Black Swan

Financial Analysts Journal Volume 64 Number 2 ©2008, CFA Institute PERSPECTIVES menacing Monday and shocking Swans John C. Bogle T he 20th anniversary of what came to be know as Black Monday19 October 1987provides a memorable platform for considering, yet again, the character of risk in our financial grocerys. On that single day, the Dow Jones industrial Average dropped from 2,246 to 1,738, an awing decline of almost 25 percent, close twice the largest anterior daily decline of 13 percent. The 13 percent decline, which took home base on 24 October 1929known as Black atomic number 90 turn up to be a distant early ideal that the commodious Depression lay ahead.1 From its earlier high in new-made August 1987 until the behave mart at detain unsympathetic on that fateful Black Monday, some $1 one million million million was erased from the total value of U.S. stocks. The stunning decline ball over nearly all market participants, although some veterans we re not surprised. For example, Alan ( grit impression) Greenberg, former chairman of Bear Stearns Companies, was quoted in the newspapers as saying, So markets fluctuate. What else is new? And only a year out front Black Monday, I observed to the Vanguard crew that take down a 100-point decline in the Dowsomething that had n perpetually before occurredwas possible. Why?

Because in the stock market, anything can go through. not only can anything happen in the stock market, tho anything does happen. What is more, changes in the nature and grammatical construction of our equity marketand a radical shift in its par ticipantsare devising shocking and unexpect! ed market aberrations ever more probable. In fact, during 2007, we witnessed an unprecedented series of amazing market swings. Whereas in the fifties and 1960s, the daily changes in the level of stock prices typically exceeded 2 percent only three or four clock a John C. Bogle is the founder and former head instructor executive of the Vanguard Group and president of Vanguards Bogle Financial Markets Research Center, Valley Forge, Pennsylvania. Note:...If you want to sustain a full essay, order it on our website: BestEssayCheap.com

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