The 1987 stock market crash is the worst day in stock market history. What dumbfounded many stock brokers and investors are that time is that major event helped make it. No economy collapsed, no government shutdown, no world leader died. It wasn’t supposed to happen, but it did. Turns out that what sparked the whole event was a sudden rush for the exits, made worse by computer-based program trading. Same programs that were designed to prevent losses through features like options and futures. Wave upon wave of selling made a vicious cycle, and these computer-driven programs made it worse.
Since the 1987 stock market crash, a lot of changes have been made, but flash-crashes still occur from time to time. Like on May 6, 2010, which prompted the SEC to revise its circuit-breaker rules. Making it so that when there is a drop of even 7% in the S&P 500, a halt will be triggered, and 20% will stop trading for the rest of the day. On October 15, 2014, yields plummeted 35 basis points in a matter of minutes because 10-year Treasurys skyrocketed all of a sudden and on August 24, 2015, China’s market significantly dropped before America’s market opened, affecting Europe. This caused the Dow to plunge by almost 1,100 points in the first minutes of trading.
According to Alexander Green, Chief investment strategist of The Oxford Club, there are things that we can learn from these incidents. For instance, you should emphasize on quality while the market is near its peak. Allocate your assets properly, use training stops, diversify, and hold a good amount of cash. The cash on your hand gives you ammunition to lessen the risks and take advantage when the next bear market arrives.
The Oxford club is a network of successful entrepreneurs and investors. They use their experience to form unique strategies to constantly beat the market. Members enjoy and take advantage of the many connections to make through the club. The Oxford club provides the best investment research available in order for its members to make informed decisions which are still valued even by the most veteran stockbrokers.