Greed is good, or is crowd greed better?

Believe me this Friday, Friday the 19th of October is going to be anything but quiet.

Why do I say that?

Well it could be that in the back of many traders minds is the fact that 20 years ago to the day ... October 19th, 1987 the stock market crashed 23% and sent shock waves through the economy and scared the heck out of millions of investors.

Have things really changed since that horrendous day back in '87?

Yes and no. Here's how things have changed in my opinion.

1. Exchange technology is much more powerful and sophisticated than it was back in '87. That's a good thing.

2. More traders are using the internet to track and trade the market. That's a good and bad thing. The exchange maybe able to handle the orders, but can individual brokerage company website handle a crisis/flood of orders. My guess is no.

3. Human nature has not changed since the beginning of time. We still make war, reproduce, make love, get angry and a host of other personality traits like fear and greed. This is a plus and a negative. for the market.

Not only did we see a crash in the market in 1987 we also witnessed the premiere of the movie "Wall Street." Who remembers Gordon Geckko the lead character of the movie and his now famous "Greed is good" speech? Watch Gordon Gekko's 1987 speech here:

In 1929 and again in 1987 economics and commonsense valuations went out the window as traders investors scrambled to exit the market at any price. The same can happen today despite all our high tech toys and trading tools.

It's all overtaken by the one constant that has remained in the market and throughout history, and that is crowd and human behaviour. I read this book many years ago and its now considered a classic on this subject of crowd behavior. It is titled "Extra Ordinary Popular Delusions and the Madness of Crowds". I strongly recommend that you read this book, as it puts the history of crowd behavior, and market bubbles in perspective.

This Friday, get your helmet and padding on because my guess is that it's going to be a bumpy ride.

Be prepared for any emergency.

Good luck,