October 19 isn’t exactly an anniversary that those in the financial world remember fondly. It is, of course, the date of the Black Monday stock market crash in 1987, making this the 30th anniversary, a date to mark but not necessarily celebrate.
Looking back on it, those in financial centers in the United States should have seen it coming. Markets in Asia and London began to crash long before the market even opened in the United States. But there was little anyone could do to prevent the Dow Jones Industrial Average from plummeting nearly 23%, the largest single-day drop in history in terms of percentage.
The crash was actually spurred on by computer software that was designed to start selling stocks automatically if the market started to collapse. Today, no one would think twice about such a computer system, but back then, that kind of technology was foreign to most people.
The new system was, of course, designed to protect investors from such a disaster. However, with the computer system in place, selling only led to more selling, and before anyone knew it, the Dow Jones was down more than 500 points and October 19, 1987, would forever be remembered as the worst day in the history of the stock market.
In fact, Black Monday caused more than just financial problems for people. A paper published last year found a link between stock market success and hospital admissions, most notably those related to depression and anxiety. According to the date, Black Monday caused a 5% spike in hospital admissions, which may sound small but is actually quite significant.
Of course, Black Monday wasn’t the end of the world. The stock market managed to rebound and we avoided the decade-long depression that followed the crash of 1929. Things are also as good as they’ve ever been, with the Dow Jones, Nasdaq, and S&P 500 all experiencing record highs within the past week.
However, it’s good to remember Black Monday as a reminder that there’s no such thing as a sure thing, and in just one day, everything can change. It’s a good lesson to keep in mind as we remember Black Monday 30 years later.