Stock Market Crash October 2015? 9 Of The 16 Largest Crashes In History Have Come This Month

Crash Warning Danger Sign

The worst stock market crashes in U.S. history have come during the month of October. There is just something about this time of the year that seems to be conducive to financial panic. For example, on October 28th, 1929 the biggest stock market crash in U.S. history up until that time helped usher in the Great Depression of the 1930s. And the largest percentage crash in the history of the Dow Jones Industrial Average by a very wide margin happened on October 19th, 1987. Overall, 9 of the 16 largest single day percentage crashes that we have ever seen happened during the month of October. Of course that does not mean that something will happen this October, but after what we just witnessed in September we should all be on alert.

Clearly, there is a tremendous amount of momentum toward the downside right now. As you can see from the chart below, all of the gains for the Dow since the end of the 2013 calendar year have already been wiped out…

Dow Jones Industrial Average October 2015

And as I wrote about just the other day, last quarter we witnessed the loss of 11 trillion dollars in “paper wealth” on stock markets all over the planet. The following comes from Justin Spittler

The S&P 500 fell 8%… and so did the Dow and the NASDAQ. It was the worst quarter for U.S. stocks since 2011.

Stocks around the world dropped too. The MSCI All-Country World Index, which tracks 85% of global stocks, also had its worst quarter since 2011. The STOXX Europe 600 Index, which tracks 600 of Europe’s largest companies, fell 10%. It was the worst quarter for European stocks since 2011 as well.

China’s Shanghai Composite fell 28% last quarter, its largest quarterly decline in seven years. The MSCI Emerging Markets Index fell 19%. It was the worst quarterly decline for emerging market stocks in four years.

In total, last quarter’s selloff erased nearly $11 trillion in value from stocks around the world.

Sadly, the mainstream media is assuring everyone that things are going to be just fine, and a lot of people on the Internet seem to have the attitude that “nothing is happening“. Just like in 1929, a brief period of stabilization after the initial fall has lulled many into a false sense of security. The following comes from Zero Hedge

Just as in 1929, the market was performing fantastic and the continuous wealth increase seemed to be unstoppable. A short 10% correction was seen as ‘healthy’ and soon a new uptrend was starting (the green line). This is exactly the same scenario we saw in the past few weeks. Market commenters said the 10% drop in the Dow Jones was a ‘healthy correction’ and we’re on our way to the next uptrend and Christmas rally.

Most people seem to assume that since I run a website called “The Economic Collapse Blog” that I must be rooting for a stock market collapse and an economic implosion, but that is not true at all. The longer that the financial markets can hold together, the longer all of our lives can stay quiet, peaceful and “normal”. Once the chaos begins, all of our lives will change dramatically. No matter how much any of us have prepared, what is coming is going to deeply affect all of us at least to a certain degree.

It would be far better for me, my extended family and my friends if I am wrong about an imminent financial collapse. Most of the people that I personally know are not even close to ready for what is coming. And during the coming credit crunch it is inevitable that people that I personally know will lose jobs and suffer business setbacks.

Sadly, the truth is that life in America is never going to be any better than it is right now. At some point, this stock market bubble will fully implode. At some point, our debt-fueled prosperity will disappear. At some point, the extraordinary recklessness of the big banks will catch up with them in a major way.

As we witnessed in 2008, our financial system is not designed to handle a severe bear market. We should have learned some very hard lessons from the last time around, but we didn’t. Instead, our financial system is even more vulnerable to a crisis today than it was back then. A huge turn down by the financial markets will rip many of our top financial companies to shreds. So a bear market would be extremely bad news, but unfortunately many prominent analysts seem to believe that this is precisely what we are now facing

Jim Cramer, the ex-hedge fund manager and host of CNBC’s show “Mad Money,” has been vocal recently on air, saying repeatedly that he doesn’t like the market now, and last week said “we have a first-class bear market going.” Similarly, Gary Kaltbaum, president of Kaltbaum Capital Management, has been sending out notes to clients and this newspaper for weeks, saying the poor price action of the stock market and many hard-hit sectors, such as energy and the recently clobbered biotech sector, has all the earmarks of a bear market. Over the weekend, Kaltbaum said: “We remain in a worldwide bear market for stocks.”

On the way up, all of the extreme risk-taking didn’t seem to matter much because everyone was making a lot of money.

But on the way down, all of the extreme risk-taking is just going to accelerate the collapse.

Personally, I do not know exactly what will happen over the next few weeks, but without a doubt I have a very bad feeling about the rest of this year.

What about you?

What do you think will happen?

Please feel free to add to the discussion by posting a comment below…

(Originally published on The Economic Collapse Blog)

1 thought on “Stock Market Crash October 2015? 9 Of The 16 Largest Crashes In History Have Come This Month”

  1. Ironically, the rise in the stock market we have seen in the last few days is going to cause much steeper and longer fall. Only a few days ago, the stock market plunged upon hearing the Fed would continue its stimulus,. That is its first fall on that kind of news in years, so it marks a sea change. (http://thegreatrecession.info/blog/global-economic-collapse-2/) It revealed that, for the first time since stimulus began, the continuation of stimulus was seen as a bad thing.

    Why? Because, after so many months of predicting a rate increase, the Fed caused people to believe it CANNOT raise rates without killing the economy, and that began to open people’s eyes, as I’ve said would happen this fall (whether the Fed raises rates or not) to just how weak the “recovery” is. It sent a shock through the market because it showed the Fed does not believe the US economy is immune to what is happening overseas and that it does not believe the recovery is strong enough to survive without stimulus.

    My line of thought has been that the Fed’s stimulus programs have reached that point in the curve of diminishing returns where each continuance of stimulus will have a negative impact. For a few months I’ve been saying that by this fall the Fed’s stimulus would go from producing less and less of a benefit to actually producing a negative impact on the economy as it is long in the tooth and each continuance will make it all the more obvious that recovery is eluding the Fed and the country.

    But why is this present rise in the stock market after such a drop going to produce a steeper fall. Psychology. The drop that happened a week ago caused even the likes of CNBC’s Jim Cramer (as you quote) to get off the bull-market bandwagon and finally see that we’re entering a bear market. Now, we’ve had this significant rise right after, and many of the permabulls are already breathing a huge sigh of relief and saying, “Whew! We didn’t go over the cliff, and we’re headed back to a bull market.” Many of them, like Cramer, were about ready to concede the bull market was over. Many of them, in fact, after the Fed’s last continuance DID concede in print the next day that it was over.

    So, now has come this bounce up, like we saw in ’29 — the kind of bounce you and I have both been saying is going to happen as there is never a smooth slope to the bottom. This bounce has already become a huge breath of fresh air to the remaining bulls, and that is exactly WHY such a bounce preceded a great crash in October of ’29. Suddenly everyone is wiping their brow, saying “Whew! We made it. We’re on our way back up.” Then the next bad news comes along, and the market falls again. It is when you just think you are in the clear at last and suddenly feel the bottom falling again, that you panic. — that you realize, “Oh my gosh, even this isn’t holding. It’s all giving away again.” That’s when you start to realize there is no salvation for the market.

    Think of a horror movie as an example. When you are watching and just settling down because the scare didn’t materialize — it was all nothing — and suddenly death stares you in the face, that is when you scream! That sudden change for calming back down to facing something worse than what you thought you were going to face causes panic. So, this rise is a set-up (I don’t mean a conspiratorial one, just that’s how it may likely function) for a much, much sharper panic in the very, very near future. For it is if something happens right AS the calm is settling back upon us, that shock hits us the hardest. This is exactly the kind of thing that can set us up for panic.

    Of course, if nothing bad happens, the setup for shock will move on by. However, there are so many bad things poised to happen right now that the odds are strongly in favor of a panic.

    –David Haggith

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