25 years ago, did Oct 19 '87 influence you?

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Peculiar_Investor
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25 years ago, did Oct 19 '87 influence you?

Post by Peculiar_Investor »

Did the events of 25 years ago have any influence on your investing career?

For myself, it was three years into my working career, been married for just over a year, deep in mortgage debt on our first house and we'd just started RRSPs and begun our investing lifetime. I had started to develop an interest in stocks and was researching a number of them for potential purchase. Somewhere I still have the list that I created and had marked up on the evening of Oct 19th with the view that if I had real commitment to stocks for the long run, I'd should be buying them starting the next morning. In the end, I didn't start the next day, but by the end of the year we had purchase at some on the list, as well as continued to aggressively pay down our mortgage.

So yes, I would say that it did have any influence on my investing career and helped shape my understanding of risk and how I would react to it. Made 2000 and 2008-09 much easier to deal with, as I'd been though similar events.

Added: You might want to review some 2008-09 topics for viewpoints and actions as it happened, such as Breadcrumbs - can we find our way out?, TO SELL OR NOT? and What Will You Learn From This Bear Market as some starters.
Last edited by Peculiar_Investor on 19 Oct 2012 08:25, edited 2 times in total.
Reason: Add links to older, as it happened topics
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Shakespeare »

I knew about it but was focused on my job at that point. Most of my money was in CSBs - unfortunately I missed the great CSB rate premiums of the early 1980's by a couple of years because I was still paying off debts and building a non-student household with (gasp) new, not used, furniture.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Bylo Selhi »

Shakespeare wrote:I knew about it but was focused on my job at that point.
Me too. I did have some money in equities but most of my portfolio was fixed income inside an RRSP. At the time I was focused on nurturing a year-old business. I was far too busy to "panic." That experience helped me get through future corrections/crashes more serenely than most of those around me.

The bubble bursts of 2000/1 and 2008/9 were harder for me to stomach in large part because I was more attune to media coverage. Now to paraphrase Timothy Leary my motto is, "Turn off. Tune out. [optionally]Drop cash in."
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by scomac »

Make that three. We just moved into a new home and were busy with setting that up. My only investments back then were CSBs and GICs so the Black Monday swoon was a non-event for me. I actually have no recollection of it at all, only through articles that I read long after it occurred.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by kcowan »

I had 20 years into a DB pension and held a few technology stocks because my business was technology. So I felt the meltdown but it was not critical to my future then. But the DB pension became the basis for a golden handshake 5 years later.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by adrian2 »

I was busy building the multilaterally developed socialist society and had no idea what was happening on Wall Street.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by newguy »

I found out about it when my boss told me he lost $1000 and would never buy stocks again, he only mentioned it because he knew I was buying mutual funds. I didn't know how much I lost since I never knew how much I had but it was way more than $1000. It sounded like a buying opportunity to me so I put whatever I had into IG's retirement fund :roll: with the rest of my money.

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Re: 25 years ago, did Oct 19 '87 influence you?

Post by fundamental »

I was a poor university student with zero savings, so financially no impact.

Influence-wise, realized that black-swans, while infrequent, do exist and can be utilized opportunistically by investors.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by freedom_2008 »

I was a student (in grad school), too. I remembered in that afternoon class, the professor walked into the room with a very long face, and said: I just lost half of my investment.

I didn't have any debt nor any spare money, so no personal feelings then. Year 2000 (high tech crash) was the learning year for us, lost more than half of our RRSP, not because we invested actively in the market, but we had no concept of diversification then and failed to pull out from company stocks in the DC plans. We stayed away from stocks for a long time afterwards.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by poedin »

Wasn't even aware that it happened - university studies :geek: and part-time jobs pretty well summed up my life at that time. RRSPs were CSBs and 5yr GICs, taxable accounts held Greenline funds & Trimark.
After graduating read up about it and other similar events - prepped me for the wild ride of the new millenium.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by DenisD »

Think I had a few equity funds at the time. Don't think I did any buying or selling.

What I remember is listening to the predictions of gloom and doom from the gurus of the day.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by adrian2 »

DenisD wrote:What I remember is listening to the predictions of gloom and doom from the gurus of the day.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Insomniac »

I only had about $3000 in our RRSPs at the time so it wasn't a big deal. The older guys at work were very concerned. The thing that sticks in my mind was the TV news reporters chasing Jimmy Pattison down to get his comments on the crisis. Jimmy said he was "taking advantage of some good buying opportunities".
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by big easy »

I had just started investing and had only a few thou. in the markets. I remember I didn't sell but I didn't buy either. I sat on the sidelines for a couple years waiting for a further collapse that never materialized. I learned then the value of dollar cost averaging and not trying to time the markets. It took another decade to discover index funds. When the markets collapsed this last time, difficult though it was, I rebalanced all the way down.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by IdOp »

At the time I had everything in savings bonds, term deposits and/or savings accounts. I'd heard of the DJIA but didn't really have any idea what it was. I found out about the crash from a newspaper headline in a vending machine near a bus stop I used in the mornings. My reaction was, "What's the big deal, OK so the Dow went down 25%, but why would anybody care about that?" :) :roll:
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Arby »

The market decline in 1987 didn't influence me, as I didn't follow the market at that time. I think I was mostly invested in GIC's and CSB's. When I look at the long term chart of the TSX, 1987 looks like a minor blip as compared to the tech wreck of 2001/2 and the financial crisis in 2008. Those latter two events had a far greater influence on me.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by blonde »

In the summer of '87 my spouse and I started the five year retirement-pilot.

We had No debt. Investments were diversified amongst real-estate (SFH, commercial property, farmland (grain)) blue chip stock paying dividends, royalty payments, CSBs, GICs, small business, play-money...

Stock market was rather flat for a long time. Interest rates on GIC's were in the double digits, CSB's were in the double digits but IIRC there was a ceiling on the amount that could be purchased (C$50K). Dome Pet and other UCSers put a couple stripes on my back, reinforcing 'Don't Trust Anyone'. Cash-Flow from the farmland was next to nil. The small business was doing great.

Dealing with a broker was slow...no internet...no cell phone. The week prior to Black Monday/Tuesday, the stock market appeared very eerie...some form of opportunity was starting to show-up, needless to say this was the first opportunity for a looong time. On the Monday we gave the broker the go-ahead and put all the play-money on the table. Staying within my investment comfort-zone was paramount. The rest is history.

This experience seasoned me to be patient and look for an opportunity regardless what is thrown out at the time. My grandfather was an excellent Mentor. The life of a contrainian is a darn good thing...needless to say, the popularity is not a good thing at a garden-party.

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Re: 25 years ago, did Oct 19 '87 influence you?

Post by ockham »

I had about 40K in the market at the day's beginning, about 30K at the day's end: a loss, albeit on paper, of ~25%. It hurt.

For the short term, I learned that I had no idea what I was doing. It was 6 years before I put any new money in the stock market. For the longer term, I learned that at any given time, I have likely misestimated my own risk tolerance. I still use that day as a useful reminder.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by ghariton »

I was out of the market at that time.

I had paid off my mortgage a few years earlier and had started investing through a full-service broker (what else, at the time?). He mercilessly churned my account for two years, to the point that by September 1987 I had lost 20% of my money. In disgust I pulled out of the markets and closed my account, swearing to invest only in CSBs in future.

Despite being out of the market in October 1987, I still lost significantly that year.

The lessons I learned were (a) stay far away from full-service brokers (b) be very careful when dealing with any kind of financial adviser.

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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Shine »

I was trying aggressively to pay down my student loan, however benefited somewhat from the high CSB rates of the early 80's. (My mother always made me purchase a CSB each year starting when I was 10 years old. I remember tearing the little coupon off the bond each year when I was a kid.)

Never started investing in equities or funds until about 1990.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Bylo Selhi »

This probably belongs in the outstanding financial pornography thread but since it's about lessons "learned" from 1987...

'87 and Now
As we acknowledge the 25th anniversary of Black Monday, this most recent October 19th should serve as a critical wake-up call reminding us that when buyers disappear, the results are devastating. But, of course, I think most people realize that fact, it’s just a question of how they respond.  Mr. Bogle needs to fully understand that the world has changed dramatically and the strategies of yesteryear are no longer applicable in this day and age. Back then, it was buy, buy, buy.  I would sincerely hope that if Jack Bogle took a phone call today, he would adamantly say sell, sell, sell.
Worse still, this Certifiable Financial Pornographer crosses the line when he uses Bogle to try to give his piece some semblance of authority or credibility :roll:
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by j831robert »

Not really! I had recently retired from the army (after 39 years of service), had yet to complete my first income tax return (wife always did ours), and had invested mostly in Trimark and the like. Not sufficiently 'with it' to be overly conscerned with what I then probably assumed was a normal cyclical adjustment and just left well enough alone. Have pretty well followed that same road over the years and ignored most of what the pundits were touting as flavour-of-the-day. Just checked and the only survivor of my initial investments I am still holding is BMO but from the initial capital input to todays valuation our portfolio over the 25 years has increased by 2000% - sounds great but we have always lived well within our means (frugal but not mean) so have been able to stuff quite a bit in the stockings and still holiday in Vegas as the mood moved. Everyone should be so lucky !
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30 years ago, did Oct 19 '87 influence you?

Post by Peculiar_Investor »

We've just past the 30 year anniversary of Black Monday. Given the length of the current bull market the financial press did carry some stories about the Black Monday.

I'm actually a bit surprised this anniversary didn't generate some FWF discussion, so I'll bump the topic with one of the more interesting articles that I've read so far is Shit Happens which includes a couple of interesting graphs. The first, Image
Michael Batnick wrote:Eliminating 1987 from this chart is a great way to visualize the fact that investors ought to focus on the long-term. Over these three years, and I understand that three years is not long-term, stocks rose more than 30%.
Batnick's conclusion is worth remembering IMHO, particularly in light of the financial crisis of 2007-09,
Michael Batnick wrote:When I see these charts, the salient point to me is that shit happens, and the best way to protect yourself against this reality is to construct a portfolio that can survive a one-day or five-year shit-happens market.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by AltaRed »

An interesting graph to be sure about the need to 'stay the course'. We keep hearing about this date as a catastrophic event and yet a year later, nothing much to fret about.

I have only vague recollections of this event since I did not have much skin in the game back then beyond some money in a small RRSP and company stock in my employee savings plan. Too naive in financial planning matters and too busy in my career to do any damage.

Added: For me it was the Asian flu followed shortly by the dot com bust that really got my attention about diversification and 'staying the course'.
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Re: 25 years ago, did Oct 19 '87 influence you?

Post by Taggart »

I didn't have a lot of money in 87. Still don't, but more than I had then. It was all a bit scary at the time, since I was buying into a market where either the New York Times or Wall Street Journal (can't remember which) had a chart that eerily looked like 1929. John Templeton calmed my jitters later on Wall Street Week though, so he was a great help. I remember a few years later on the internet I was talking to an investor who had used margin during the fiasco and had lost everything and more. Said he could never invest in the stock market again. I keep away from margin or any borrowing for the stock market. Always have.
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