On Oct. 19, 1987 -- Black Monday -- the stock market tanked. The Dow Jones Industrial Average fell over 500 points -- a 22% decline.
But more than 30 years removed from the epic crash its hard for some, especially younger folks, to understand the severity of that day and the risks associated with major stock market crashes (other than the evaporation of wealth). To understand the implications its important to understand the events that led up to the Crash of '87 through a series of stories as part of our "Crash of '87 -- TheStreet Special Report."
The crash was triggered for a few reasons. But one of them was legislation from Congress that would limit the tax savings that companies would receive after merging. So companies would have less of an incentive to merge.
The legislation was unveiled the week before Black Monday, causing the stock market to drop. Regulation tends to make investors nervous.
But on Monday, the selling kicked into high gear thanks to computer trading, which would automatically push investors into cash positions and sell their stock holdings anytime the market declined.
Imagine what happens when almost everyone is employing this strategy? Pure mayhem!
The "Crash of '87 -- TheStreet Special Report" is a series of stories, videos, graphics and other multimedia elements that look at the stock market crash of 1987, also known as Black Monday. TheStreet (TST) examines the cause of the crash, reveals some of the hottest stories of the day, and discovers what could cause a similar crash in the future. How can we prevent another Black Monday? Read more about the Crash of '87.
Black Monday made headlines 30 years ago today. Check out our full Crash of '87 Special Report for the ultimate #TBT:
- Has Wall Street Employed Enough Tech to Protect Against Another Black Monday?
- When I Think of October, I Think of Black Monday
- What Led to the Black Monday Crash?
- Vanguard Founder John Bogle Reflects on Black Monday
Originally published Oct. 19.