Is a 1987 crash imminent?
Does Sam think this is similar to 1987 and is a crash near? The answer is flat out no. Today's market doesn't resemble 1987 in any way and he says that he sees little sign of danger at this point. In 1987, inflation rose from 1% to 4% in a matter of months and interest rates followed suit. The 30-year Treasury rose from 7.5% in March to 9% in May and spiked to over 10% in the days leading up to Black Monday. Today inflation is barely approaching 2% and long-term interest rates are at 2.88%. In Switzerland, a 50-year government bond pays just 0.48%. With the choice between bonds and cash paying almost nothing, investors are being forced into the equity markets to look for returns. With a strong economy and corporate profitability, the best option is most definitely stocks.