How can you put the losses of Black Monday into proper perspective? Well it helps me to think of it this way: on October 13, 2008 at the height of the recent financial crisis, the stock market had its biggest one day point loss in history; 777 points. In order for the losses that day to match what happened on Black Monday though the Dow would have had to lose 2,300 points!
A rash of possible explanations for Black Monday have been circulating for years. The most popular of these is the "program trading" theory where numerous computer sell programs began triggering each other every time the market ticked down a few more points. After a while the slide became a self generating monster no one could control. Others have pointed east and said that it was simply a reaction to what happened in Hong Kong, whose market had nosedived in the run up to the Dow opening that Monday. Still others used a word that would come back to haunt the financial world two decades later; "derivatives". In this case portfolio insurance derivatives. Most everyone agrees though that matters were made immeasurably worse by a good old-fashioned panic that swept the trading floor once the slide began and made Black Monday a day that will live in financial infamy.
|Black Monday. After a while all you could do was pray.|