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 didn’t 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...