I was in high school on October 19, 1987, when the equities markets went into a death spiral -- losing a stunning 22.6%. My mom asked me: "Are we going to have a Depression?" I didn't think so. After all, by looking around, it seemed like things were fine (in the real world at least).
Well, the memories are coming back as we approach the 20th anniversary of the event. And, Barron's [a paid publication] has an excellent piece on the topic.
Despite events such as September 11th and the Long-Term Capital meltdown, the U.S. markets have proven to be resilient since Black Monday. Although, we had a recent close-call. That is, in August, it did look like the U.S. markets were headed for a crash. Goldman Sachs (NYSE: GS), Merrill Lynch (NYSE: MER), and other top financial institutions plunged. Hedge funds went into chaos. There was a credit crunch. Buyouts came to a halt.
The good news is that it looks like the Federal Reserve has learned some important lessons and reversed the carnage.
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