Thanks Ben. If I knew I’d be rich! Yes, everyone’s looking ahead to 2019 and I’m developing a post on the topic right now. We likely won’t see a crash anytime soon, unless the G7 get carried away by all the tariff talk. Which could happen. The rest of the world has become addicted to US spending, although they describe that as “beneficial interdependent trade.” They’re actually getting surly about it, (G7 meeting) so we can’t say this won’t escalate into something bad. It looks like they’re going to threaten Trump with Tariffs and numbers and see if he bites. He hasn’t even dealt with China yet, so this does look scary. As you said, prices are rising and the demand is there. As long as Millennials are able to buy, this boom could go on a long time. However, how many of the G7 would enjoy seeing the US economy plummet?
A popular explanation for the 1987 crash was computerized selling dictated by portfolio insurance hedges.[11] However, economist Dean Furbush pointed out that the biggest price drops occurred during light trading volume.[12] In program trading, computers execute rapid stock trades based on external inputs, such as the price of related securities. Common strategies implemented by program trading involve an attempt to engage in arbitrage and portfolio insurance strategies. As computer technology became widespread, program trading grew dramatically within Wall Street firms. After the crash, many blamed program trading strategies for blindly selling stocks as markets fell, exacerbating the decline. Some economists theorized that the speculative boom leading up to October was caused by program trading, and that the crash was merely a return to normalcy. Either way, program trading ended up taking the majority of the blame in the public eye for the 1987 stock market crash. U.S. Congressman Edward J. Markey, who had been warning about the possibility of a crash, stated that "Program trading was the principal cause."[13]
The full effects of the industry crash would not be felt until 1985.[38] Despite Atari's claim of 1 million in sales of its 2600 game system that year,[39] recovery was slow. The sales of home video games had dropped from $3.2 billion in 1982[40] to $100 million in 1985.[41] Analysts doubted the long-term viability of the video game industry,[42] but following the release of the Nintendo Entertainment System, the industry began recovering, with annual sales exceeding $2.3 billion by 1988, with 70% of the market dominated by Nintendo.[43] In 1986, Nintendo president Hiroshi Yamauchi noted that "Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games". In response, Nintendo limited the number of titles that third-party developers could release for their system each year, and promoted its "Seal of Quality", which it allowed to be used on games and peripherals by publishers that met Nintendo's quality standards.[44]
Spread your risk. Having a well-designed mix of investments is a great idea anytime, but especially so in a down market. That's because you don't take a pounding by having all your eggs in one potentially leaky basket. Studies show that holding a judicious mix of growth and value stocks, possibly in international as well as U.S. companies, and some bonds and cash investments too, is a great way to minimize investment loss.

Since traditional statistical methods are perhaps less appropriate for extreme markets, other paths of examination may be more fruitful. For example the Santa Fe Institute is examining links between different disciplines. Potentially a market crash may have more in common with a growing pile of sand, than how the same market performs outside of a crash environment. When a grain of sand is added to an existing pile so the pile grows ever higher. Most of the time, one more grain will cause the pile to grow in height by a just fraction. However, at other times the addition of a single grain will lead to a collapse and in turn that collapse may be small, large or potentially even massive. Some researchers believe that better understanding these sorts of events hold the key for a better understanding of extreme market events, because today many traditional models simply fail to hold up.
On May 6, the markets only broke trades that were more than 60 percent away from the reference price in a process that was not transparent to market participants. A list of 'winners' and 'losers' created by this arbitrary measure has never been made public. By establishing clear and transparent standards for breaking erroneous trades, the new rules should help provide certainty in advance as to which trades will be broken, and allow market participants to better manage their risks.[80]
As an investment banker who buys blocks of mortgages around America this is an important subject as to whether the value of my collateral will deteriorate. Talbott does a good job presenting his case that there is a relationship between household income and housing prices. His point is well taken that low interest rates have fueled this boom and that when rates rise, housing prices will have to come down. So, from the perspective of his thesis, I found this to be well written and well documented even if I agree there is a risk but do not believe that it will be significant.
In the second half of 1982 the number of cartridges grew from 100 in June to more than 400 in December. Experts predicted a glut in 1983, with 10% of games producing 75% of sales.[23] BYTE stated in December that "in 1982 few games broke new ground in either design or format ... If the public really likes an idea, it is milked for all it's worth, and numerous clones of a different color soon crowd the shelves. That is, until the public stops buying or something better comes along. Companies who believe that microcomputer games are the hula hoop of the 1980s only want to play Quick Profit."[28] Bill Kunkel said in January 1983 that companies had "licensed everything that moves, walks, crawls, or tunnels beneath the earth. You have to wonder how tenuous the connection will be between the game and the movie Marathon Man. What are you going to do, present a video game root canal?"[29]
Thank you, Gord, for the insightful article. We bought our SoCal (South Bay) home two years ago and our neighborhood’s prices have soared since. We are currently looking at a potential profit of more than $350k given recent comps.. Definitely not a bad thing, but it’s creating a dilemma in our home since my husband is all about cashing out while the market is hot and renting until prices go down again. I on the other hand, am more in favor of doubling down on our home and area by converting our garage to a liveable (and rentable) unit. We really like our area and home, but the potential profit is incredibly enticing. What do you think would be the smartest move in this circumstance?
There are a few things to bear in mind here. The first is that investors can overestimate their ability to endure losses during the good times. So be a little more conservative in your allocation than you might think. Also, it's not just about having nerves of steel, it's also about how soon you'll need the money in your portfolio. Even if you are a fearless and disciplined investor, it doesn't matter if you need to spend down a big chunk of your portfolio each year. Regardless of your temperament you'll be a forced seller in a weak market, and therefore, considering having some of your assets more conservatively positioned so that they are a more robust source of cash when you need them can make sense.

The turbulence of the election, rising interest rates against overheated housing markets does give some plausibility to a US housing crash in 2018 or 2019. Proponents of an upcoming crash point to too many Americans living lavish lifestyles, still buying expensive foreign luxury cars on a $40,000 salary, while sitting on over-leveraged monster mortgages that could be subject to quickly rising mortgage rates.

To be clear, this isn't an exhaustive list of things that could potentially cause a stock market crash. And it's likely that more than one of these factors could combine to cause a crash. The 2008 crash, for one, was primarily caused by excessive speculation that caused a bubble in real estate prices, along with excessive leverage taken on by both consumers and financial institutions, as well as investor panic after banks started to fail.
3. They also found, to the surprise of some readers I’m sure, “that some widely cited economic variables displayed an unexpected, counterintuitive correlation with future returns. The ratio of govern- ment debt to GDP is an example: Although its R2makes it seem a better performer than others, the reason is actually opposite to what one would expect—the government debt/GDP ratio has had a positive relationship with the long-term realized return. In other words, higher government debt levels have been associated with higher future stock returns, at least in the United States since 1926″.
What you can do is prepare for the next crash. In fact, regardless of how the stock market is doing today, you should be prepared for a crash – because unexpected events (black swans) can trigger one at any time. You don’t need to wait for the next stock market crash prediction to come along to learn about bear markets, how they occur, why they occur, and what you can do to avoid being wiped out. We prepared this guide for that very reason.
Using a simple options calculator (like that available at options-price.com) we can calculate how our put options purchased in the example above would perform after a 20% decline in the span of just a month. In this hypothetical example, SPY drops to 175 and implied volatility rises to 55 (for this example I took the VIX level of 45 in October 2002, as suggested by Spitznagel, and added 10 points for 10% out-of-the-money put options). Our puts have gone from $9 each in value to $328.10. We own 55 of them so they are now worth just over $18,000 in total.

Some enduring red flags, Filia said, are in the form of politics and geopolitics — growing populism across Europe as well as Middle East and Asian tensions. But more than that he sees shrinking liquidity — central bank spending flows in reverse for the first time in a decade — as the "first real crash test" for momentum and volatility, as well as rising interest rates.
The Fed didn't realize a collapse was brewing until March 2007. It realized that hedge fund housing losses could threaten the economy. Throughout the summer, banks became unwilling to lend to each other. They were afraid that they would receive bad MBS in return. Bankers didn't know how much bad debt they had on their books. No one wanted to admit it. If they did, then their credit rating would be lowered. Then, their stock price would fall, and they would be unable to raise more funds to stay in business.
Adjust accordingly. If you have to take some course of action, change the stocks you're buying. Historically, some stock sectors do better than others in declining markets. For example, high-dividend stocks tend to be less volatile than other stocks. They are usually insulated from big bear market drops due to the dividend alone. Sector-wise, utility stocks, consumer cyclicals, service-oriented companies, food and pharmaceutical stocks tend to do better during an economic downturn than other companies. Some stock sectors just tend to outperform others during a bear market. The bad news is that when the market does turn bearish again these stocks won't rise as fast and as high as, say, technology or emerging market stocks.
In 1982, a price war began between Commodore and Texas Instruments, and home computers became as inexpensive as video-game consoles;[12] after Commodore cut the retail price of the 64 to $300 in June 1983 some stores began selling it for as little as $199.[9] Dan Gutman, founder in 1982 of Video Games Player magazine, recalled in 1987 that "As the first wave of the personal computer boom started, the video games market began to taper off. People asked themselves, 'Why should I buy a video game system when I can buy a computer that will play games and do so much more?'"[13] The Boston Phoenix stated in September 1983 about the cancellation of the Intellivision III, "Who was going to pay $200-plus for a machine that could only play games?"[9] Commodore explicitly targeted video game players. Spokesman William Shatner asked in VIC-20 commercials "Why buy just a video game from Atari or Intellivision?", stating that "unlike games, it has a real computer keyboard" yet "plays great games too".[14] The company offered competitive upgrades, where rival systems could be traded for a discount toward the purchase of a Commodore 64. Commodore's ownership of chip fabricator MOS Technology allowed manufacture of integrated circuits in-house, so the VIC-20 and C64 sold for much lower prices than competing home computers.

The turbulence of the election, rising interest rates against overheated housing markets does give some plausibility to a US housing crash in 2018 or 2019. Proponents of an upcoming crash point to too many Americans living lavish lifestyles, still buying expensive foreign luxury cars on a $40,000 salary, while sitting on over-leveraged monster mortgages that could be subject to quickly rising mortgage rates.


The stock market crash of October 1929 led directly to the Great Depression in Europe. When stocks plummeted on the New York Stock Exchange, the world noticed immediately. Although financial leaders in the United Kingdom, as in the United States, vastly underestimated the extent of the crisis that would ensue, it soon became clear that the world's economies were more interconnected than ever. The effects of the disruption to the global system of financing, trade, and production and the subsequent meltdown of the American economy were soon felt throughout Europe.[39]
Solid advice, but investors should broaden their horizons to encompass digital currency, as the fallacy of global fiat currency is insane in the social media world we live in today.  Trust in the government is eroding, as is the reporting needed to only use a dollar denominated unit of measure in a world where block chain and liquid, easy to use Bitcoins are in your digital wallet and you can buy anything from an airline ticket to a car on auction on eBay.
By September 1983 the Phoenix stated that 2600 cartridges "is no longer a growth industry".[9] Activision, Atari, and Mattel all had experienced programmers, but many of the new companies rushing to join the market did not have the expertise or talent to create quality games. Titles such as Chase the Chuck Wagon (about dogs eating food, funded by the dog food company Purina), Skeet Shoot, and Lost Luggage were examples of games made in the hopes of taking advantage of the video-game boom.

They are missing one imprtant thing in their analysis. This time around one can not look a historical data and charts. Market have never before been rigged like they are today. Frequency trading , shorts , naked shorts, fututres(in case of commodities it means unlimited supply of virtual goods) ETFs, etc. Never in historyhedge funds have been so sophisticated in rigging markets so none of the technical data or any fundamentals play a role over here. It's what riggers want to do ..........


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In finance, Black Monday refers to Monday, October 19, 1987, when stock markets around the world crashed. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already sustained significant declines. The Dow Jones Industrial Average (DJIA) fell exactly 508 points to 1,738.74 (22.61%).[1] In Australia and New Zealand, the 1987 crash is also referred to as "Black Tuesday" because of the time zone difference.
Watched CNN and CNBC for first time in years today. Then went over to Fox for a bit.. Very little info on world market crash today.. It is stunning how information is being skewed to the masses. All they were really talking about was Trump and HilLary, and oh yes those brave American terrorist beaters. The depth of denial in our country is breathtaking. I feel like I am living in an alternate reality, the world is crashing around our ears and very few seem to give a rats ass, unbelievable. Went and had two of my rifles bore sighted , zeroing them agian at range tomorrow. Bought 500.00 of emergency food, and ordered a good solar watch I have been looking at.Picking up extra 1000 rounds of Ar, and 250 rounds for my 308. Feel like I have very little time to finish preps. I also ordered a cast iron wood stove and am picking up 4 cords of wood this weekend. I hate feeling this paranoid but damn how can one take a sane look at our world and not be. God bless and protect you all in the coming weeks.

Rising bond yields: Given that equity markets typically share an inverse relationship with bond yields, the latter has been a cause for concern. India's 10-year bond yield is currently hovering above 8.18 per cent against the previous close of 8.11 per cent, and is up 84 basis points on a year-to-date basis. Moreover, higher yields expose the rupee and equities to dollar outflows.

NR, still stacking myself. Picked up some more .22 and .30 Carbine at the last gun show a month ago. My next big purchase is a new 12-ga. pump, Mossberg 500 or 590. 6 cords of wood are stacked at the BOL now. My cousin just got finished replacing the batteries for the solar system and installed a new Flojak hand pump for the well. Still have the creek out back as a backup source of water. What I have left to move now is just enough to fill up the truck for bugout. The woodstove at the cabin was just replaced 2 years ago along with the pipe. Cabin was totally remodeled 3 years ago. everything is in top condition there. Bugout time can’t come soon enough for me.
When asked if today’s stock market carnage could be a contagion effect of IL&FS default, Deven Choksey, Managing Director of KRChoksey Shares & Securities Private Ltd told CNBC TV18,”It is an asset-liability mismatch. The fear you have a money recovery taking place; the government of India is required to pay off the money pertaining to the projects, and particularly i think the road projects, where I think a question of Rs 10,000 crore of collection is required to be taken care of. According to me it’s a temporary mismatch, and I don’t think they are undercover on debt. We have sufficient amount of cover as far as the assets are concerned; may be they have defaulted on their payments, and as a result the ratings agencies have downgraded them, and that has led to this kind of a cascading effect. But to me, as I understand, this money should come back to IL&FS and that should ultimately help them in resolving the asset liability mismatch situation or a liquidity situation in which they are right now.”
But a substantial minority of us have shares. According to a study by the ASX, 31 per cent of Aussies owned shares in 2017. That’s millions of people who watch Alan Kohler do the Finance news each night with a knot in their stomach. Are they a bit more tight-fisted if the finance news is bad? Some will be, especially if they are close to retirement.
Following the 1987 stock market crash was one of the major reforms that were introduced was by the Chicago Mercantile Exchange and the NYSE. They together introduced the revolutionary “circuit breaker” mechanism. This system was installed in these two exchanges to that no major market crashes further occurred. What this mechanism did was halt the market in case of major fall of the Dow. During this period no trade could be carried out in these two exchanges. If the Dow fell 250 points or more, the market would stop its trading for an hour. If the fall had been for more than 400 points then the market would halt for two hours.
"This is a kind of a panic sell-off occurs when the usually large amount of stop losses gets triggered as markets were not expecting such a drawdown in a single trading session," Mustafa Nadeem told FE Online. It was basically widespread to multiple companies, specifically, to NBFC space as there were concerns over credit risk coupled with that plunge in private banks, NBFC, and infrastructure housing finance companies, Nadeem said further. A lot of stop losses that were there in the market at much deeper levels of around 11,200 - 11,150, Mustafa Nadeem said. It was hardly 8-9 minutes of transactions that were much bigger that dragged the Benchmark index down. Though, on the flipside, There was buying seen at lower levels that pushed markets back above 11K level. Sensex was down almost a 1000 point within those few minutes, Mustafa Nadeem said. Technically this will change some technical setup in the medium term. If one would recall the same mode was seen in Early January this year. 
There was a chart floating around in early 2014 that had a 97.5% correlation between the stock market of 1928-29 and the stock market of 2013-14. That chart boldly predicted a massive stock market crash in 2014. Instead, from when the market was supposed to crash into the end of the year, stocks rose nearly 10%, and were in the middle of the longest bull market in history.
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