Thursday, October 11, 2012

Trick Or Treat: A History of October Stock Market Surprises

The start of the Great Depression…the largest single-day market crash in history…a collapse in stocks that nearly brought down the entire financial system. What is it about October that brings out the demons? It seems to happen too often for there to be no connection at all, but on the other hand, each of the major October stock market surprises has had its own unique circumstances. Part of it probably has to do with the fact that professional investors think in terms of calendar year performance. If events suddenly happen that change their outlook on the economy and the markets, they may be more inclined (as compared to, say, April or June) to take drastic action. Indeed, it is not always a negative story. In 2011, the first day of October saw the beginning of a stunning rally after a severe two month correction that carried through the rest of the year. But there have been plenty of memorably ghoulish Octobers—here’s a brief anthology.

[The Panic of 1907, The Great Crash of 1929, Black Monday 1987, The Financial Collapse of 2008.]


Doug Short
According to Doug Short, the vice president of research at Advisor Perspectives, the stock market is somewhere between 33% and 51% overvalued at this point.  In a recent article he offered the following evidence to support his position….
? The Crestmont Research P/E Ratio (more)
? The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)
? The Q Ratio, which is the total price of the market divided by its replacement cost (more)
? The relationship of the S&P Composite price to a regression trendline (more)
Peter Schiff
Peter Schiff, the CEO of Euro Pacific Capital, has been one of the leading voices in the financial community warning people about the crisis that is coming.
During a recent interview with Fox Business, Schiff stated that the massive financial collapse that we witnessed back in 2008 “wasn’t the real crash” and he boldly declared that the “real crash is coming”.

Robert Wiedemer
Economist Robert Wiedemer warned people what was coming before the crash of 2008, and now he is warning that what is coming next is going to be even worse….
“The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012.”
Harry Dent
Financial author Harry Dent believes that the stock market could fall by as much as 60 percent in the coming months.  He is convinced that stocks are hugely overvalued right now….
“We have the greatest debt bubble in history. We will see a worldwide downturn. And when you are in this type of recessionary environment stocks should be trading at five to seven times earnings.”

Related: Forget 666; 808 Is The Number Of This Market's Beast


Brock lesnar said...

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