Terrible Tuesday

Everybody keeps comparing our current financial mess to the Great Depression. But for my money, it looks and feels like October of 1987.

On Black Monday the market fell over 20% in one day. That was pretty bad. Mind you, the market had rallied over 30% early in the year, and essentially gave it all back from August through October. But the volatility was a killer.

On Tuesday many of the specialists on the New York Stock Exchange had had their equity wiped out. So many stocks just stopped trading. Soon the indices stopped trading as well. We were looking at a true financial seizure.

That’s what it looked like last Thursday when T-Bills traded with negative interest rates. But just like 21 years ago, someone stepped in with a plan to normalize the markets. In 1987 it was the big investment banks. This time it’s big Hank Paulson.

In 1987 we actually ended the year with a positive return. The lesson was that nothing is as bad as it seems. Crises come and go, but people who can hang on usually end up okay.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-03T21:12:38+00:00September 23rd, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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