The comparison "Black Monday 1987 vs. 2025" What could happen?

Jesse Cohen (@JesseCohenInv) posted an intriguing analysis. He compared two charts: the famous "Black Monday" of 1987 and a projection for 2025. It seems that bearish investors smell something in the air.

Let's take a closer look at this.

The Black Monday of 1987: a day to remember

On October 19, 1987, the Dow Jones fell more than 20%. In a single day. The worst percentage drop in its history. Brutal.

What are the causes? Several. The market was overvalued after an extensive rally. Automated trading systems were new and amplified the panic. There was a lack of liquidity when it was needed most. Interest rates were rising. And the American trade deficit worried everyone.

The recovery was quick compared to 2008. But the scare remained etched for years.

Is 2025 a mirror of 1987?

The idea is provocative. A market that rises sharply and then... bam! Vertical collapse.

Those who support this theory point out a few things:

  1. Valuations that seem excessive. The S&P 500 and the Nasdaq have multiples that raise eyebrows.

  2. Central banks tightening the screws. The fight against inflation could be stifling growth, little by little.

  3. The world is not at peace. Conflicts here, broken supply chains there. Energy rises and falls like a roller coaster.

  4. Technology could amplify any decline. Today's algorithms are faster and more ruthless than ever.

What could happen? Some scenarios

Scenario A: Another Black Monday

Something explodes. Perhaps an important bank collapses or some conflict escalates. Panic spreads like wildfire.

The algorithms go crazy. Institutions are selling en masse. Everything drops by 20-25% in days. Not weeks, days.

Small investors are fleeing. Volatility is skyrocketing.

Recovery? It will depend on what the central banks do and whether people regain confidence.

Scenario B: A significant correction, but not catastrophic

Profit taking after good years. Normal.

The economy is cooling down as rates remain high. A drop of 10-15% seems logical.

Central banks say the right words. The panic does not arrive.

The market finds a floor and gradually recovers. Nothing like 1987.

Scenario C: We continue upward with some scares

The economy holds up despite everything. Its resilience is surprising.

AI, advanced technology, and green energy continue to attract money. A lot of money.

Central banks achieve the golden dream: a "soft landing".

There will be bad days, tense weeks. But not a collapse like in 1987.

To finish

Comparing 1987 with 2025 is interesting. It's also risky.

Today's markets are different. Central banks are intervening more. The rules are stricter. Technology has transformed everything.

History teaches, but it almost never repeats itself exactly. What happens will depend on the fundamentals, the decisions of the powerful, and that unpredictable factor: the psychology of the masses.

No one has a crystal ball. Not even Jesse Cohen.

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