Twenty-five years after “Black Monday” — when the U.S. stock market went
into a free fall and the Dow Jones Industrial Average lost 22.6 percent
in a single trading session — some market experts believe we could
still see a repeat of the worst one-day plunge in history.
“In one sense, it could happen again,” David Blitzer, managing director and chairman of the S&P 500 committee at Standard and Poor’s, told CNBC on Friday. “We could get to a point where everybody decided that the world was incredibly over-valued and the only thing to do was to sell,” he said.
“In one sense, it could happen again,” David Blitzer, managing director and chairman of the S&P 500 committee at Standard and Poor’s, told CNBC on Friday. “We could get to a point where everybody decided that the world was incredibly over-valued and the only thing to do was to sell,” he said.
He added: “We do have circuit-breakers and in theory they would work very well, but the human psychology
that was around in 1987 is still around today and that is that
everybody can suddenly change their mind and the result can be a massive
crash.”
Blitzer
noted that in 1987, when trading predominantly happened on the floor of a
particular exchange, human fallibility was a threat — and it still is.
Read more: http://www.cnbc.com/id/49474587
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