Know Your Crash!

Monday 5 Feb 2018, the Dow plunged recording the single biggest point (almost 1600points) drop in history.

In this backdrop, I decided to hold all my prepared posts because I felt the urgency and the compelling reason to write something about Market Crashes that is so topical for this period.

You see, one needs to perform an incisive study on how stock markets operate in good times and bad. There is no better time than now to get timely advice on how to benefit from the regular cycle of market panic and market boom.

If you refer to my booklist, I have nothing but the strongest recommendation for you pick up all that you can read about market crashes from the book Market Panic by Stephen Vines. He provides some unusual answers to questions regularly asked by investors and shows why panics offer unique opportunities. Long-held assumptions about the benefits of investment diversification are challenged and new ways of understanding the panic cycle are offered. Interviews with market professionals directly involved in handling some major stock crises provide a compelling insider’s account of what actually happens when panics break out. This book also looks at ways in which stock markets are becoming more detached from the companies and economies they are supposed to represent and shows how this is building a new and more dangerous form of instability into the market system. This is a truly comprehensive study examining all aspects of the stock market panic phenomenon.

Pick up this book to read now!

For those following this blog, I’ll put out something extra, a 6-part series of articles – “The Great Crash” which gives an account of the Black October Crash in 1929. Most of the articles are primarily extracted from B. Mark Smith’s market history book, Toward Rational Exuberance, 2004.

“History does not repeat itself, but it rhymes.” – Mark Twain

Reading this, I hope you will be able to draw the parallels to what you see and hear in today’s macroeconomic conditions. To be honest, the reason I chose to share extracts of this book and the crash that is almost a century ago is really to demonstrate that crashes are psychologically created, man-made and cyclical. Therefore it keeps repeating enough in a meaningful way for us to profit from it or not lose out financially because of a market crash.

The Great Crash – Part 1

The Great Crash – Part 2

The Great Crash – Part 3

The Great Crash – Part 4

The Great Crash – Part 5

The Great Crash – Part 6


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