anniversary of the 1987 crash

Discussion in 'Stock Market Today' started by StockJock-e, Oct 19, 2017.

  1. StockJock-e

    StockJock-e Brew Master
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    I was too young to remember any of that, but if you are in your 60's you probably have some great stories of that day!

    http://www.bbc.com/news/business-41685002

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    Black Monday 1987: 'Our jaws hit the desk'
    By Joshua Cheetham & Daniele Palumbo

    Thirty years ago investors were stunned as global stock markets collapsed like a chain of dominos.

    The day became known as Black Monday as months and years of share price rises were reversed in a single day of trading.

    One dealer recalls being so stunned "jaws were hitting the desk".

    In August 1987, every major US index hit record highs. But in Autumn of that year investors began selling - and - by October, at a rapid rate.

    Pessimism appeared to be setting in the days running up to Monday 19 October.

    Both the Dow Jones and the S&P 500 had lost more than 9% over the week by the time markets closed on Friday 16 October.

    That loss had Asian investors playing catch-up when they opened for business on Monday.

    And as more markets opened, that selling activity in Asia sparked more selling in Europe, leaving the US playing catch-up with the losses it had originally inspired.

    By the end of the day, the Dow Jones had fallen by more than 20% and the UK's FTSE 100 by 11%.

    It ended up as the steepest crash since 1929.

    "Our mouths were wide open, our jaws were hitting the desk," says Peter Borish, who at the time was second in command at Tudor Investment Corp, a US hedge fund.

    Tudor was one of the few firms to predict the crash and ended up turning a profit by innovative use of computer modelling.

    "Fear always trumps greed and fear was at its maximum point then, so when people are fearful rationality goes out the door and they just start selling."
     
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  2. Stockaholic

    Stockaholic Content Manager

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    wow has it really been 30 years! :eek:

    crazy!

    happy 30yr anniversary everyone! :D
     
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  3. T0rm3nted

    T0rm3nted Moderator
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    Saw the thread title and figured YOU created it. Usually you're on top of things like that!
     
  4. Timbo

    Timbo Active Member

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    I was 22 and more into weed n chicks than my financial future.
     
  5. Stockaholic

    Stockaholic Content Manager

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    dang it, i'm usually on top of these things!

    i nearly forgot to give this thread a bump on this being the 31yr anniversary of the '87 crash.

    happy anniversary everyone! :p
     
  6. Stockaholic

    Stockaholic Content Manager

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    fwiw this coming monday is the anniversary of the 1987 black monday crash :hmm:


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  7. Stockaholic

    Stockaholic Content Manager

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  8. roadtonowhere08

    roadtonowhere08 Well-Known Member

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    Getting some very well deserved recognition, bigbear0083. Congrats! :banana:
     
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  9. The Brontide

    The Brontide Active Member

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  10. bigbear0083

    bigbear0083 Well-Known Member

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    Happy 34 year anniv. today :p
     
  11. StockJock-e

    StockJock-e Brew Master
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    Hitting middle age there pretty fast! :D
     
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  12. bigbear0083

    bigbear0083 Well-Known Member

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    Remembering The 1987 Crash
    Posted on October 19, 2022
    source

    October is known for many things, with incredible market crashes likely being at the top of the list. The Crashes of 1929 and 1987 stand out for many investors and who could forget the selling and volatility of October 2008?

    In honor of the greatest drop in stock market history, we’ll take a closer look at the crash of 1987. On Monday, October 19, 1987, the Dow fell 22.6% for the largest one-day drop in the more than 126-year history of the Dow. To this day it is still the largest percentage drop ever, but it now ranks as the 97th largest point decline.

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    What caused it? The funny thing is that 35 years later I’m not sure everyone can officially agree. Here are some things to know about the Crash of 1987:
    • For starters, stocks were in the midst of a huge run off the August 1982 lows, with the Dow up more than 40% for the year in early August 1987, amounting to one stretched rubber band.
    • Then consider Alan Greenspan took over the Federal Reserve Bank in August and to cool things off, was hiking rates. Talk about a bad time to start a new job.
    • Program trading was blamed as well, with Louis Rukeyser the Friday night before the crash pointing out issues with program trading. (Simply put, program trading meant stocks were liquidated as certain levels were hit. It worked fine until stocks began to fall more than ever expected, leading to more selling as prices dropped.)
    • Currency markets were on edge as well, as the U.S. wanted Germany to weaken their currency due to the latest trade deficit numbers. The back and forth was all over the media, as recently as the Sunday before the crash.
    • The selling started earlier actually, as the three days before the crash the Dow was down 3.8%, 2.4%, and 4.6%, making it safe to say investors were on edge all weekend for how things might open on Monday morning.
    In the end, the Dow fell a then record 508 points for a 22.6% one-day decline, topping the previous largest one-day decline of 20.5% in December 1914, when the Dow began trading after being halted for nearly five months due to World War I.

    Something most investors might not know is that stocks still finished the year in the green in 1987. Sure, they were well off their highs and the huge volatility was too much for many investors to handle, but if all you saw was the yearly gain of 2% in 1987, you’d think it was a boring year!

    We might not know what caused the Crash of 1987, but we also still don’t know what caused the Flash Crash either. The Flash Crash occurred in May 2010 (when many stocks and ETFs lost huge values, only to regain the losses by the close for one wild few minutes of trading). The truth is with more and more computers involved, we are due to get big swings periodically. March 2020 saw some of the largest swings of all time (seven of the 10 largest point declines ever took place during this year), putting major stress on the system.

    Today we do have circuit breakers in place to help calm nerves should we see another major decline in prices, but it’ll take a huge drop for those to kick in.

    In the end, volatility is the price of admission and although we think we are much closer to a major low in stocks currently, should we all have the privilege to invest long enough, there will likely be another day stocks fall significantly. And when they do, just remember that the Dow started trading on May 24, 1896, and it has seen wars, famines, pandemics, inflation, deflation, booms and busts, and more. Yet, it has always eventually come back to new highs and we don’t think this time will be any different.
     
  13. Spud

    Spud Active Member

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    I remember it very well. It was not a good time at all. I hope and pray we never see it again.
     

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