The year 1987 made Paul Tudor Jones famous as the man who had predicted the crash. Jones had started his company, Tudor Investment, three years earlier after years as a commodity pit trader. In the summer of 1987, he was profiled by Barron’s and discussed his bearish outlook on the US stock market. Jones’s thesis rested on two key ideas. First, he used an "analogue model" his research director, Peter Borish, had developed. The model was an overlay chart of the stock markets of the 1920s and 1980s and showed an "astonishingly robust" correlation. Jones also pointed to a chart showing the Dow Jones Industrial’s deviation from its trend. Prior spikes had occurred in 1836, 1929, and 1966 — all followed by bear markets. He observed that there was exuberance in other markets (for example, in fine art), and noted some troubling debt and economic statistics. "I feel that you have to start getting short now because the panic, when it comes, will be so violent and sudden that the longs won’t ...
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