Stock Market Superstitution or Roosting Chickens?

posted by Curt Bentley, on October 20, 2007 10:17 am

Yesterday was the 20th Anniversary of Black Monday in 1987, when the stock market dropped over 500 points in a single day. Well, the stocks dropped over 360 points yesterday, which might be the biggest one day drop in the last 20 years. However, a comparison of the two statistics shows just how the stock market has increased during the intervening time.

When the market dropped on Black Monday, the 508 points lost was a 22.6 percent decline in the market. Yesterday's drop of 360 points (just over 70 percent of 508) only lowered the total value of the Dow Jones Industrial Average by 2.6 percent. Just with my initial calculations, the Dow Jones is "worth" almost ten times more than what it was in 1987. Does that strike anyone else as remarkable? It seems to me that no one should be surprised that the stock market is correcting itself. That type of growth seems, to me, to be unsustainable. But, then again, I am not a financial analayst, and base all my conclusions off of the basic principle of the Law of the Harvest, which my dad taught me when I was a kid.

I've been saying for a while now, but I am really pessimistic about the future of the economy. I think the growth of the last few years has been built on an unsound foundation--people trying to reap what they haven't sown--and that we are headed for a major correction. I am pretty sure it will be a major correction because I think that only a major correction will effect the change in behavior necessary to get people back to sound principles. In my mind, the chickens are coming home to roost. Only part of me hopes I'm wrong.

filed in Politics, other, and Economy

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