Another Stock Crash Like 1987’s Is Inevitable

by Mark Hulbert
Market Watch
CHAPEL HILL, N.C. (MarketWatch) — Prepare yourself for another stock market crash as big as the free fall in October 1987.
That’s a daunting prospect indeed, since at current levels such a decline would mean the Dow Jones Industrial Average would plunge by more than 3,000 points in a single trading session.
And we’re kidding ourselves if we think that market regulatory reforms such as circuit breakers will be able to prevent it.
These sobering truths are what emerge from a fascinating line of recent academic research into the frequency of market crashes. Recognizing them is perhaps the best way for us to respect this week’s 25th anniversary of the Oct. 19, 1987 Crash, when the Dow plunged 22.6%.
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