The newspaper headlines read: "Roller coaster stock markets have investors feeling queasy" (The Globe and Mail; "The stock market crash: History repeating itself?" (The Calgary Herald); "Uncertainty continues to pummel stock markets" (Sudbury Star); "The next market boom may be a lifetime away" (Financial Times). Interestingly enough, these headlines are from November 2002. One year later, the S&P/TSX Equity Index was up 20.8%; and two years later had soared by 40.7%.
It's important at times like this not to fall for the sensational headlines. Consider that the September 30, 2008 edition of the Edmonton Journal had a front page story, above the fold, titled "Biggest market drop since 1987." The article was accompanied by a picture of a securities trader with a facial expression that could only come from getting his kneecaps broken and learning that his dog ran away. Scary, yes. But the reality is that, as a number, it was large. As a percentage of the current index, however, it was tiny compared to Black Monday in October 1987.