Wall Street

[mkemse]

I'm sure we all understand what you are saying. Nevertheless, all of the movements in the Dow Jones on Monday were adverse, and none of them were the same as what happened in 1987.

Perhaps that's telling us that 1987 and 2008 aren't truly comparable. After all, the 1987 crash was caused by computerised investment programs all selling their portfolios at the same time in response to the same signal, whatever that was. But it surely wasn't due to the fact that speculators felt that the whole financial system was about to collapse due to banks holding doubtful mor_tgages (why was this word edited out?) which were no longer acceptable as security for further lending. Banks were not refusing to deal with each other on the interbank lending markets. Banks were not in a situation where they had to get nationalised/bought-out or die.

In 1987, although the market might have been distorted and in need of a radical adjustment, none of the major financial institutions - the ones capable of seriously damaging the world's economy: like AIG, Lehman Bros or HBOS - were in any kind of jeopardy. They could put their hands on all the money they needed and meet their obligations as they fell due.

Not in 2008.

I note your investment strategy. I'm too old to have such a high risk profile: I'm opening an account at Northern Rock, which was nationalised a few weeks ago. At least I have the Government to support it. I hope your plan works out for you, but I cetainly wouldn't bet the house (bad metaphor?) on a single throw at this particular dice table.

I believe the points being made is that althou the Dow lost 700 points the percent loss which is what anaylists look at was small, yes -777 was the largest single point loss but the 6% percent loss did not even make the top 10 list of worst day in Dow Histiry, everyone is saying don't look atthe point loss look at the percentage loss, when you do that which is how it is analized, the loss was in reality not as bad as the -77 made it appear