30 years ago today…

So here’s my take on Black Monday, which happened today in 1987…

Markets crash. It’s a feature. It shouldn’t happen often, but it will happen once in a very long while. It’s not predictable in advance and there are only some types of crashes you can prepare for with an investment strategy. Other types of crashes will catch you by surprise and impact your portfolio no matter what you do.

You need to spend more of your time steeling yourself for this possibility than you spend on a Grail Quest for a magical strategy that will completely protect you. Because that doesn’t exist. The more protection you add to a strategy, the less potential upside you will be able to gain. There are tradeoffs, always. In the case of 1987, it was the method of protection itself that blew everyone up.

Anyway, I’ll send you over to the only article you need to read today, from Professor Bob Shiller, whose life’s work is studying investor behavior and market extremes. He even won a Nobel Prize…

A Stock Market Panic Like 1987 Could Happen Again (New York Times)