It would be hard to overstate the impact of the past 2 months on those who work and invest in the stock market, Ben Steverman writes for BusinessWeek. The crisis has surely spurred many investors to reevaluate the risks, but is it a game-changer, historically speaking? Although it was steep, the Dow’s October decline of 14.1% is smaller than 15 other months on record.
Indeed, the Dow’s losses for all of 2008 have yet to surpass the 30.7% fall of September 1931. Some worry the stock bubble has popped, and that equities will never return to overvalued prices. But experts disagree: “The stock market is reacting to the bad news in the banking sector and to the economy,” not an overvaluation of stocks themselves, says one financial historian.