The 1987 Crash
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- เผยแพร่เมื่อ 28 ส.ค. 2022
- The first global financial crisis erupted in the autumn of 1987 on a day known as “Black Monday.” A chain reaction of market distress sent stock exchanges around the world plummeting in a matter of hours. In the United States, the Dow Jones Industrial Average dropped 22.6 percent in a single trading session, a loss that remains the largest one-day stock market decline in history. At the time, it marked the sharpest market downturn in the United States since the Great Depression.
In today's video we look at the causes of the 1987 crash, discuss program trading and portfolio insurance and how the crash forever changes stock markets around the world.
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Hello Patrick, seeing you posting this Video about a Market Crash, do you see it crashing again in the short term? Regards!
Is it all about confidence and liquidity ?
LOL... "a turd of the value"... gotta just luuurv all this ponzi casino waffle BS... oops. sorry... "market" economics but, at the end of the day
it all comes down to what Mr Einstein said... "The definition of (criminal) insanity is doing the same thing over and over again
and then expecting different results"!!!!!!!!!
Don't fret, the debt ceiling always goes up. I wonder if 2008 crisis survivors had it easier. this could lead to economic downturns. We need to be prepared for potential market volatility. how can I secure my 250k portfolio against declining?
Everyone needs a Margin of Safety in their portfolios and just remember, It's time in the market versus timing the market.
De-risk your portfolios, shore up your core holdings, and take some profits while balancing your portfolio allocations. I’d also suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I. We've made over 80% capital growth minus dividends.
I'm cautious about giving specific recommendations as everyone's situation varies. Consider independent financial advisors like "JENNIFER LEIGH HICKMAN" I've worked with her for 9 years and highly recommend her. Check if she meets your criteria.
I was in high school on this day and my electronics teacher said he had money saved up to put in the market when it dropped. He was excited on the day of the crash and ended up putting it in the next day. This made a big impact on me.
I worked in a warehouse and one guy said he lost a lot of money that day, but made it all back within a year
I was in college at this time and a classmate told me that his father told him it was a good idea to walk as close to tall buildings foundations as possible the next few days.
Timing the market is a bad idea anyway.
What a OG
@@federicoytbe Unless you time it well like this guy's teacher.
I love this old 80's footage from the trading floor. Trading back then looks super intense!!!
Here's another part for your atmosphere. Back in the S&P pit many guys wore steel-toe shoes to avoid getting smashed. Some guys wore racquetball glasses coz those cards with the sharp corners were incoming (whizzed in) to floor brokers. To make it there it helped to be tall and stout.
I was 12 at the time. I remember one of my friends dad’s panicked on Monday and sold off everything, losing a ton of money, money which he would have gotten most back by Friday. Taught me a valuable lesson about patience and investing on dips.
Lmfao. Had to solidify the L
Another exceptional look at market history by Mr. Boyle. I’ll never forget that day in 1987. I leaned about greed, fear, and irrationality, and those lessons have guided me ever since.
Thanks Tom!
I always heard the cause of this crash was just “computer systems that weren’t yet ready for prime time” but now I see it was a whole confluence of events. Thanks for putting this in a historical perspective. And a global perspective. I had no idea HK and NZ were hit even harder than we were here in the US.
Hah, small world :) Thanks for your work!
Read Rick Bookstabers book a demon of our own design
Problems in system rarely have a single cause and never have a simple solution.
at 5:36 a young Robert Downey Jr. fuzzy and bewildered at the floor pit of the exchange
"Wisdom is never given, it must be asked for." Thank you for your knowledge.
Except for that piece if wisdom, thank you
My friend who worked on the floor of the NYSE lasted 3 years before he bought an organic farm selling lettuce and Cornish game hens.
It probably saved his sanity.... wise man.
@@NickanM I work with a lot of Cabbages now so I feel like I'm on a farm not an office.
Sounds familiar lol
I find myself in a different industry but with similar goals in mind lol
@@Envoy_Intuition Your coworkers - Did you hear? Collin bought the farm, so sad.
Timestamps:
0:18 History of Black Monday
2:02 Evens leading up to the crash and why it happened
3:49 Lavaraged buyouts
4:27 The day before the crush
8:15 October 19th New York Stock Exchaned had opened
10:26 Fidelity system involvement in the market crash
15:58 Other explanations for the crash
20:54 Trading on a day after the crash
22:45 How the crash affected on other markets
26:01 What Traders and Risk Managers learned
That helps a lot, thx
thank you Danny
Thanks
Thanks for the stamps but you left out the most important timestamp of 5:36, when Tony Stark was moonlighting as a trader :)
LOL... "a turd of the value"... gotta just luuurv all this ponzi casino waffle BS... oops. sorry... "market" economics but, at the end of the day
it all comes down to what Mr Einstein said... "The definition of (criminal) insanity is doing the same thing over and over again
and then expecting different results"!!!!!!!!!
I got stopped out of all my stocks on Black Monday 1987. What bothers me to this day is my stop limit orders weren't executed until each stock had reached its bottom. I got stopped out of Applied Materials. Which then went up 500 times. (Edit: Had I repurchased it, )All I had to do was wait 40 years.
Well, a stop order simply ELECTS another type of order. Elects means that it activates the second type of order that is in reality attached to the stop, that's just the inner working mechanics of stop orders. Reads like your stop elected itself into a limit order instead of the default market order. So, if the market had by this time (first electing the stop to activate the limit order), moved below your limit price. Your order would have gone unfilled.
For example, if your limit was the number five as the lowest you'd sell for. But, the market zoomed below five into four then three, etc. Your limit order would not fill.
Next time you use a stop for protection. Maybe just use a plain stop order and that will become a market order.
Stop limits don’t work that way. Someone has to be willing to buy. Under Norma market conditions it will trade close to the limit you set. A freefall will pass it altogether. Surprised it even triggered a sell at the bottom. A stop loss putting out a market order on a nosedive probably would have sold much lower than the trigger price as well.
LOL... "a turd of the value"... gotta just luuurv all this ponzi casino waffle BS... oops. sorry... "market" economics but, at the end of the day
it all comes down to what Mr Einstein said... "The definition of (criminal) insanity is doing the same thing over and over again
and then expecting different results"!!!!!!!!!
I wasn't even aware of the crash at the time. I was 22 and working as a test technician at an electronics firm. They laid off some engineers and other people I had no access or motive to connect with. I got to keep my job. Working as a "soldier"in the tech field, and not as a "manager" has been beneficial to me in the long run. Companies need soldiers more than they need "generals", and this is how I was not fired from any job - only laid off once in 1991 - in the past 40 years.
In the Crash of 1987, the Nikkei was at 22,000. It's now at 28,000.
I was there as a very young professional. It started happening, as I remember, about ten minutes after market open. I actually got my IRA account out of the stock market completely before it started. My regular account rode it down. I have a picture of the crash on a Compaq 386 portable computer III.
Thats amazing, and you kept the pc, wow
@@Sinekyre14 I kept the picture, not the pc, but thanks anyway. It's a picture of the deep vertical line on a stock graph from an early live stock market subscription service as it's being displayed on this computer.
@@BasementBerean thats wild
I was in high school and worked at Walmart back in 87. I remember the Walmart stock price board they had up by bathroom went from like 97 dollars to 20. I was new to stock prices but it left impression. Lol
I just gotta say your sense of style is immaculate👌🏾 thanks for the knowledge Patrick 👍🏾
I appreciate you coming through and demystifying these things for us. So much of these ideas are super weird to me but you make it digestible and interesting
Thank you Patrick for these great videos you make!
This is the best, most understandable examination of this economic event. Best channel on TH-cam, hands down.
I would love to see a 1929 version of this! Love your style!
He's not gonna talk about that one because if I remember correctly, it took 25 years for the Dow to go back to previous highs and finally break even in that occasion.
That would ruin his narrative that everything goes up indefinitely and every crash happens mostly because of fear and not because of fundamental reasons.
The crash in 1929 is the clear example that "stonk only go up" but sometimes you're not gonna live long enough to see that happen.
There were glass domes with ticker-tape machines inside that sounded like clicking sewing machines, or more truly like those old Morse code station keys, except steadier. Making the planked floors to be covered with streams of ticker-tape / confetti. The rooms had high ceilings and lazy fans which allowed stratas of cigar smoke to linger at all times. And, a fella could always get a drink once tipped to who's in the know for some. Usually any cigarette girl could tell you if she'd seen you around for awhile.
J K Galbraith’s The Great Crash of 1929” is good for that.
@@marcusdavey9747 Thanks! I will have to check it out!
There are plenty of videos on 1929.
I thought this was exasperated by the big 1987 storm in the UK which caused the insurance industry to go into panic due to the amount of claims coming in (at the end it was £2bn). The storm was 15-16 October 1987 with the first trading day, Black Monday
Do you mean exacerbated?
@@manishm9478 Autocorrect!
Yes, trading closed early in London on that Friday I believe. Due to transport disruption caused by the storm, few traders were able to get into work on Friday morning.
I lived that. Things like that change your thinking permanently. Great video. You are one of my favorite youtubers.
Super informative video. Keep up the good work.
Great video Patrick, thanks for covering such relevant topics during these unstable times.
Amazing as always. Thank you for the video.
Great depth on the subject
Greatly appreciated your video, very informative and relevant.
Wow thanks for sharing I learned a lot
That was one of the most beautiful days of my life. I will never forget it. I was 9 years old.
Thank you! Enjoy your content and analysis.
“Those that fail to learn from history are doomed to repeat it.”
Winston Churchill
Outstanding account of the crash. Thanks.
Best analysis of crash i have seen so far
Wonderful analysis! Thank you so much, Patrick!
Love this detailed history dive
Great analysis!
Huge kudos for a professional manner and knowledge!
Another Great video.
Great video. I love the hand movement
great video Patrick, thanks for that
This was a great, in depth and detailed exposition of this crash. Thank you so much for your effort!
Actually this is a good thing. Buy as much as you can. Think of it as a fire sale😅
Thank you for this video! Great one 👌
Thanks for the special treatment of this topic, it’s one of my favorites!
Very very interesting!!
Thank you
The company I was working was cutting over a new telephone system on Black Monday. The cut was a disaster. System would power reset every 5 minutes or so. One of our techs said the market was down 500 points. That was on crazy day.
Great content really
Great job Paddy 👍
Great video Patrick!
This had a feel similar to your Ponzi video. Love that video and this one!!
Thanks for the info hitman! Blending in well
Is that Robert Downey JR at 5:35?
Great video
excellent as always.
Thx for upload
Thanks for yet another informative and entertaining video
Mind blowing explanation
Another content swish. Keep trucking PB, we love it!
Great! Thanks Patrick
Great video!!!!!! Thank you
Love your videos
Thank you Mr. Boyle for exceptional content, as always. Too bad you weren't making internet videos 20 years ago.
You gave me a chuckle and made me reminisce, thank you.
Back then in the computer space we all assumed a greater level of connectivity would be here by now. The whole purpose in doing what we were doing was to get at and provide information. We used to discuss what information we would like and how it could he shared. If you were in this space you might indeed have been thinking how to share this information in the future differently than 'today'. . I'm not conveying the grandness.... Many of the things we discussed have yet to happen.
Patrick is like a AI robot reporting to my query. So much knowledge and depth. Excellent video
Interesting. Thanks.
Great job I really enjoyed this review of the crash I worked as a specialist clerk on the floor on oct 19th 1987 and retired from the floor in 2011 well done
Thanks! This crash isnt understood widely enough!
A great explanation on a complicated subject
6:41 who doesn't know the perfect strategy, buy high and sell Low.
Thank you...I'm trying to prepare for the 2023 Crash...Cheers!
i agree about a 2023 crash, which means it will occur before this.
Although it's a little weird to say I enjoyed the video I do appreciate the information and the way it's presented a lot so I guess I did enjoy it it just seems weird to say I enjoyed a video about such a topic but I have been very happy with the videos of yours that I've seen. Thanks
Why isn't "scam or fake account" and option when "Reporting"? It's clearly a very common issue. I have a Bot reply to almost every one of my TH-cam comments withing hours of it. Either posing as the content creator like in this case here(if it is even visible to others) or I have been getting the same exact seemingly nonsensical reply in 3 languages with links but by many different user account names.
Nassim Nicholas Taleb's book "The Black Swan" is worth reading about this event and others like it. This level of price movement in one day was estimated at the time by financial engineers using bell curve models to be a "five sigma event"; or an event that was supposed to happen only once in every 30,000 years. However, in recent times, scholars have analyzed the history and found that these "once in 30,000 years" events have occurred 48 times in the history of the NYSE.
In the past twenty years of the stock market, just ten days of abnormal skyrocketing stock market prices account for half the gains up until now.
if you account movement after close, oof
“7-10 books on the idea that markets can move much more than people realise”
@@dansplain2393 I loved that subtle dig
@@MonzennCarloMallari the fact Patrick pretends not to be able to count the books really got me
@@dansplain2393 the Taleb book I loved the most was the one where he spent most of the pages to respond to his haters, turning it to a virtual Twitter feed
And by "loved" I mean "hated"
Thanks!
Welcome!
PATRICK O'BOYLE RULES!
i remember that day, i was in high school and every grown up i knew was in panic. Also, i didn't know RDJ worked in the markets back in the day, look at 5:36 mark.
It was indeed RDJ. Check "NYMEX Floor Trading" in TH-cam
Yeah I seen that, definitely looked like him.
I sold stocks on the Thursday(?) before Black Monday, iirc around $4000. It was a start up that was wiped out completely and didn't recover. No genius, but I'd had a run on it and thought I'd take the profit.
Another excellent video! Could we have some more 80's analysis? Maybe the bond markets in the pits and at Salomon Brothers.
Thank you for highlighting that the main factor in pricing the product on the market are metadata from that market, not the underlying product.
finally a decent video on TH-cam about this crash
Patrick posting this following the market violently falling is not concerning at all :)
Priming for Monday or October…
Did Patrick get a new camera? The video quality on this segment is amazing.
Thank you
Awesome show. I only got the 2nd half but was informative.
once again Patrick. you have not done yourself and spoke the other truth about what happened and I learned a little something today thank you. it was really more in depth than I thought. it's coming from a one time trailer, professional trader, to a trade in my own account trailer.JD
@@loupasternakYes sir.You are correct. Thanks for pointing that out to me. I really need to proofread my sentences.JD
Nice book on your table, 'Guns, Germs and Steel' by Jared Diamond. There's also 'Collapse'.
Great update as always, but it left out the critical bit of how with most exchanges delayed openings on the 20th, the NY Fedsters were able to rig the Chicago MMI (Major Market Index) higher, it being the only market open before most of the others resumed trading. By pushing the MMI higher the Fedster's trapped most traders behind a rigged stock market rally with forced short covering to boot. It was some of the most interesting days of my then NYC commodities trading weeks. A wonderful time. Sadly, the markets have stayed mostly rigged ever since. Is the Great Nixonian Error of fiat money Great or what?
I remember when the DOW broke 1,000 and everyone went crazy.
‘’Courage taught me no matter how bad a crisis gets ... any sound investment will eventually pay off."
Making it out at a young age is quite difficult. I started a side hustle at 17, saved up and made some good investments. l'm 28,live on my own and having a good life for myself. Big ups to you and everyone out there trying
Sounds like plan, how do you put money to work?
@@alexmontrey5372 Yes it sure is. I put in money in investments and get profits. That 's how I make more money without working. This does not sound new to you right ?
@@ibrahimfaizan6047 Thanks for replying me, I've heard so many people talk about investment but none had said how to do it right.
@@alexmontrey5372 Am hoping on you can explain more on how you make extra income from investments
I was going to college in Brooklyn, my roommate and his brother, who were from upstate NY, said we should go camping. We drove up to their home, picked up some of their friends, drove past Lake George, and spent the weekend in the woods. On the return trip, the car broke down, and my roommate's brother and I took the train back to the city. We got back late, I spent the night on his apartment floor, and when I woke up the next morning, I turned on my Walkman (The 80's!) to hear what I had missed. The first thing I heard was that the stock market was crashing. All the guys living in that apartment worked on Wall Street, and I got out of there before they woke up. My roommate's brother ended up working as a ski instructor.
I was there. I printed out a few dozen Quotron pages, still have em. Good times.
You're a great humourist. It's a shame when that only gets exercised in your choice of stock imagery. I miss the funnies in your script writing.
That said, you're still awesome and I love and appreciate you and what I learn from your vids.
This is a great example that the market is subject to the whims of the economy, not the other way around.
What’s Robert Downey Junior doing on the Wall St trading floor (@5:37) I was in primary school at the time and vaguely remember seeing this event all over the news in the U.K.
Fascinating stuff this
lmao that dig at Taleb :D
Love Paul Tudors voice at 14:10
The whole stock market thing is still bewildering to me
Yeah it’s like gambling most of the time. But eventually the boom ends in a bust if you’re patient enough.
This is great. Thanks. But the Crash has many lessons and impacts that you still have not covered. Eg how it changed the options market? How the smile or skew happens and persist to this day? … Hope you talk more on these
I had to laugh when that article cover was shown, about the impending doom from unprecedented borrowing. They had it right, but it really didn't hit the fan until 2007-2008. Now, let's see what the financial wizards will try to "securitize" to squeeze even more blood from the turnip.
I vaguely remember that there were some pretty big changes in the interest rate on 10 year treasuries leading up to the 1987 market crash. The year started with the 10 year rate at 7% - it went up to 10% right before the crash.
China began buying 30 year T-Notes in the 1990's and that seems to be about to be due to pay off for them?
The declining GDP and the Debt seem a bit more difficult to overcome than the Star Wars spending that was going on in those days.
The US was exporting some products and Grain in those days.
Lately the failure of the LNG folks to live up to their $200 billion revenue gain, from extorting European consumers seems to have failed?
We have weapons to sell, but who has cash to buy the elaborate systems, and who actually is threatening anyone, but the US?
The 2008 events seemed to leave the nation with some economic issues that distributing Credit Cards to all who ask for one seems to have enabled even more Consumer Debt.
"Could Be Bad." .....Troy Tschudi
The idea of portfolio insurance is interesting. I just dont understand how one can reduce the inherent equity market risk without taking on more market risk through the insurance itself. Then again, I did once buy SPY puts 😀