<p><img src="https://www.crushthestreet.com/wp-content/uploads/2018/10/wall-street-blackandwhite-360x240.jpg" /></p><div id="et-boc" class="et-boc"> <div id="et_builder_outer_content" class="et_builder_outer_content"> <div class="et_builder_inner_content et_pb_gutters3"><div class="et_pb_section et_pb_section_1 et_section_regular et_section_transparent"> <div class="et_pb_row et_pb_row_2"> <div class="et_pb_column et_pb_column_4_4 et_pb_column_4 et_pb_css_mix_blend_mode_passthrough et-last-child"> <div class="et_pb_module et_pb_text et_pb_text_1 et_pb_bg_layout_light et_pb_text_align_left"> <div class="et_pb_text_inner"> <p><strong class="highlight">October 19, 1987: if you’re old enough to remember this day, then you will likely never forget it. It’s the day the stock market collapsed, but it wasn’t just <em>any</em> collapse. On that fateful day, the Dow Jones Industrial Average plunged 22.6%, and as it turns out, this was the biggest single-day percentage loss in U.S. stock-market history.</strong></p><p>No day has been worse, before or since – which seems untrue, given the horror show of the Great Depression and the wealth destruction of the Great Recession. However, even though the Great Depression had a greater cumulative impact, its worst day (October 28, 1929 – also called Black Monday, interestingly enough) “only” saw the Dow Jones shed 12.82%; and the Great Recession didn’t have anything even close to that single-day loss.</p> </div> </div> <div class="et_pb_module et_pb_image et_pb_image_0 et_always_center_on_mobile"> <span class="et_pb_image_wrap"><img src="https://www.crushthestreet.com/wp-content/uploads/2018/10/image001.jpg" alt=""></span> </div><div class="et_pb_module et_pb_text et_pb_text_2 et_pb_bg_layout_light et_pb_text_align_left"> <div class="et_pb_text_inner"> <p style="text-align: center;"><em>Courtesy of dailybreeze.com</em></p><p>Today, even with the memory of 2008, it’s still hard to imagine the bedlam that took place on Black Monday in 1987, when the Dow finally ended the seemingly endless trading day at 1,738.74, down 508 points. To give you a modern-day perspective on this, a crash like that today would be the equivalent of the Dow Jones losing 5,000 points in one day.</p> </div> </div> </div> </div> <div id="article_cta_mid" class="et_pb_row et_pb_row_4 article_cta"> <div class="et_pb_column et_pb_column_4_4 et_pb_column_5 et_pb_css_mix_blend_mode_passthrough et-last-child"> <div class="et_pb_module et_pb_text et_pb_text_3 et_pb_bg_layout_dark et_pb_text_align_center"> <div class="et_pb_text_inner"> <h2>93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.</h2> </div> </div> <div class="et_pb_module et_pb_text et_pb_text_4 et_pb_bg_layout_dark et_pb_text_align_center"> <div class="et_pb_text_inner"> <p style="text-align: center;">Wealth Education and Investment Principles Are Hidden From Public Database On Purpose!</p><p style="text-align: center;">Build The Knowledge Base To Set Yourself Up For A Wealthy Retirement and Leverage The Relationships We Are Forming With Proven Small-Cap Management Teams To Hit Grand-Slams!</p> </div> </div> <div class="et_pb_module et_pb_code et_pb_code_1"> <div class="et_pb_code_inner"> </div> </div> </div> </div> <div class="et_pb_row et_pb_row_5"> <div class="et_pb_column et_pb_column_4_4 et_pb_column_6 et_pb_css_mix_blend_mode_passthrough et-last-child"> <div class="et_pb_module et_pb_text et_pb_text_5 et_pb_bg_layout_light et_pb_text_align_left"> <div class="et_pb_text_inner"> <p><strong class="highlight">What caused the panic of 1987? We could point to a number of factors: increasing tensions in the Persian Gulf; computerized trading, the implications of which we didn’t fully understand yet; the fear of higher interest rates (sound familiar?), a multi-year bull market without a meaningful pullback (sound <em>very</em> familiar?), and weakness in Asian markets (sound <em>very</em>, <em>very</em> familiar…?).</strong></p><p>It seems like investors haven’t learned much since that time, as we’re facing the same issues today: heightened geopolitical tensions, algorithmic trading, interest-rate fears, Asian market weakness, and an unchecked multi-year bull market. The only difference between 1987 and 2018 is that today we have what the SEC calls “circuit breakers” in place.</p> </div> </div> <div class="et_pb_module et_pb_image et_pb_image_1 et_always_center_on_mobile"> <span class="et_pb_image_wrap"><img src="https://www.crushthestreet.com/wp-content/uploads/2018/10/image003.jpg" alt=""></span> </div><div class="et_pb_module et_pb_text et_pb_text_6 et_pb_bg_layout_light et_pb_text_align_left"> <div class="et_pb_text_inner"> <p style="text-align: center;"><em>Courtesy of <a href="https://www.quora.com/What-is-a-circuit-in-the-stock-market-And-how-it-is-broken">quora.com</a></em></p><p>The circuit-breaker rules are a little more involved than this, but in a simplified version, the SEC will halt market trading for a little while if the S&P 500, during a particular market day, falls by 10%, and then again at 15%, and then again at 20% – up to three possible trading halts in a single day.</p><p><strong class="highlight">Therefore, it’s still entirely possible for the U.S. stock market to lose 20% in a day, much like it did on Black Monday in 1987. Sure, there would be a couple of halts during the day, but do you <em>really</em> think that would stop the panic?</strong></p><p>Today’s algorithms are much more prevalent than they were in 1987, and they’re programmed to make trades when certain levels are reached. If the S&P 500 fell 15% in a day, untold numbers of computers (and humans too) would trigger their stop-losses and sell like there’s no tomorrow.</p><p>In other words, -15% would inevitably lead to -20%, irrespective of temporary trading halts. And that’s just in a single trading day: SEC halts wouldn’t carry over to the next trading day, when the bloodshed would start all over again from 0%.</p> </div> </div> <div class="et_pb_module et_pb_image et_pb_image_2 et_always_center_on_mobile"> <span class="et_pb_image_wrap"><img src="https://www.crushthestreet.com/wp-content/uploads/2018/10/image004.jpg" alt=""></span> </div><div class="et_pb_module et_pb_text et_pb_text_7 et_pb_bg_layout_light et_pb_text_align_left"> <div class="et_pb_text_inner"> <p style="text-align: center;"><em>Courtesy of businessinsider.com</em></p><p>What we <em>really</em> need is a circuit breaker on the American asset bubble, real-estate bubble, inflation, Fed manipulation of the markets… Only when real reform starts to happen will we have any hope of achieving a market that resembles reality – until then, prepare for more Black Mondays ahead.</p> </div> </div> </div> </div> </div> </div> </div> </div><p>Original Article Available <a href="https://www.crushthestreet.com/articles/31-years-after-black-monday-have-we-really-learned-anything" target="_blank">HERE</a></p>