Black Monday

Just a quick post about the Black Monday 1987, because Monday is going to be the 19th of October 2009, so it's the 22nd anniversary of the crash.

In finance, Black Monday refers to Monday, October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong, spread west through international time zones to Europe, hitting the United States after other markets had already declined by a significant margin. The Dow Jones Industrial Average (DJIA) dropped by 508 points to 1738.74 (22.61%).

By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, Spain 31%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%. New Zealand's market was hit especially hard, falling about 60% from its 1987 peak, and taking several years to recover. (Wikipedia)

Where Wikipedia gets it wrong:

A degree of mystery is associated with the 1987 crash, and it has been labeled as a black swan event. Important assumptions concerning human rationality, the efficient market hypothesis, and economic equilibrium were brought into question by the event. Debate as to the cause of the crash still continues many years after the event, with no firm conclusions reached.

It was actually not a black swan event at all, since Marc Faber successfully and accurately predicted it several months before it actually occurred.

Now I am wondering if it is possible that we assist to the same kind of event since we have reached such an extreme level of overvaluation and so much complacency in the markets...