DJIA Drop October 19, 1987
DJIA Drop October 19, 1987



22 years ago today the nation suffered a horrible finanical set-back known as Black Monday.  The Dow Jones Industrial Average fell a whopping 22.61% in just one day.  Recovery would not be quick or easy.  The Dow dropped 508 points to 1738.7.


The drop started in Hong Kong and moved west through the international date line.  China was hit the hardest and things from there just raced around the world.  According to that great source, Wikipedia:

By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, Spain 31%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%. New Zealand’s market was hit especially hard, falling about 60% from its 1987 peak, and taking several years to recover.[2] (The terms Black Monday and Black Tuesday are also applied to October 28 and 29, 1929, which occurred after Black Thursday on October 24, which started the Stock Market Crash of 1929. In Australia and New Zealand the 1987 crash is also referred to as Black Tuesday because of the timezone difference.)


It is still pretty much a mystery why things happened as they did October 19, 1987. However, financial experts have named leverage as the cause of both crashes, 1987 and 2008.  However, in 87  bank leverage was given as the troublemaker and in 2008,  derivative leverage was given as the culprit.   Insurance derivatives were also mentioned in 1987. 

Actually, there are as many theories out there as there are mouths to utter them.  There are no conclusions.  However, one of the immediate responses was for the federal reserve to pump liquidity into the system.  33 nations met in December to discuss the problem.  They predicted that the world economy could be as bad at in the 30’s for the next few years.  Obviously, it wasn’t.

However, still fresh on our minds, is the day we watched the Dow drop more than 800   points in one day  in what appeared to be a free fall.  Overall, in Black Week, as the crash of 2008 has become known as, the Dow lost  1,874 points in ne week.  Black Week  began October 6, 2008.

So have we survived it?  Are things getting back to normal?  While it hasn’t been officially named a bull market, stocks have done well since March.  It is said that the stock market runs about 6 months ahead of the rest of the economy.  That means things should be looking up, right?  Right?  RIGHT?  Somebody say RIGHT back, please!

7 Thoughts to “Black Monday Anniversary”

  1. Second-Alamo

    R-I-G-H-T-! (with fingers crossed)

  2. Gainesville Resident

    The market is doing pretty well lately. Just like we recovered from Black Monday, and from the market crash after 9-11, we’ll recover from this one too. In fact, there was very good money to be made if you took advantage of the cheap stock prices late last year and early this year. There could even still be good money to be made now assuming the market climbs above 10,000 as the economy recovers.

  3. Moon-howler

    I understand there is still a lot of money to be made out there. Lots of people haven’t jumped in yet because of fear.

    How are things down south, GR?

  4. Moon-howler

    Second Alamo, I am a believer so I am hoping we are all R-I-G-H-T.

  5. Moon-howler

    Things off to a slow but positive start. Let’s hope it sustains!

  6. Moon-howler

    So far, so good. There were a few hiccups in the beginning.

    Apple’s earnings report is this afternoon after 4 pm. Apple sets a standard for tech stocks. I have great expectations!

    There are almost a million houses in the foreclosure process right now. More foreclosures this year than last. The reason? People losing jobs and house prices dropping. Where? CA, NV, FL seem to be the worst hit.

  7. Gainesville Resident

    Some more earnings reports came out this morning that were good – Apple, Texas Instruments, and Caterpillar. Stock market looks good this morning so far in pre-market trading. ISRG announces earnings after the market close this evening – hard to say which way it will go – should be interesting. Stock will either hold its recent huge gains or drop if earnings aren’t as good as estimates.

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