– as the 30th anniversary of the 1987 crash approaches, investors warned history might repeat itself –
Market-related and geopolitical factors that occurred prior to Black Monday are playing out again currently.
Simon Watkins, one of the top traders in the world for seven years and author of up-coming book The Complete Guide To Successful Financial Markets Trading, says that significant factors that transpired in the run up to the historic crash are being mirrored presently.
Here Simon highlights five key signs that portend another major crash at any time:
1. The Dow Jones Industrial Average is trading at all-time highs
In the lead up to the 1987 crash, the Dow Jones Industrial Average (DJIA) had been trading at all-time highs and peaked during August 1987 at 2,722 points; it then plummeted 508 points on October 19th (Black Monday).
Fast-forward to the present day and the DJIA hits its all-time closing high of 22,412.59 on Wednesday, September 20, 2017 followed by an intraday all-time high of 22,419.51 on Thursday, September 21, 2017.
2. The pattern of US economic growth
In the run up to Black Monday, the US was in a period of moderate economic growth; the real rate (that is economic growth minus inflation) of which was very small. This low level growth is what the country is seeing now. The US is also currently experiencing its third-longest economic expansion in history. Shorter-term business cycles are usually three-to-five years. The fact that the US is at present in a cycle that’s lasted 99 months is a sign that a correction is imminent and recently led to Goldman Sachs saying its model showed an increased 31% chance of recession in the US in the next nine quarters.
3. Broad-based fears over the economic state of Asia
Ahead of the fall of the Dow Jones Industrial Average on October 19th 1987 there was a big decline overnight in Hong Kong. This was prompted by fears about the exact economic state of Asia generally and China specifically. Fears about the Chinese economy are again prevalent.
4. Financial volatility and OPEC
At the end of 1985/1986, Saudi Arabia abandoned its historical role of propping up oil prices. This resulted in the crude oil price dropping in excess of 50% by mid-1986. At the start of 2014 Saudi Arabia led OPEC into a strategy of over-producing crude oil to bankrupt the US shale oil industry. The result? Crude dropped from just over $105 a barrel to just below $30. It’s currently well under $60.
5. Political worries
Four days before the 1987 crash, Iran hit Sungari (an American-owned super tanker) with a missile. The next day it hit US ship Sea Isle City. US warships shelled an Iranian oil platform in retaliation. Fast-forward to today and President Trump has made clear he wants to revoke the Iran nuclear deal. Added to this is the nervousness in the markets and beyond about the current situation in North Korea.
“The similarities in market-related and geopolitical factors in the run up to the 1987 crash and current day are remarkable and certainly prognosticate a significant crash,” said Simon Watkins, financial journalist, author and trader. “However, this doesn’t mean Armageddon for investors. Correctly positioning a portfolio in anticipation of such a fall allows investors not just to avoid catastrophic losses but also to make alpha-returns in the immediate aftermath and beyond.”
The full article – Thirty years on from ‘Black Monday’: The signs that history could repeat itself imminently – is available on request. To pre-order Simon’s latest book please visit: https://www.amazon.co.uk/dp/B075XMYVMV
To request a press copy please contact: Francesca De Franco on 0794 125 3135 or email: firstname.lastname@example.org
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NOTES TO EDITORS
About the author:
Simon Watkins worked for many years as a senior Forex trader and is now a consultant to a number of the world’s biggest hedge funds, so he is well-placed to pass on his expertise to you. He’s written extensively on Forex, equities, bonds and commodities for many publications worldwide, including: The Financial Times, Euromoney, FX-MM, The Emerging Markets Monitor, Global Finance Magazine, World Finance Magazine and FTSE Global Markets.
For more information: http://www.advfnbooks.com/authors/swatkins.html
Paperback page count: 296
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