Index Investing News
Friday, May 30, 2025
No Result
View All Result
  • Login
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
No Result
View All Result
Index Investing News
No Result
View All Result

History of Black Monday – The Big Picture

by Index Investing News
October 11, 2022
in Economy
Reading Time: 4 mins read
A A
0
Home Economy
Share on FacebookShare on Twitter


 

 

Imagine the impact of markets losing a ~quarter of their value in one trading session.

That was what happened 35 years ago next week: October 19th, Black Monday a/k/a the 1987 crash.

If you are a relatively young investor, you may be unfamiliar with what happened that day or why. The 87 crash impacted many market-related elements. We can trace lots of today’s market structure to that event, and the changes it wrought subsequently.

Consensus over the ensuing years has focused on several key drivers:

1. Overheated market: +42.5% for the first 3 quarters of the year;
2. Portfolio Insurance: Created a vicious feedback loop and added to downward pressure;
3. Index Futures Trading; Relatively new (1982) product allowed broad and leveraged exposure;
4. NYSE Infrastructure: Regarded as “broken,” overwhelmed by rising volumes, in desperate need of upgrades.

Like most big events, it was likely caused by some combination of factors — the four above are the leading candidates. They created a unique set of circumstances that led to the biggest one-day percentage drop in market history – a 22% collapse for the Dow Jones Industrial Average.

A more difficult-to-quantify factor was psychology: The 1966-1982 secular bear market was still fresh in traders’ memories.1 Many doubted that the new bull market, dated to 1982, had staying power.

Even still, the Dow finished 1987 up 2.3%. For the full calendar year, the S&P 500 total return was +5.8%; the Nasdaq 100 lost -5.3%.

It was a unique but highly instructive era; for anyone who wants to dive deeper into history, Tim Metz’s Black Monday: The Catastrophe of October 19, 1987 … and Beyond — highly recommended!

 

 

Previously:
Where Were You On Black Monday? (October 19, 2015)

25th Anniversary Black Monday 1987 Crash (October 19, 2012)

Art Cashin: Black Monday, An Unforgettable Single Day (October 19, 2012)

 

________________
1. It was a volatile 17-year period with numerous rallies and selloffs. Markets were flat to modestly higher over that 16-year period. For the S&P500, the nominal return on investment was 54.6%. However, in real (inflation-adjusted) terms, they look quite different: Add in the effect of rising CPI and your returns plummet to -49.7%, or down -3.96% per year.

That is without dividends; including reinvested dividends and the returns over that period were 206% — but the inflation-adjusted returns were just 2.74%.

 

 

 

CPI and Dividend calculations via DQYDJ:

 

Print Friendly, PDF & Email



Source link

Tags: BigBlackHistoryMondayPicture
ShareTweetShareShare
Previous Post

Ethereum Could See A 15% Drop This Week

Next Post

HOKA Men’s Mach 4 Running Shoes as low as $74.87!

Related Posts

BoE governor urges UK authorities to hunt nearer commerce ties with the EU

BoE governor urges UK authorities to hunt nearer commerce ties with the EU

by Index Investing News
May 29, 2025
0

Unlock the Editor’s Digest without spending a dimeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly...

Why Should People Pay Tariffs?

Why Should People Pay Tariffs?

by Index Investing News
May 29, 2025
0

A serious assertion by the Trump Administration is that tariffs are paid for by foreigners.  And, certainly, underneath very particular...

The Knowledge on Lively Massive Cap Underperformance

The Knowledge on Lively Massive Cap Underperformance

by Index Investing News
May 29, 2025
0

  Generally, the info is so overwhelming that little commentary is required. From SPIVA, right here is the info on...

Trump tariff ruling dangers slowing down supply of UK commerce deal

Trump tariff ruling dangers slowing down supply of UK commerce deal

by Index Investing News
May 29, 2025
0

Unlock the White Home Watch publication without spending a dimeYour information to what Trump’s second time period means for Washington,...

US commerce court docket says Donald Trump’s world tariffs are unlawful

US commerce court docket says Donald Trump’s world tariffs are unlawful

by Index Investing News
May 29, 2025
0

Unlock the White Home Watch publication free of chargeYour information to what Trump’s second time period means for Washington, enterprise...

Next Post
HOKA Men’s Mach 4 Running Shoes as low as .87!

HOKA Men's Mach 4 Running Shoes as low as $74.87!

Shoreline’s Highland Ice Arena to close this week

Shoreline’s Highland Ice Arena to close this week

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED

Ryan Fitzpatrick names ‘giant red flag’ with Zach Wilson

Ryan Fitzpatrick names ‘giant red flag’ with Zach Wilson

November 2, 2022
O’Shae Sibley Wasn’t Interested in Toning Himself Down

O’Shae Sibley Wasn’t Interested in Toning Himself Down

August 7, 2023
Families of PS752 victims push for government action against Iran on anniversary of deadly crash

Families of PS752 victims push for government action against Iran on anniversary of deadly crash

January 7, 2024
7 Solid Prayers For Financial Breakthrough

7 Solid Prayers For Financial Breakthrough

August 25, 2023
BTC Regains K; ETH, XRP, SOL Pump

BTC Regains $84K; ETH, XRP, SOL Pump

March 15, 2025
Bitcoin Efficiently Retests Yearly Excessive – All-Time Excessive In Sight Subsequent Week

Bitcoin Efficiently Retests Yearly Excessive – All-Time Excessive In Sight Subsequent Week

January 19, 2025
Whale Moves Huge Amount Of Shiba Inu Tokens As SHIB Unveils To Metaverse

Whale Moves Huge Amount Of Shiba Inu Tokens As SHIB Unveils To Metaverse

January 15, 2023
India’s January 2025 offers surge 11% in quantity however drop 42% in worth

India’s January 2025 offers surge 11% in quantity however drop 42% in worth

February 11, 2025
Index Investing News

Get the latest news and follow the coverage of Investing, World News, Stocks, Market Analysis, Business & Financial News, and more from the top trusted sources.

  • 1717575246.7
  • Browse the latest news about investing and more
  • Contact us
  • Cookie Privacy Policy
  • Disclaimer
  • DMCA
  • Privacy Policy
  • Terms and Conditions
  • xtw18387b488

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In