Are we heading for a big stockmarket crash?

Equities are overvalued by pretty much any measure. Does that mean we're heading for a stockmarket crash? And what can you do about it if it does?

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It's looking like 1987 all over again
(Image credit: 2012 AFP)

The stockmarket crash of October 1987 is infamous for its speed and scale. On Monday 19 October hot on the heels of a tough week the Dow Jones index plunged by more than 20% in a single trading session. Markets around the globe were hit hard too over the course of the crash, the New Zealand market lost 60%, for example. In the end, the crash caused little lasting damage. Markets recovered quickly and the economy saw very little impact. Even so, we'd all rather sit a 20% market loss out, if at all possible. So is there any way to predict when such a plunge is likely?

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.