Sunday Nostalgia: Video - Black Tuesday October 2007

Black Tuesday

On 20 October 1987 the news of share market falls on Wall street sparked a dramatic day of selling on the New Zealand market. The NZ market lost 60% of its value and has yet to recover 1987 pre-crash levels, while our cousin across the ditch, lost 42%.

Share prices reached an all-time high on 18 September 1987. The exchange had 309 listed companies, far more than ever before. From 1982, when the international bull market began, the New Zealand market rose about 600% (compared with 250% in the US and 400% in Australia). Spooked by a dramatic fall on Wall Street, the New Zealand stock market collapsed on 20 October, which became known as ‘Black Tuesday.’ Share values dropped by $5.7 billion – 4.3% – in four hours, as thousands of investors fled the market. Values halved over the next 10 months. In the following years, New Zealand’s recovery lagged far behind those of its chief trading partners. By 1993 only 140 companies remained listed.

Most broking firms drastically downsized and many fell over. To survive, many companies merged or were taken over – some by overseas firms. This boosted their capital and attracted more off-shore investors. By 1996 over half of New Zealand broking firms had overseas connections.

The NZX is now a much better run institution than it once was, but many of the same people from 20 years ago remain and many of the same ideas of short term gains continue to live in the minds of brokers and company analysts.

Share Investor Reading

New Zealand Stockmarket: A History from beginning to present day.
Stockmarket Education: How do you buy shares?
Stockmarket Education: What is a Share?

Stockmarket Education

Stockmarket Dictionary
Stockbrokers: What you should know before choosing one
10 Basic questions to ask before investing
How the Stockmarket works
Understanding Risk
Watch Your Risk Tolerance
Stockmarket Education: What is a Share?
What Moves the Stockmarket?
7 Signs of Shareholder Friendly Management
Financial Media For Investors
Dividends in detail

Related Links

NZX - How to Invest

c Share Investor 2010

Panic 2008!

"Market Crashes", "Dow Plunges", "Global Recession".

Its enough to make you feel like Edvard Munch on a combination of speed and cocaine.

Headlines blaring across the worlds financial and main news organisations are saturating investors brains to the extent that they can hardly see their way out of all the gloom.

Of course there are practical and real reasons why most of these headlines exist and we haven't seen the worst yet but lets face it the world ain't going to come to an end.

All things must pass!

I am fed up with all the negative stuff and I am looking past the drama of "Panic 2008" and "Black October"(whats up with October for down stockmarkets?) and towards what lay on the other side of it.

We are coming close to the bottom of the down part of a financial cycle and the big economic impact is likely to hit soon and last until well into 2009/early 2010-of course the reactions by politicians to it may delay growth -at the same time though the seeds of an economic recovery are being planted.

The New Zealand dollar has been decimated and will continue to fall and this of course will help an export led recovery, one that is sustainable, rather than the tax and spend merry go round we have been on for the last 9 years.

Lower New Zealand interest rates, and US ones in particular will lead to an increase in business growth through cheaper lending and a pick-up in job numbers and in home lending this will lead to all the knock-on industries benefiting as a result.

Lower asset values will lead to more prudent buying by investors and a gain for those who have bought in a falling market and for those who haven't had to sell their house, stocks or rental property.

Lower commodity prices for oil, grain, sugar and a whole host of other staples that make economies tick will be a welcome relief for citizens lumbered with less employment or problems with high debt.

My point is that with every downside associated with the current financial and economic turmoil there is a mirror upside in the future and that is just how economic cycles work.

The fact that the upwards cycle has been a steep one unfortunately means the downside will be reasonably lengthy but in the process of movement back towards the top there are opportunities to be had for investors to capitalise on by buying cheap assets and benefit from their foresight when things inevitably get better.

All we need now is a little more faith in the future to make the upside a reality sooner rather than latter.


Panic 2008 @ Share Investor

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Global Market Meltdown: What is Warren Buffett doing?
A sensible approach to global market volatility




c Share Investor 2008