Thursday, October 16, 2008

The Coming Economic Crash

Good Morning,

I was doing some research on the events in the U.S. Stock Market and just
happen to stumble up on the Stock Market Crash of 1987. On October 19, 1987 the Stock Market crashed to S&P 500 fell about 20% leading to the fall of the market. The problems in the trading systems interacted with the price declines to make the crisis worse. One notable problem was the difficulty gathering information in the rapidly changing and chaotic environment. The systems in place simply were not capable of processing so many transactions at once. Uncertainty about
information likely contributed to a pull back by investors from the market. Another factor was the record margin calls that accompanied the large price changes. While necessary to protect the solvency of the clearinghouse processing the trades, the size of the margin calls and the timing of payments served to reduce market liquidity. Finally, some have argued that “program trades,”
which led to notable volumes of large securities sales contributed to overwhelming the system.

History Always repeats its full so its time you protect yourself and your assets

peace coolwater

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