30 years ago today, the stock market experienced Black Monday. Investors watched in terror as equities lost over 22% in a single day. In this article, Kevin McNab provides some words of wisdom while reflecting on what happened during this scary time. Are you prepared for the next market downturn?
Though it was 30 years ago today, to many Black Monday remains ironed in their memories as though it was only yesterday. On October 19, 1987 the Dow Jones Industrial Average dropped 508 points, roughly 22.6 percent of its value at the time.
Financial experts said portfolio insurance was responsible for the event. At the time, this was a quantitative tool that used futures contracts to guard against market losses. Unfortunately, this was not the case.
In the three decades since, global markets have recovered only to fall again in unpredictable cycles.
Despite the devastation of the event, today’s market is reliant on computers for quantitative algorithms that select stocks, mitigate risk, trade, bet on volatility and more.
In the years since 1987 we have come a long way toward understanding what drives stock performance and how to apply it to our portfolios.
We got a handful of perspectives from Colorado-based financial advisors and experts on what they remember of Black Monday, what they learned and what might seem eerily similar today.