by James Rickards
Daily Reckoning
The Aug. 5 mini-crash was a potent reminder to investors that stock markets aren’t a one-way street.
It wasn’t the end of the world. Market indexes down 3.0% in a day is a big deal, but it bears no comparison to October 1929 when the stock market fell 21% over two days or October 1987 when the stock market fell 21% in one day.
What caused the Aug. 5 mini-crash? There are several suspects. The employment report issued on Friday, Aug. 2 showed a decline in job creation and an uptick in the unemployment rate.
Neither move was extreme but it got the markets’ attention. In fact, the Aug. 5 decline actually started on Aug. 2, giving the two-day decline a greater impact.