1987

The market has not only crashed once in history, but a few of the crashes, or slides, have had great impacts on the markets. Warning signs are known with hindsight. History can forewarn us all of the perils that might come when certain events happened. These ideas should have been going around your head as you've been reading this blog, and I'm sure that you've done a little investigation on your own.

Here is a comparison to 1987, another black year for the U.S. economy.

This Day of Reckoning can not be far away, and a sudden reversal of confidence by foreign investors could crash the US stock market for reasons very similar to what happened in 1987: equities riding too high on a cheap dollar.

However, the level of leverage in the capital markets is generally acknowledged to be very much higher than in 1987, beyond even what produced the Wall Street crash of 1929. So the fireworks, when they start, will truly light up the sky.

Leading the leverage boom is the hedge funds followed by the private equity funds. Nobody is exactly sure how much leverage is in the system from the derivative structures erected by these financiers but it is a house of cards that will come crashing down in a stock market correction.