Black Monday Revisted

Today, October 19th, is the anniversary of Black Monday, the day a quarter-century ago when the stock market fell 22% in a single day. For my Lady and I, quite active in the markets, it was an exciting time — we had been short from the previous Wednesday and did well indeed that day.  But there were grave concerns:

  • No trading system had ever seen conditions like this, therefore there was no way to predict further success. We bailed out.
  • At the rate things were going, we were facing a potential collapse of civilization. Estimates were that the banks would experience mobs by Wednesday, all credit cards would be disavowed by Friday, and by a week later even currency would no longer be accepted. Anyone in a uniform, from military to police, would be a target of mobs.
  • Tuesday, October 20, saw the FDIC announcing that it would not protect the banks or anyone’s private deposits. The markets were ordered closed.
  • But one person, the head of the Chicago Mercantile exchange, apparently defied this order and re-opened, believing that the panic would get worse without some outlet. His gamble worked — the CME dropped much further, but then hit a bottom and slowly, carefully, began to come back. By Wednesday, the crisis was believed to be over — and in only a few months, the loss was recovered.
  • But not completely — a number of financial companies, some quite large, were destroyed on October 19th.

WSJ cover

The Wall Street Journal today has an interesting look back at that time, focusing on the advertisements running in the WSJ on Black Monday.  How many of you remember when “The Gospel of John” referred to the CEO of Apple, selling a book by that name and soon to be labeled “one of the world’s worst CEOs”?  Or remember when the Cookie Monster was a salesman for IBM?

===|==============/ Keith DeHavelle

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