20 YEARS AGO: Black Monday October 19, 1987

So, you are a serious student of the market! Good for you. We must talk more in the future. Thank you very much for your informed contribution to this thread.

"Probably due for a correction." I completely agree with this. If there is a major decline this October, I will jump in with both feet as soon as I estimate it is over. The overall trend still is up, in my opinion.

When you are pushing 60, 20 years does not seem so long ago. As to the stock market, it has been an important part of my life since 1967 when I was 16 and bought my first stock. It has not made me rich, but most of the time my trades are profitable.

efreddy, Good answer. I came here to answer spiderlizard's question but I see you have already given as good of an answer as can be given. Thanks.

Hi efreddy : That was a very knowledgeable answer about the market. For the benefit of mylotters who might be investors here (I believe there's a lot), what is your model of valuating a company whether it's over-valued or under-valued. Thanks. Yours Truly, Tony Chai a disabled stock options trader http://options4u.blogspot.com

A stock is a part of a company,you can buy (or sell)it on the stock market but of course there must someone sell(or buy) for it. Everyday there were people who wants to buy (and sell) ,someone wants to buy or sell on the price of the day (not very smart in my opinion) but there are others who made their price. When you want to buy a stock that was yesterday at close 15 $ and you set your price at 15 $ but there were a lot more people who wants to buy it on that price then people who wants to sell ,the price should be more then 15 $ and you don't get that stock. When there are more people who wants to sell it on that price you bought this stock (and even on a lower price then 15$). For selling it's the opposite. On october 19 1987 there were a lot more people who wants to sell then there were people who wants to buy and stocks tumbled,but the company they want to sell stays the same and most people doesn't think of that,they think when you see smoke, there is fire and because these price of the stock from the company was falling ,the company is in bad shape and they wants to sell too. When they see stocks rise they think the company are doing well and they wants to buy,but you should always ask the question is the stock rising (tumbling) because the company are doing well (is in bad shape) or is it because the investors are overreact. There was no reason why stocks were rising more then 50%(there was a reason why stocks were rising but not that much) on a year from sept 1986 and stocks were too expensive,the correction of it was very heavy and made stocks at a good level again. They always are talking about october 19 1987 because this heavy correction but in August 1987 the DJ has reached 2722 and there was already a correction before october 19 1987 because the fall of 508 points that day was from 2246 to 1738. I had sold most of my stocks in August and september 1987 and was already started to buy a part again on october (too early when you look afterwards but you only knows this afterwards). Never catch a falling knife because you could hurt by it,but on the stock market it isn't always clear if that knife is still falling or is already on the ground and when you want that knife you should have taken it. I lose some money on october 19 1987 but that loss was recovered very fast ,afterwards I had no reason to complain.