Remembering the Anniversary of the ’87 Crash…And Why We’re Better Off Now

October 18, 2017 | posted in: Financial Insights, LPL Weekly Market Commentary | by

In this week’s Weekly Market Commentary, LPL Research examines the important differences between the terrible crash 30 years ago this week, and where we are now.  While some claim it’s a cycle that’s destined to repeat, facts don’t seem to bear that out.

Key takeaways include:

  • Though charts comparing 1987 to 2017 look similar, gains leading up to 1987 were much stronger.
  • We believe that the stock market is standing on a much stronger fundamental foundation today, making another crash appear unlikely.
  • As we reflect on this anniversary, let’s appreciate this bull market but not get complacent. Market events don’t repeat themselves, but they sometimes rhyme.

The most important takeaway? “We believe that the stock market stands on a much stronger fundamental and technical foundation today than it did in October 1987, with less euphoric sentiment, making another crash like 1987 appear unlikely. Improvements in regulations and market structure can be debated, but investors clearly have better access to information and can trade much more easily.”

Read the full analysis from LPL’s John Lynch, Chief Investment Strategist, andJeffrey Buchbinder, CFA Equity Strategist, here.