My Concerns Validated?

posted by Curt, on October 16, 2007 07:22 am

This article showed up on MSNBC.com this morning, and says some things in line with what I've posted about a couple of time (see here and perhaps here). This whole article is about whether the crash of 1987 could happen in the stock market again. I particularly liked this quote from the end:

While it’s unlikely that either the stock market or the credit markets will replay the scripts that led to their collapses, nothing can rule out the possibility of future panics. The stage for both events was set by hubris as the wizards of Wall Street thought they had somehow outsmarted the risks that had reined in their forebears. Investors — both individuals and institutional money managers — willingly went along for the ride. Once that confidence began to unwind, the resulting panics fed on themselves, fueled by fear.

So as long as investment decisions are ultimately made by human beings – governed by those primal emotions of fear and greed — there’s little chance that financial markets can be insulated from future panic-driven sell-offs.

The only thing I potentially disagree with is whether it's unlikely that the market will crash again.

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