By Isaac Cohen*
The plunge in the stock market last week confirmed that October is the scariest month. Last Thursday, was the last of six consecutive days of losses in market value which amounted to $2.2 trillion, or almost 7 percent. Such a fall was not seen since October 2008, when in the middle of the Great Recession the markets plunged 17 percent.
Another concern is that this time the fall was led by the best performing stocks, the high technology companies, such as Apple and Netflix, or those of the service sector, such as Amazon. Some analysts, quoted in The Wall Street Journal (10/15/18), estimate that those stocks “accounted for around half of the entire fall,” since September 20. Therefore, some see similarities with the “dot-com boom,” which lasted from October 1990 to March 2000 and ended in the recession of 2001. It is also recalled that the Great Recession was preceded by the “housing bubble,” which lasted from October 2002 to October 2007.
Finally, just because of its duration, there is concern that the present rally, which started on March 9, 2009, may soon come to an end. Harvard Professor Martin Feldstein said in The Wall Street Journal (09/28/18) “the principal risk now is that a stock market slowdown could shrink consumer spending enough to push the economy into recession.”
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
