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Cashin: The worst Monday of all, nearly 30 years on
Posted on 10/20/14 at 6:30 am
Posted on 10/20/14 at 6:30 am
More historical than financial, but I thought some here would enjoy the retrospective.
quote:
On the 27th anniversary of Black Monday on Oct. 19, 1987, market veteran Art Cashin, now the director of floor operations at UBS, recalls in vivid detail how the event transpired:
On this day in 1987 (that's 27 years ago, if you are burdened with a graduate degree), the New York Stock Exchange (ICE) had one of the most dramatic trading days of its 220-year history.
The Big Board suffered its largest single day percentage loss (22 percent) and its largest one-day point loss up until that day (508 points). No one who was on the floor that day will ever forget it. While it was an unforgettable single day, there were months of events that went into its making.
===================
The opening was not an outright disaster, but that was primarily due to the fact that many stocks did not open immediately. They were delayed, with indications to warn investors of the prices at which they might open (with hopes of inviting bargain hunters). Meanwhile in Chicago, where you could short without a plus-tick, prices were headed into freefall. Soon prices were lower in Chicago than in New York. That brought even more selling pressure to New York.
Shortly after the opening, as it became clear that this would be a very special and very dangerous day, several NYSE directors met in Chairman Phelan's office. They checked around the street to gauge any new trends in the selling pressure. They were also on the phone with the White House via former Sen. Howard Baker, who was White House chief of staff.
Meanwhile, back on the floor, the situation felt more unreal. Orders flowed in faster and faster and the tape ran later and later. (The tape was linear and the human eye can only recognize a certain number of symbols per second-900, I think. To run faster than that would make the tape an unreadable blur. Traders can trade faster than the maximum reading speed, so the tape ran late.) One broker said it was like a bizarre dream sequence: nothing seemed real.
In late morning there were signs that the markets might begin to stabilize. Then the newly appointed chairman of the Securities and Exchange Commission, David Ruder, was intercepted by reporters leaving a meeting at the Mayflower Hotel in Washington. Whatever they asked and whatever he said, it somehow was reported that the markets might have to be halted. Later, he would swear it was a typo but you can't unring a bell. The fear of a halt sent buyers scurrying away. Stocks went into virtual free fall.
LINK
Posted on 10/20/14 at 8:12 am to NC_Tigah
I remember too well. I was sitting in front of my Bloomberg screen at work thinking it was the end of the world as we knew it.
That was back before I realized a day like that was one helluva buying opportunity so I didn't take advantage of it.
But to my credit I didn't sell a single stock that day either. Within 6 months my losses were gone.
That was back before I realized a day like that was one helluva buying opportunity so I didn't take advantage of it.
But to my credit I didn't sell a single stock that day either. Within 6 months my losses were gone.
Posted on 10/20/14 at 9:46 am to LSURussian
I can't imagine what a 22% move in one day was like. The flash crash a few years back was nuts enough.
This post was edited on 10/20/14 at 9:48 am
Posted on 10/20/14 at 10:53 am to LSU0358
quote:It shook me, I know that. A nightmare.
I can't imagine what a 22% move in one day was like.
Posted on 10/20/14 at 10:58 am to LSURussian
Many on here and the other trading group I participate in get worked up over 2-3% in the S&P and Dow. 22% would be wild. That would be ~400 S&P points or 3300 Dow pts. A single S&P futures contract would experience a swing ~250% of the value of margin that is put up for that contract (a $20,000 move for $6,000 dollars of margin).
This post was edited on 10/20/14 at 11:06 am
Posted on 10/20/14 at 2:31 pm to LSU0358
yeah that sounds catastrophic. how far did it fall in 2008, 15%?
Posted on 10/20/14 at 3:26 pm to slutiger5
The 08/09 bear didn't have any single days that hit the 15% level. The whole correction that lasted 18 months was ~65%.
Posted on 10/20/14 at 3:36 pm to LSU0358
quote:
The whole correction that lasted 18 months was ~65%.
Wow, didnt realize that. I remember January 09 was ugly and had a couple large tumbles.
Posted on 10/20/14 at 10:15 pm to LSURussian
I was fairly new to investing in the stock market when it crashed in 1987. I seem to remember that the market in Asia was down big before the open in the US. After it was all over, commentators on FNN (precursor to CNBC) were talking about how retirees were wiped out in a single day. Watching the tape scroll across and seeing all the losses in stock prices was unbelievable. As crazy as it was in 87, IMO the 2008/2009 crash was much worse and more dangerous.
Posted on 10/21/14 at 4:07 pm to CajunTiger92
I was young ,but I vividly remember reports that Sam Walton lost an estimated $3 billion dollars or more & he shrugged it off: "It's just paper anyway".
If I got a huge windfall I would invest it very conservatively . Can't stomach the markets.
If I got a huge windfall I would invest it very conservatively . Can't stomach the markets.
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