I Sat Through the 1987 Crash and Trust me, This One Isn’t Over

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[00:00:04] Doug McIntyre: I’ve been around long enough so that I can remember several market crashes.

[00:00:09] Doug McIntyre: The one I remember myself is 87 because I had one of the original Bloomberg terminals. I was actually able to sit at my desk and watch it go down. we hadn’t reset a couple of weeks ago. It wasn’t that bad. I mean, I guess we were in a, we were in a bear market for about 20 seconds, right?

[00:00:31] Doug McIntyre: There’s been, markets rebuilt some strength, I believe very firmly that if another shoe drops in the tar, in this tariff. War or if we get back into a tariff war with the 900 countries that we’ve said, we’ll wait 90 days on, you could see the market really fall apart a lot. I would not be surprised even slightly if we saw 30, 30% on the downside.

[00:01:03] Doug McIntyre: And I don’t mean spread over six months, a 4, 5-day thrashing of the market now, do I think this is the most likely case? No. Do I think this people ought to at least consider it when they’re looking at their port, how they position their portfolios for the next year? I sure would because you don’t have to have the greatest problem in the market can crash without phenomenal reason to do so.

[00:01:32] Lee Jackson: Well, how much was the market down in 1987? In one day? Re remind our viewers 26%. 26%. Now, if that happened today, given that the Dow is much higher than it was in 1987, I remember when people were throwing Dow 10,000 hats around in the late nineties and 2000. What would that equal, Doug? If we had a similar sell off in the Dow, how many points would that be?

[00:02:02] Lee Jackson: Six or 7,000 at least. Maybe more, maybe more, maybe more like eight, like you’d written about before. And, for, our viewers, you have no idea how people were stunned that day. In fact, I, when I first started in the business as an entry level stockbroker was 1991. Every, and that was four years later.

[00:02:26] Lee Jackson: Everybody had on their desk. That Bloomberg screen that you saw that showed everything down. It was, a kind of, that was when all those quotes were on and Bloomberg screens were green-ish tent and everything was down and it was just like everybody had that picture on their desk. And it’s almost hard to conceive of that.

[00:02:46] Lee Jackson: Now you dropping 26, 27% in a day.

[00:02:50] Doug McIntyre: If that happens though, it becomes, it becomes. For the economy. The amount of confidence that people would lose if that happened, particularly among people who are upper middle class and, upper class people. Because so much of the consumer spending is, as that tier of people.

[00:03:14] Doug McIntyre: I mean, there’s sort of this. Statement, which may not be true, but that is that like 90% of the spending, consumer spending done in the United States is by the top 10 to 20% of the people, right? If the market gets killed like that, consumer spending gets slaughtered. Consumer spending gets slaughtered.

[00:03:33] Doug McIntyre: You start to see layoffs. Oh, absolutely. See layoffs, it’s one of these flat spin spirals where you, consumer confidence is bad. GDP is bad. People get laid off because they’re laid off. There aren’t any more consumers. an $8,000 drop in the 8,000 point would wipe out a lot of the economy.

[00:03:56] Lee Jackson: Yeah. the thing that’s so incredible is that with the thing that was interesting about this most recent selling is the sheer velocity of the selling. Was just incredible. And, a lot of it can be matched, the, BS and the offers can get matched, but that wasn’t as easy in 1987 when there were still $2 brokers on the floor and, you had to call it in and somebody had to run a piece of paper to somebody and, you know why?

[00:04:25] Lee Jackson: It’s all electronic now. It’s not out of the question that a move by China, any sort of aggressive move by them militarily that could do it. that could, if something happened to the president, if, if somebody took another shot at Donald Trump and, was, were successful even to wound him like when Reagan was shot in 81, that could do it, but it’s almost hard conceive of the drop we saw that day.

[00:04:57] Lee Jackson: While, there’s been some an okay rebound in the stock market. There’s every bear market and every stock market crashes had bear market rallies. After it happened in 87, it happened in 94, it happened in 99, 2000. It happened ’06. You get a 20% bear market rally and people would say, oh, the worst is over.

[00:05:20] Lee Jackson: Let’s hop back in. And then they got hammered again. So I think everybody now, especially when they take a look at this, they should be careful now. This isn’t over by any means. No, it’s, I don’t think this is over.

[00:05:32] Doug McIntyre:  It’s not over. And if the Chinese get really upset, one of the things they can do is they can start to sell.

[00:05:40] Doug McIntyre: They can start to sell our debt. And basically say to the US government, Hey, if you really want us to stop doing this, we need a better deal on tariffs. Yeah. You talk about a real threat, that’s a serious threat to the US economy. China just saying that would make people go crazy. So look, if you’re an investor, keep an eye on this.

[00:06:04] Doug McIntyre: The worse the tariff problem gets, the more likely it is that the Chinese play. What I would describe as, the ace, and that is saying we’ll start to sell. Yeah. that’s a

[00:06:16] Lee Jackson: nuclear bomb is, selling our debt. And the thing is, that everybody should be very clear about this. As much as, they wanna put the pressure on other nations, and we do need to be treated fairly, but I mean, all those other nations are calling the White House.

[00:06:33] Lee Jackson: what do we need to do to make a deal that’s gonna get done? That’s not who this is all about. This is all about China. All about China. And it’s not just the inequities in terms of the trade imbalance, but it’s the theft of our intellectual property. the copyright theft, the stealing of, the making toys and games and things that are bootlegged, in China it’s about a lot of stuff, but make no mistake, This is about us and China. Yeah.

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