Actually prices didn't gap that much. The vast majority of the decline took place during trading hours and went tick by tick. More evidence that she is full of it.
Which is why, as I noted in my first post in this thread, I do not rely on this number in my day to day trading. However, it theoretically provides an indication of "value." I was merely pointing out that there is no particular aggregate untapped value in evidence based on historical norms. Was she not referring to an "underpriced" market? My earlier posts can simply be summarized as "Where?"
It's the human nature for people to want to have to believe that there are bright people residing in lofty offices in the financial capitals of the world who "must" have some ability, to whatever degree, to predict the future price action of equity markets. They just "must,' even though history clearly establishes, as Benjamin Graham so eloquently and succinctly stated, that the ONLY thing that anyone, no matter how much education or how bright or how on top of current events they are, can know is that future prices of equities "will fluctuate." Some people like to point out that the editorial panel at the Wall Street Journal do better, on average, picking 'winning stock' by throwing darts at the ticker section of their paper, taped to the wall, each year, than literally nearly every analyst out there. Abby Joesph Cohen and those like her get paid what she does because of who she knows, where she works, and because of a tragic, inherently flawed and desperate desire by individuals to want to believe that there are people who can see the future. The marketing, political power and orgiastic nepotism of Wall Street, feeds the machine that leads to the fees. Give almost anyone here access to managing the money of a few pension funds, with maybe a couple billion dollars under their control, and with conservative and minimally rational investing methods, most will at least match the gains of the overall indexes, before fees. That is a very sad reality (I believe) that demonstrates just how bad of a job the professional money management industry does - because the majority of these people fail to even match the performance of the indexes, which is why Vanguard came to be. The following is just my opinion, but I believe that Bogle has proven that what I am parroting is factually true. The empirical data supports my claims. I just finished reading 'Unconventional Success: A Fundamental Approach to Personal Investment' by David F. Swenson, who manages the Yale Endowment Fund. It is an excellent book and only reinforces my opinions on this matter. The average investor, with average intelligence, can do much better managing their own money, because the fee structure and management techniques that "professionals" impose on their clients represent a wealth-devouring cancer, that drag down what is already sub-typical performance.
Wasn't '87 the start of one of the longest bull markets in history? Surely we should be hoping that it is a repeat 1987.