Black Monday was a baptism of fire for this cub reporter in the Square Mile almost a working lifetime ago, but the 30th anniversary this week of the 1987 stock market crash may still have lessons for investors today.

For example, people who fear another October crisis after the FTSE 100 hit an all-time high of 7,556 last Thursday might find that distance lends perspective to the view.

In plain English, if you can afford to remain invested for five years or more, then even the most dramatic short-term setbacks fade in significance.

Not that it felt that way on October 19, 1987, when the index of Britain’s 100 biggest shares fell by 10% in a day — and then by the same margin the next day. Panic turned to pandemonium partly for technical reasons: the worst storm in living memory had hit southeast England the previous Thursday night and Friday morning, disrupting rail, road and telephone communications.  ……

......  Alan Steel, who founded the Scottish independent financial advice firm of that name in 1975, said: “Numerologists have noticed that stock markets fell in 1987, 1997 and 2007.  Is there a curse on the year seven?

“Nonsense.  Practical analysts who are more streetwise are more confident, and even expect an end-of-year rally in 2017.  Methinks the big difference is that there is no euphoria in markets today — and, remember, a bull run is like sex: it’s at its best immediately before it ends.”  ……

Quote courtesy of the Sunday Times
Sunday 15 October 2017