NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.Among the posts this past week were entries about stock market crashes and the Fed's Beige Book. Please click here for information about subscribing to RealMoney Pro.
Putting Crashes Into Perspective
Originally published on Friday, Oct. 18 at 5:58 p.m. EDT. One retest of the opening lows one hour into the day, and that was about all the threat bears could muster. I still get the feeling that too many people operate with a bomb-shelter mentality -- the fear of getting hit by a "crash." Could it happen? Absolutely, but in my trading, the "flash crash" was as close as I'm come to experiencing a crash. It is interesting though to look at the single worst days in the history of the Dow Jones, courtesy of The Wall Street Journal. Since the crash of 1987, in which the Dow dropped more than 22% in a single day, there has not been a single-day drop exceeding 8%. In fact, there have been five down days of 7%-8% since 2000, which means there is about a 0.15% chance it will happen. Since 1987, a drop of 7% or more has occurred seven times, or about a 0.10% it will happen.