For the past 5 years Wall St. had been in the midst of a bull market. However, after reaching its all-time high at the end of this summer the market began heading south. Then on the afternoon of Monday, Oct. 19, 1987 a number of friends called me at work to tell me that Wall St. was experiencing a meltdown. Stock prices had plunged and the market was forced to close early because the huge volume of selling was just too great for the trading floor to handle. At the closing bell the Dow had plummeted 508 points, a decline of nearly 23% (this was on top of 235 points that been lost the previous week.) This % decline was nearly twice the decline back on Oct. 28, 1929 on the eve of the Great Depression.
I was 30 years old at the time and had been kicking myself for not investing during this bull market (I didn't open my first mutual fund until the following year). However, on the upside, since I didn't have much at stake (as was the case with most of my peers) I wasn't shaken like many of my older colleagues were. My boyfriend at the time was very concerned. He was chief counsel at EF Hutton, a brokerage that had been under investigation for various financial improprieties. Today's market collapse quickened its demise and in less than 2 months it merged with Shearson Lehman/American Express. (However, he did keep his job after the merger.)
From work I went home and tuned to the CBS Evening News to try to grasp the enormity of it all. Gosh, how much further might this collapse go? This was cause for anxiety as Tuesday dawned. Trading that day was characterized by wild swings, so much that the market closed for a brief time at mid-day in hopes of regaining its bearings. Thankfully, the market rebounded in the afternoon and half of Monday's losses were regained in the next few trading days. This was in stark contrast to the Black Mondays of 1929 and last year which presaged the beginning of grim economic times. By contrast, this was merely a market "correction".
Although the number of points lost on this day in 1987 was 270 fewer than last year's 777-point plunge on Sept. 29 the % change was much greater because it was off a much smaller base (back then the Dow was only in the 2,000's compared to 11,000+ in 2008). By comparison, last year's one-day decline was a drop of "only" 7%. (A behind-the-scenes account of what transpired on Oct. 19-20, written by a former reporter for the Wall St. Journal, is provided in the book Black Monday: The Stock Market Catastrophe of Oct. 19, 1987).
Somewhat lost in the week's financial turmoil was the acrimonious confirmation hearings for President Bush's choice for the Supreme Court, Robert Bork. At the end of the week the U.S. Senate would vote down his nomination by a 58-42 vote.
Remembered by Rob Frydlewicz