1989 stock market crash
Videos
On October 19, 1987, global markets experienced one of the most dramatic single-day crashes in history: the Dow Jones dropped 22%.
Panic spread across trading floors, screens flashed red, and chaos ruled the markets. Investors and traders alike were caught off guard, as risk models back then offered little protection against a crash of this magnitude.
Yet, despite the unprecedented move, the market eventually recovered, as it always has, reminding us that volatility is part of the trading landscape.
Today, technology and AI tools aim to help traders spot early warning signs, the cracks in the market before they escalate into full-blown panic.
It’s sobering to look back at Black Monday and realize how quickly sentiment and fear can dominate.
Are there any traders here who actually experienced Black Monday firsthand? How did it shape your approach to risk and trading afterward?
"After having lost some 10 percent of its value the week before, the Dow Jones Industrial Index fell 508 points, or 22.6 percent, on Black Monday, wiping out $500 billion in what was, at that time, the biggest-ever one-day stock-market loss to date."
It took roughly two years for the DOW to recover to pre-Oct levels.
The regulators has since introduced crash protection via circuit breakers, so that trading stops if it were to plunge. Even during the great financial crisis in 2008, the largest single one day fall was 8%.
How prepared are you for another Black Monday if it were to occur ?
Most of us will probably shrug our shoulders and carry on,
the smarter ones amongst us will probably deploy the cash that has been sitting on the sidelines.
Those who borrowed money could face a margin call.
Those who shorted the market are probably laughing all the way to the bank.
By the way, this is a great video capturing the mood of that week.
https://www.youtube.com/watch?v=XFn1G2goDQw
Best quote: "I am too old to cry but it hurts too much to laugh"
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End Dec 31 1986, DJIA 1,895.9
Peak August 25th 1987 DIJIA 2722.42
End October 19th 1987 DJIA 1738.40%
End Dec 31 1987, DJIA 1938.83
Gain from Jan to Sep 1987: 32.9%
Loss from Peak 1987 to End of Black Monday: -36%
Loss from single day Black Monday: -22.61%
No.1 Movie at the box office during that week: Fatal Attraction