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Strategies & Market Trends : Z Best Place to Talk Stocks
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To: E.J. Neitz Jr who wrote (49294)9/28/2003 12:09:21 PM
From: DanZ  Read Replies (1) of 53068
 
Ed,

I'm not prepared to offer an opinion on all the similarities and differences between 1987 and today, but one major difference is interest rates. The 30 year treasury bond was yielding about 9% in October 1987, up 2% in a matter of months. After the stock market collapsed, the Federal Reserve pumped more money into the system than at any time in history and rates plummeted within days. Rates have not been that high since. My recollection is that inflation and GDP were much higher in 1987 than today, and we are just coming out of a recession in 2001 whereas the recession of 1982 should have had little to no effect on economic conditions in 1987. Also, the so called "circuit breakers" in place today did not exist in 1987. Program trading is blamed for much of the decline on Black Monday, and program trading must stop when circuit breakers are hit today. Personally I like a little fear in the market because it means that a big decline is more unlikely.
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