We saw today (June 6, 2008) a minor Stock Market meltdown.  Let’s talk about how much of a loss -394.64         (-3.13 percent) points is in comparison to past meltdowns.  It was the 8^th largest point loss in one day and as a percentage it is doesn’t even come in the top 20. It was a day that had poor economic data released.  The data released Friday was somewhat worse than expected.  When you add the oil price increases and the public’s jitters over the tense election process, you can then see enough emotional heat being generated, at least probably, enough to cause this meltdown.

Will we have a downturn on Monday or a recovery?  Let’s look at a couple of past major downturns for some reference.  The largest point loss was 09/17/2001, a loss of -684.81 points (a loss of -7.13%, the 14^th largest percent loss). This was the Monday following the infamous 9/11/2001. Though on 9/10 the market was down     -0.34 point, then the market was closed 9/11, 9/12, 9/13, 9/14. Friday September 7, 2001 was down -234.99 points (-2.39%).  The largest percentage loss was 10/19/1987.  A loss of 22.61%, though it was only 5^TH largest point loss (-508.00).  This loss was on a Monday following a loss of -108.36 or -4.60%. Eight out of the twenty top percentage losses were on Mondays. Only three were on Fridays, one Tuesday, two Wednesdays, and 5 Thursdays.  Four of the top twenty point losses were Fridays, five were Mondays, five were Tuesdays, one Wednesday, and five were Thursdays.  To me there is only a limited pattern, not one I would bet on.

This coming Monday could bring a greater drop or it could be a good point for those with excess cash to pick up some great deals.

If you are interested this in 1929 Stock Market it looked like this:

Some of the data came from: http://online.wsj.com/mdc/public/page/2_3024-djia_alltime.html

Some came from: http://finance.yahoo.com/q/hp?s=%5EDJI

Hoping your investing is profitable,

Oldheart

This provides some great insight about past downturns, Oldheart! Thanks for writing it!

By the way, reading through this I kept looking for "so what's his opinion about Monday's market?" But you never gave an opinion! Haha, you write just like the authors in the Wall Street Journal:  Completely unbiased and you presented good facts and good information without giving an opinion! :D

Seriously, though, what's your input about Monday's market? Do you think its a good time to pick up some good stocks at low prices, or do you think the market will continue to react negatively to the data released Friday?

All the best,
Saber

thanks for the info

Howdy Saber,

Sorry, I am not very good at writing, so I can see why people are confused.  Here goes my opinon (kind of answering without a true committment to what will happen):

As you can see if we only use past data; only one Monday was down six were Mondays up (and one is to happen).  If you take only past data, then Monday will probably be up.  If we include the emotional nature of the investing public, then Monday could be down further.  This is why I said "This coming Monday could bring a greater drop or it could be a good point for those with excess cash to pick up some great deals."  I think emotions play a big part of what individual investor sub-consciously use in making their decisions. 

I hope this helps.  I will be watching to buy some stocks with high dividend yields (near ex-dividend dates, not including 6/9 you don’t get dividend if you buy a stock Monday, with an ex-dividend date of  6/9).  I will post, later today my analysis of stocks, those high yields that are or could be a bargain on Monday.

Greatest Point Loss that happened on Fridays, then what happened the next Monday.                                                   Fri. 4/14/2000                           -617.78                 -5.66%                 

                Mon. 4/17/2000                  276.74                 2.69%                   

Fri. 6/6/2008                      -394.64                 -3.13%                 

Mon. 6/9/2008                  ??????                  ?????                   

                Fri. 7/19/2002                   -390.23                 -4.64%                 

                Mon. 7/22/2002                -234.68                -2.93%                 

                Fri. 10/19/2007                 -366.94                 -2.64%                 

                Mon. 10/22/2007                44.95                  0.33%                   

Greatest Percentage Loss that happened on Fridays, then what happened the next Monday.                                      Fri. 8/12/1932                             -5.79                     -8.40%                 

                Mon. 8/15/1932                    3.40                    5.39%                   

                Fri. 7/21/1933                     -7.55                     -7.27%                 

                Mon. 7/24/1933                    5.57                    6.28%                   

                Fri. 10/13/1989                  -190.58                 -6.91%                 

                Mon. 10/16/1989                88.12                  3.43%   

                Fri. 1/8/1988                       -140.58                 -6.85%                 

                Mon. 11/9/1988                   33.82                  1.77%   

Happy Investing,

Oldheart             

Thanks, Oldheart. Both of your articles gave me lots of good points.

I really thought we were going to see a much more drastic increase in the Market since Friday, but it hasn't been the case. :( 

 Financial seems to be up.