Black Monday?
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I saw Black Monday trending on Twitter. Most of the people tweeting about Black Monday weren’t alive for Black Monday. If they were, they were potty training or learning their colors.
TL:DR There will be no Black Monday tomorrow. No one, and I mean no one, can call a market crash like that. As a matter of fact, the dean of Finance Professor Eugene Fama said something really prescient to me once. “You only see crashes in the rearview mirror.” He’s right of course.
Fama and others are one of the reasons I love Chicago Booth. They simplify really hard concepts so you can understand them. Friedman, Becker, Coase, Miller, Lucas, Sowell, and now their students that actively adhere to the way the Chicago Boys formed their logical arguments make it easy to understand.
I was on the floor for Black Monday. I wasn’t trading just yet. It was October 19th, 1987. I started trading in May of 1988. I clerked for an options trader named Roger Carlsson. EMA was his badge and he was one of the best traders you have never heard of. I was his fifth employee. His previous clerk, Dave Vecchione (VK) was in the pit and I was behind him watching Roger, and his two other options traders Martha (MHM) and Gary (GR).
To say that the trading floor was bedlam that day is an understatement.
It was the single craziest day I have ever seen. I traded through 2008, LCTM, and other market dislocations. Black Monday is #1 and it’s not close.
I had outtrades that were only due to a keypunch error. My boss wrote down a price that didn’t match the broker’s price. Clearly, when I looked at the paper order duplicate, the broker was correct, my guy wrong. The change cost him $100k.
Stocks lost more than 20% in a single day. The 1929 Crash took two days to accomplish that. If you thought the Covid Crash was volatile, you’d never have made it through the 1987 crash.
I saw guys try and buy dips. “Let’s buy a one lot here”, they said. They were looking at charts and trying to find “support”. By the time they got their card back, they were out $25k-$50k.
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I remember that day or better, week. I was on a trade mission overseas at an oil and gas trade show. The only real communication back to North America in those days was via telex or booking a long distance phone call a day or two in advance at the hotel
KGB officebusiness centre.Didn’t really affect me personally. In those days my pay check went into paying weekly mortgage payments at 10.5%, taxes and utilities. Savings were a future dream.
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I was in college. I remember seeing Reagan come out and tell everyone the economic fundamentals were strong. There were real fears that it was 1929 all over again. In fact, I remember a news story interviewing the one old man still in the business who had been working in 1929
