Talk:Black Monday (1987)

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Untitled[edit]

Regarding the discussion of technical analysis predictions, for what it is worth, I very well do remember two analysts, independent of each other, in August 1987, publicly and specifically calling a market top and advising a soon-to-be bear market. I also remember very well during that August, September, and October the classic bubble behavior of investors and the media trumpeting the raging Dow, not unlike and very smilar to late 1999 and early 2000.

Also, the term "crash" is (perhaps unfortunately) defined as a percentage drop---but without market context. In the big picture, ignoring percentage drop, Black Monday and the market drop of October 1987 was really only a cyclical bear market in the context of the secular bull market that started in March 1982 and ended in March 2000. Black Monday was really an excellent buying opportunity for mid-term and long-term investors and those investors who understood the principle of long valuation waves. A "crash" of more than 20% following a bubble AT THE END of a secular bull market AT THE END of a long valuation wave is devastating, e.g., March 2000 to March 2003. A "crash" of more than 20% DURING a secular bull market DURING ass long valuation wave is when stocks are on sale, which was true of October 1987.


This article looks like it could be a copyvio. Lope, did you copy & paste this from somewhere else on the Internet? Can someone verify this is not a copyvio? —Frecklefoot 18:32, 8 Sep 2003 (UTC)

Also a distinction should be made between Black Monday(Malta) and Black Monday

-nope, those are my own words. If it looks similiar to the 1987 Stock Market Crash website its only because that's a site I've created myself.


The article says: "Many have noted that no major news or events occurred prior to the Monday of the crash, the decline seeming to have come from nowhere." But what about the Great Storm of 1987, three days earlier? Edward 23:38, 2005 May 16 (UTC)

I have never seen a contemporaneous account that said that this storm was on the minds of the traders during the crash. (Nor any post facto accounts either). Chris vLS 21:22, 17 May 2005 (UTC)
Few of the traders could get to work on Friday morning and those that did were unable to trade normally because of problems with the computers, trades had to be made by phone. But then again, this was just London, the crash started elsewhere. Edward 23:31, 2005 May 17 (UTC)

Don't think an isolated storm in Great Britain couldn't have caused a worldwide crash that hit countries as far away as Australia and Japan. Large storms don't have huge effects on stock markets. The typhoon that hit South East Asia last year is an example - world stock markets hardly budged. Commodities did, but not stocks.

The storm may not have caused the world wide crash, however the the reaction of stock brokers to the storm must have had an impact There were other factors which explain why the world economy was fragile at the time, however the crash needed an event to trigger it and there has never been a convincing smoking gun. The typhoon in South East Asia had no impact on major financial institutions so how could it affect the world economy. In fact these days trading can continue seemlessly even if two important buildings in the heart of Ne York are physically destroyed. This was not the case in 1987. The City of London still relied heavily of face to face contact. They did not have lap top computers and they still used the papers they held in the filing cabinets. The storm struck the worst place, from an economic perspective, possible in England - London. It also struck on the worst possible day, Friday, which prevented traders from closing their positions for 3 days. By the time they got to work on Monday it was too late.

The City of London should not be underestimated, it is still very much a major player in the world economy, it is the ancestral home of the "invisible" world economy. It IS the British economy, the City of London is ecomomically bigger by far than the rest of the country; by a long long way. For historical reasons London and New York are particulary close, and there have been many occasions when panic in one market has had a knock on affect on the other market. If the markets in London and New York sneaze then the markets of Australia and Japan will catch a cold, every time.

There most definitely were traders at the time who privately blamed the mess they got into on the storm, as anyone old enough to remember should be able to testify.

-New York and Tokyo were the major markets of the time, don't see how a small storm in the UK could cause a crash. I'd be pretty surprised if many Japanese or New York brokers were even aware of London markets being closed. In general natural disasters don't move stock markets - the floods in the US the summer of 2005 were much more disasterous than the London storm but didn't cause stock markets much grief. Lope

Until the London theory has proof in the form of an academic paper or something else as notable, it contradicts the no original research policy at wikipedia and should probably be removed. Does anyone know where this theory can be referenced? - Aug 3 2006
My father's stock broker used the excuse that the storm of 1987 prevented him from going to work on Friday 16th October, and as a result he had not been able to close his positions ahead of the crash on the following Monday. Of course one stock broker does not cause a crash, but it does suggest because of the storm the London markets may have been vulnerable at the time. I am not suggesting that the panic selling in other markets round the world was a reaction to the London storm per se, but maybe a reaction to the reaction of London Stock brokers. However this is a genuine story that was given to my father within days of the crash, and not something made up years later by a non-academic, or for that matter an academic. Unfortunately I have nothing in writing from the stock broker, but I think it would be a pity to remove this from wikipedia. - Nov 2006.
I recall reading that the storm contributed to the crash because "self-correcting mechanisms within the market" on which programmed trading implicity relied failed to happen. I have added a note about the storm in the article (I remember the storm), but have refrained from stating that it was a cause. The storm is fact and therefore has a place in Wikipedia - the link to the financial crash is speculation and should therefore not be published (unless accompanied by a reliable source indicating the level of credence for the speculation). However, placing the two facts next to each other without linking them will allow the reader to make up their own mind. Martinvl (talk) 09:00, 18 February 2010 (UTC)

Link at end possibly wrong[edit]

The link at the end, which leads to a story about a VAX machine getting into trouble, might be erroneous. I suggest this because I've seen the story before without the line at the very end linking it to Black Monday (in fact, I always thought the event took place significantly prior to 1987). While it's possible that somebody might add this last line to add dramatic emphasis to the story, it's unlikely that it would be cut out by somebody - it's forms a punchline to the story. Therefore I think the link between this VAX story and Black Monday is probably incorrect.

Note: the joke link in question (*Alleged computer mishap) was removed 2005-11-05 RaulMiller 00:20, 22 November 2005 (UTC)

New Zealand[edit]

I'd like to see a graph of the New Zealand sharemarket during this period. It crashed badly, and stayed crashed for years afterwards. The crash caused the collapse of a number of high profile investment companies and affected other parts of the economy, including house prices I think. Tangerine Cossack 14:54, 8 January 2006 (UTC)

I've added a sentence on the crash in New Zealand. See the cited reference for a graph of the main NZ share price index over the following decade. There's more about the effects here: World Markets; A Warning Flag Over New Zealand, New York Times, January 27, 1991. -- Avenue (talk) 13:55, 11 December 2007 (UTC)

Small error[edit]

"In fact it was not the largest one-day percentage decline in recorded stock market history. That occured on December 12, 1914, when the DJIA fell 24.39%."

This is somewhat correct however there was no trading between 7/30/1914 and 12/14/1914 due to WWI. Due to this lapse in time 1987 is considered to largest single day decline.

Rename/move[edit]

I'd like to move this to 1987 Stock market crash (but I am unsure of the ideal capitalisation (not a pun)) which is a bit more meaningful and more likely to be what a user would search for. Any thoughts? -- Iantalk 03:23, 22 February 2006 (UTC)

1987 stock market crash is already a redirect to this page (you can find it by "what links here"). We could swap them, but there's not much of a practical difference. --Alvestrand 06:46, 22 February 2006 (UTC)

Causes...[edit]

As I recall, some supply siders attributed the crash to the Senate repealing some of Reagan's tax cuts, such a bill passed committe day prior???

Fallout[edit]

I had just entered the brokerage business in October 1987, and one area I would like to see explored is the fallout from the crash. I remember hearing about individuals and firms who suffered staggering losses. Some of the fallout may be esoteric to such areas as restrictions on selling short put options, but there are probably other more significant reactions that can be reported on. Robertknyc 02:21, 1 December 2006 (UTC)

TA Predictions[edit]

"In late August some observers warned that technical analysis indicated the market was now in a cyclical "bear" mode.[verification needed]" I'd like to see verification of this. Technical analysis is hardly universally accepted as accurate. It would be frankly astounding if it predicted a stock market crash like this. --Valwen 06:27, 2 December 2006 (UTC)

I agree with this. I don't remember, at the time, a chorus of analysts, technical or otherwise, saying in late August that the market was in a cyclical bear mode. The S&P and Dow topped on August 25 and had barely begun to pull back into month's end, so it makes no sense that a consensus of technicians would pronounce "in late August" that a cyclical bear market had begun. As of August 31 there was a pullback lasting just a week, and there were no major broken uptrend lines, etc. It probably makes sense to eliminate this line, or, unlikely, provide documentation of the assertion. Robertknyc 16:41, 2 December 2006 (UTC)

Certainly all claims by technical analysts have to be documented with references by reliable media. There is one technical analyst who I more-or-less believe on this point with a possible reference on investopedia, but looking in detail the reference relies only on his own say-so. This is of course Robert Prechter who verifiably claims to have called the run-up (Predicting 3600 on the Dow on the Jan. 5 cover of Barron's). He also had an opinion piece on Oct. 20 1987 with a correction on Oct. 21 in the Wall Street Journal, that seems to say the DOW is going straight down the tubes, this is only the beginning (and I've been saying this for a while). It's the (and I've been saying this for a while) as I remember it, that was the cause of the newspaper correction, and the source of much of Prechter's bad PR. But if he hadn't said this - at least to his own subscribers (and not the public, like his up forecasts) - then it would certainly take large cojones to say it in the WSJ on Oct.20, 1987. So I actually believe him on this, but on not much else.
By the way, as a warning, anything that I say about Prechter may be called into question by Robert Folsom, who works for Prechter and is involved with me in a dispute about the editing of Robert Prechter.
Smallbones 17:31, 2 December 2006 (UTC)

Shouldt the actual decline on october 19 be told in the article?

Something like this:

"The Dow lost 22.6% of its value or $500 billion dollars on October 19 1987".

A bit "strange" that one cant read this number from the current article, only comparisons.

193.217.103.155 17:38, 19 February 2007 (UTC) HH, Norway

There is no worth in citing people who have made a correct prediction(?) of the crash. There is ALWAYS someone predicting prices to go the direction you are thinking of, up als well as down. Afterwards, people talk about the winner: "oh, hwo clever of him", but nobody can tell a hit from pure chance. It is meaningful ONLY if a person makes a SERIES of true predictions; and even that does not warrant a good theoriy - think of old Joe Granville who did have his merits as a TA in his time but later on in the '80ies kept saying "sell", "sell", "sell" while the market boomed, boomed, boomed. 213.102.98.183 (talk) 23:45, 14 April 2008 (UTC)

Iranian connection?[edit]

The linked Motley Fool article states, "In the early morning, two U.S. warships shell an Iranian oil platform in the Persian Gulf. Combined with a myriad of economic factors, this helps to set off an unprecedented 508 point downpour in the Dow Jones Industrial Average." Shouldn't this be mentioned, too? Calbaer 02:26, 5 May 2007 (UTC)

I remember the news that morning very well, and this was the only other news story of any substance, other than the turmoil expected in the stock market. It should be included, but I don't think that anybody thinks that this caused the crash - it's notable only in that it was the only other news at the time. Smallbones 13:45, 5 May 2007 (UTC)
Clearly the author(s) of the Motley Fool article think it was the trigger. It would be interesting to see whether anyone else did. Calbaer 13:49, 5 May 2007 (UTC)


Possibly Related?[edit]

Whilst reading an article posted to Slashdot entitled 'Big Red Button Disasters', which asked readers to post their own example of Big Red Button Disasters, I stumbled upon a link to a Big Red Button Disaster that occurred on the same day and apparently coincided with trillions of dollars being moved between two countries and a computer being reset during the transaction. Could this have been a contributing factor or even possibly a cause of black Monday? A very humorous story, actually... http://www.hactrn.net/sra/vaxen.html

On a separate note, wouldn't a more apt name for Black Monday have been Red Monday, denoting a negative number or loss (as opposed to profit)? Jack Schitt 05:59, 10 May 2007 (UTC)

Reaganomics[edit]

Was the 1987 crash a consequence of the economic policy of Ronald Reagan? I've read from some articles alleging it is. I don't know personally but I wonder why the article doesn't even mention the name of Reaganomics. 71.169.36.89 (talk) 23:43, 9 March 2008 (UTC)

I guess no. What Reagan did was making enormous tax presents to the wealthy, by multiplying the level of debt like no US president before or after him (in fact, when he left the level of debt was 2.8 times the level when he came into presidency). But I do not think that this causes a crash. More probably, it was the policy of the FED: hardliner Paul Volcker hat throttled liquidity rigorously for several years to stop the booming inflation which ran by an annual rate of about 20% when Volcker came into office, which still was in the presidency of Jimmy Carter, so that cannot be attributed to Reagan. —Preceding unsigned comment added by 213.102.97.50 (talk) 00:01, 15 April 2008 (UTC)
Actually, no U.S. president is capable of increasing or decreasing tax; under the Constitution, only the House of Representatives can initiate money bills. 67.71.3.140 (talk) 03:53, 18 February 2013 (UTC)

Data in the SPX, please![edit]

The DJIA being the least representative of the big indices, please add the corresponding levels of the SPX, which gives a picture far more accurate than the DJIA! 213.102.96.57 (talk) 00:15, 15 April 2008 (UTC)

Black Monday (2008)[edit]

I am removing the reference to the events of September 2008 because it does not make sense in its current context. The list of other stock market drops is to provide other examples of stock market crashes that follow abnormal market closures. The 9/29/08 event was not an example of this.

In terms of percentage decline, 9/29/08 was only the 17th-largest drop in the history of the Dow. A reference to 9/29/08 would therefore be gratuitous unless all 17 of these days were described, and the purpose of this page is not to compile a comprehensive list of stock market declines.71.163.63.50 (talk) 06:08, 30 September 2008 (UTC)

Black or red[edit]

In finance, being in the black means a financial gain, while being in the red means a financial loss. Could someone explain in the article why it is called Black Monday instead of the more appropriate Red Monday? See[1] Apteva (talk) 22:23, 9 October 2008 (UTC)

causes[edit]

what about the savings and loan crisis??.Rodrigue (talk) 12:50, 12 October 2008 (UTC)

Funky title[edit]

The accompanying article is one of either

7 that have as title "Black Friday" ...
2 that have as title "Black Saturday" ... or
1 that have as title "Black Monday" ...

... (in each case) disambiguated by a parenthesized year. Since this is in contrast to all the other days of the week, that style probably is unneeded and reflects either ignorance of the acceptability of Dab-page entries like

Black Tuesday, September 11, 2001 attacks

or something like a lack of persistence in weighing possible titles. I have not investigated them individually; instead, i suggest review, of each article, by one or more editors with prior interest in its corresponding topic, with an eye to finding a title that either avoids the "Black ...day" or disambiguates it with something more evocative than a year. Years are good tools for helping users who happen to have seen a brief reference to "Black Friday" and have at least rough idea of the year involved, but giving priority to that case in titling the article, rather than letting the Dab page handle that job, is almost always an impediment to most users seeking the article. Almost certainly, most of the 10 should be renamed.
--Jerzyt 07:02, 8 January 2009 (UTC)

Unnecessary Bias Removed[edit]

I have removed the unnecessary reference to a narrow theory completely invented and created by Taleb: This encyclopedia entry should not reference a single individual's hypothesis unless that idea has been largely adopted, either by the public at large, an academic community, or some other valent group which has discussed it. His notion of "black swan," including the term itself, is completely of his own personal fabrication, and is entirely circumscribed by his own work. Some individuals in the pseudo-pretentious 'netizen community' have even taken to using the term adjectively as if to imply some universality of the concept. If it is believed that a reference such as this should be made, then a section on "Theories or Hypotheses" should be created, and Taleb's opinion could therein be placed. His personal opinion of the event though does not belong in the opening entry, nor should one be required to pursue an entry on his book to understand a historical event; it essentially serves as a platform of kind to advertise or promote his book or personally created ideas within it, which Wikipedia is not. —Preceding unsigned comment added by SalvadorQ (talkcontribs) 08:58, 15 May 2010 (UTC)

"the largest one-day percentage decline in stock market history"[edit]

I've replaced this with "the largest one-day percentage decline in the Dow Jones" because the linked to page is specific to the Dow. If you believe that in one of the markets affected it was the largest decline any stock market in the world has ever seen please say more about why you believe that and which market you're referring to. Jamesday (talk) 23:58, 25 April 2011 (UTC)

Truncated Graphs[edit]

The truncated graphs are misleading. They should be replaced by graphs that start at the Y origin. — Preceding unsigned comment added by 192.249.47.209 (talk) 22:26, 18 October 2012 (UTC)

Unsourced material[edit]

Below material was tagged for needing sources long-term. Feel free to reinsert the below material with appropriate references. DonIago (talk) 20:29, 2 June 2014 (UTC)

The Crash Itself[edit]

I've just read through the article. There's a peculiar thing; it talks about the run-up to the crash, and the fallout from the crash, but the events of 19 October 1987 seem to happen off the page. The article skips from "the crash began in Far Eastern markets the morning of October 19" directly to "by the end of October, stock markets in Hong Kong had fallen etc". What happened on the day? Was trading halted? What did the newspapers say the day after? Did anybody commit suicide? Did world leaders react, and if so, how? -Ashley Pomeroy (talk) 22:48, 17 February 2015 (UTC)

No such thing as eminent or prominent etc. Be can be any no matter what and any can be perfect. — Preceding unsigned comment added by Lyhendc (talkcontribs) 04:31, 5 October 2018 (UTC)

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Inconsistent referencing style[edit]

  • The referencing style is inconsistent. Will straighten out w/in the next 2 days or so. ♦ Lingzhi2 (talk) 05:49, 28 August 2019 (UTC)

Will try to add new info, one source at a time[edit]

I've got some sources. The standard way to add info might be to gather facts from many sources on one section or subtopic, and add a summary of those, then move to a new subtopic. However, to me that seems to be more work. I think I'll just grab a source, add as much as seems useful from that source, then move to another. That may temporarily make it seem like the whole article is too heavily written from one source... Moreover, some sources I get around to using later may modify info from ones used earlier. That's OK too, in the long run. ♦ Lingzhi2 (talk) 08:44, 1 September 2019 (UTC)

GA/FAC push (slow and steady, maybe three months?)[edit]

OK, I'm declaring an official GA/FAC push for this article. :-) It will almost certainly take at least two or three months before it's even ready to go into a Content Review process (PR, GA, FAC), so there's no three-alarm rush or anything. I will be working slow and steady. Any and all who wish to do so are welcome to join in. ♦ Lingzhi2 (talk) 04:53, 13 October 2019 (UTC)

  • Making progress. Adding global perspective; should add 3 or 4 more countries. The "Background" section is relatively pathetic. I haven't done much of anything there yet. ♦ Lingzhi2 (talk) 07:14, 14 November 2019 (UTC)
    • Well I put it up for GA. After 345 edits we've gone from this to this. We'll see what happens... or whoever is around will see. Cheers. ♦ Lingzhi2 (talk) 01:57, 23 December 2019 (UTC)

GA Review[edit]

This review is transcluded from Talk:Black Monday (1987)/GA1. The edit link for this section can be used to add comments to the review.

Reviewer: Cerebellum (talk · contribs) 01:31, 7 May 2020 (UTC)

Good Article review progress box
Criteria: 1a. prose (Symbol support vote.svg) 1b. MoS (Symbol support vote.svg) 2a. ref layout (Symbol support vote.svg) 2b. cites WP:RS (Symbol support vote.svg) 2c. no WP:OR (Symbol support vote.svg) 2d. no WP:CV (Symbol support vote.svg)
3a. broadness (Symbol oppose vote.svg) 3b. focus (Symbol support vote.svg) 4. neutral (Symbol support vote.svg) 5. stable (Symbol support vote.svg) 6a. free or tagged images (Symbol support vote.svg) 6b. pics relevant (Symbol support vote.svg)
Note: this represents where the article stands relative to the Good Article criteria. Criteria marked Symbol comment 2.png are unassessed


  • Lead: There is some information that is in the lead but not the body, such as that the Dow fell 508 points. This info should be repeated in the body.
  • Extent of the crash: List of largest daily changes in the Dow Jones Industrial Average indicates that the crash was the largest percentage drop in a single day in the exchange's history, but this article says "This was one of the largest one-day percentage drops." If it was really the largest, I recommend mentioning that in the article.
  • Aftermath: You cover the regulatory changes due to the crash, could you add something on the long-term impact? Did the market recover immediately or was there lasting economic damage?
  • Worldwide view: The article focuses on the US, which I think is acceptable since the crash started there. We don't need a section for every country but I think some kind of "other countries" or "worldwide impact" section would be appropriate. The lead says that Hong Kong, Singapore, and Australia's markets fell 40%, but I didn't see that info in the article body. Would be interested to hear why those countries were hit so hard.
  • References: Referencing is thorough, but please add a source for the first paragraph of "background", I tend to think that GA's should have at least one citation per paragraph.
  • Spot checks: Checked references #4, 32, 74. Information checks out.
  • Images: Appropriate graphs and a timeline are included, I don't think you need anything else.
  • External links: I couldn't get the "CBC Reports on Black Monday" external link to work.

The information you have is presented lucidly and comprehensively, I just think the article needs to be expanded a bit to cover the aftermath and world-wide impact. I'll place the article on hold for seven days. --Cerebellum (talk) 01:18, 9 May 2020 (UTC)

No change after seven days, unfortunately I'll have to fail the article. Please renominate when ready! --Cerebellum (talk) 03:02, 16 May 2020 (UTC)

Additional comments[edit]

Two specific comments about the lead and a more general comment echoing above.

  • reverse images in the lede, DJIA at top, since FTSE not mentioned.
  • "The Reserve Bank of New Zealand's refusal to loosen monetary policy in response to the crisis, however, had sharply negative and relatively long-term consequences for both financial markets and the real economy." I presume this is in reference to the country on its own, but the current phrasing and context is ambiguous, should be clarified by replacing "both" with "the country's" and dropping "the" before "real economy".
  • General: There's a great deal of US microeconomic focus to the article, but it lacks a larger macroeconomic picture. Given how much of the background to Black Monday lay in issues related to currency markets and interest rates, it seems to me a great absence that neither the Plaza nor Lourve Accords are discussed. Using Shiller's 1988 work in the background is dated and suffers from recentism. Most economic history points to the toxic mix of US deficit spending from the early 1980s, over-valued dollar (to the Plaza accord), trade deficits with Japan and West Germany, rising interest rates and tight money supply. Lourve accord starts to unravel when Germany moves to lift rates, US asset managers see a combination in the threat of a falling dollar, rising US interest rates and continuing rise in the trade deficit and run! There's also no sense of probably the most significant larger marcoeconomic consequence of Black Monday: the end of (US-led) attempts at international currency coordination.

Regards, --Goldsztajn (talk) 20:21, 9 May 2020 (UTC)

For what it's worth, Martin Feldstein saying more or less the same thing 30+ years before I did[1] and Soros' version out of interest.[2]

References

  1. ^ Feldstein, Martin; Modigliani, Franco; Sinai, Allen; Solow, Robert (1988). "Black Monday in Retrospect and Prospect: A Roundtable". Eastern Economic Journal. 14 (4): 337–348. ISSN 0094-5056.
  2. ^ Soros, George (1988). "After Black Monday". Foreign Policy (70): 65–82. doi:10.2307/1148616. ISSN 0015-7228.
--Goldsztajn (talk) 07:46, 10 May 2020 (UTC)
Thank you for the additional comments! --Cerebellum (talk) 03:02, 16 May 2020 (UTC)