Not surprised. The media would have us believe that the “Crash of ’87” happened like a bolt out of the blue. It didn’t. Warning signs appeared months ahead.
The market was seriously overvalued when the mighty Dow closed at 2,709.5 on August 21, 1987. Our trustworthy VV-DJIA was at 2,184.3, 19.4% below the Dow. Our Recommendation Profile turned unfavorable a week later when the Buys decreased to 24.0% and the Sells increased to 48.3%. Inflation was rising, so Mr. Greenspan, newly appointed Head of the Fed, raised interest rates twice between August and October. As the investment climate continued to deteriorate, we warned our readers repeatedly to take profits and put Stops on all “H” rated stocks. On October 9, we said that the Dow would continue going down and advised our readers to sell Low VST-Vector stocks short.
When the market crashed on Black Monday, VectorVest readers were Not Surprised. See Page A22 of Today’s Wall Street Journal for a very interesting review of the events leading up to Black Monday.