This week is the 30th anniversary of the stock market crash of 1987. Reading through the articles meant as recollections of the events of the day, it is hard to miss the fear s that bear markets, and especially market crashes, bring. Living as we are in an 8-year bull market, some of the younger investors who have not experienced a crash before would do well to read some of the articles. Some of the other key reflections from this week’s readings are the importance of having a simplified investing strategy and that bitcoin and cryptos may be here to stay.
Relive the crash to get a feel of how markets work and players react in a crash:
“I remember walking from the 41st floor down to the 40th floor. The 41st floor was this cathedral of bonds, and then you walked down to 40 and were in this cramped, low-ceiled, dark place that was the equity department, with a lot of guys who were named Vinny and Tommy and Donny….they were all
Weekly Chart: The value function below was pioneered byDaniel Kahneman and Amos Tversky in their paper Prospect Theory: An Analysis of Decision under Risk. The paper provided the base for Richard Thaler to begin ´misbehaving`. Prospect theory states that people hate losses much more than they love gains even though the losses and gains are equal in magnitude.