History can be a painful teacher.
——
On Black Monday in 1987, I was working as a young stockbroker at Kidder Peabody & Company and had the chore of reporting markets for a local radio station that day. 50,000 Watts from 1250 AM WTAE in Pittsburgh echoed with my voice recounting the losses of that bleak day.
Black Monday refers to the stock market crash that occurred on October 19, 1987. It was one of the most significant single-day stock market drops in history. On that day, the Dow Jones Industrial Average (DJIA) fell by a staggering 22.6%, which remains the largest one-day percentage loss in the history of the DJIA.
The causes of Black Monday were complex and debated among economists and financial experts. Some contributing factors included computerized trading, program trading, and concerns about rising interest rates. The crash had a global impact, leading to stock market declines in other countries.
The event had a lasting impact on financial markets, leading to changes in trading practices and the implementation of circuit breakers to halt trading during extreme market volatility. It also served as a reminder of the potential for rapid and severe market fluctuations.
October can be tough on the stock market. Known as the “October Effect,” it is the perception that stocks tend to decline during October. It is considered by many to be an investor psychological hurdle rather than a statistic phenomenon. In any case, it is something that can have real outcomes and worth being aware of should markets start dramatic price swings. From my person experience, I can assure you that it felt very real.
Courtesy of Investopedia, here are some of the largest historical crashes that happened during this month:
Black Tuesday (1929)
Black Thursday (1929)
Black Monday (1929)
Black Monday (1987)
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