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History's Worst Stock Market Crash and the Greatest Investing Lesson!

Stock-Markets / Stock Market Crash Oct 19, 2018 - 03:04 PM GMT

By: Nadeem_Walayat

Stock-Markets

It's that time of the year again when the stock market doom merchants are at their most vocal as they focus on the historic apex of the darkest day of the darkest month for stocks of the year, October 19th, the 31st anniversary of the 1987 Black Monday that saw the stock market crash by an unprecedented 22% in just one day that few saw coming but ever since many prophesise the repeat of each October, regardless of what the stock market has actually been doling each year as the perma bear crowd can always be seen literally jumping up and down like demented rabbits proclaiming that a crash is once more imminent, pointing to a myriad of harbingers of the imminent stock market apocalypse such as the Hindenburg Omen. Against which the historic record paints a picture of a coin toss having proved infinitely more accurate than the perma crash is coming calls awaiting their broken clock moment to proclaim success.


So it is no wonder that October tends to be an unusually irrational month for stock market expectations, and even more so for this year given that the Trump inspired delusional rally has relentlessly risen in the wake of Fed interest rate tightening whilst the trade war with China and the rest of the world rages as I have covered at length in my Trump Reset War With China series.

Why China Lost the Trade War Even Before It Began - SSEC Stocks Index (1)

In respect of which the Chinese Emperor Xi Jinping's has repeatedly stated in front of his 5000 communist party goons by effectively laying out the blue prints for what to expect from the emerging Chinese economic and military global empire. So the trend that I warned of near 2 years ago is most definitely still in motion as the worlds existing empire, the United States and the emerging Chinese Empire are heading towards inevitable conflict that will probably turn nuclear where the North Korea saga is just one side show of.

For more on the "Trump Reset - War with China" mega-trend see my following 3 articles -

How to Successfully Trade a Stock Market Crash

I am sure that the 31st anniversary of the stock market crash will keep many readers busy reading reams and reams of garbage produced by those who were never there in the first place. And for the few who were there, never traded the stock index futures on that day, and for those who were active market participants were like 99% of the traders on that day paralysed by fear into a state of inaction. That leaves perhaps a mere handful who both saw the crashing coming, then traded it, and most importantly profited from it, as Trump would say beating it badly.

In which case watch my video for what happened in the run up to and on the day of the great crash of 1987, of how I managed to for see, trade, and and beat the 87 crash that provided very valuable real world trading and investing lessons that are just as valid today as they were 31 years ago!

https://youtu.be/epi2TtnfkCA

The Greatest Investing Lesson Learned In the Aftermath of the 1987 Crash

So once more the doom merchants are peddling their perma wares despite the fact that even if this time stocks do by chance crash, that EVERY crash in the general stock market indices such as the Dow, S&P and FTSE have always resolved in the mother of all buying opportunities. That is the KEY LESSON learned in the aftermath of the 1987 crash. For following the crash there was widespread prevailing perma doom! And it did not just persist for a few weeks, or a few months but for a good 9 years! That's NINE YEARS OF PERMA-DOOM in the face of a relentless bull market that climbed a wall of worry which long since passed it's 1987 PEAK. All the way to Dow 6000 and beyond as the following chart illustrates -

This is why for THIS 10 year old bull market I have consistently iterated that where the general stock market indices are concerned "the greater the deviation from the stock market high, then the greater the buying opportunity presented". Which is the primary lesson learned in the years that FOLLOWED the 1987 Crash.

Which is why I love Black Mondays! When others are panic selling, my minds on what to buy.

However, there is a downside to this mind set which this year illustrates. For I had concluded that a lunatic in the White House would present fellow stock investors with such an ideal buying opportunity, a significant deviation from the bull market high. Unfortunately, such a buying opportunity has failed to materialise, which is the nature of the beast for the market isn't going to give away easy money, you have to work for it!

Nevertheless I did forewarn of a probable correction for October back on the 21st of July 2018 that was first made available to Patrons who support my work. So to get immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for as little as just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And as I stated in my preceding 2 updates of 9th Sept and 26th August that I expected the then relatively stronger Dow to resolve towards convergence with my forecast rather than to trend to a higher Dow target than my forecast of 27,000 by late December 2018.

11 Sep 2018 - Stock Market Trend Forecast Update

Which recent price action was a confirmation of convergence towards trend forecast.

So yes, 2018 has been a disappointing year as so far as a mega-trend buying opportunity has failed to materialised. However, so that there is no confusion, we remain in an exponential mega-trend stocks bull market courtesy of the key mega-trend drivers that look set to drive the general stock indices into the stratosphere as I have covered over many years such as the inflation mega-trend and my series on Machine Intelligence investing articles and videos as my first video in this series illustrates:

In respect of which I still aim to create a series of videos to cover the real secrets for successful trading and investing, so ensure you are subscribed to my youtube channel and free newsletter for notification of these.

And remember to get immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Your analyst,

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2018 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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