30-Year Anniversary of the 1987 Stock Market Crash – Ep. 294

30-Year Anniversary of the 1987 Stock Market Crash – Ep. 294

Black Monday 1987
Today marks the 30th anniversary of the 1987 stock market crash. It's hard to believe that it's been 30 years. I still remember where I was when the crash happened and my reaction to it. It happened just after I had graduated from the University of California at Berkeley. By the time the crash happened, I had already accepted a job in Newport Beach, California. I was going to be working in the commodity options market, but I hadn't started yet.
Lesson: The Market Goes Up
The crash began a few weeks before I was on the job, but I do remember when I first got there, I met a guy who had a lot of S&P 500 puts for clients and for him, anyway the crash was a great thing because he was able to make a lot of money on those puts. Of course the S&P was a fraction of its current value. The market is up dramatically since the 1987, which is the lesson that everybody hope that you learn: "Hey don't worry about the market. If it ever goes down, it's going to come back up."
Trade Deficit Tiny Compared to Now
I remember some of the catalysts that were weighing heavily on the stock market leading up to the crash of '87 was the fact that the dollar was weakening as a result of a increase in the trade deficit - trade deficits that are tiny in comparison to the enormous one that we run today. Yet nonetheless, people were rightly worried about it back then. They couldn't care less about the trade deficits now.
Interest Rates at 9%
Also interest rates were rising. The yields on the 30-year bond (nobody really talked about the 10-year back then) were 9% and they were going up. So you had 9% interest rate, interest rates rising, the dollar falling, the trade deficits getting bigger and the stock market had pretty much ignored what everybody agreed was bad news at the time. The stock market kept going up anyway, despite all of that. Eventually it all came crashing down in 1 day.
Good Company
One of the things I remember about that was how Alan Greenspan reacted. I mentioned this on a prior podcast. Greenspan had not been the Fed chair that long when the market crashed. He took over from Paul Volker. I knew Greenspan, and was familiar with him because he was a libertarian and an Austrian economist. He had written an essay on Gold and Economic Freedom, which I had read, in addition to Ayn Rand's Capitalization: the Unknown Ideal.



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Episoder(1081)

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SchiffRadio Podcast Episode 7

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21 Okt 20142h 12min

SchiffRadio Podcast Episode 6

SchiffRadio Podcast Episode 6

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21 Okt 20142h 20min

SchiffRadio Podcast Episode 5

SchiffRadio Podcast Episode 5

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6 Okt 20142h 24min

SchiffRadio Podcast Episode 4

SchiffRadio Podcast Episode 4

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SchiffRadio Podcast Episode 3

SchiffRadio Podcast Episode 3

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SchiffRadio Podcast Episode 2

SchiffRadio Podcast Episode 2

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15 Sep 20142h 3min

Schiff Radio Podcast Episode 1

Schiff Radio Podcast Episode 1

Schiff Radio Podcast Episode 1  Synopsis: * Wall Street foolishly dismisses August's horrible Jobs Report * ECB cuts rates in misguided push for higher inflation. * "Shrink-flation," what is it and why those using the term still don't get it. * Implications of Switzerland's coming gold reserve vote . * Protesting Fast food workers determined to put themselves out of work. * Does Alibaba's biggest IPO in history shows portent more interest in foreign stocks? * Countrywide's Anthony Mozilo is not the real villain. * NY Fed concedes 25% of college grads wasted their time and money. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

9 Sep 20141h 52min

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