Stock market crash WARNING: Black Monday is coming again – ex-trader

On October 19, 1987, share prices went into a free-fall, with millions of pounds and fortunes lost in a matter of hours.

The fateful day went down in history as Black Monday.

Three decades later and there are worrying signs that history could be about to repeat itself, according to Simon Watkins, former trader and author of The Complete Guide To Successful Financial Markets Trading.

Factors that were apparent in the run up to the historic crash are now being mirrored in 2017, Mr Watkins has warned.

For example, America’s top stock index the Dow Jones is today trading at close to all-time highs.

Back in 1987, US stocks had also reached record highs in August  but then dramatically tumbled by 508 points just two months later.

The US economy is also retracing a similar pattern.

In the run up to Black Monday, the US was in a period of moderate economic growth but amid inflation actual growth was very small.

The US is also currently experiencing its third-longest economic expansion in history, Mr Watkins pointed out. 

Business cycles are typically around three to five years – suggesting that a correction is imminent.

In another striking similarity between 2017 and 1987, there were significant fears over Asia and China’s economy stability.

The Black Monday crash started in Hong Kong stock markets overnight. 

Oil markets were unsettled in the mid eighties after Saudi Arabia abandoned its role of propping up oil prices and by mid-1986 prices had halved.

Since 2014, oil has again been hit a dramatic drop in value, going from more than $100 a barrel to less than $60 today.

Investors have now been urged to protect themselves from a prospective storm.

Mr Watkins said: “The similarities in market-related and geopolitical factors in the run up to the 1987 crash and current day are remarkable and certainly prognosticate a significant crash.

“However, this doesn’t mean Armageddon for investors.

“Correctly positioning a portfolio in anticipation of such a fall allows investors not just to avoid catastrophic losses but also to make alpha-returns in the immediate aftermath and beyond.”