Black Monday wasn’t a surprise for some people. Some specialists expected it but it wasn’t prevented because of the work of the U.S. Securities and Exchange Commission. 1986 and 1987 were very good years for the stock market. There was an extension of an extremely powerful bull market that had started in the summer of 1982. The main idea of the companies during that time was that their company should continuously grow by acquiring other companies.
So to buy other companies a company would lend some money and sell junk bonds to the public. The money received from these junk bonds would be spend on buying one of the companies needed. “Microcomputers” now known as personal computers became a fast growing industry. People believed that these computers would change the world to better while creating wonderful business opportunities. The investing people eventually were caught up in a wrong euphoria that was similar to that of any other historic bubble and market crash. This euphoria made investors believe that things will be getting only better.
However, in October 1987 investors decided to stop this risky game and move into the more stable environment offered by bonds or, in some cases, junk bonds. Investors started to go away from the market but at the same time, the programs put a stop loss on stocks and sent a sell order to DOT. The printers were overloaded and all the investors became effectively blind. People were scared and started dumping stock in the dark without knowing what their losses were or whether their orders would execute fast enough to keep up with plummeting prices. The Dow lost 22.6% of its value or $500 billion dollars on October 19th, 1987. It was the biggest loss for one night ever.
When people knew that a massive stock market crash was happening, they started to call their brokers to sell their stocks. This made the situation even worse and led to awful consequences. Many people lost millions of dollars instantly. Federal Reserve tried to do everything to prevent a recession and banking crisis but millions of investors lost their money.
Black Monday will forever stay in the memories of people as the day when the stock crashed and millions of people lose their money. There were even accidents when angry investors killed their brokers. It is a really black day for the economy of the US. However, we can say it happened only because it wasn’t prevented by the government.
Black Monday wasn’t a surprise for some people. Some specialists expected it but it wasn’t prevented because of the work of the U.S. Securities and Exchange Commission. 1986 and 1987 were very good years for the stock market. There was an extension of an extremely powerful bull market that had started in the summer of 1982.