October 02, 2007

Anybody else got 1987 (or 1929) deja-vu?

My foreign funds, oil, gold, silver and stocks have been flying (in dollar terms) since Bernanke's panicked cut a few days ago. Flying. But I've got a strange feeling....

The housing market may still be in denial, but it appears that Wall Street and foreign markets are in Denial Squared.

It looks like the majority of you think the stock market is going to crash this October (see poll to the right). Kinda tough to have that opinion when a full-fledged stock party is breaking out, eh? And remember, 1987 was a blip in the road. 1929 on the other hand...

I've got one finger on the SELL button. And remember, from Manias, Panics and Crashes, eventually cash will be king. The only question is when.

This October marks the 20th anniversary of the 1987 stock market crash, the biggest one day post-war percentage drop for US markets.

In a few short hours on Monday, October 19, 1987, the Dow industrials (DJI) gave up 508 points, or 22%, bringing an abrupt end to what had been a lively Wall Street party.

The crash came against a backdrop of inflation fears, rising oil prices, Middle East tensions and a host of other eerily familiar worry signs in Wall Street's most notorious month, and helped cement October's reputation as the toughest month for the markets, at least psychologically.

So, could it happen again?


K-fed said...

Kieth, Stop this, we should be talking about Britney losing her kids.

Anonymous said...

It must be October since Keith has his predictable..."Could this be the month the stock market goes bust".....Ooooooooooooooo Ima Scared.

I wonder what next months lead article will be...Don't tell me...Le'mme guess...Ummm Could it be: "No Retail sales this Holiday season..Christmas canceled because of bubble"

Dow 8,000 right Nostradamus??

Anonymous said...

yes it can... i have seen nothing good in the reports. yes, we may be cutting rates but that is only a signal that things are falling apart

Happy Homedebtor said...

Right, because the auto-safeguards that stop trading suddenly vanished this month? Because there's no internet trading like '87 and there's going to be a huge storm in England? Because automatic sell-programs are still archaic/new and will cause another cascade effect? Come on man...what are you here, Dhalsim with that kind of reach?

Anonymous said...

More like 1998. Panic. Fools sell. Smart hang on. 2 years later your portfolio is up 50%.

You boys keep buying CDs, I'll stick to stocks.

Anonymous said...

Here's one that is bound to tank:


Look at the graph, up 100% in 6 months.

Easy money shorting.

Anonymous said...


Oh you silly renting people.

DOW futures up again this morning.

$8.5B bank merger happening. Yeah a real credit crunch out there. No more M&A activity.

What a bunch of tools.

westwest888 said...

Here's how Congress is handling the credit and currency crunch - by increasing our credit limit!

"Increasing the statutory limit on the public debt - Vote Agreed to (53-42, 5 Not Voting)

The Senate voted in favor of this resolution to raise the debt limit from $9 trillion to $9.8 trillion."

Anonymous said...

Even Moziloompa has said this will be a "NUCLEAR WINTER"---He knew he needed to sell more of his shares, so he could stock up on canned goods....see? it makes sense now.

As for the current stock market party....What a bunch of crap and it's all fixed and run by crooks. You might as well fly to Vegas and piss your $$$$ away!!..at least you can take in a show or shake your booty at the Palms for awhile....shyyt.

Tangelo Mozilo said...

I guess the South Seas bubble burst because of internet trading and auto-sell programs. Thank God it's different this time.

LauraVella said...

It's crazy...goes up on bad news.

The talking heads are already calling it a buying opportunity!

Everyone, prepare yourselves!

Anonymous said...

Didn't Real Estate crash as an asset class in 1926 before the stock market crashed? Also, when stocks dump you losses are on actual purchased assets (right?) it's different when you've bought on 'margin' (a mortgage) and you're left with debt - it this correct thinking?

W.C. Varones said...

Cash is not king.

The dollar is what Bernanke is murdering. Stocks and gold are going up in dollars because the dollar is going down. That is not going to change unless Bernanke, Bush, and Congress stop destroying the dollar.

Anonymous said...

The stock market is at record highs. Gold is at record highs. Oil is at record highs. Long term bonds are at 5 year highs.

Something HAS to give. I am slowly getting out of the market.

Another prediction of mine – the green bio fuel bubble is popping.

The housing bubble popping is going to take a huge cut out of the economy – we are still in the first inning on this (although everyone else thinks it is over).

But as a wise man said “The market can be irrational longer than you can be solvent”

Marky Mark

Roccman said...

Stock market went up just before collapse in Weimar Germany

Stock market went up in Argentina before its collapse

Stock market went up in USSR before its collapse

Stock market went up in 1929 when America's stock market collapsed.

Anonymous said...

Deja Vu? How friggin' old do you think we are? Most of these anonytrolls are barely out of diapers.

Anonymous said...

Lots of people here complaining about the "chicken littles" (in their eyes) re: Wall Street.

Here's the reality: what's good for Wall Street is bad for you. So it's up...just the money-men getting theirs before the music stops. If you work for a living, the rise of the stock market will make the "correction" worse for you.

Remember: these Wall Street types view lay-offs, outsourcing/offshoring, etc. as "good for business"...no cares about the workers on whose shoulders the real wealth is made.

Anonymous said...

you are correct that this environment is similar to the '20's in the US - the exception being that China is the US from that period and we are Britain. Our currency will be hammered but the remnants of our empire will sustain us in (relative) comfort. So the economy looks bad and could get worse but shouldn't destroy us, just cause some modest pain. The only thing that really scares me is the natural resource situation. This peak oil thing could be real. That is the only thing I see that could cause massive destruction of economies - but we would actually be relatively well off compared to many because of our military muscle and control of probably the largest reserves in the world now (Iraq) - who says bush and cheney were dumb?

Laura said...

PBS station here in the bay area is running a documentary on the stock market crash of 1929.

Early last year it was hard to find any articles on the Great Depression over the net. Lately it's been very different.

Keyser Soze said...

I remember Oct. 20th, 1987 well. As a loan officer....I spent the entire next day down in the basement, doing LTV's on each loan which had stock as collateral. We didn't panic and didn't call in one loan or require additional collateral.....a wake-up call, nonetheless. I think the worst part of the crash was that Elaine Garzarella and a few other whack-jobs became famous by calling it.

Oh and btw....here in Sedona, the Century 21 real estate office on 179 is gone and is now a New Age collection of fortune tellers, psychics and what-not. I don't know if they moved, merged or just went out of bidness.....but still funny.

Anonymous said...

in 1987 the fed was raising interest rates...now they are cutting them. that is why the market is flying...it is actually pretty flat if you look at in Euros.

keith said...

Let me say this again


thank you

-the management

Anonymous said...

All I can say is that I am very uncomfortable with a market that is ignoring the potential loss of 100 of billions in loans. The lack of common sense in lending over the last few years just cannot be ignored by a single 1/2 point rate cut. Someone must absorb all these losses and it must be reflected on their balance sheets. The last time this happened the gov't had to step in with the RTC & the S&L bailout. Not a chicken little, but not a pollyanna either, just feeling like the only rational person in the room right now.



Anonymous said...

WASHINGTON (AP) -- An index that forecasts near-term home sales fell in August to a record low as would-be homebuyers had difficulty getting mortgages.

The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for existing homes fell 6.5 percent from July and 21.5 percent from a year ago.

August's reading of 85.5 was below analysts' expectations and the lowest ever for the index

Anonymous said...




Anonymous said...

A warning about FXI - it's confusing:


Also, the premiums are hideously expensive unless you buy way out of the money. (Far below the current trading price).

Anonymous said...

SLV down 5% today. Any other brilliant advice boys?

Anonymous said...

Stock market went up in USSR before its collapse


HUH? The USSR had no stock market idiot.

DOPES said...

Leave me alone I'm depressed and don't feel like talking to you guys anymore.


Anonymous said...


It's deja-vu all over again!


uncle sam said...

Don't be surprised if the hand you are biting stops feeding you.

Anonymous said...

...eventually cash will be king...


Still repeating this simple-minded mantra in the face of clear evidence that the US Fed may be inclined toward a policy of hyperinflation?

Folks, remember, Keef is very much an amateur in the realm of trading and investing. I would not do as he does.

Anonymous said...

Let me say this again


thank you


All right, but fiat currency is fiat currency.

If you own tangible things in the face of global hyperinflation, you could end up far richer than if you hoarded "cash", in any currency.

Anonymous said...

The markets were at alltime highs in early october 1929 too.

Oh, but its different this time.

Anonymous said...

Beware of the BLACK SWAN!!!

Veronica Lodge said...

RE: Stock market climbing out of economic cesspool.

Could this be a SUCKER'S RALLY?


Lost Cause said...

Yes, gold is again set for record territory. But I could have told you that, when I predicted what would happen if a Republican president were elected, even though I am surprised that it really happening. It is called republican governance and conservative custodial care of the economy. See Herbert Hoover (1929) and Ronald Reagan (1987).

Could a political party really have that much destructive influence? Unfortunately, yes.

Anonymous said...

If things go up for several years, then obviously they are destined to keep going up forever.

Nothing can ever crash again, it's impossible.

It's different now, and it will stay different forever.

Everything has been made perfect and indestructible in the last couple of decades.

Nothing is unsustainable now. There are no limits to anything anymore. Everything lasts for infinity now.

God it's great to be alive these days. It almost seems too good to be true.

Anonymous said...

Beware of the BLACK SWAN!!!


Yes, quite.

Let us consider that the first rearing of the ugly head of the mortgage-backed bond meltdown was just a little black swan. The big daddy black swans are up ahead, as more ARMs reset, more foreclosures occur, more hedge funds and banks go under, more households go bust, more damage is done to the US Dollar to try to inflate our way out of the carnage.

We ain't seen nothin' yet.

Anonymous said...


Yeah, quit picking on Dopes, he might be right...

Housing and market prices can continue rising for a long time in an inflationary environment.

It took people in post WWI Germany many years to realize how bad their inflation really was.

Then they elected Hitler :(.

Anonymous said...

housing prices will move the opposite to inflation. Yes opposite.

Homes are financed, which means their prices are a function of interest rates. Interest offered to borrowers fluctuate to keep banks profitable.

If inflation escalates, lenders will have to raise rates which would help lower prices.

Anonymous said...

"The only thing that really scares me is the natural resource situation. This peak oil thing could be real."

Here's some food for thought, given the idea that there's potentially more oil, north of the border, than much of the middle east...



I think peak oil is a hand waving, based upon the lack of both political and business will to use newer technologies for retrieval, extraction, and production. If oil becomes unaffordable, for everyone, then we'll see a lot more will to get at the resources which we already have.

Anonymous said...

"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months." Irving Fisher, Ph.D. in economics, Oct. 17, 1929

Anonymous said...

housing prices will move the opposite to inflation. Yes opposite.

Don't you mean in the opposite direction of interest rates?

Interest rates are dropping and house prices would be going back up if it weren't for those pesky kids (I mean loan requirements such as having a job, 20% down, and being able to make the payments ;).

Anonymous said...

We already have our Hitler

serindippity said...

"Stock market went up in USSR before its collapse"

What was that? Price of bananas in Moscow?

You do know that the USSR was a Communist country?
How was that going to work?

"We have one share of Socialist Plutonium Factory number 47. If you buy, we call KGB."

They were working on restaurants that weren't all named "Restaurant" (I'm serious!) then. But they had a great subway.

Anonymous said...

You know that a Black Swan doesn't mean "Bear Market". It means something really totally out of most people's conception as being a risk.

It was considered axiomatic in Europe that swans were all 100% white. Not mostly white, but that it was a part of being swannish. And this was true. Then a westerner saw one single black swan in Australia, something not known to Europe---ever.

All these downturns we can reasonably forsee, those aren't black swans. Those are just bear-market predictions.

What's a black swan? Something either so weird and unexpected, or obscenely risky that pricing it in is pointless.

it's hard to think of them since usually they are not thinkable. A terrorist attack in USA wasn't a black swan. But nearly everybody was thinking "car bomb" or "hostages", like 99% of terrorist attacks before. Jets which destroyed the WTC was a black swan.

"grey" swan guesses.

a) disintegration of Mexico and Communist insurgency which destroys oil production

b) ET alien invasion

c) Bussard's nuclear fusion reactor really works

d) supernova causes massive global radiation hazard, killing 25% of above-ground lifeforms over two weeks, and mass famine for everybody else after.

e) Chinese communist party falls after mass protests after Olympics.

f) Chinese Communist party brutally suppresses insurrection but damages economy.

g) New Canadian government scraps NAFTA, cuts off oil pipelines.

h) Bernanke assassinated when he fails to cut rates. Nobody volunteers as replacement.

i) "purple" peaceful revolution in Iran, mullahs deposed.

j) Republican Congress shuts down government to piss off President and Mr Clinton. And they don't re-open it, and US Treasury defaults on bonds for first time in history. Massive economic dislocation as all dollar long rates increase 300 basis points in an instant.

k) NATO dissolves after President Cheney uses thermonuclear weapons on Syria and Iran. EU, China and Russia ally, discuss "containment" of
US and economic blockade.

l) Jesus comes back. Raptures up only observant Jews from socialist Kibbutzim.

Quoth He: "Nu? Didn't you RTFM!?"

Hundreds of disillusioned evangelical preachers quit, move to San Francisco and turn into the queeniest bottoms of the bathhouse.

m) Britney becomes a Mormon; spawns 4 more babies. One is black. Named "Swanita".

Anonymous said...

Blubber prices are rising fast as thier are very few whales left and soon all will be extinct.

The price of whale blubber will go increase over 1 trillion percent.

Only by physical whale blubber, purchase a small home in Norway and then store it in the basement.

You will soon be very, very rich.