1987

Uncanny resemblance between today’s sharemarket and 1987

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Original article by Karen Maley
The Australian Financial Review – Page: 31 : 2-Mar-18

Independent strategist Russell Napier says growth in M2 money supply in the US has fallen significantly in 2018, noting the parallels with US money supply in the year leading up to the sharemarket crash in October 1987. The rise in the yield on US 10-year bonds in 2018 has also mirrored the upward trend in 1987, albeit to a much lower level. At around 2.9 per cent, the bond yield is still well below the 1987 peak of 10.1 per cent, but Napier points out that the recent rise has been much larger in percentage terms.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. CONGRESSIONAL BUDGET OFFICE

‘Market vulnerable to 1987-style crash’

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Original article by Glenda Korporaal
The Australian – Page: 19 & 23 : 16-Oct-17

With the 30th anniversary of the Black Monday stock market crash of October 1987 approaching, experts warn that there is the potential for another sharemarket rout. Former ASX chairman Maurice Newman was the head of Bain & Company at the time of the 1987 crash. He notes that sharemarket valuations are again highly inflated, and share prices are now well above those that prevailed immediately before previous crashes. The former CEO of the Sydney Futures Exchange, Les Hosking, also warns that financial markets are vulnerable to another crash.

CORPORATES
ASX LIMITED – ASX ASX, SYDNEY FUTURES EXCHANGE LIMITED, BAIN AND COMPANY

Small-cap party could end in tears when the next crash comes

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Original article by Philip Baker
The Australian Financial Review – Page: 26 : 20-Oct-16

The Dow Jones Industrial Average has gained almost 944 per cent since the Black Monday sharemarket crash of October 1987, while the S&P 500 has risen by 854 per cent. In contrast, Australia’s All Ordinaries Index has increased by nearly 245 per cent. However, analysis by Richard Coppleson of Bell Potter suggests that when dividends are taken into account the All Ordinaries Accumulation Index has only slightly underperformed the S&P 500. Meanwhile, Coppleson warns that the current rally in small-cap stocks is unsustainable and a major fallout is inevitable.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, STANDARD AND POOR’S ASX ALL ORDINARIES INDEX, BELL POTTER SECURITIES LIMITED, RESERVE BANK OF AUSTRALIA