Stock Market crashes of the last 100 years
“The biggest difference between this particular crash and the others is that in the immediate aftermath of the atrocities, people knew what was coming in the markets.”
Anthony Correia / Shutterstock.com
One intriguing element of the 9/11 crash is that there was “suspicious” and very heavy activity in airline and index Puts in the days leading up to the attacks. Somebody made hundreds of millions on these bets and, to this day, the culprits still seem to remain in the shadows. This only adds weight to the conspiracy theorists’ stories that many more people knew what was coming on that terrible day than is widely believed. United Airlines and American Airlines, two of the airlines used by the terrorists in the attack, saw the shares drop 40%. Global air traffic declined considerably over the following months which led to a decline in revenues and profits amongst the global airline industry and ultimately to the bankruptcy of US Airways and United Airlines, and also massive layoffs at American Airlines.
The attacks on the Twin Towers shocked the world and set the geo political stage for the adventures by the UK & US into the Iraqi & Afghanistan theatres. The markets grappled with the implications for many months in the immediate aftermath of Sep 11. One particular compounding issue that led to the markets making decade lows almost a year later was the fact the world economy was still coming through the effects of the bursting of the end millennia technology bubble and the devastating wealth decimation that occurred in this arena. A final bottom was made in April 2003 — ironically just around the time of the Invasion of Iraq. A few lessons here — anticipation of a crash and selling elsewhere, as in Europe in the days after the Sep 11 attacks, generally means that the worst will not come to pass as “those who want out are out”. Two, as occurred in April 2003, once valuations reach historic nadirs, news flow can become an obscuring factor and inherent value becomes more important. Many would have been forgiven for expecting the first shots in Iraq to set off another downturn in the markets, but, in the event, this marked the low point for a strong 4 year bull run. The old adage “Buy when blood is on the streets” rings true more often than not.
TABLE - 9/11 AFTERMATH CRASH
January 2013
| www.financial-spread-betting.com | 33