Lessons from the October 1987 crash
What investors can learn from the events of 30 years ago.
Summary: Three decades ago, global stock markets went into complete meltdown, wiping out the wealth of millions of investors across the world, including many Australians. This week it’s worth revisiting those events and overlaying them with the current market conditions.
Key take-out: For investors, the key is to focus on the fundamentals of what you are investing in, and to be acutely aware of the dangers of overborrowing..
..With stock market valuations high, corporate and household debt levels running at record levels again, and interest rates on the rise globally, there’s a message in there for everyone carrying too much debt on their shoulders.
Read the complete report here;
https://www.investsmart.com.au/investment-news/lessons-from-the-october-1987-crash/141671
Tomorrow marks the 30
th anniversary of the October 1987 stock market crash. Individuals, businesses and governments borrow (and banks lend) money when they are confident that they can pay it (and be paid) back. The latest figure for total global debt rose to a record high of $217 trillion, or 325% of global GDP, which is also a record.
With global debt rising twice as fast as global GDP, and interest rates on the rise, it is fair to say that confidence among creditors and debtors has never been higher. The irony, and the danger, is that the growing risks of debt burden and default have also never been higher.
How much longer can global credit markets expand in a rising interest rate environment before a credit crunch leads to contraction and ultimately debt deflation on a scale never seen before?
