Prior to the crash of 1987, the largest single-day drop in the stock market occurred on October 29, 1929, when the market fell by about 13 percent. While drops of this magnitude are rare, it is not uncommon for stock prices to rise or fall by 3 percent or more in a single month. Stock prices seem to be very unpredictable. In addition, economists have long recognized that stock prices go through turbulent and tranquil periods.
This article appeared in the January/February 1993 edition of Business Review.View the Full Article