Month: October 2010

Risky Lessons from ’87 and ’07

ICangles Investment Post…

History didn’t repeat in the 1987 stock market crash and the bear market that began in 2007, but it rhymed. Both market tops were propelled by the use of derivate security products that falsely promised to remove risk from investing, were characterized by unrealistically high valuations around an asset class and witnessed an important financial market freeze due to an ‘insurance run’. Although the general symptoms were the same however, the specifics were very different. And it is important to understand both the similarities and differences in order to spot future stock bear markets and assess the current market.