The Short View: Market crash?

By John Authers, Investment Editor

Published: October 6 2008 21:10 | Last updated: October 6 2008 21:10

“Crash” is a sensitive word in markets. By common consent, there have only been two in the stock markets of the developed world: in October 1929 and October 1987. Must we now add October 2008 to the list?

There are good arguments against that. Both 1929 and 1987 involved daily falls of much more than 10 per cent, and they were generated by the stock market itself with shares trading at multiples that were plainly unjustifiable in 1929 and at very high levels in 1987. In both cases, the Dow Jones Industrial Average, the oldest established measure of US stocks, had gained more than 50 per cent in the preceding year.

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Will the future be like the post-1929 era or the post-1987 experience? The big difference between the two lay in governments’ response and in the health of banks. Those are the key questions now.

VOI che ne dite?

Come stanno i Governi?. E come stanno le Banche?

chiediamolo a Profumo