1987 STOCK MARKET CRASH (22% IN ONE DAY!)

I was investing on October 19, 1987 when the market crashed 22.68% on what has become known as Black Monday after a Friday drop of  4.6% on record volume*  from a much lower level than today.   At that time, trades were still done by hand and  I couldn't even get my broker on the phone.  By year end, both the DJIA and the S&P 500 ended up about 3%, not a lot but certainly not as bad as it looked at one time.  Thus I was nervous last Friday when the D{JIA dropped more than 500 pts in a day,because of the bounce back in 1987, I wouldn't despair yet.  Remember also that the stock market has risen in each year of President Obama's terms and that the year before a presidential election (as this one is) is often the best year of the presidential stock market cycle. 

While, the P/E of the DJIA at the close of business on Monday is within the "normal" range (15.19), the S&P 500 is still high, though the dividend is much higher than a year ago (2.71% Monday vs 2.23% a year ago).  The P/E of the S&P 500, however, is still in the "bubble" range (21.63) although there too, the dividend is much higher than a year ago (206% vs 1.90).**

Both the DOW Utility and DOW Transportation indices are still somewhat high (16.30 and 17.10) though the dividends of both are much higher than a year ago ( 3.65% vs 2.71% and 1.49% vs 1.09% respectively).**

I don't know what is normal for the Russell 2000, but the P/E is actually higher than a year ago (89.22 vs 78.97) although the dividend is much higher today (1.48% vs 1.29%). Although I also don't know what is normal for the NASDAQ 100, the P/E still looks in the "bubble" range though a tad smaller than year ago (22.35 vs 23.06 a year ago).  In this case, however, the dividend is also somewhat smaller  (1.21% vs 1.28%).**

While the U.S. economy has only 13+% of its GDP dependent on exports, a stronger dollar would hurt our economy only a little bit.  A stronger dollar, however, would hurt the country more; however, the dollar index has gone the other way (for now) at 93.33 on Monday, down from 96.81 a week ago.

Our exports grew by 27% from 2009 through 2013, adjusted for inflation. China, it should be remembered China is only number 3 of our export countries, Mexico and Canada each being larger.  See predominant export and import by state:***

Predominant Export by state:

 Predominant Import by State:

* https://en.wikipedia.org/wiki/Black_Monday_(1987)
** http://online.wsj.com/mdc/public/page/2_3021-peyield.html
*** http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS;
http://trade.gov/neinext/role-of-exports-in-us-economy.pdf;
http://www.ibtimes.com/us-economy-2015-check-out-top-imports-exports-every-us-state-1910766