Nineteen years ago we saw the second largest ever single day percentage drop in the Dow Jones Industrial Average. Remembering the period leading up to that day is not exactly comforting. Need a reminder? Years of rapid growth had led to fears of a recession, which were then tempered by talks of a soft-landing. Inflation fears were fading. And then it happened. We were young then, very young. Our most vivid memory of October 19 is of the father of one of our friends who had lost a lot of money that day, seen his savings wiped out. He didn’t exactly defenstrate himself but his eyes looked as if he might have already died.
Of course, after a few days, weeks or years, it became clear that Black Monday, 1987 was no Black Thursday, 1929. We didn’t plummet into a depression. The market roared back, and lots of folks made their reputations buying into Black Monday. Oddly, we haven’t seen much by way of reminiscing about Black Monday today. Is Wall Street’s institutional memory just not quite that long? Does no one want to think about it? Or is it just not relevant anymore? Feel free to leave your thoughts, comments or memories in comments below.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
Defenestrate? as in to jump out of a window? nice.
I was in the 6th grade when it happened and I remember it vividly. I grew up in a typical small new england town where the fisherman’s kids grew up alongside the doctors’. That day it was clear who was who. Kids were actually taken out of school that afternoon, including my “boyfriend” Chris. The teachers kept saying things about the next Great Depression. I remember thinking they were crazy old bats and wanted to know for myself what really happened.
When I called Chris that night to find out what was wrong, he said that his dad was yelling and screaming in his parents’ bedroom and his mom said that their family was going to be poor from now on. “I didn’t realize you guys were rich.” I ventured, stupidly.
“well,” Chris sobbed, “we were. And now I’m not even going to be able to go to college, forget about Exeter.”
I went downstairs for dinner and tried to talk to my parents about it…they were totally clueless, and acting strangely self-righteous. (Being social-do-gooders, they were not big investors.) I asked them, “well, if this IS like the Great Depression, could I go buy some stocks now that they aren’t worth very much and maybe the prices will go up again later? Like all those stocks in 1929 went up again, right, Dad? So maybe that will happen again! It’s like buying things on sale, right? Right?”
“Yes, exactly. Pass the mashed potatoes, please.”
Black Monday was my first realization that some people knew how to make money, and some people didn’t know, or care, what made markets move. It seemed immediately like an opportunity to gain knowledge about something that not everyone in the world knew about yet, something that was a mystery to some people, but not everyone, not the smart ones. That day is unquestionably one of the reasons I was always attracted to this business. No shit.
There’s my reminiscence.