Last Friday was the 25th anniversary of the horrific stock market crash of 1987. While stocks didn’t collapse like they did in 1987, the anniversary nevertheless saw an ugly 205 point sell-off in the Dow.
And today, the Dow is off 230 points with around 90 minutes left in today’s trading session.
It’s worth noting that the 1987 crash was preceded by a series of huge sell-offs.
Today, the folks at Bespoke Investment Group dared to compare the stock market in 1987 to the market this year (see below).
The analysts do, however, note some differences:
While the patterns between 1987 and 2012 are similar, there are two key differences. First, the S&P 500 was up considerably more at its peak in 1987 (+39%) than it was at the 9/14 peak this year (+16.6%). Secondly, in terms of valuation, the S&P 500’s P/E ratio is considerably lower now than it was in 1987. In 1987, the S&P 500’s P/E ratio at the low after the crash (14.37) was still higher than it is now (14.28).
Here are the charts. Note the scale:
Photo: Bespoke Investment Group