Skip to comments.Black Monday: What Happened?
Posted on 10/19/2007 8:56:35 AM PDT by dakine
On Oct. 19, 1987 Black Monday the Dow Jones Industrial Average plunged 508.32 points, or about 22.6%, and closed at 1,738.40. The decline almost doubled the 12.8% loss in the 1929 crash.
By mid-1988, the market had recovered and, in general, the U.S. economy had shrugged off the sharp downturn. In contrast, the U.S. economy nose-dived after the 1929 crash and didnt revive until the nation rearmed to fight World War II.
The difference: Quick action by the Federal Reserve.
Black Monday was the result of a perfect storm of diverse factors, says Irv DeGraw, a finance professor at St. Petersburg College in Florida. The market had enjoyed a big run, but was getting shaky, interest rates were rising, new anti-takeover legislation was pending in Congress and there was a large amount of margin buying. In addition, there were two relatively new computerized trading strategies portfolio insurance and program trading and both were widespread.
(Excerpt) Read more at minyanville.com ...
IIRC, often overlooked or not mentioned is that the market closed up for the full year 1987 in spite of Black Monday's decline.
I remember Reagan coming out and saying everything would be fine. He was right. It was one great buying opportunity.
Is there such a thing as “Fed calls?”
Wasn’t some of that event later blamed on the electronic age progress in programed trading and the impact of the increased speed of electronic orders causing a domino effect?
The sow-the-discord media is bringing this up now, because???
20th “anniversary”.... I remember it well...
As I recall, Tuesday morning was the darkest moment. Around lunch-time a judicious large trade in the MMI futures kick-started the cash market in stocks.
Those were some brutal days.