A History Of Market Crashes In Charts

As stocks plunged toward their harrowing, bear-market lows earlier this month, Omega Advisors CEO Leon Cooperman infamously railed against algorithmic traders and HFT for creating distortions in the market that caused the cascading selloff (though, as we joked at the time, no fingers were pointed when stocks soared off the lows following a massive pension buy order).

 

Though the Dow's biggest one-day point gain on record was likely spurred by pension fund rebalancing (or the frontrunning of said rebalancing), the scrutiny that this month's volatility has brought to algos and their potential to amplify selloffs and rallies (even when there's no clear catalyst for such moves) due to their trend-following nature has been perhaps the most salient takeaway from the worst December for US stocks since the Great Depression.

With mainstream investors finally questioning the very integrity of the markets and their ability to accurately set prices - a phenomenon that we have been warning about for some time now - Bloomberg's editors decided that now would be a good time to remind their readers of every major selloff of the 20th century as a way to nudge the market that selloffs like the one we just endured are quite "normal", and have been happening since the days when order tickets were written up by hand (don't tell that to any of the hedge fund managers who will be shutting down their hedge funds as a result of December's bizarre market violence).

In any case, as Bloomberg claims, vicious selloffs like the 20% drop we just witnessed are "far from unheard of."

While any 20 percent sell-off hurts, the one happening now is far from unheard of in terms of depth or velocity. Over the past 100 years, there are almost too many examples to count of stocks tumbling with comparable force.

"It’s an inevitable process," Marshall Front, founder of Front Barnett Advisers, who began on Wall Street in 1963. "It goes on over and over again."

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