the office parks were closing....some clients who were extremely wealthy were getting out of the market...I should have taken action..
I believe us humans have a psychological mechanism in which we block out unpleasant memories otherwise we'd never invest in the markets...
(Excerpted from Bill Fleckenstein’s ”MarketRap” August 8 / Posted by a well informed reader) I’d hate, however, for the newbies drawn to this thread to interpret Monday’s action as a bear market. It definitely was not. Possibly more like a cautionary early “shot across the bow.”
To be clear - Neither I nor the quote’s author meant to advocate selling into / at the end of a bear market. I view the clip as simply an attempt to explain why bear markets fall at an accelerated rate compared to the rate at which the preceding bear climbed.
Here’s another unrelated thought - Nobody rings a bell at the bottom of a bear market signifying “It’s safe to come back in.”
@BaseballFan is spot-on in terms of the mood of most investors during those uncommon but spine-chilling episodes. Yes, the ‘87 flash-crash (about 25% down in a single afternoon) is emblazoned in my mind. Some of the older guys at work who were on the eve of retirement resembled pale ghosts walking the hallways the following day.
Can still remember overhearing a young guy freaking out on his cellphone at the Atlanta airport sometime in 2000 while we waited for a connecting flight. His portfolio had fallen double-digits on several consecutive days and stocks were crumbling again as he spoke. (See data on NASDAQ 2000-2002 at bottom of post.)
And in the spring of ‘08 I bumped into a long-lost HS friend (from the 60s) while shopping in a local market who appeaed sickened by having lost more than 30% of his IRA assets in the last 6-8 months. I gathered that he had been led to believe junk bonds were “safe” investments. He’d loaded up on them.
The above merely paints an image of how humans in different situations react at these times. It’s not intended to exculpate them from blame or offer any advice going forward.
*** “In 2000, the Nasdaq lost 39.28% of its value. In 2001, the Nasdaq lost 21.05% of its value. In 2002, the Nasdaq lost 31.53% of its value.” (Data from Google)
Mr. Market always overreacts both to good and bad news.
If nothing else I hope that folks who might have been all-in or thought they could handle days like last Monday pause, reflect and readjust as appropriate.
https://www.investor.gov/introduction-investing/getting-started/assessing-your-risk-tolerance
Having read a bit about investing, I thought the 1987 market crash might present a buying opportunity.
Despite this knowledge, I didn't actually take advantage of the situation.
During the dot-com bubble (circa 1995 - 2000), I was employed in the tech industry.
Many coworkers were discussing massive gains in Yahoo, Cisco, and the like.
It was very difficult to ignore this continuous chatter - FOMO is real!
Since markets appeared to be in a bubble, I resisted the siren song of the dot-coms.
I didn't panic during the subsequent crash but should have purchased more equities afterward.
The Global Financial Crisis (GFC) of 2007 - 2008 was very challenging for me.
There were many bankruptcies, multiple bailouts, bank runs on money market funds
(Reserve Primary Fund "broke the buck"), and rising unemployment.
Congress initially rejected the Emergency Economic Stabilization Act of 2008
($700B Troubled Asset Relief Program was a component) which led to a ~9% decline
in the S&P 500 and Nasdaq Composite that day. The legislation was passed a few days later.
The seemingly endless onslaught of severe economic events caused significant anxiety.
To me, it felt like the US economy might suffer a precipitous decline analogous to the Great Depression.
Once again, I didn't panic but should have increased equity purchases after this major crash.
I hope to never experience a similar scenario again during my lifetime!
I doubled down. Beginning in October ‘07 with a 60/40 mix, I gradually shifted 100% into domestic equities and then, about a year in (December 2008) I moved all that to a couple global growth funds which had fared substantially worse than domestic. Next, by a stroke of luck I converted about 40% of these badly depreciated assets into a Roth in early March ‘09 (Roth - The gift that keeps on giving). I’d just begun taking SS and the additional income covered the tax hit. The markets turned up on March 9, 2009.
Don’t know what the next step would have been. Probably would have floated a loan sometime in late ‘09 to convert the remaining IRA holdings into a Roth . Then, had the bear market continued into 2010, I’d have mortgaged the house to pour all of its equity into the most aggressive growth funds I could find (likely tech-heavy or international). Had it continued into 201l, not sure what I’d have done … (maybe start praying or simply drink more).
If you take the tack I did, it’s incumbent to back off a bit as markets rise so that you have some capital to reinvest next time things go to hell. I won’t say my way was more profitable than just riding it out. But it may have been less stressful in that you at least feel like you’re making decisions that may impact your fortunes. Stress is sometimes defined as feeling helpless to control your own fate.