Echoes of Gecko - The Hyperion Effect

25 years ago this month, the stock market crashed.

Not just any crash, but to still to this day the largest one day fall in most markets history. Black Tuesday, as it was known here in Australia, followed Black Monday in the U.S. where they Dow dropped over 500 points………What?, bid deal I hear you say, after all the Dow has been up and down by 1,000 points during the Global Financial Crisis. But that misses the point, when it fell by 500 points the market was only trading at 2,300 points. Still you say 25% is nothing compared to the 50% during 2008/9, but that ignores the fact that this fall happened in ONE DAY.

The crash of 1987 is often remembered as the end of the heady days of rising markets and entrepreneurs, after all it gave Kerry Packer his once in a lifetime Alan Bond and saw blokes like Christopher Skase and John Elliot talked about in the same breath as we today speak of Steve Jobs and Bill Gates. Wall Street the movie was  released in 1987 and gave us the catch cry of that generation, ‘Greed is Good’. But do the scars of 1987, like stories of past deeds that get bigger every year, run as deep as we think?  

Take a look at the chart below (Hat Tip to Rob Fraim who posted this on the Big Picture Blog), which shows you the Dow Jones over the past 30 years, can you pick out 1987?

DJIA historical w/o dates


No?, cant quite see it, let me help you with same dates


DJIA historical w/dates

Crashes are painful, but if you give them time, they become an afterthought and end up as just another scar that heals itself and is eventually forgotten.

I was only 12 years old when the 1987 crash happened and I have no great recollection of that time, but I was working during the crash of 2000 and I was right at the coal face in 2008. I remember that during 2008 I kept looking back at the chart showing 1987 and wondering how long it would take for this fall to become just another mark on the chart of history. Whilst the pain of 2008 has not been erased yet, not in Australia at least, if history tells us anything it is only a matter of time before it will be.

You see investing is never about the short term, its never about the trade, the buy, the sell, the long or the short. Investing is about taking a long term view, putting in place a strategy and sticking to it. Its about having an end goal that you’re working towards,  ignoring the noise and focusing on what you can control.

As I look back over 25 years I see an echo of 1987 and so in 25 years from now, when my successor is looking back at 2008 I’m sure that it too will just be a faint echo. I certainly won’t be looking back and the only echo’s I will hear, will be of my children, and maybe grandchildren.

After all, maybe a little bit of greed is good for all of us, you just need the patience for it to come to you.

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