Is the 2020 crash different from 2008, 2001 or 1987?

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squirm
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by squirm » Thu Mar 19, 2020 12:07 pm

BlueHorseshoe wrote:
Wed Mar 18, 2020 5:00 pm
I'm a newbie so apologies for possibly a stupid question...Is this market crash different from prior crashes in 2008, 2001 or 1987?
The difference is the amount of fed ammo has gone down, however banks are in a much much position then 2008. Also this is a health issue, the other two were financial issues.

bugleheadd
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by bugleheadd » Thu Mar 19, 2020 12:09 pm

rbaldini wrote:
Wed Mar 18, 2020 5:07 pm
One way the 2020 crash seems different from 2008 and 2001 (I don't know anything about 1987) is that it is largely exogenous, I think. It's not as if we suddenly looked down and realized we had been building up stock prices on a pile of junk for many years. The economy seemed to be in good shape. Then a virus suddenly showed up and started shutting the world down. This gives me some hope that, when we get through this, we'll be well poised to recover. Take that all with a grain of salt because I don't know much. Perhaps I am forgetting exogenous shocks of prior recessions, or perhaps the economy was not as sound as I believe.
was the economy really in good shape in January 2020?

Hemispheres
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Hemispheres » Thu Mar 19, 2020 12:12 pm

ved wrote:
Wed Mar 18, 2020 6:35 pm
In previous crashes, governmnet, companies etc encouraged consumers to participate in the economy by spending.
It's different this time, because to stop the virus, the economy has to be shut down.

Think about that for a minute. To be able to survive the virus, the world has to deliberately crash its economy.
This is the biggest difference, imho.

Hemispheres
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Hemispheres » Thu Mar 19, 2020 12:29 pm

I don't know enough about high finance to know when this exogenous shock to the economy and stocks translates into a 2008-style liquidity/solvency crisis. We just had the USGov forced into backing MMFs like they did in 2008. When are the high rollers in the financial world going to discover that their investments turn out to be worthless, again, like 2008?

rbaldini
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by rbaldini » Thu Mar 19, 2020 1:06 pm

bugleheadd wrote:
Thu Mar 19, 2020 12:09 pm
was the economy really in good shape in January 2020?
I gather you disagree. Care to elaborate?

It's not so much that I thought the economy was in good shape. Rather that the drop appears to be mostly due to an unpredictable exogenous shock. It's not like we suddenly realized our economy was on a shaky foundation and confidence finally collapsed. At least that's not what I'm hearing. It's that a virus is keeping millions of people from working, threatening to overload hospitals, etc. That's going to cause a big drop in the productivity and therefore stock prices regardless of how good your economy is!

My impression of 2008 and 2001 is that the problems were more internal, but maybe I'm misremembering. The basic catchphrase that seems to stick around from 2000 is "tech bubble". For 2008 it's "subprime mortgages". For 2020 it's going to be "corona virus". The latter happened to us, the former happened because of us. That's an oversimplification (one can be better prepared for viruses, etc), probably, but it gets the general idea across.

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bertilak
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by bertilak » Thu Mar 19, 2020 2:10 pm

Thesaints wrote:
Thu Mar 19, 2020 9:22 am
You completely missed my point. Those other crashes felt like the end of the world when they were happening, and so will the next one.
No, they didn’t!
Positive thinking!
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Wind_Reaver
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Wind_Reaver » Thu Mar 19, 2020 2:59 pm

BlueHorseshoe wrote:
Wed Mar 18, 2020 5:00 pm
Is this market crash different from prior crashes in 2008, 2001 or 1987?
"there is nothing new on Wall Street... Whatever happens in the stock market to-day has happened before and will happen again." -Edwin Lefèvre

(Written almost a century ago.)

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Oicuryy
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Oicuryy » Thu Mar 19, 2020 4:03 pm

A few years back the Liberty Street Economics blog did a series of twenty-five posts called Crisis Chronicles.
https://libertystreeteconomics.newyorkf ... hronicles/

Look for similarities and differences.

Ron
Money is fungible | Abbreviations and Acronyms

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Brianmcg321
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Brianmcg321 » Thu Mar 19, 2020 4:18 pm

It was a lot different for me.

In 2001 my account value was about $10k. Stay the course.
In 2008 it was about $150k. Stay the course.
In 2020 it was knocking on seven figures. Well it stopped knocking. This Permanent Portfolio sounds interesting.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by flaccidsteele » Wed Mar 25, 2020 9:01 am

BlueHorseshoe wrote:
Wed Mar 18, 2020 5:00 pm
I'm a newbie so apologies for possibly a stupid question...Is this market crash different from prior crashes in 2008, 2001 or 1987?
Apparently the 2020 virus crisis is like a bad snowstorm. Basically it’s one of the tamer kind of downturns

Bernanke: Coronavirus disruptions ‘much closer to a major snowstorm’ than the Great Depression
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

Valuethinker
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Valuethinker » Wed Mar 25, 2020 9:17 am

rbaldini wrote:
Wed Mar 18, 2020 5:07 pm
One way the 2020 crash seems different from 2008 and 2001 (I don't know anything about 1987) is that it is largely exogenous, I think. It's not as if we suddenly looked down and realized we had been building up stock prices on a pile of junk for many years. The economy seemed to be in good shape. Then a virus suddenly showed up and started shutting the world down. This gives me some hope that, when we get through this, we'll be well poised to recover. Take that all with a grain of salt because I don't know much. Perhaps I am forgetting exogenous shocks of prior recessions, or perhaps the economy was not as sound as I believe.
Summer 1990 you had Saddam Hussein invading Kuwait. The bear market lasted until Operation Desert Storm began in Jan 1991.

But there was also the S&L Crash going on in the background.

So you could say it was 50% an exogenous external event which at the time seemed major and now seems less so.

Similarly the bear market had already started, but you did have 9-11. Which kicked off the next downward leg.

I agree that this bear market seems largely about an exogenous shock, Covid-19, albeit in the context of a market which was richly valued when it began.

Valuethinker
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Valuethinker » Wed Mar 25, 2020 9:19 am

bugleheadd wrote:
Thu Mar 19, 2020 12:09 pm
rbaldini wrote:
Wed Mar 18, 2020 5:07 pm
One way the 2020 crash seems different from 2008 and 2001 (I don't know anything about 1987) is that it is largely exogenous, I think. It's not as if we suddenly looked down and realized we had been building up stock prices on a pile of junk for many years. The economy seemed to be in good shape. Then a virus suddenly showed up and started shutting the world down. This gives me some hope that, when we get through this, we'll be well poised to recover. Take that all with a grain of salt because I don't know much. Perhaps I am forgetting exogenous shocks of prior recessions, or perhaps the economy was not as sound as I believe.
was the economy really in good shape in January 2020?
Lowest unemployment rate in decades. Economic growth. Real wage growth.

There were some signs of weakness but generally it seemed pretty good. I usually use Calculated Risk blog as my marker re US economy - he called both the housing crisis, and the bottom of the US housing market, correctly.

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