Black Monday: A Stunning Number
Here’s a stunning number, thanks to Sam Stovall, chief investment strategist for Standard & Poor’s Equity Research Services. A comparable drop to the 1987 crash in the Dow today would equal a fall of 3,165 on the Dow. Yes, you read that right.
Whenever I look at historical levels for equity prices, I always remark, “Were they THAT low?”–this says a lot for being a long-term investor. Back at the end of the third quarter of 1987, the Dow Jones industrial average (DJIA) was 2,596, which makes the magnitude of the Oct. 19 decline of 508 points all the more sobering. With the DJIA at 13,896 as of the end of the third quarter of 2007, a 22.6% decline–what the DJIA experienced on Oct. 19, 1987–equates to a drop of 3,165 Dow points today. Since then, however, the DJIA has posted a compound annual growth rate (CAGR) of 8.7%.
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